Proposed HHR Facility At Staples Mill Shopping Center A Long Shot For Churchill Downs

Written By Dave Bontempo on July 18, 2024
The Churchill Downs name, signifying the company's long shot bid to open an HHR facility in Henrico County

Two visions, one local brouhaha.

And it gets bigger by the day.

The scene plays out in Henrico, about 10 miles north of  Richmond. That’s where Churchill Downs, the owner of Colonial Downs and several Rosie’s Gaming Emporiums across Virginia, submitted plans for a gambling facility featuring historical horse racing machines. The submission came just before new rules would complicate the process.

Churchill Downs rankles district leaders with its timing

The timing of Churchill’s move drew the ire of Brookland District Supervisor Dan Schmitt, who represents the area where the project is planned. He publicly denounced its timing last month and again this week.

A wild card surfaced Tuesday, with several Henrico County state senators speaking out against Churchill’s proposed operation.

Eight members of Henrico County’s Virginia General Assembly delegation followed up by sending a letter to Churchill Downs Incorporated urging the company to withdraw its plans for the facility.

The depth of this legislative sentiment will have a significant bearing on this case and the expansion of horse race betting in Virginia.

How it happened in Henrico

Churchill Downs filed plans last month to convert part of the Staples Mill Shopping Center into a casino-like parlor with 175 historical horse racing game machines, along with a restaurant and bar. These machines play out the results of past races. People wager on them, unaware of the previous results from a pool of hundreds, if not thousands, of races.

Virginia legalized HHR gaming in 2018 to save its horse racing industry and the Colonial Downs Racetrack. According to a published report from the Virginia Racing Commission, players wagered more than $4 billion on HHR machines in Virginia last year.

The Henrico facility would fill a nearly 25,000-square-foot space between a Virginia ABC store and a Subway restaurant at the western end of the shopping center’s main building at Staples Mill Road and Glenside Drive. The currently vacant space previously housed a Surplus Furniture & Mattress store.

Finer details of Henrico’s zoning ordinance

The property’s B-2 business district zoning allows historical horse racing machines and so-called “parimutuel wagering” as a by-right use with a maximum of 175 machines. More than that would require a provisional-use permit (PUP)  from the county, a process that entails a public hearing.

Henrico was updating its rules to require a PUP for any such facility, regardless of the number of machines, when Churchill Downs started submitting applications for its project.

From May 9 to June 25, the county completed its process of introducing the ordinance amendment, conducting two public hearings and a public notice period before county supervisors could vote to approve it. That happened June 25.

However, the Churchill Downs application had already been in the pipeline for about a week and was grandfathered in from the new rules.

Translation: Churchill Downs wanted to gain an inside-positioning edge. It wants to obtain casino revenue to augment horse-racing operations and does not want the added bureaucratic layer of county government.

Schmitt cries foul

What occurred next is the administrative equivalent of a jockey filing an objection over interference from a competitor.

Schmitt decried the Churchill Downs application, which evades the new licensing process. Under new rules, the public will weigh in on proposals like this before approval.

That might spell doom for the Churchill Downs project.

Nearby Richmond voters have twice rejected gaming expansions, both by a 51-49% margin in 2021 and 60-40% in 2023.

If approved, those proposals would have seen Urban One and Churchill Downs construct and operate a $1.3bn casino resort on the city’s south side, an area campaigners said would benefit from economic development. 

But that measure has now been soundly defeated.

With Henrico so close to  Richmond, the Churchill Downs proposal is viewed as a measure that opposes the public will.

Schmitt, who believes Churchill Downs should honor the new rules, called on Churchill Downs to refile the application under the PUP process.

It also bothers him that Churchill Downs was well aware of beating the deadline to avoid applying under new, less favorable, rules.

Churchill Downs touts good neighbor role

HHR games are nothing new to Churchill Downs, which purchased  Colonial Downs in 2022 for $2.45 billion. The purchase included six Rosie’s Gaming Emporium HHR facilities and five more opportunities throughout Virginia.

Churchill Downs touts the thousands of new jobs it creates and the millions of dollars it provides as contributions or tax revenues via the HHR businesses.

According to Churchill Downs documents, more than $400 million has been invested in Rosie’s and Colonial Downs since the opening of the first Rosie’s six years ago. Churchill Downs says it has created over 1,200 new jobs and contributed $54 million yearly in state and local revenue.

That makes Churchill Downs, which operates the famed  Kentucky Derby, a valued state partner.

Odds might be too long for Churchill Downs

Churchill Downs’ decision to select an area that decisively rejected a gambling expansion now becomes a longshot entry. Going against a county supervisor is one thing. But the muscle applied against it by state legislators might be too much.

The pushback is a negative sign for Churchill Downs even if the facility goes forward. Consider an array of potential hurdles, including fines, delayed permits, tough new operating hours regulations, etc.

And the public won’t likely support Churchill Downs via the PUP process.

It would not be surprising, therefore, for Churchill to use this as a bargaining chip for favorable treatment elsewhere—a tax break here, an option to operate there, some future benefit in a state where it’s presumably viewed favorably as a taxpaying entity.

Perhaps it misread the temperature in greater Richmond. But there are other places.

The company has previously said it won’t operate where it’s not wanted.

Churchill Downs may have to realize that Schmitt had no choice but to object. If he didn’t, Schmitt would go against the wishes of the people he serves.

Churchill Downs may also realize that its application–even under the old rules–could be rejected.

This could be the time to collect a future bargaining chip instead.

Photo by Gregory Payan / AP Images
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Dave Bontempo

Dave Bontempo, a multiple national award-winning boxing commentator and writer, writes NFL betting columns for the Press of Atlantic City and iGaming Player, as well as contributes regularly at PlayVirginia.

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