'Long-term skin in the game' – state ups ante for minority investment in casinos

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The chairman of one of the most powerful committees in the General Assembly laid down a marker in January for minority investment in casino projects vying for licenses in Virginia, including three pending proposals in Richmond.

House Appropriations Chairman Luke Torian, D-Prince William, an African American minister from Woodbridge, proposed that applications for a state license to operate a casino include a minority investment plan. He said it would encourage developers to give an equity stake in their projects to minorities or minority-owned businesses, or at least show they are trying.

“I am very concerned that we are continuing to allow businesses to come into the commonwealth [and] operate without any minority equity ownership,” Torian told the House General Laws Committee, which approved the amendments to legislation introduced to make technical changes to the ground-breaking law adopted last year to legalize casino gambling in Virginia.

Constitutionally, he acknowledged that Virginia can’t require developers to include equity investments by racial or other minorities, but the legislation, which casino developers supported and Gov. Ralph Northam signed into law late last month, is the state’s most forceful attempt to ensure that minority investors and contractors share in the profits of a lucrative new gaming industry.

“Long-term skin in the game, as a percentage of ownership,” Torian said in an interview last week.

But minority investment is hard to measure in casino industry dominated by big companies and billionaires who often provide the money to back ownership by minority investors, whether an African American business, a Native American tribe or local investors recruited by developers to boost their credentials.

In Richmond, the Pamunkey Indian Tribe and Poarch Band of Creek Indians offered two of the three casino resort proposals that didn’t make the city’s cut last week, while the remaining three candidates – ONE, the Cordish Companies and Bally’s Corp. – are touting their commitments to minority investment and ownership.

ONE, a $517 million casino resort Urban One and Peninsula Pacific Entertainment are proposing in South Richmond, claims it would be the only Black-owned casino in the United States because its majority owner is a Black, family-owned media company based in Silver Spring, Md., with four radio stations in Richmond that focus primarily on African American listeners.

Four other cities permitted to legalize casino gambling have already chosen operators and developers, so “Richmond is the last opportunity for some big African American representation to happen,” said Alfred Liggins, president and CEO of Urban One, founded and chaired by his mother, Cathy Hughes.

“The city of Richmond is going to end up with the most lucrative of all the casino licenses,” Liggins said.

The project also includes a number of high-profile local investors, many of them African American, including former Richmond City Manager Robert Bobb and former University of Richmond basketball star Johnny Newman. It would be built by a partnership between Hourigan, a Richmond-based construction firm, and Team Henry Enterprises, owned by Devon Henry, an African American investor in the project and campaign contributor to Richmond Mayor Levar Stoney.             

However, Urban One would rely on Peninsula Pacific – a casino developer which owns Colonial Downs Racetrack and Rosie’s gaming emporiums in Virginia – to operate the gaming business and provide a financial “backstop” to the majority owner.

Liggins emphatically denies that Peninsula would control the company or the profits. “Absolutely an unequivocal hard no,” he said.

Peninsula, based in Los Angeles, would be paid to develop and operate the casino resort, but Liggins said that he and his company would provide more than $60 million of the $75 million in common equity for the project. It would borrow money from Credit Suisse to build the project.

“It’s not any billionaires at all,” he said. “The majority of the capital is coming from my company, as well as my mother and myself.”

Cordish, an established casino developer and operator based in Baltimore, said it is offering 50% minority ownership in the $600 million casino resort it has proposed at the current Movieland site in Scott’s Addition – the only project pitched north of the James River.

Its investors include NFL Hall of Fame football player Bruce Smith, an entrepreneur who lives in Virginia Beach; Richmond businessman Jerry Bushrod and his son, Jermon, a former NFL player; and the owners of Davis Brothers Construction, which Cordish calls the oldest Black-owned construction company in Virginia.

Davis and two other minority-owned contractors, Canterbury Enterprises and Mark Turner Construction, would build the Live! Casino & Hotel Richmond, based on the brand that Cordish has established in Baltimore, Philadelphia, Pittsburgh and two Florida cities.

Bally’s, formerly Twin River, based in Rhode Island, is less specific about its commitment for minority investment in the $650 million casino resort it has proposed for the Parkway Crossing property in South Richmond. Its backers include another NFL Hall of Famer, linebacker Willie Lanier Sr., as well as Lanier’s family-owned business, Lanier United, and Thompson Hospitality, based in Reston and owned by entrepreneur Warren Thompson.

Darrell Green, an NFL Hall of Fame defensive back, was one of the original investors but since has dropped out.

“Unfortunately, Darrell Green is no longer a part of the project. Darrell had to step back for personal reasons, but continues to be an advocate for the proposal and we appreciate his support,” said Marc Crisafulli, executive vice president of strategy and operations at Bally’s.

Crisafulli said the company would finance the project but would distribute a share of the profits to minority equity investors that it has yet to determine.

“While we are not disclosing the ownership stake percentages held by our current partners, we can confirm that minority ownership is a priority for us and that we have set aside additional ownership for minority investors,” he said.

Willie Lanier Jr., the NFL star’s son and managing partner of Lanier United, said, “Our plan is to extend the equity opportunity” to others in the Richmond area.

The company is a commercial construction and real estate firm that Lanier said has made major contributions to Richmond’s North Side and especially Virginia Union University, a historically Black university.

“Virginia Union has been a main focus of our attention and will continue to be a main focus,” he said.

Ironically, Liggins acknowledged that he discussed possible minority investment in casino projects with both Cordish and Bally’s, among others, as well as MGM, the majority owner of MGM National Harbor, a casino resort on the north side of the Potomac River in majority Black Prince George’s County, Md. Urban One has a $40 million stake in the MGM project, or 7%.

“Peninsula Pacific came up far and away the best partner for us because they know Virginia better than anybody,” he said.

Liggins raised the issue of minority ownership in Richmond at the General Assembly in early 2020, when the legislature was debating casino legislation.

This year, he said, “The General Assembly did something about it.”

mmartz@timesdispatch.com

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