Bristol’s Newest Savior: a Proposed Casino and Resort

Jim McGlothlin (right) talks about his proposed casino project. Photo credit: Bristol Herald Courier

The City of Bristol, having mortgaged its future with a failed mall development project, is betting on another big-ticket project: a proposed $150 million casino with accompanying hotels, conference center, retail, and restaurants built at the failed mall location. The backers assert that the Bristol Resort and Casino would create an estimated 2,000 jobs initially, growing to 5,000 eventually, and paying an average salary of $46,000. The project would generate $30 million annual tax revenue for the hard-pressed locality.

All the backers need is for the General Assembly to rescind its ban on casino gambling in Virginia.

Normally, I would be highly skeptical of a project like this. When developers spin a fantasy vision of jobs and tax revenues, there’s always a hook — all they need is a little support from government. Loans, subsidies, loan guarantees, whatever. But in this case, the Bristol casino backers are funding the project themselves.

“Not one dollar is coming from the city of Bristol, the state of Virginia or the federal government. Clyde and myself are going to put all the money up for this,” James W. McGlothlin told the Bristol Herald Courier last September in announcing the project. By Clyde, he was referring to Clyde Stacy, a former high school classmate, fellow coal baron, and Southwest Virginia business leader.

If McGlothlin is behind the project, it has credibility. McGlothlin, founder of the United Companies, made his first fortune cobbling together non-union coal properties during the great coal boom of 1974. I got to know him in the early 1980s when I covered the coal industry for the Roanoke Times & World-News. During a succession of strikes by the United Mine Workers of America, United kept its mines open in the face of widespread picketing and violence. Actively engaged in Virginia politics at the time — an era when coal industry entrepreneurs had loads of money and carried clout in Richmond — McGlothlin was a major campaign donor. As the economics of the coal industry deteriorated, as I recall, United sold its coal industry interests. McGlothlin expanded his fortune by diversifying into natural gas and golf course development, among other interests.

As his business interests changed, McGlothlin became less involved in Virginia politics. But the College of William & Mary Law School graduate has given large gifts to his alma mater, and he and his wife donated a large art collection to the Virginia Museum of Fine Arts along with funds to build an expansion. Unlike many successful entrepreneurs who made their money in coal and retired to Florida, taking their money with them, McGlothlin has stayed committed to Southwest Virginia.

“Clyde and I were talking one day, and he told me about this concept. He said a casino, and I thought how hard this will be to do — but it immediately flashed in both our minds what it would do for the city and the area,” McGlothlin told the Herald-Courier.

He cited recent industry closings, low wages, limited job opportunities, the depressed economy of much of Southwest Virginia and an ever-growing need.

“It would solve our problems. It’s overwhelming how the match of the need coincides perfectly with something like the casino,” McGlothlin said.

Tax revenue from the casino, he said, “would be like manna from heaven.”

If there’s a catch, it’s that there is a narrow window of opportunity, and the General Assembly must act quickly. A market exists for only one casino in this part of Virginia, Kentucky, and Tennessee, so the first mover wins. “If somebody opens a casino in Kentucky or Tennessee, then I think our opportunity evaporates,” Stacy told the Herald Courier. And it so happens that a group called Raven Rock Entertainment has entered into an agreement with the city of Jenkins, Ky, to locate a 150,000-square-foot gaming area and 300-room hotel near the Virginia border. That project, like Bristol’s, requires an act from the Kentucky legislature.

It all sounds wonderful. And if the proposal had come from anyone other than McGlothlin, who knows a hell of a lot more about business than I do, I would be mercilessly skeptical.

First there is the question of market demand. The United States is crawling with casinos. There is endless competition. No one from outside the central Appalachian region is going to choose a Bristol casino, located in a former mall development, as a resort destination. Business will come from residents within easy traveling distance of Bristol. I’m dubious that there are enough gamblers with enough disposable income to keep a Bristol Resort and Casino going. But, then, McGlothlin has conducted the marketing studies, and I haven’t, and he’s got skin in the game, and I don’t.

