Virginia Governor's Veto Means Skill Games Remain Off-Limits

May 20, 2024
Republican Governor Glenn Youngkin on Friday vetoed a bill to legalize skill games and create a regulatory and tax framework for the machines found in convenience stores and gas stations in Virginia.

Republican Governor Glenn Youngkin on Friday (May 17) vetoed a closely watched bill to legalize skill games and create a regulatory and tax framework for the machines found in convenience stores and gas stations in Virginia.

In his veto statement, Youngkin noted that in recent years the state has authorized land-based casinos, sports betting and pari-mutuel wagering, on top of the established operations like the Virginia Lottery, horseracing and charitable gaming.

“When it comes to additional gaming options, such as games of skill, we must proceed with a robust set of safeguards,” Youngkin wrote.

Youngkin’s veto of Senate Bill 212 was widely expected.

After the House and Senate reached a consensus on the final terms of the bill, the governor then sought to overhaul SB 212 with stricter regulations and a higher tax rate, but the legislature overwhelmingly rejected his changes.

“I sent over a package of amendments which addressed my many concerns with the bill,” the governor said. “While it is regrettable that my recommendations were not adopted, I remain open to working with the General Assembly going forward on this subject.”

Youngkin's proposed amendments would have limited the number of machines allowed in Virginia to 20,000, raised the tax rate to 35 percent, allowed cities to ban the machines, and required that host locations already be authorized to sell lottery tickets.

He also proposed to carve out a 35-mile radius around any licensed casino, racetrack, or gambling “satellite facility” where skill-game machines would have been banned.

Youngkin’s significant rewrite of SB 212 also sought to eliminate the legislature's approved language to give the Virginia Alcoholic Beverage Control Authority (ABC) temporary oversight of skill games beginning on July 1. His amendments would instead have granted regulatory oversight to the Virginia Lottery.

Currently, there are an estimated 9,000 to 14,000 unregulated gaming machines in convenience stores and other retail locations that have been unplugged after the Virginia Supreme Court in October reinstated a ban on the terminals that lawmakers first approved in 2020.

Opponents of skill-game terminals insist there is overwhelming support to keep the ban in place.

A poll of 500 registered Virginia voters conducted by Impact Research on behalf of Virginians Against Neighborhood Slot Machines found a majority, or 56 percent, of voters oppose the expansion of skill games, while 36 percent support it, and 8 percent are undecided.

Nearly two-thirds, or 64 percent, of Virginia voters say that if skill games were to become legal, they believe it is important for their voice to be heard through a referendum.

“Virginia has set a precedent of fostering a gaming environment that prioritizes safety and responsibility,” said Nick Larson, spokesman for Virginians Against Neighborhood Slot Machines, an anti-skill game advocacy group funded by gaming companies.

“This poll is further evidence that voters in the Commonwealth do not believe convenience store slots align with Virginia values and they should remain illegal,” Larson said.

On the other hand, supporters of skill games argue that the machines help to level the playing field for small businesses at a time when Virginia has legalized new forms of gambling, including sports betting and casinos, for which only major companies are eligible to obtain a license. Supporters had estimated that regulation of the machines would generate $200m in annual tax revenue for the state.

The lobbying campaign for skill games has been led in large part by Pace-O-Matic, a Georgia-based developer of skill games that also does business in Pennsylvania and various other states. Pace-O-Matic executives were unavailable for comment.

According to the Virginia Public Access Project, the Pace-O-Matic Committee has raised $973,515 in contributions since 2022, including $412,500 from the company and $100,000 from Michael Pace, Pace-O-Matic’s chairman.

It was not immediately clear following the governor's action on Friday if the General Assembly would reconvene to vote on a skill-games bill, but any proposal would have to be approved by June 28 to take effect on July 1.

If lawmakers do not take up skill games by the deadline, SB 212 is expected to serve as a starting point for future proposals likely to be debated by lawmakers who return to the state capitol in Richmond on January 8, 2025.

“There’s more work to do,” Senator Aaron Rouse, a Democrat who was a primary sponsor of SB 212, told the Virginia Mercury. “We’ll make sure that we do put in that work so that by the time we come back we can be in a good place to have an agreement on the bill.”

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