Gambling on the Maryland-Virginia Waterfront

the Potomac Shores development on Cherry Hill Peninsula is one possible location for a riverboat gambling parlor, licensed under Maryland laws
the Potomac Shores development on Cherry Hill Peninsula is one possible location for a riverboat gambling parlor, next to Virginia customers but licensed under Maryland laws
Source: ESRI, ArcGIS Online

Since 2007, Maryland has legalized slot machines and then casino gambling. That has impacted business at the West Virginia and Delaware gambling centers. Charles Town, WV used to be the closest place for DC-area residents to gamble legally, and 50% of the business in Delaware's casinos came from Maryland residents. As the Delaware Lottery director noted:1

You'll need a pretty good excuse to drive past a Maryland casino to come to one of ours now... It used to be just us and Atlantic City, but we have a proximity problem now. We couldn’t have the monopoly forever.

Maryland's expansion of gambling means Northern Virginians no longer need to drive to Atlantic City or to the racetrack at Charlestown, West Virginia. Virginia gamblers can cross the Woodrow Wilson Bridge to gamble at three casinos in Maryland along the I-95 corridor. Most gamblers in Maryland's facilities live within 30 minutes of the facility, though the sixth casino in Maryland at National Harbor in Prince George's County may draw as much as 20% of its customers from tourists visiting DC. The National Harbor casino will also attract Virginia residents, which Maryland counted on when assessing where it should authorize its sixth casino:2

...the new casino in Prince George’s County, at any of the three locations proposed, will be the most conveniently-accessible casino for most of the population of Virginia.

Virginia has a long history with gambling. The Virginia Company of London, which financed the settlement at Jamestown and initial colonization efforts, used a lottery in 1612 to raise funds from English gamblers for the venture. In 1767, George Washington sponsored the Mountain Road Lottery to build a road to what today is the Homestead Resort, but it failed to sell enough tickets because there were so many other lotteries occuring at the same time. King George III finally banned new lotteries in 1769.3

George Washington took dramatic gambles throughout his life, from traveling to confront the French near Lake Erie in 1753 to starting a distillery in 1797, but his plan to using finance a road through the Allegheny Mountains failed because there were too many competing lotteries
George Washington took dramatic gambles throughout his life, from traveling to confront the French near Lake Erie in 1753 to starting a distillery in 1797, but his plan to using finance a road through the Allegheny Mountains failed because there were too many competing lotteries
Source: Mountain Road Lottery: Setting the Record Straight by Ron Shelley

Virginia started its state lottery in 1988, and authorizes many bingo operations today. The Virginia Racing Commission licenses pari-mutuel betting at steeplechase races such as the Gold Cup in Fauquier County, and since 1997 at the Colonial Downs racetrack between Richmond and Hampton Roads. Across the state there are a few off-track betting parlors and many more kiosks for online pari-mutuel betting on out-of-state tracks.

Virginia strategically located two off-track betting parlors near North Carolina in Alberta (on I-81) and Ridgeway (on US 220, near US 29), plus one near Tennessee in Weber City in Scott County (on US 23, near I-81). State officials clearly understand the concept of drawing customers across state lines for gambling, in order to increase tax revenues in Virginia.

off-track betting parlors in Virginia are located to meet customer demand in the urban areas - but locations in Alberta, Ridgeway, and Weber City are designed to pull customers across the North Carolina/Tennessee borders
off-track betting parlors in Virginia are located to meet customer demand in the urban areas - but locations in Alberta, Ridgeway, and Weber City are designed to pull customers across the North Carolina/Tennessee borders
Source: Colonial Downs, Colonial Downs OTB Locations

For the last century, the General Assembly has been strongly opposed to casino gambling. Other states in the region, starting with New Jersey in 1978, have opened facilities that draw customers from Virginia. In 2013 the State Senate did authorize the Hampton Roads Transportation Planning Organization to study casino gambling opportunities in Virginia, to explore the potential for using revenue from gambling to fund transportation projects and reduce highway tolls.

The report cited studies that predicted 45% of people living within 30 minutes of a casino would gamble, and in 2003 12% of Virginians gambled in casinos by traveling to Atlantic City and Las Vegas. The optimistic assumption in the study by the Hampton Roads Transportation Planning Organization was that tax revenues would exceed $100 million annually if a casino was authorized in the region, in large part because:4

In the event that a casino was built and operated in Hampton Roads, a large number of those trips would likely be redirected to the local casino.

...the propensity to gamble increases with proximity to a casino, and the vast majority of the increased gambling occurs locally.