Second, there is the question of tax revenues and job creation. McGlothlin and Stacy hired Richmond-based Chmura Economics & Analytics, which found that the casino-resort complex could generate an economic impact of $1.5 billion annually and 10,500 direct and indirect jobs, would contribute $70 million in state and local tax revenue, and would save the state an additional $48 million due to lower unemployment insurance and other aid programs.

I expect the jobs number includes not only casino jobs but jobs in hotels, the conference center, stores, and restaurants — plus jobs created as the payroll of newly employed workers and contractors circulates through the economy. Here’s what I don’t know: If most patrons of the casino/resort are local, to what degree will the new facility cannibalize expenditures on other forms of entertainment, other stores, other restaurants, and other meeting venues? If the project creates 10,500 direct and indirect jobs, how many direct and indirect jobs, not to mention taxes, would it siphon away from other businesses? The City of Bristol might benefit, but to what extent would other jurisdictions in Central Appalachia suffer?

As long as McGlothlin and Stacy are investing their own money, I don’t think it matters that their investment would redirect the geographic flow of local entertainment dollars. That’s the free market system. That’s creative destruction. But when we evaluate the pros and cons of Virginia gambling legislation, let’s make sure we’re looking at the net benefit to Bristol and Virginia.

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20 responses to “Bristol’s Newest Savior: a Proposed Casino and Resort

  1. Thanks for this posting, Jim. I had heard about the push for a casino, but did not know the details. I agree with you about being skeptical if this were being pitched to a locality in search for local buy-in. It is tragic that the best hope for some economic revival in that area involves an undertaking that relies on taking in money from people in the area that probably can’t afford to lose it.

  2. A lobbying team that in another life I might have been part of, given past work with several of them:

    https://www.vpap.org/lobbying/client/324410-bristol-casino-resort-llc/

  3. I have no issue with gambling in Bristol, Va. However, I wouldn’t invest in this business (as far as the facts I’ve seen). Charlotte is 3+ hours from Bristol. Roanoke (hardly a metropolis) is 2:20 away. Pigeon Forge, TN (Home of Dollywood) is just under 2 hours away. Knoxville is 1:45.

    Now, double all those times for a round trip.

    Kingsport is close but only has about 50,000 people.

    Can Bristol really become a “destination”? Not just because it has a casino.

    I just don’t see this but I do genuinely wish the entrepreneurs good luck with their venture. If I were still going back and forth to see my son in Knoxville I would have stopped in the casino.

  4. I’m not opposed to gambling anymore than I am to the lottery or alcohol or even pot but point out that none of these are done unfettered free market without govt regulation and enforcement – which does cost $$$ to do.

    I also don’t think people only spend “entertainment dollars” on Gambling. I don’t think a lot of folks necessarily re-direct their entertainment dollars from one activity to gambling. More likely, those who play the lottery will find their way to the casino to spend more of their dollars and I’d be remiss if I did not point out the hypocrisy of those who say that people know better what to do with their money than the govt does. NOT!

    But having said that – I don’t see much difference than giving recognized Native American tribes the right to operate Casinos than others – other than to point out that apparently the proceeds from Native American casinos are restricted to certain purposes like health care for tribal members.

    But – no – this is not like some entrepreneur who has invented Uber or AirBnb; gambling is as old as mankind and often has been the focus of govt – to restrict it or to allow it with restrictions… not exactly “disruptive” economics.

  5. Word is table game revenue is going down in WV, as MD, PA, and OH have gotten into casinos — and that is despite the gas boom drawing in thousands of potential gamblers making good money. They are looking to transition into sports betting. Hopefully these investors are looking at all that, because a failed casino-resort is more depressing than a failed mall. Absolutely not one dollar of public money or forgone revenue should go into it.

    • Your comment is dead on the money. Gambling Casinos in poor isolated areas are absolutely the reverse of economic development. They introduce into a poor and depressed region, a game that is intentionally rigged, and elaborately designed and camouflaged, to drain people of their own money by preying on the weaknesses and addictions of those people. They also draw within their vortex a host of bad habits, social pathologies and plagues, including criminal activities. Thus gambling casinos built in such areas poison the place, magnify the dependency and hopelessness of the people there and further depress the entire region and its future, often beyond repair. These sorts of facilities are grossly immoral.

