Lawmakers are seeking to squash the regulatory powers of the Virginia Charitable Gaming Board amid a corruption scandal.
Four members of the Joint Subcommittee on Charitable Gaming sent a letter to House Speaker Todd Gilbert last week. They asked him to replace certain members of the board, including chairman Chuck Lessin, who is at the heart of the issue.
Lessin opened a poker room last year in the Richmond Bingo Hall. Then, he started a business that allowed charities to rent his space to run charity poker tournaments.
However, the subcommittee members felt heading a regulatory agency and running a business in the same Virginia gambling market is a conflict of interest.
As a result, there are six bills in the legislative pipeline that would severely limit the power of the Charitable Gaming Board.
Those bills plan to enhance enforcement and increase penalties for violators. Electronic slot machines would also be under greater regulatory scrutiny under other proposals.
Finally, one of the bills would strip the board of any regulatory authority at all. However, it would allow those on the board to serve alongside state regulators in an advisory role to prevent further corruption.
Virginia charitable gaming expansion preceded casino gambling
There was plenty of momentum for gambling to make its way to Old Dominion in 2020.
Previously, there was no legalized gambling in Virginia outside of the state lottery. But two years ago, then-Gov. Ralph Northam signed bills that legalized VA online sportsbooks. Voters also approved the construction of five Las Vegas-style casinos in Virginia seven months later.
However, there was no guarantee that voters would pass the ballot initiative that would bring casinos to the state. In the interim, legislators approved bills that essentially allowed nonprofit organizations to run poker tournaments as a fundraising activity.
The state established charitable gaming laws in the 1970s, but the industry was under strict rules. Legislators prohibited poker and other card games under previous laws.
There was just one problem: Lawmakers legalized charitable gaming expansion without outlining a clear set of rules for those organizations to abide by.
Lack of immediate regulation bred possible corruption, lawsuit
Lessin already owned the Richmond Bingo Hall and the sports bar attached to it. He immediately began the process of adding a poker room to it once the bill became law. Additionally, he urged regulators to begin issuing poker licenses immediately.
The Charitable Gaming Board was part of the Virginia Department of Agriculture and Consumer Services (VDACS). VDACS and the commercial gaming board agreed on charity regulations at the end of 2020, but many charities were already moving forward with fundraisers.
Ultimately, VDACS halted the issuance of charitable gaming permits last May, which led to a lawsuit from Lessin.
He filed suit against VDACS, arguing that the law allowed for gambling, even without a clear-cut regulation. Secondly, he argued that the regulators should’ve already granted him a permit since the regulations were in place prior to his launch.
The judge ruled in Lessin’s favor in August. He ran his first poker tournament in Pop’s Poker Room at the end of the month.
Inspector general wants changes in Virginia charitable gaming
After Lessin won the suit, the Office of the State Inspector General (OSIG) came in to review the structure of the Charitable Gaming Board.
In September, the OSIG released a report that found problems with having Lessin on the board. According to the report, the integrity of the regulatory body is at risk from actions like Lessin’s.
The report recommended the following changes:
- Update the code to ensure proper oversight of all charitable gaming gross receipts.
- Update the code to address conflicts of interest and provide needed consistency between the types of charitable gaming activities.
- Also update the code to provide VDACS the authority to deny, suspend or revoke permits.
- Update the code to regulate the owner, lessor or lessee role within charitable gaming.
- Have VDACS reevaluate staffing levels after the impacts to the changes to the code and regulations have been implemented to ensure proper oversight and enforcement statewide.
- Have VDACS establish a time frame for releasing charitable gaming applications after regulations have been promulgated.
Lessin claims regulators are the corrupt ones
There was plenty of incentive for charitable gaming organizations to act quickly and receive a license as soon as possible. Commercial casinos could be in Virginia by this year, and charitable businesses wanted to establish themselves as a gaming option.
Lessin said that the lawmakers are operating in the best interests of those companies at the expense of Virginia charities. He told a local ABC affiliate that the efforts of the lawmakers are misguided:
“I think the Charitable Gaming Board has been mistreated in a really big way and I think that all of that falls at the feet of big money coming in and influencing the legislators to try and shut down what charities have had for decades.”
Hard Rock Casino and Resort Bristol will open a temporary gaming floor, likely this year. It will become the first commercial casino in Virginia history in the process. Hard Rock will unveil the full casino floor next year.