Unregulated gaming machines could cannibalize up to $140 million this year from the Virginia Lottery, according to Executive Director Kevin Hall. That would reduce lottery funding of public education by $40 million, he said in recent testimony before the House Appropriations Committee.
Hall warned the committee about the “alarming proliferation” of “gray machines” located at lottery retailers, increasing from 500 in January to around 4,500. “What’s alarming here, beginning in spring, is the acceleration of the deployment of these machines into the retail spaces where we conduct the overwhelming majority of our business,” Hall said.
Appropriations Chairman Chris Jones asked, “Has there been some ruling that has given them the green light to do this?”
In 2017, the Virginia Alcoholic Beverage Control Authority issued a nonbinding letter to Pace-O-Matic, parent company of Queen of Virginia Skill and Entertainment, stating it did not consider the company’s games to be illegal gambling devices and would not enforce action against ABC licensees that installed them.
But ABC Chief Executive Travis Hill said, “What occurred was a kind of a broadcasting of our letter representing that the commonwealth had somehow approved these devices overall.”
Attorney General’s Mark Herring’s office had advised ABC on the 2017 letter but in 2019 said local city and county prosecutors should determine if the games are legal. ABC told retailers it also would defer to local prosecutors.
Jones said it was “incredible” that ABC had issued the 2017 letter. “It’s gotten outside the realm where we have any control as a commonwealth. I think the citizens deserve better than that.” A spokesman for Herring said he’s abiding by the “longstanding position” of the office by leaving gambling enforcement to local prosecutors.
However, in June, Charlottesville Commonwealth’s Attorney Joe Platania became the first local prosecutor to declare the games violate anti-gambling laws. In response, Queen of Virginia sued Platania.
Hall disputed Queen of Virginia’s claim that historical racing machines could have caused the decrease in lottery sales. Hall said retailers located near Rosie’s locations that offer the machines—which are regulated by the Virginia Racing Commission and produce state and local tax revenue–have felt “minimal impact” from them.