    • For more details, here is a very much shortened version of an article published in The Guardian Newspaper titled: Slot Machines: a lose lose situation, by Tom Vanderbilt June 8, 2013

      “Once seen as a harmless diversion, hi-tech slot machines now bring in more money than casinos – and their players become addicted three times faster than other gamblers. We investigate how the industry keeps us hooke. The first thing you notice on entering the vast hall of the casino is the sound: …It all percolates and pulsates in a gently propulsive fashion, as if to convey a sense of progress even as it relaxes…

      In her book Addiction By Design: Machine Gambling In Las Vegas, Natasha Dow Schüll, an anthropologist at the Massachusetts Institute of Technology, writes that in the late 1990s the “prescient audio director” at Silicon Gaming decided that every one of the sounds made by its slot machines – a number that now exceeds some 400 discrete noises – would be issued in what she terms “the universally pleasant tone of C’… The sonic strategy is at one with an overall ethos that Schüll terms “smoothing the ride”, a holistic mantra running through the casino experience …”all of it is in the service of maintaining the flow.”

      … “Gambling, as I see it, is an irrational behaviour that is impulsive.” …She arrived during one of the city’s periodic building booms, including a particular surge in what are known as “locals’ casinos” – not the flashy, themed spectacles of the Strip, but more low-key, less mazy centres for “convenience gambling”, as the industry calls it, where residents comprise up to 90% of the haul and machine games such as video poker dominate. She didn’t need academic research to gauge this latter trend. “I was staying with my boyfriend’s grandmother, who lived right across the street from the Gold Coast, a locals’ casino. We noticed that she got up every night at 2am, and she would be gone until about 10am. We figured out that she was going and playing video at the Gold Coast.”

      While Schüll’s research began with casino architecture, it is the rise of these machine games – and their carefully calibrated machine-user interfaces that, she says, enable, if not exactly seek, addictive behaviour – that became her ultimate focus. “I’m not playing to win,” one Vegas resident told her. She was playing, Schüll says, “to keep playing – to stay in that machine zone where nothing else matters”.

      I have intercepted Schüll, on her way to teach a doctoral seminar at Columbia University, to walk me through Resorts World casino in Queens, New York. … I enter the casino driveway, ascend the multistorey car park and a few short steps later am on the floor. This is where “flow” begins. In the words of Bill Friedman, a legendary Las Vegas casino designer interviewed by Schüll, “Driving from the street into the property should be effortless.” … and Like most casinos in Vegas, it is large, its geography blurred (paramedics told Schüll it took them longer to reach victims inside casinos than it took them to get to the casino itself). The space is rather like a city, with gridded blocks of machines occasionally opening into wide, circular “plazas”, in the centre of which are slot machines ringed around columns.

      In these spaces, the ceilings are slightly recessed, mirroring a circular pattern in the rug. “Your mind sort of drops imaginary lines down,” Schüll says, “and you have a sense that you’re being protected. It helps differentiate the space, rather than having it feel like one giant warehouse.”

      Resorts World is, in essence, a locals’ casino. Its slot machines average more than $370 a day in revenue each, more than twice the take of Vegas machines. While there are some vague gestures towards New York City theming (odd, as the casino is already in the city), this is not a haunt for high-rolling “action” gamblers, as the industry calls them – live games are still illegal in New York. This, rather, is a sanctuary for “escape” gamblers, the kind who are more interested, Schüll says, in spending time on a machine than in getting big wins. “Some people want to be bled slowly,” an executive of the so-called “Costco model” of gambling says. And while there’s a Sex And The City slot machine, there are more rolling walkers than Manolos in view among the crowd, which tilts older – and, this being Queens, Asian.

