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Virginia lawmakers are taking another run at creating a new gambling regulator via the state's budget process, but politics related to overlapping efforts to authorize skill-game machines may remain an obstacle.
Currently, Virginia's gaming industry is overseen by multiple state agencies, an issue that state lawmakers and Governor Glenn Youngkin have been trying to correct for the last two years through legislation to establish an independent Virginia Gaming Commission.
Senate Bill 1287, introduced by Republican Senator Bryce Reeves, would have established the 11-member commission to oversee most of the state's gambling industry but it was amended before it was approved by the Gaming Subcommittee of the Senate Committee on General Law and Technology.
The amended bill was approved last month by a 13-2 vote in the General Laws and Technology Committee and then referred to the Senate Finance and Appropriations Committee for further consideration.
SB 1287 died when it was left in committee on February 4, also known as crossover day, which is the last day for each chamber to act on its own legislation.
The only exception to the crossover deadline is to add bill language or amendments to budget bills.
House and Senate committees responsible for Virginia’s spending plan have both included funding for a gaming commission in their proposed state budgets that should be negotiated and approved in the coming months.
Through its amendment, the Senate committee also added language to SB 1287 from a bill by Senator Aaron Rouse, a Democrat, that would legalize so-called skill-game machines in convenience stores and other locations across the state.
That move, and the failure of the Virginia General Assembly to pass a clean bill establishing a gaming commission, has frustrated Reeves, the Senate bill's sponsor.
“Let me be very blunt,” Reeves told Vixio GamblingCompliance. “Politics were at play in the session, and I believe you now find it in the budget because collectively everyone agrees we need to get the Virginia Gaming Commission set up and running as soon as possible to be able to allow agencies the time they need to realign.”
Reeves added that passing a budget including the commission language will “start the clock for the strategic reorganization of various functions to allow a streamlining of systems and a clear and defined regulatory authority”.
Currently, the Virginia Lottery regulates the state lottery, online sports betting and land-based casino gambling, while the Virginia Racing Commission (VRC) oversees horseracing and historic horseracing (HHR) machines, which began operating in 2019.
The Virginia Department of Agriculture and Consumer Services (VDACS) regulates charitable gaming, as well as fantasy sports.
Under the plan, the Virginia Gaming Commission would regulate online gambling, charity gaming, bingo, live horseracing, fantasy contests, the state’s five licensed casinos and ten HHR licenses for Rosie’s Gaming Emporium.
The sole exception is the Virginia Lottery, a state agency that would remain a separate entity and continue to regulate the retail and online sale of lottery tickets in the state.
“From a former regulator's standpoint, the consolidation bill would benefit the state and its citizens by combining a number of disparate gaming activities under one centrally controlled authority,” said Ronnie Jones, a Virginia-based gaming consultant and former chairman of the Louisiana Gaming Control Board.
“It would replace the patchwork of the state's current regulatory scheme,” Jones said. “It's the model that's in use throughout most of the country.”
Standing up a gaming commission has been a priority for Republican Governor Glenn Youngkin, who remains reluctant to legalize skill-games.
Youngkin has this year called on lawmakers to create a gaming commission before any further expansion of gambling is considered.
In October 2023, the Supreme Court of Virginia overruled a lower court injunction and reinstated the state’s ban on unregulated skill-game machines that had become ubiquitous in convenience stores, truck stops and other venues across the state.
A bipartisan effort to create a regulatory framework and tax structure for the machines during the 2024 General Assembly session failed in May when Youngkin vetoed a compromise bill that had been agreed to by the House and Senate.
“It's no secret around Richmond that some members of the (House of Delegates) are still smarting over Youngkin's veto of the skill-games legalization effort from last spring,” Jones told Vixio.
“I strongly suspect that skill-game interests have been a key part of the opposition amalgam that killed the original consolidation bill [to create the Virginia Gaming Commission]. But I also think they probably had some help from members of the [House] who wanted to wrest other types of concessions from the administration.”
Jones noted that skill-game machine providers have a track record in Virginia and elsewhere, “of hiring some of the most connected lobbyists and they are more than generous in making campaign contributions to policy-friendly legislators.”
“They are formidable political opponents and good at what they do,” he added.
It has been two years since Reeves and Delegate Paul Krizek, a Democrat, began their efforts to develop a new gaming authority to regulate Virginia's rapidly expanding gambling market.
The idea of giving a single state agency the power to regulate most forms of gaming was first proposed in a 2022 report by Virginia’s Joint Legislative Audit and Review Commission (JLARC).
Eventually, Guidehouse, a Virginia-based consulting firm, was hired and produced another report that recommended a two-year plan for the state to create a gaming commission while keeping the Virginia Lottery a separate entity.
“At this point it's unfortunate that the General Assembly spent thousands of dollars on a private consulting firm to produce a report and offer recommendations on gaming regulation only to ignore the findings of the final report,” Jones said.
Jones cautioned that it may take some time to overcome the number of political obstacles standing in the way of commission approval.
“I have given up on predicting how that body will move forward on gaming regulation,” Jones said.
