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In the latest battle in a fierce war over unregulated gaming devices, operators of supposedly skill-based games in a rural Virginia county have been given 15 days to cease operations, or face being charged with a felony, according to a letter issued by the local county attorney’s office.
In response to an inquiry to the legality of the machines by Pittsylvania County Community Development, Robert “Bryan” Haskins, the Commonwealth’s attorney for Pittsylvania County, sent out a letter to local businesses warning them the devices qualify as illegal gambling machines.
It is unclear how many grey-market machines are in the county. Haskins on Monday (March 21) declined further comment.
In his letter, Haskins admitted that it was highly unusual for his office to issue a legal opinion on possible crime of civil sanctions for conduct.
“It appears that many people believe that any machine, whether a ‘skill game’ or other machine which is also deemed an ‘illegal gambling device,’ are allowed to operate in Virginia. This is simply not the case,” Haskins wrote in a six-page letter.
He cited a temporary injunction that was entered in Greensville Circuit Court as a main source of confusion. The temporary enforcement ban is set to expire on May 18 absent some further court order.
The temporary injunction prohibits enforcement of the ban on skill-based machines that have been operating within the Virginia Alcoholic Beverage Control Authority (ABC) regulatory framework.
The Virginia General Assembly voted in 2020 to ban the machines from July 2020, until then-Democratic Governor Ralph Northam insisted upon a 12-month reprieve to raise money through monthly fees for a coronavirus relief fund.
Each machine that was allowed to operate was required to be registered and regulated by the ABC as of June 30, 2020. A tax of $1,200 per month per machine was assessed, raising more than $88.2m for the state during the one-year reprieve, according to the ABC.
Any skill-based machine outside the ABC framework is deemed illegal, even if it is being used at a location that was previously approved by the ABC.
“The civil and criminal penalties regarding illegal gambling remain the law of the Commonwealth unless and until they are overturned by a court,” Haskins said. “No court has done so yet.”
“The only exception is those machines which fall within the temporary injunction entered by the Greensville County Circuit Court,” he added.
Any operators who fail to comply could be subject to a Class 6 felony, which is punishable by one to ten years in jail and up to a $20,000 fine. They could also be subject to a civil penalty of up to $25,000 for each gambling device, Haskins wrote.
Pittsylvania County is in southern Virginia and the county line begins near Altavista, some 28 miles south of Lynchburg, and runs south to Danville along the border with North Carolina.
Voters in November 2020 approved casinos in four Virginia cities, including Danville.
Caesars Entertainment began demolition late last year of an old industrial complex in Danville to build its $500m casino-resort that is set to open in late 2023.
Former NASCAR driver Hermie Sadler and others who support skill-based games have sued the state to allow the games to remain in use at authorized ABC locations state-wide. Sadler, who owns Sadler Brothers Oil, installed skill-based games at several of his convenience stories when they were legal last year.
Sadler has argued the skill-based games to not constitute gambling. Greenville Circuit Court Judge Louis Lerner is expected to rule on the challenge brought by Sadler when the temporary ban expires on May 18.
The 2022 session of the General Assembly also saw Virginia lawmakers weigh further legislation related to unregulated gaming machines and illegal gambling.
As of Monday, Republican Governor Glenn Youngkin had not signed Senate Bill 530, which deals with grey-market games. The General Assembly in Virginia passed the measure prior to wrapping up its 60-day legislative session in Richmond earlier this month.
The bill, authored by Republican Senator Bryce Reeves, lays out civil penalties for the possession of grey-market machines, as well as a civil penalty for manufacturing for sale, selling or distributing these machines in the Commonwealth.
The bill subjects those businesses operating grey-market games at unregulated locations to fines of up to $25,000 for each machine, plus reimbursement costs for the investigation and preparing the case, along with attorney fees.
“What this is going to do is go after some of the manufacturers that are dropping some of these games into our state illegally,” Reeves told his Senate colleagues prior to passage of the bill.
Two further bills, House Bill 766 and Senate Bill 401, were also both passed by both houses of the legislature to establish the Office of the Illegal Gaming Enforcement Coordinator within the state police. Among other things, the office would be responsible for coordinating actions by state agencies, liaising with federal law enforcement, and overseeing a public tip line to receive complaints about illegal gambling.
The measures are similarly awaiting the signature of Governor Youngkin, who took office in January.
Virginia is one of several states that have experienced an influx of so-called skill-based games in recent years as manufacturers have found loopholes in state laws to get their machines into convenience stores and gas stations alongside lottery products.
The Virginia Lottery claims the proliferation of these games has cost it $140m annually. In Missouri, the lottery has also urged lawmakers to ban the games, but any bill to make the games illegal has been part of the debate over legalizing video lottery terminals (VLTs) and sports betting.
According to a report commissioned by the MO Coalition for Video Lottery issued earlier this month, an added benefit of legal VLTs would be to drive the untaxed grey-market games out of business.
Pennsylvania and North Carolina are two states considering legalizing grey-market games, while a bill to ban the machines in Kentucky is being considered in the state's Senate.