      As we pause before a video poker machine, I see how deeply this “smoothing the ride” idea goes. Slipping in a $20 bill, I press the large “deal” button. But it’s not one hand of poker I’m playing – it’s 10. Some machines go up to 100. “You’ll see screens with these tiny decks,” Schüll says. “It’s parsing what was formerly a volatile risk – you either won or you lost.” And, indeed, in those 10 hands, a winning hand of two pairs shows up. “It’s insurance,” she says of the multiple decks. “Disappointment insurance.” Your overall stake may be slowly sliding away, but there’s always the hint of the win, somewhere. “Positive reinforcement hides loss,” a game designer told Schüll. “As the market is saturated with casinos, you don’t want to burn your market out,” Schüll says. “You want to keep them coming back. And to get most of their money, you need to let them have most of it back for a longer time.”

      “… By the late 1990s, Schüll notes, machine games were generating twice as much revenue as all “live games” combined; by 2003, an estimated 85% of the industry’s revenue came from machines (in the UK, revenues from so-called fixed-odds betting machines now exceed casino revenues). Schüll says that the machines, whose “old lady” image left them untouched by associations with vice, were the perfect vehicle for gambling’s expansion from a Vegas novelty to part of the fabric of everyday life everywhere (decades of experience with video games, and screens in general, didn’t hurt either, she adds).

      The games themselves were undergoing an evolutionary change … most of them targeted around breaking down those moments of inertia – just as decades of Taylorist efficiency had done on the assembly-line floor. The lever was dispensed with … Stools were added, then increasingly ergonomic chairs. Reels could be spun by pressing a button (thus doubling, Schüll says, the average number of games that could be played per hour, from 300 to 600). “Embedded bill acceptors” eliminated the need to fumble for coins, speeding up play another 15% and increasing the amount played by 30%. “Ticket in/ticket out” systems got rid of the need to dispense coins as winnings; as one slot floor manager told Schüll, “People didn’t want to wait to be paid off, because even if it took just three minutes, to them it felt like 20 minutes.” There was a curious paradox at work here: as the games got faster, players stayed on longer …

      The whole point, Schüll says, is “smoothing the ride”, allowing the casino more effectively to manage its risk (by holding out an infinitesimal mathematical hope to the player that they might “strike it big”), while keeping the player engaged by dangling “near misses” that will not, statistically, actually occur as much as our eyes might believe they would. The goal is to entice them to play close to “extinction”, the rather unfortunate industry term for a player who’s gone broke. To further the actuarial vibe, frequent players are assigned a “predicted lifetime value” by the casino modellers, a phrase that reminds us that in the gaming industry, the “product” is the person sitting at the machine.

      We pause in front of a Cleopatra slot machine, a popular “five-reel” multi-line machine designed by industry giant IGT, replete with a panoply of ankhs, asps and other orientalist symbology. There are five reels, which of course are not really reels, and no “legacy lever”. Winning is not merely a matter of lining up a few sets of cherries; rather, as laid out by a tangled diagram resembling the London tube map, there seem to be an infinite array of ways to win – the so-called “Australian model” of machine gambling. It is, strictly, a “penny slot”, meaning the $20 bill I slide into the machine translates into 2,000 credits. Don’t let the name fool you – penny slots generate upwards of 50% of all profits, and no one plays a penny; instead, you bet in chunks of 50 or 100 credits, or “bet max”. This is one of the many subtle behaviour manipulations that are going on here; what’s the harm when you’re betting a penny? (In fact, Schüll says, players end up spending more on the small-denomination machines.) As my money is accepted, a husky female voice intones: “May my luck be upon you.” I press a button, the reels spin. As they come to a stop, a rising crescendo of sound alerts me that I have won – though it takes me a minute to realise where, amid all the permutations. Even before the LED counter has finished ticking off my winnings, I can press “bet max” again to interrupt the process. As a representative of Bally, the gaming company, observed: “A gaming machine is a very fast, money-eating device. The play should take no longer than three and a half seconds per game.”

