Rivers Casino exceeds local revenue projections in first year, still has no timeline for hotel

PORTSMOUTH, Va. (WAVY) — In its first year, Rivers Casino has provided more tax money directly into the City of Portsmouth than originally projected.

Roughly $18.3 million has gone directly into the city’s general fund since the casino’s grand opening on January 23, 2023, according to Brian Donahue, the city’s economic development director.

That breaks down to roughly $15.4 million from the city’s share of gaming tax revenue, $2.2 million in real estate tax, and roughly $700,000 in meals, admissions, and business taxes.

Going back to 2021, the casino development team touted that the city could expect $16 million in taxes annually.

“I think it’s gone fantastic,” Donahue said. “I think that everything we expected would come from Rivers Casino locating in Portsmouth has been happening from a, you know, revenue generating standpoint, from the partnership with the casino with the community involvement that they’ve had. I think it’s met and exceeded all of our expectations and what was expected.”

However, one economist warns those projections might need to be modified considering expected competition has yet to materialize and the lack of a hotel.

Rivers Casino celebrates 1-year anniversary with time capsule ceremony

Should the city expect at least $16M a year?

Rivers Casino Portsmouth is Chicago-based Rush Street Gaming’s fifth casino.

Built for more than $340 million, the 250,000-square-foot complex includes a gaming floor with more than 1,400 slot machines, 80 table games, a sportsbook, a golf simulator, several bars, five restaurants and an event space.

The project, which sits on more than 38 acres off Victory Boulevard near where it intersects with Interstate 264, was approved by voters in a November 2020 referendum with 70% of the vote.

The state legislation that made it all legal was carried by Del. Barry Knight, (R-Virginia Beach) but in Portsmouth, there was no bigger cheerleader than the Senate’s patron, State Sen. Louise Lucas (D-Portsmouth).

“I think this is just the beginning of what’s going to be an awesome stream of revenue ongoing for the city,” Lucas said at the one-year casino celebration. “Of course … that had been my goal all along.”

Portsmouth is considered a “fiscally stressed” city.

The city has a poverty rate of more than 17% and more than 40% of its property is exempt of real estate tax, mainly because the land is owned by the government. Real estate taxes make up a majority of a local government’s operating funds to pay for everything from roads, police and teachers.

Currently, Portsmouth has the highest real estate tax rate in the region, charging $1.30 for every $100 of assessed value.

In its first nine days of operation, the casino brought in more than $9 million in gaming revenue alone.

On average, the Casino brought in $21.8 million each month, contributing an average of $1.3 million directly to Portsmouth each month.

The $18.3 million would be enough to lower the city’s real estate tax rate by 18 cents. However in the current fiscal year budget, the city only budgeted $10.5 million.

That money helped the city give a 5-cent credit on the real estate tax, essentially lowering it to $1.25.

“FY 2024 includes a conservative estimate of $9 million, providing a buffer for a short term decline in receipts over the first few years before annual growth begins,” the budget document reads.

Unlike Rush Street Gaming, the city has not planned for $16 million in local revenue annually, rather only for the first year.

Yearly revenue is expected to decrease to roughly $10 million in gaming revenue in 2025 and then increase from that point on.

However a concern of Robert McNab, chair of the Department of Economics at Old Dominion University, is that projections have all been done with the expectation that Norfolk would also have a casino open.

In 2020, lawmakers passed legislation allowing five “economically-distressed” host cities to build casinos with voter approval. Voters gave the green light in Bristol, Portsmouth, Norfolk and Danville. A referendum to allow for a casino in Richmond failed twice.

However there is now a push to bring casinos to Petersburg, and Tysons Corner in Northern Virginia.

“Portsmouth’s casino is in probably in the best competitive position it will see for many years. There is no Norfolk casino, there is no Richmond casino, it is enjoying a monopoly on the casino gambling space in Hampton Roads,” McNab said. “If your revenues are just slightly above projections in the best case environment. You should probably be looking at a lower estimates in revenues going forward if we see the Norfolk casino eventually get off ground.”

