Both houses of the Virginia Legislature, four years after voting to ban unregulated so-called skill games, have passed a compromise House/Senate bill to legalize, regulate and tax the machines as a way to help local business owners with extra revenue.
The action followed months of debate on House and Senate versions of the bill, and a conference committee that yielded a compromise easily passed, with votes of 31-9 in the Senate and 49-43 in the House of Delegates. It now awaits signature or veto by Governor Glenn Youngkin.
The bill would restrict play on the machines, which purport to have an element of skill involved in winning or losing, to people aged 21 and over, and would allow them to be placed only at locations licensed with the state Alcoholic Beverage Control agency.
It would cap the number of games allowed at each ABC-licensed retail establishment at four; 10 machines would be allowed at truck stops. That is closer to the five- and 10-machine limits contained in the original industry-backed bill than some versions of the legislation that sought stricter limits.
Receipts from the machines would be taxed at a 25 percent rate, higher than the original bill’s 15 percent. Notably, prior portions that would have required local approval of the machines were removed from the final bill, meaning cities, towns and counties would be without veto power over addition of the machines.
Passage of the legislation follows a roller-coaster ride of actions related to the skill games, opposed by the regulated casino industry, equipment manufacturers and others as basically unregulated slot machines, subject neither to taxation nor to the rules established to regulate slot machines in Virginia’s nascent casino market.
The Virginia Legislature voted in 2020 to ban the machines in legislation signed into law by then-Governor Ralph Northam, a Democrat. The ban took effect in July 2021, but Northam granted operators of the machines—including small bars, restaurants and stores—a one-year reprieve to use machine revenues to offset revenue losses due to the Covid-19 pandemic.
A legal challenge in 2021 resulted in a temporary injunction preventing enforcement of the ban, but the Virginia Supreme Court ultimately repealed the injunction, and municipalities began enforcing the ban last November.
This year, however, a well-financed coalition formed by the manufacturer of the skill games, Georgia-based Pace-O-Matic, and small business owners pressured the lawmakers to repeal the ban. Operators testified before the legislature that the machines had been a lifeline that saved their businesses during the pandemic, and that it has been difficult to make ends meet, and preserve jobs, since the November enforcement of the ban.
“For years, thousands of small businesses throughout the commonwealth have come to rely on the supplemental, sustainable revenue provided by skill games,” said Rich Kelly, a restaurateur and president of the Virginia Merchants and Amusement Coalition, according to the Associated Press. “This victory will solidify their presence in Virginia and give thousands of small business owners peace of mind knowing they can keep their doors open, create jobs, and support their local communities.”
The regulated casino industry was joined by Virginia community groups in denouncing the legalization effort.
“This is bad policy that would bring an unprecedented expansion of gambling to every corner of Virginia without even attempting to provide basic guardrails including local referendums, legitimate background checks, security or problem gambling regulatory requirements,” Virginians Against Neighborhood Slot Machines, a group formed to lobby against the legislation, said in a statement.
There is no guarantee that Youngkin will sign the measure into law. As recently as February 26, the governor expressed misgivings about parts of both the House and Senate legalization bills.
“The administration has serious concerns with both the House and Senate versions of the bill,” Youngkin spokesman Rob Damschen told the Virginia Mercury. “There are numerous issues to work through including the regulatory structure, tax rates, the number of machines, impact on the Virginia Lottery and broader public safety implications.”