      Schüll compares it to psychologist Mihaly Csikszentmihalyi’s famous concept of “flow,” that engrossed state in which time seems to vanish. Flow, the theory goes, requires a number of preconditions: a clearly defined goal; quick feedback on whether or not the goal has been attained; and a sense of operational control over the activity. All of this is present here, and what it adds up to, Schüll says, is a greater propensity for gambling addiction. She quotes studies noting that machine gamblers – even those who had previously played other games without problems – became addicted three to four times more quickly than others (one psychologist compares it to crack cocaine) …”

      For this entire Guardian article please see:
      https://www.theguardian.com/society/2013/jun/08/slot-machine-lose-lose-situation

      • You’ve put your finger on it. A slot machine is intended to be as addictive as tobacco, as drugs, as alcohol. And the cost? “In the gaming industry, the “product” is the person sitting at the machine.” Not just the person, but the moral fiber of the person: his/her ability to resist the emotional pull of what he knows rationally cannot succeed, will devastate him, will harm his family, will degrade him in the eyes of his peers. So, we invite this corrrupting influence into the community to save it?

        • Acbar – I wonder too how much money is involved in the lobbying effort to get these sorts of “Gambling Casino’s” legalized in the Commonwealth of Virginia. And how all this money going into this lobbying effort is, in its own way, playing on an addiction of Virginia’s political elected elite?

          • Dick Hall-Sizemore

            Eight lobbyists have registered for the Bristol operation. Louis Lucas has been trying for years to get a casino in Portsmouth. This year four lobbyists are registered to represent Portsmouth and/or Castle Hill Gaming. I have no idea how much money is involved.

          • $550K donated to far, per Blue Virginia. $200K to the Speaker’s fund alone. Guess which committee it will go to. My bet- Rules, which the Speaker chairs.

        • Dick and Steve – thank you for that valuable information, namely:

          “Eight lobbyists have registered for the Bristol operation … This year four lobbyists are registered to represent Portsmouth and/or Castle Hill Gaming.” And ” $550K donated to far, per Blue Virginia. $200K to the Speaker’s fund alone. Guess which committee it will go to. My bet- Rules, which the Speaker chairs.”

          And, thank you Acbar, for this powerful statement:

          “In the gaming industry, the “product” is the person sitting at the machine.” Not just the person, but the moral fiber of the person: his/her ability to resist the emotional pull of what he knows rationally cannot succeed, will devastate him, will harm his family, will degrade him in the eyes of his peers. So, we invite this corrupting influence into the community to save it?”

          Combine these statements to the central message of the Guardian newspaper article titled “Slot Machines: a lose lose situation.” The message there is that while today’s science and technology can be used to enable and empower people to thrive and achieve their dreams, today’s science and technology, including artificial intelligence, also can be used to exploit the weaknesses and vulnerabilities within people to dis-empower people, destroy their dreams, and the futures of their families.

          A prime example of this awesome and terrifying power of science and technology, including artificial intelligence, is the gaming industry. How it has built into today’s gambling casinos, particularly its gaming machines, the means to attack vulnerable peoples’ greatest weaknesses. How it intentionally designs and builds these machines to drain these vulnerable people of their money and health, destroying their futures, and those who depend on them – wives, kids, elderly parents – and their communities, too.

          Like the Guardian article said:

          “You’ll see screens with these tiny decks,” Schüll says. “It’s parsing what was formerly a volatile risk – you either won or you lost.” And, indeed, in those 10 hands, a winning hand of two pairs shows up. “It’s insurance,” she says of the multiple decks. “Disappointment insurance.” Your overall stake may be slowly sliding away, but there’s always the hint of the win, somewhere. “Positive reinforcement hides loss,” a game designer told Schüll. “As the market is saturated with casinos, you don’t want to burn your market out,” Schüll says. “You want to keep them coming back. And to get most of their money, you need to let them have most of it back for a longer time …”

          The whole point, Schüll says, is “smoothing the ride,” allowing the casino to more effectively manage its risk (by holding out an infinitesimal mathematical hope to the player that they might “strike it big”), while keeping the player engaged by dangling “near misses” that will not, statistically, actually occur as much as our eyes might believe they would. The goal is to entice them to play close to “extinction”, the rather unfortunate industry term for a player who’s gone broke. To further the actuarial vibe, frequent players are assigned a “predicted lifetime value” by the casino modellers, a phrase that reminds us that in the gaming industry, the “product” is the person sitting at the machine.

