A Virginia Senate committee voted Thursday to drastically increase the proposed tax on casino gaming revenues and the license fee for casino operators in reporting out a bill to allow casinos by referendum in the state.

The Senate Finance and Appropriations Committee voted 14-2 to approve a substitute version of Senate Bill 36 that would permit one casino in Bristol, Danville, Norfolk, Portsmouth and Richmond. But it features a remarkably higher tax rate than the bill that emerged Wednesday from the General Laws and Technology Committee.

The revised version would impose a 27% tax on the first $150 million in casino gaming revenue, a 20% tax on revenues between $150 million and $300 million and 28% on revenues above $300 million. The previous bill would impose rates of 15%, 20% and 28%, respectively, and suggested two different rate tiers, based on the value of the casino. This legislation eliminates that distinction.

The latest version of the bill also proposes increasing the local share of tax revenues to 9% on the first $150 million in gaming revenues, 10% from revenues between $150 million and $300 million and 11% from revenues above $300 million. The previous version of the bill specified 5%, 6% and 7%, respectively.

The gaming tax rate hikes are forecast to generate an additional $194 million annually for the state and $94 million for localities.

The bill now seeks to raise the license fee for a casino operator from $1 million to $15 million.

The Bristol Resort and Casino group issued a statement in response to the vote.

“We are still reviewing the specific changes to the bill and this is a long process before session ends. That being said, we are pleased to have the legislation that specifically includes the five original cities pass yet another committee and we look forward to the upcoming floor vote,” according to the statement.

A state gaming report suggested imposing a 27% rate on gaming revenue but said casinos could still be viable — although much less profitable — at the 40% rate.

Patron Sen. Louise Lucas, D-Portsmouth, appeared surprised by some of the changes.

“Some of the localities have been here in Richmond all week long, and I’m getting text messages. My mobile device is blowing up,” Lucas said. “The [tax] rate is causing the most concern. … Is there any way we can work out these differences in conference?”

Committee Chairwoman Sen. Janet Howell, D-Reston, said that would likely occur later.

“I am sure the House and the Senate are going to have different versions, so it will go to conference,” Howell told Lucas. “I don’t know what the outcome would be, but it [rates] would certainly be on the table.”

There were a total of 10 changes to the casino bill, including one that would require that all slot machines in casinos be connected to a central gaming system and another to allow the Colonial Downs Group to have up to 2,500 additional historic horse racing games in its locations, staggered as casino referenda were approved. That is designed to offset the expected impact casinos could have on HHR revenues.

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