Virginia Skill-Games Ban Lawsuit Dismissed, Fight Moves To Legislature

November 15, 2023
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A decision by a judge in rural Virginia to dismiss a lawsuit challenging the state’s ban on unregulated skill-game machines has disappointed small business owners and manufacturers, but was overwhelmingly supported by the U.S. gaming industry.
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A decision by a judge in rural Virginia to dismiss a lawsuit challenging the state’s ban on unregulated skill-game machines has disappointed small business owners and manufacturers, but was overwhelmingly supported by the U.S. gaming industry.

Judge Louis Lerner granted the state’s motion for summary judgment on Monday (November 13), noting the Virginia Supreme Court had already reinstated the ban on the machines, so to proceed to trial would be inappropriate.

"We are pleased with [Monday’s] ruling,” Attorney General Jason Miyares said in an email.

Lerner had scheduled a three-day trial beginning December 18 to decide the fate of the estimated 9,000 to 14,000 unregulated gaming machines found in convenience stores, bars and truck stops state-wide. 

“Illegal gambling — in all its forms — is a scourge on communities across the country, preying on vulnerable customers, contributing to other crime, and cheating states out of needed tax dollars,” said Chris Cylke, senior vice president, government relations with the American Gaming Association (AGA).

Cylke said that so-called “skill” machines have long operated outside the lines in Virginia, with operators willing to take legislative and legal action to protect their revenue. 

“This decision rightly affirms Virginia’s prerogative to regulate gambling activity within its borders, and it’s now up to law enforcement to ensure these predatory machines are removed from communities across the Commonwealth.” Cylke said in a statement Tuesday (November 14).

Former NASCAR driver and truck stop owner Hermie Sadler brought the lawsuit more than two years ago, claiming a 2020 state law banning skill games effective July 2021 was a violation of his constitutional rights.

Supporters of the machines argue that playing a skill game is not the same as gambling.

Republican state Senator Bill Stanley, an attorney who represented Sadler and Sadler Brothers Oil Company, alleged the ban violated small businesses’ constitutional right to free speech.

The Virginia General Assembly voted to ban so-called skill games, but lawmakers agreed to a temporary delay in enforcement at the request of then Democratic Governor Ralph Northam so that tax revenue from the machines could be used to fund state needs during the coronavirus pandemic.

Lawmakers made them illegal on July 1, 2021, but Greenville County Court Judge Lerner issued a temporary order blocking the state from enforcing the ban through an injunction issued in December 2021.

Judge Lerner had issued a temporary injunction allowing the machines to continue to operate while the case was pending, but on October 13 a three-judge panel of the Supreme Court overturned the injunction.

“We are disappointed in the Greenville Circuit Court’s ruling, but we always anticipated this was likely going to come down to a legislative effort,” Mike Barley, chief public affairs officer for Pace-O-Matic, said Tuesday.

Barley made it clear in his statement that the skill game industry is committed to working with lawmakers to pass common sense legislation to regulate and tax skill games.

He said that Pace-O-Matic believes many senior Virginia lawmakers are supportive of finding “a legislative solution that protects the constitutional rights of small businesses and Virginians that operate and play skill games.”

“We want to thank Hermie Sadler and his legal team for continuing to fight for the skill game industry,” he said. “Over the last three years, skill games have proven to be a critical and sustainable source of income for thousands of Virginia small businesses.”

Supporters will have just 60 days next year to convince enough Republican and Democratic members of the Virginia General Assembly to support regulating and taxing skill games.

The 2024 regular session of the Virginia General Assembly convenes in the state capital of Richmond on January 10 and adjourns on March 9.

Pace-O-Matic’s decision to seek a legislative solution comes as state voters have made their opposition known to the continued expansion of gambling in Virginia. Voters on November 7 defeated local referendums to establish a casino in Richmond and a major historic horseracing facility in Manassas Park.

Supporters of skill games will also have to deal with opposition from the commercial gaming industry, including casino and  historical horseracing operators in Virginia, which continues to lobby policymakers across the U.S. regarding illegal and unregulated gaming.

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