          … As a representative of Bally, the gaming company, observed: “A gaming machine is a very fast, money-eating device. The play should take no longer than three and a half seconds per game.”

          Schüll compares it to psychologist Mihaly Csikszentmihalyi’s famous concept of “flow,” that engrossed state in which time seems to vanish. Flow, the theory goes, requires a number of preconditions: a clearly defined goal; quick feedback on whether or not the goal has been attained; and a sense of operational control over the activity. All of this is present here, and what it adds up to, Schüll says, is a greater propensity for gambling addiction. She quotes studies noting that machine gamblers – even those who had previously played other games without problems – became addicted three to four times more quickly than others (one psychologist compares it to crack cocaine) …”

          One cannot imagine that Kirk Cox, a man who devoted the first half of his professional life to educating kids, and man’s whose stated mission as Speaker of the Virginia house of delegates is:

          “Kirk works tirelessly to make Virginia the best place to live, work, and raise a family through his leadership on a wide variety of issues important to his constituents. A champion of quality public education, improved veteran services, support for citizens with disabilities, increased economic development opportunities, and job creation, Kirk has successfully advanced many legislative initiatives in recent sessions,”

          One cannot imagine that such a man as Kirk Cox, in his capacity as the second most powerful man in public office in Virginia, would not vigorously oppose the legalization of such gaming machines and casinos in Virginia.

          Nor can one imagine that Kirk Cox would support such a bill because of the $550K said to have been donated so far to Virginia politicians by its industry supporters, including, per Blue Virginia, a $200K donation to the Speaker’s fund alone.

        • Acbar – this mirrors a tragedy in my own life. At the end of every summer I convince myself that the Redskins have a plan this year. A new coach, a new quarterback, a new color fo cup for beer at FedEx Field. I restock my Redskins paraphernalia – new hats, shirts, jerseys, sweatshirts, etc. All are of lower quality and higher cost than the equivalent clothing without the logos. But I buy them anyway. I plot which games I will attend in person … once even flying to London to see the Deadskins manage a tie withe Bengals. Money flows, hope runs eternal.

          By October I realize it will not be the Redskins’ year this year. Yet I still watch the games, still provide revenue to that flea bitten franchise. I shuffle through the huddled masses yearning to be free (of Dan Snyder) at FedEx Field knowing that it will take hours just to get out of the parking lot. Blessedly, the regular season ends, the Redskins players and coaches pack up for golf in the Caribbean and I can move on to watching well run, well coached teams like the Kansas City Chiefs play football on TV. I promise my self that I’m done with Snyder, Allen and the rest of that unending Keystone Cops episode. However, next year will come, The ‘Skins will have some new gimmick up their sleeve and I’ll be online looking at the latest logo gear.

          Everybody has their addictions. In the case of gambling even though you should know you will lose over time or hoping for a good season from a team that hasn’t posted a good season in 20 years … it’s not the government’s place to protect adults from themselves.

          • Reed Fawell 3rd

            My God, Don, you’re not done with Snyder after all these years! What it’s been, nearly 20 years. You’re last guy, I’d expect. Now I am worried.

  6. Beyond Bristol – if the GA did pass enabling legislation and it was not just for Bristol but all of Virgina- what would that mean in terms of other similar “my own money” ventures from popping up across the state especially in other economically depressed areas of Virgina or for that matter in the urbanized areas of NoVa and Tidewater?

    And if we’re going to do that – why don’t we just also allow on-site marijuana sales and that would really make places where a lot of folks would want to go!

    This is the area where people get subjective about what is right or wrong and whether the State should be encouraging it or prosecuting it.

  7. My sister used to live in Bristol…would be good if we could make some attraction in Bristol to leverage off of tourists heading to Dollywood and the Smokies. Bristol raceway I guess on the TN side can’t remember.

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