Virginia Approves Legislation To Regulate Skill-Game Machines

March 4, 2024
After what was expected to be a contentious process, Virginia lawmakers were instead able to quickly reach a compromise allowing members of both chambers of the General Assembly to approve a consensus bill repealing the state’s ban on skill-game devices.

After what was expected to be a contentious process, Virginia lawmakers were instead able to quickly reach a compromise allowing members of both chambers of the General Assembly to approve a consensus bill on Friday (March 1) repealing the state’s ban on skill-game devices.

“This conference report represents a true compromise that means everyone is not happy,” Senator Aaron Rouse, a Democrat, told his colleagues as he introduced the conference report on the Senate floor.

Rouse said he believed the conference report to Senate Bill 212 provided a strong regulatory framework so small business owners could benefit financially from skill-game devices that critics say is similar to slot machines.

The proposal passed the Senate 31-9 and was approved by the House of Delegates by a vote of 49-43.

The legislation now goes to Republican Governor Glenn Youngkin, who last week made it clear that he had “serious concerns” about the two House and Senate bills to regulate skill games.

“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,” said Rob Damschen, Youngkin’s communications director, in an email last week.

The legislation approved by the General Assembly would establish a 25 percent tax rate on the machines' gross revenues and allow up to four machines in convenience stores, bars and other locations, with up to ten permitted in truck stops licensed by the Virginia Alcoholic Beverage Control Authority (ABC).

Under the proposal, skill-game machines could be reactivated on July 1 under a temporary regulatory system overseen by the ABC. Regulatory oversight would then transfer to the Virginia Lottery Board, which currently regulates the state lottery, casinos and sports betting, in 2027.

The measure does not require voters to approve skill games in cities and counties through ballot referendums and blocks local governments from banning the machines.

“Folks have asked about a referendum,” said Republican Delegate Terry Kilgore. “We did not do that for sports betting. We only did that [for casinos] where there was infrastructure that would need to be addressed in local communities such as roads and highways.”

The conference substitute of Senate Bill 212 also establishes a voluntary exclusion program, similar to the one operated by the Virginia Lottery. Rouse said the proposal also sets up a clear reporting system to make sure “we can track every dollar that goes into a skill game and every dollar that is paid out.”

“With these amendments, I believe we have achieved the intent of the bill, which is to help small businesses and optimise revenue for the commonwealth,” Rouse said.

The proposals to regulate skill-game machines, which had been able to remain in operation until late last year due to legal challenges to Virginia's 2021 state-wide ban, had attracted fierce opposition from various groups including casino operators and Virginia police federations.

In an open letter to Youngkin and lawmakers in both chambers, Ronnie Jones, a Virginia resident who served as chair of the Louisiana Gaming Control Board from 2013 to 2021, expressed his opposition to legalizing skill games, citing local opposition to similar machines in Louisiana.

“During my time in Louisiana, we learned this lesson the hard way when video draw poker devices were first legalized there in 1991,” he said. “Despite our objections, legislators passed the bill anyway.”

The terminals in Louisiana were authorized for bars, restaurants and truck stops throughout the state, which Jones said led to community opposition and the legislature then later approving a measure to give local voters a choice.

Not surprisingly, Jones said, nearly half of the 64 parishes opted out and video poker devices were removed from those areas.

“It turns out the devices weren’t as popular as the industry asserted,” he added.

The Virginia House and Senate initially passed contrasting versions of the skill-games bill, with the former calling for local approval and central monitoring of machines, as well as a higher tax rate compared with the more light-touch regulation favored by senators.

On Wednesday, a conference committee comprising three members of each chamber was appointed to work out the differences in those bills and the groups were able to quickly reach an agreement.

That conference committee included Republican state Senator Bill Stanley, who was a controversial choice because his law firm represented the Virginia truck-stop owner who sued the state to overturn the 2021 ban.

Delegate Sam Rasoul, a Democrat, said he was voting for the compromise bill but did not like it. Rasoul said he supported the measure because he saw it as an equity issue.

“There are some big players making good money here in the Commonwealth,” Rasoul said of the state's gaming market. “I believe a lot of these small businesses should have the opportunity to have a cut as well.”

He noted that Virginia has passed several gaming bills in recent years.

“Vice taxes are not the way to pay for the most important things in our society,” Rasoul said.

Youngkin will now either sign the bill, veto it, or suggest amendments before the General Assembly’s April 17 reconvened session. The current legislative session will adjourn on March 9.

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