While Donahue reiterated he thinks Rivers will be able to deliver the annual $16 million in revenue to the city, Lucas wants the casino to have the best hand possible.

The Joint Legislative Audit and Review Commission, also known as JLARC, delivered a report to the Virginia General Assembly last November that found additional casinos would reduce net gaming revenue by $55 million for projects that have already been authorized.

It’s one of the reasons Lucas, who has major control over legislation as chair of Senate Finance committee, is holding firm on not allowing more than five casinos statewide.

“There will be some consideration given to the one in Petersburg, as I understand it, because the senator there wants to have one and it was written into the bill that it would be five,” Lucas said. “And because Richmond did not pass this referendum, we said that Petersburg will have the next bite of the apple. So there’s still a lot of be five casinos.”

New casino and new business

Lucas also predicted businesses would want to open up around the casino.

While research suggests casinos usually operate as “islands,” in which customers don’t necessarily frequent neighboring business, Donahue said he has seen otherwise.

“We’re seeing interest in the market area along Victory Boulevard and we’re seeing commercial properties that have gone on the market,” Donahue said.

There have been more than $12.7 million in property sales in the vicinity of the casino since the last January, according to an analysis by 10 On Your Side.

The Twisted Crab, a local chain-seafood restaurant based out of Yorktown, recently purchased the former Ruby Tuesday along Victory Boulevard for $1.3 million. The casino helped sway them to the property, Donahue said.

Along Missy Elliott Boulevard, The Miller Group out of Virginia Beach purchased property to put up new homes.

“I think that as the entertainment district expands, we have more offerings, more reasons for visitors to come to Portsmouth that will probably see those numbers go up,” Donahue said.

But where would those visitors stay?

How about the hotel?

The development agreement between Rush Street Gaming and the City of Portsmouth calls for a hotel and conference center to be built to complement the casino.

As part of the campaign for an affirmative vote on the 2020 referendum, renderings were sent in mass to voters showing a multi-level tower sitting just to the north of the casino’s main entrance.

However 10 On Your Side uncovered that Rush Street Gaming would not be required to start building a hotel as long as Norfolk voters also approved a casino with a hotel, which they did.

In March 2021, Councilman De’Andre Barnes said some people felt like they were tricked in their vote for the project, given that the hotel development had no strict timeline.

Mike Tobin, senior vice president for Rush Street Gaming, assured council members that “absolutely we are building a hotel.”

However not much has been said since then.

Portsmouth casino developer commits to building hotel, but won’t say when

“You know, we’re we’re constantly evaluating the need for a hotel and, well, I feel very confident that we’ll make the right decision when the time comes,” Roy Corby, general manager of Rivers Casino Portsmouth, said earlier this month.

When pressed on when that time would be, Corby said it was “a little too soon to say exactly when development would come.”

Two triggers remain intact in the development agreement that would force Rivers to commence construction.

If Norfolk’s competing casino is open for a full year and net gaming revenue for Portsmouth’s casino reaches $175 million in that same timeframe, construction for the hotel and convention center must begin.

However, with development of Norfolk’s casino still in the planning stages, construction on the hotel would have to begin once net gaming revenue reaches $250 million in a straight 24-month period.

The casino will likely exceed the $250 million revenue number since opening this month, meaning there could be news by next January.

In the case that neither of those benchmarks are reached after four years and Rush Street Gaming hasn’t started to plan for a hotel, the city has the option to bring another developer to do the job.

“The expectation is that they will move forward with a hotel as part of the casino. I don’t have any, you know, announcements or comments on that, but I would say stay tuned,” Donahue said. “I think based on the performance they’ve experienced, that that’s in the future .”

Regardless, Donahue thinks Portsmouth is better off with Rivers Casino. From the more than 1,100 new jobs to the $861,000 to the local nonprofit organizations.

“I would just say, you know, we’re extremely pleased with the partnership we’ve had with Rivers Casino,” Donahue said.

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