The state legislature has refused to authorize a referendum on riverboat gambling, which could lead to "dens of iniquity" casinos with poker, blackjack, and slot machines that compete with Maryland or West Virginia casinos. A Portsmouth legislator has requested state authorization of a casino or riverboat gambling to finance transportation projects in the Hampton Roads region and spur development in that economically-depressed city, claiming Virginians spend $1.5-$2 billion annually at out-of-state casinos.5

In 2014, the bill finally received approval by a key committee in the State Senate, but died before passage. By then 40 states had authorized casino gambling, but Virginia legislators chose to remain one of the 10 states who did not. The State Senate’s Democratic leader at the time assessed the potential of final approval of casino gambling in Virginia as very low, saying:6

The only question about casino gambling is who will be the 50th state to get it - us or Utah....

Forty-nine states will have it before we get it... You can bet that at that casino across the river, probably a third to 50 percent of their revenue is gonna come from Virginia. They’ll be raking in a fortune before it dawns on us that we should have done that a long time ago. It’s money that could have stayed in Virginia, but once again we’ll be left out in the cold.

In 2015, the Bureau of Indian Affairs in the US Department of the Interior granted Federal recognition to the Pamunkey tribe. Such recognition acknowledged that the tribe had been in continued existence and had not disappeared in the 408 years since English colonists arrived at Jamestown. On a more practical level, formal recognition expanded the tribe's access to Federal programs designed to enhance social and economic opportunity.

The decision by the Bureau of Indian Affairs did not authorize casino gambling on the tribe's reservation in King William County. Creating a casino on the reservation would be very difficult, due to the opposition by Virginia's elected officials.

The Indian Gaming Regulatory Act was passed by the US Congress in 1988, after the US Supreme Court ruled in California v. Cabazon Band of Mission Indians that states lacked authority to block casinos on reservations held "in trust" for Federally-recognized tribes. By 2015, when the Pamunkey were recognized, over 40% of the Federally-recognized tribes operated casinos and gaming facilities in 28 states.

The Pamunkey could open a casino without state approval only if the US Congress passed another law accepting the Pamunkey's 1,200-acre reservation as a Federal reservation, which would be managed by the Bureau of Indian Affairs "in trust" for the tribe. Assuming Congress did pass a new law to expand the Pamunkey reservation status from just state-recognized to Federal-recognized, the tribe still could not offer what the Indian Gaming Regulatory Act categorizes as Class III gaming (slots, blackjack, roulette, horse racing, or lotteries unless the tribe negotiated an agreement with the Commonwealth of Virginia.

Such tribal-state compacts define how revenues will be shared, and require approval by state legislatures before the National Indian Gaming Commission will regulate them. The hostility of the Virginia General Assembly to casinos could remain a barrier that only another act of Congress could overcome. The US Supreme Court has ruled that states can simply refuse to negotiate a Class III gaming compact with a tribe, so Virginia officials could demand an unacceptable share of the revenue as a condition of signing a compact.

The Pamunkey could initiate a Class II gaming operation - essentially bingo games - with approval from just the National Indian Gaming Commission. Technology now allows that bingo experience to resemble the atmosphere of a casino, but a Class II facility would lack the variety of games of what is available in Maryland.7

Beyond the difficult legal and political hurdles, if the Pamunkey tribe decided to start a gambling operation it would have to attract customers to the isolated reservation. The reservation is a one-hour drive on narrow roads from I-95 at Richmond or I-64 at Williamsburg. The Colonial Downs horse track in New Kent County, built for $45 million on I-64 between the urban centers of Richmond and Norfolk/Virginia Beach, stopped offering horse races and closed its gambling facilities in 2014 because profits were insufficient.

the closure of the Colonial Downs horse track in 2014 suggests that the Pamunkey Reservation, even more isolated from customers, would struggle to attract enough customers to justify even a Class II gambling operation based on bingo
the closure of the Colonial Downs horse track in 2014 suggests that the Pamunkey Reservation, even more isolated from customers, would struggle to attract enough customers to justify even a Class II gambling operation based on bingo
Source: ESRI, ArcGIS Online

MGM opposed the Federal recognition of the Pamunkey tribe, fearing potential competition. Maryland gambling companies have saturated the market along I-95, but there is still an under-served market south of Fairfax County. From Lorton to Richmond, there are many potential customers interested in entertainment that includes gambling, but reluctant to drive through congested Northern Virginia traffic to reach Maryland's existing casinos. That creates the opportunity for Maryland to expand its gambling operations, and authorize a new gambling riverboat docked on the Virginia shoreline.

There is a history of gambling barges and boats next to Alexandria, Prince William, Colonial Beach, and Coles Point. In Prince William County, the SS Freestone (built in 1910 as a passenger steamer and originally called City of Philadelphia) was docked at Freestone Point. Technically, it was located in Charles City County. The gambling boat offered liquor-by-the-drink as well as 100 slot machines in 1957-58.

