NewsVirginia Politics


Sponsor: Virginia bill to legalize, tax 'skill game' machines dead

Terry Kilgore
Posted at 12:10 PM, Feb 02, 2023
and last updated 2023-02-02 13:41:49-05

RICHMOND, Va. — A senior Virginia Republican lawmaker said this week that his legislation that aimed to legalize and tax a certain type of electronic betting machine that has proliferated in gas stations, bars and other locations around the state is dead, but the broader fight isn't over.

“It's dead through the legislative process,” House Majority Leader Terry Kilgore told The Associated Press on Wednesday in an interview.

Kilgore's bill was set to be taken up Tuesday but did not get a hearing. He confirmed that he doesn't expect that measure to advance this session, saying he struggled to get other lawmakers on board while the matter of the machines is currently before a court in a pending lawsuit.

The machines are also referred to as gray machines because they operate in a gray area of the law. The games look and play like slot machines, though the manufacturers say there is an element of skill involved.

The issue, which does not split neatly along partisan lines, has pitted various gambling interests against one another and resulted in a years-long, expensive legal and lobbying fight.

The General Assembly initially voted in 2020 to ban the machines, taking on the issue at the same time they were clearing the way for other types of gambling, including opening the doors for casinos in Virginia for the first time.

But skill-game operators got a one-year reprieve after then-Gov. Ralph Northam asked lawmakers to delay the enactment of the ban by a year and instead tax the machines and use the revenue to help fund coronavirus relief efforts. The ban took effect in July 2021.

A legal challenge was filed and in December 2021, a Virginia judge issued an injunction blocking the enforcement of the ban and allowing the games to continue operating. The judge has declined to dismiss the lawsuit, which could go to trial later this year.

Proponents of the machines say they help small businesses that host them and enjoy a share of the income, and that they would result in more revenue for the state if they were fully regulated. They also say the confusing legal landscape has led to a proliferation of illegal untaxed games that involve only chance and no element of skill.

Mike Barley, chief public affairs officer for skill-games developer Pace-O-Matic, said in a statement provided to the AP that the company “will continue to vocalize our support for the regulation and taxation of skill games and remain committed to doing all we can to end illegal gaming across the state.”

Casinos and other opponents, meanwhile, say the machines have fueled problematic gambling while bringing minimal benefit to the state.

“With casinos, Virginia has made a thoughtful and targeted policy decision to cultivate the growth of a specific highly regulated industry, at specific locations, requiring local approval. Under this system, the safety and welfare of the general public — including minors — is protected, and our customers benefit from the industry’s close oversight and daily supervision by the Virginia Lottery, which has instituted extensive rules and regulations to govern how we operate,” the owners of the Bristol casino in southwestern Virginia said in a statement last month.

Republican Sen. Bill Stanley, an attorney for former NASCAR driver Hermie Sadler’s truck stop and gas station company in the ongoing lawsuit, said he thinks casinos simply want a monopoly on gambling.

“I think if we put a tax and regulatory scheme together, what you’ll see is, it will be very clear to our police officers and our commonwealth’s attorneys, what games are legal and what games aren’t. And you’ll see those illegal video game terminals, those illegal games of chance — slot machines — go away,” he said.

Kilgore said that was the aim of his bill: to allow a limited number of regulated games at spots like convenience stores but to do away with the “mini-casinos” or “skill game rooms” that have proliferated around the state.

“It would have gotten rid of all those. And we're going to do that, but it's going to take some time,” he said.

Kilgore’s bill would have put limits on the number of skill-game machines in certain retail establishments, outlined a taxation structure with some revenue directed toward law enforcement efforts to combat illegal gambling, and increased the civil penalty for having gambling devices in unregulated locations.

While Kilgore conceded that the bill is at a dead-end through the legislative process, he suggested the budget process could provide another avenue to address the issue this year.

Macaulay Porter, a spokeswoman for Republican Gov. Glenn Youngkin, declined a request for comment Thursday on the governor's position on the matter.

Porter previously told the Virginia Mercury that the governor had “asked stakeholders to come to the table and work on legislation that would crack down on illegal gaming.”