The new Caesars Danville Casino shattered revenue expectations in its opening weeks, making nearly $12 million in May after opening midway through the month.
This resulted in $2.1 million of tax money to the state, with $716,000 going to the city of Danville. It also brings additional casino-related tourism, which will grow even more as its temporary structure gives way to a permanent resort, hotel and casino in 2024.
Tax revenue could exceed immediate projections
Caesars Danville Casino opened on May 15, returning 17 days of data for the month’s casino revenue report. If it kept pace for an entire year, it would bring the city more than $15 million in tax revenue.
Danville City Manager Ken Larking spoke in March of the casino’s projected annual tax revenue once it opened, saying its expected contribution would be nearly $8 million. An additional $4 million-plus would come to the city from casino tourism, bringing the total financial impact to more than $12 million in its first year of operation.
A $15 million pace nearly doubles expectations, but it is probably unsustainable since casinos naturally have an opening blast of business that tapers off in the following months.
Rivers Casino Portsmouth experienced this after opening in late January. It recorded $24.6 million in revenue in February, then dipped below $20 million for the first time in May.
The Danville casino will see a similar drop-off, and Virginia casinos are too new to determine an accurate baseline. However, a $17 million monthly average in revenue seems attainable and would return the city $12.2 million in first-year taxes.
The long-term picture looks even better
Short-term projections will make Caesars the top revenue earner of the three Virginia casinos within its first few months. The future is even brighter.
The city estimated that the casino’s permanent home would attract $39 million in annual revenue, something Larking said would allow citizens to “reap great benefit.” Its projections said $22 million of that would come from taxes.
If the temporary casino can exceed original projections by 50%, what will the permanent facility bring?
A 50% increase on $22 million might be above its ceiling, but a 33% bump would challenge $30 million.
The city calculated its overall economic impact based on three components:
- Caesars annual payment
- Annual gaming tax revenue
- Other tax revenue from sales, hotels, meals and property
Per the deal, Caesars will pay the city of Danville $12 million annually, leaving the originally-projected remainder at $26 million from the other two categories.
If we extrapolate that $26 million by 33%, we get $34.7 million. Add back the $12 million from Caesars, and that new total jumps to almost $47 million.
Where does Danville’s casino tax revenue go?
Danville’s casino tax income will contribute to several key areas in the city. Larking’s original $8 million projection proposed to break up the funds as follows:
- $2.8 million (35%) for economic development initiatives
- $2.5 million (31) for Danville Public Schools
- $840,000 (11%) for police department headquarters
- $800,000 (10%) for blight removal
- $467,000 (6%) for gang prevention programs
- $252,000 (3%) for summer internship programs
- $105,000 (1%) to complete the Plan Danville effort
- $96,000 (1%) for rental inspection districts
A 50% increase in tax revenue could change the proportions, contribute toward additional improvements or give more money to all the services above. It’s a huge win, no matter what.
Even better, the city benefits by not needing to use its savings to fund these ongoing projects, something it has relied on historically, Larking said.
“We’re going to be able to put all our efforts that have been so successful over the past several years on, basically, steroids.”
The city will use casino tourism taxes for general governmental operations, an increasing expense due to rising personnel costs and inflation.
More impact from the Danville casino
In addition to the numbers above, Caesars paid the city a one-time $20 million fee to begin doing business. Nearly $11 million went to purchasing the property and making a down payment on a new police headquarters.
Proposed uses for the remaining funds include:
- Riverfront Park investments ($4 million)
- Redevelopment of White Mill ($3 million)
- Neighborhood revitalization ($2 million)
- Airport renovation funding match ($1 million)
Statewide, Virginia’s tax code includes a Gaming Proceeds Fund that requires 0.8% of casino gambling taxes (and 2.5% of sports betting taxes) to go to the state’s Problem Gambling Treatment and Support Fund.
This fund provides resources centered around responsible gambling, including counseling and support for problem gamblers, developing treatment and prevention programs and providing grants to support organizations for compulsive and problem gamblers.
Lastly, the temporary casino created 400 new jobs for residents of Danville and other cities in the region. Not every position has been filled, either, so click here if you’d like to see what jobs are available.
Hotel expected to open in 2024
Despite the success of the new casino, Caesars continues construction on the full resort to ensure an opening by the end of 2024, more than two years after it broke ground on the project.
The $650 million permanent property will create more jobs, requiring 1,300 employees in total. It will include:
- A 500-room hotel
- A 2,500-seat theater
- 40,000 square feet of meeting and convention space
- A swimming pool
- Numerous bars and restaurants
- A full-service spa
Additionally, the casino floor will boast more than 1,300 slots, 85 table games, 24 electronic table games, a Caesars VA Sportsbook and a WSOP poker room.