Virginia objected, and as part of the 1958 revision of the Compact of 1785 regarding control of activities on the Potomac River, Maryland required gambling boats to be accessed from land in Maryland. That ended the borderline tradition, and the SS Freestone was renamed the SS Potomac and finished her working days on the Hudson River.8

the SS Freestone (red X) was docked at what is today Leesylvania State Park, upstream (north) of the Potomac Shores development on Cherry Hill Peninsula
the SS Freestone (red X) was docked at what is today Leesylvania State Park, upstream (north) of the Potomac Shores development on Cherry Hill Peninsula
Source: ESRI, ArcGIS Online

In 1957, the Saturday Evening Post highlighted Colonial Beach as "Las Vegas of the Potomac." As described by the Washington Post in 2003:9

In the 1950s, Colonial Beach in Virginia's Northern Neck was a notorious gambling hotbed, a wildly popular nightlife resort drawing revelers from throughout the region. The town had been a popular summer getaway for the urban set since the early 1900s. But when a quirk of geography let Colonial Beach take advantage of Maryland's slot machine laws, the resort went on a gaming spree that lasted nearly a decade.

Colonial Beach was far from an urban area, but customers from as far away as Richmond could drive US 301 to access the Las Vegas of the Potomac
Colonial Beach was far from an urban area, but customers from as far away as Richmond could drive US 301 to access the "Las Vegas of the Potomac"
Source: ESRI, ArcGIS Online

You can still gamble at The Riverboat in Colonial Beach, though there are no slot machines. You can buy a Virginia Lottery ticket, then step a few feet across the border and purchase a Maryland Lottery ticket, bet in a Maryland Off Track Betting (OTB) parlor, play keno, and occasionally join a "Texas Hold 'em" tournament.

The tradition of borderline gambling on the Potomac River was slow to fade away. As late as 1979, the Coles Point Tavern was raided by Maryland State Police. They took a boat across the river, found gambling equipment, and arrested the owner. (As Captain Renault said when closing down Ricks Bar in the movie Casablanca, "I'm shocked, shocked to find that gambling is going on in here...")10

the Coles Point Tavern is on pilings, just across the Maryland border
the Coles Point Tavern is on pilings, just across the Maryland border
Source: ESRI, ArcGIS Online

In 2003, when Maryland legislators were debating whether to permit casinos, Virginia officials recognized the potential for a return of borderline gambling operations. The Virginia House of Delegates asked the adjacent state to "refrain from authorizing... gambling in or on the shores of the Potomac River." The sponsor of the bill was motivated by moral objections to gambling, but also acknowledged the economics of shoreline gambling were not in Virginia's favor when he commented "They get the money, we get the problems."11

The number of suitable locations for such riverboats is limited. The boundary line between Maryland and Virginia does not follow the low-water mark of the Potomac River exactly. The boundary often cuts across bays, from headland to headland, leaving Virginia with portions of the river. Prince William County between Occoquan and Leesylvania State Park, for example, is too far from the Maryland-Virginia border for customers to walk on a pier to a riverboat.

South of the state park, however, is the Cherry Hill Peninsula. The proposal to develop that area into the Potomac Shores community includes plans for a town center at the tip of the peninsula. Anyone living there would experience a long drive just to get to I-95, in order to commute to any job not located near a Virginia Railway Express (VRE) station.

However, if a Maryland gambling operator offered economic incentives for the Potomac Shores development in Virginia, then a riverboat casino next to the Virginia border could become realistic. Unlike the Pamunkey Tribe, MGM could open a border-of-Virginia casino without any approval from the Virginia General Assembly, and a casino at the Cherry Hill Peninsula would be closer to the Northern Virginia market than a casino in King William County.

the Maryland-Virginia border comes close to the shoreline from Cockpit Point to Quantico, so gamblers at Potomac Shores could walk on a short pier from the Virginia shoreline into a casino riverboat located in Maryland
the Maryland-Virginia border comes close to the shoreline from Cockpit Point to Quantico, so gamblers at Potomac Shores could walk on a short pier from the Virginia shoreline into a casino riverboat located in Maryland
Source: US Geological Survey (USGS), Quantico 7.5 x 7.5 quadrangle map (Revision 1, 2013)

Links

References

1. "Maryland raising stakes in casino wars with Delaware and West Virginia," Washington Post, March 31, 2013, http://www.washingtonpost.com/local/maryland-raising-stakes-in-casino-wars-with-delaware-and-west-virginia/2013/03/31/d90dde90-96f7-11e2-a976-7eb906f9ed9b_story.html (last checked February 10, 2014)
2. Projected Gaming Revenues and Impacts of Proposed New Casinos in Prince George’s County, Maryland (DRAFT), Cummings Associates, November 26, 2013, Maryland Gaming website, http://cdn.mdlottery.com.s3.amazonaws.com/Gaming/Consultant%20Reports/Task%20I%20II%20Cummings%20Associates.pdf; "Maryland Casinos Draw Mostly Local Crowds," Capital News Service, December 21, 2012, http://cnsmaryland.org/2012/12/21/maryland-casinos-draw-mostly-local-crowds/ (last checked February 12, 2014)
3. Robert C. Johnson, "The Lotteries of the Virginia Company, 1612-1621," The Virginia Magazine of History and Biography, Volume 74 Number 3 (July 1966), http://www.jstor.org/stable/4247219; "Mountain Road Lottery: Setting the Record Straight by Ron Shelley," http://mountainroadlottery.blogspot.com/ (last checked July 3, 2015
4. "Casino Gaming In Hampton Roads Potential Revenues, Economic Impacts & Social Impacts," Hampton Roads Transportation Planning Organization and the Hampton Roads Planning District Commission, September 2013, pp.3-4, http://www.hrtpo.org/uploads/docs/LegADhoc091613/0916013LEG-A8-Casino%20Gambling-HRTPO-HRPDC%20White%20Paper.pdf (last checked February 24, 2015)
5. "Bill allowing Portsmouth casinos clears committee," The Virginian-Pilot, February 4, 2014 , http://hamptonroads.com/2014/02/portsmouth-casinos-bill-clears-committee-hurdle (last checked February 2, 2014)
6. "Virginia resists the siren call of casinos as gambling halls proliferate across the country," Washington Post, November 29, 2013, http://www.washingtonpost.com/local/virginia-resists-the-siren-call-of-casinos-as-gambling-halls-proliferate-across-the-country/2013/11/29/d33c51c8-56b3-11e3-8304-caf30787c0a9_story.html; "Portsmouth gambling proposal still faces long odds," The Virginian-Pilot, December 17, 2013, http://hamptonroads.com/node/700441 (last checked December 19, 2013)
7. "Is a casino in Virginia’s future now that the Pamunkey have U.S. recognition?," Washington Post, July 11, 2015, http://www.washingtonpost.com/local/is-a-casino-in-virginias-future-now-that-the-pamunkey-have-us-recognition/2015/07/11/ab924cf4-24e8-11e5-aae2-6c4f59b050aa_story.html; "Caught in the Middle: How State Politics, State Law, and State Courts Constrain Tribal Influence over Indian Gaming," Marquette Law Review, Volume 90 Issue 4 (Summer 2007), p.981, http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1075&context=mulr; "Legal Distinction Between Class II and III Gaming Causes Innovation, Anguish," Indian Country Today, October 4, 2011, http://indiancountrytodaymedianetwork.com/2011/10/04/legal-distinction-between-class-ii-and-iii-gaming-causes-innovation-anguish-55045 (last checked July 13, 2015)
8. "Vegas-on-Potomac," Washington Post, June 11, 2003 http://www.washingtonpost.com/wp-dyn/content/article/2003/06/11/AR2005033107171.html (last checked December 1, 2013)
9. "Survey Form: Fairfax House Site," Virginia Historic Landmarks Commission, File No. 76-74, January 1980, http://eservice.pwcgov.org/library/digitallibrary/hsdw/L_Folder/LeesylvaniaSite76-45/pdfs/LeesylvaniaSite76-45SurvC.pdf; "Down Home in Woodbridge," Cooperative Living, June 2001, http://www.co-opliving.com/coopliving/issues/2001/June/downhome.htm; Greg H. Williams, World War II U.S. Navy Vessels in Private Hands, McFarland & Company, 2013, p.151, http://books.google.com/books?id=1zmNAgAAQBAJ; "Remembering ~ Excursion Vessels of New York Harbor," World Ship Society, http://worldshipny.com/citykeansb.shtml (last checked July 27, 2014)
10. "Maryland Police Charge Virginia Tavern Owner," The Free Lance-Star, August 17, 1979, http://news.google.com/newspapers?nid=1298&dat=19790817&id=h-BLAAAAIBAJ&sjid=Z4sDAAAAIBAJ&pg=2221,2138885 (last checked April 1, 2014)
11. "Va. House Wants Maryland To Keep Slots Off the Potomac," Washington Post, February 20, 2003, online at Maryland State Archives, http://msa.maryland.gov/megafile/msa/speccol/sc5700/sc5796/000005/000000/000003/unrestricted/post20feb2003.html (last checked December 1, 2013)

four counties in Maryland used local option authority to allow slot machines, until the state legislature over-ruled them and banned slots between 1968-1997
four counties in Maryland used local option authority to allow slot machines, until the state legislature over-ruled them and banned slots between 1968-1997
Map Source: Maryland State Archives, Map of Maryland Counties & County Seats


Horse Racing and Gambling in Virginia
Virginia-Maryland Boundary
Boundaries and Charters of Virginia
Virginia Places