Skill games will likely be banned this summer in Virginia, despite making millions for COVID relief

Capitol Connection

RICHMOND, Va. (WRIC)- A ban on skill games in Virginia is likely to start this summer, even though the machines are generating millions for the state’s coronavirus response.

An unclear line in a recently passed bill previously led some to believe that the games could stick around at least until the summer of 2022. Now, a proposed amendment from Gov. Ralph Northam is reinforcing the July 1, 2021 cut off previously set by the General Assembly.

Skill games, which resemble slot machines, are often found at gas stations, truck stops and restaurants. They’re sometimes called “gray machines” because they were operating in the gray area of state law, without regulation or taxation.

The General Assembly originally voted to prohibit the machines in the 2020 session. At the time, some lawmakers argued they were taking business away from the Virginia Lottery and that they would pose a threat to the emerging casino industry.

Ultimately, lawmakers decided to put the ban on hold in favor of a temporary tax that is still being used to support schools and small business grants during the coronavirus pandemic.

Gov. Northam explained the impact of the monthly $1,200 per-game tax in his “State of the Commonwealth Address” earlier this year.

“They bring in a lot of money. Upwards of $90 to $100 million dollars in revenue from these taxes,” Northam said. “That could double the amount of small employers who get help and, for many, that could mean surviving instead of going under.”

Star Vending and Amusement Executive Assistant Ashley Jones wants to see the General Assembly push back the ban on skill games at least until 2022.

“Before the casinos open up we could make over 300 million dollars in tax revenue,” Jones said. “The state doesn’t have to do anything to get this money. Just let us exist. Just let us continue to operate and employ people in this state. I’m going to be unemployed as of July 1st, as will thousands of others employed by this industry, if they move forward with this ban.”

The looming deadline is also a concern for small businesses that rely on revenue from these machines.

Priyen Khamar is the managing owner of an Exxon gas station in Richmond. He said the skill games bring in regular customers, who often buy food and drinks while they’re playing.

Even with the new tax, Khamar said these machines have continued to be a critical revenue source, especially as the coronavirus pandemic slows down business.

“It’s a draw for customers right now because we still are not at 100 percent of where we used to be in terms of people coming to the store.” Khamar said. “It can cover our utility bill. It can cover the internet.”

A bill from Del. Don Scott (D-Portsmouth) gave business owners like Khamar some hope that they would be able to rely on that revenue for an additional year.

Scott’s bill, which passed with bipartisan support earlier this year, appeared to exempt charitable games like bingo, poker and raffles from a new penalty for illegal gaming until June 30, 2022. The section also referenced “regulated gaming” registered with the state as of February 1, 2021, which some interpreted to mean skill games.

“Some of the language got a little screwy towards the end,” Scott told 8News in an interview on Monday. “It was never my intent to extend the skill games.”

Scott said his bill authorizes a fine of up to $25,000 for unregulated games, which can be enforced by the Attorney General or local prosecutors. Scott said this will apply to all skill game operators if the General Assembly approves Northam’s amendment banning the machines beginning July 1, 2021.

“If they are still operating and they are not charitable, they will be illegal,” Scott said.

While he’s backing the Governor’s amendment in these circumstances, Scott said he didn’t support the legislature’s initial decision to ban skill games. Like Northam, Scott believes the machines should ideally be taxed.

“If folks want to have that debate down the road on whether these games should go or stay, that’s another discussion,” Scott said. “I want to make sure we get tax revenue. I don’t want to be in the business of picking winners and losers.”

8News asked Gov. Northam’s office why he proposed the amendment, despite his earlier position. Alena Yarmosky, a spokesperson for Northam, responded in a statement.

During the 2020 legislative session, Governor Northam introduced legislation to establish a robust centralized oversight system for so-called “games of skill”. His proposed legislation would have taxed the games at 35 percent and directed the revenue to Virginia’s most at-risk public school students. The skill games industry opposed the 35 percent tax rate and the General Assembly killed that bill.

Instead, the General Assembly voted to ban the games outright. Governor Northam respected their decision. But as COVID-19 began to decimate our nation’s economy last year, the Governor in March 2020 proposed a one-year delay of this ban. At that time and in the months since, Governor Northam has been consistent in his expectation that skill games will be banned beginning July 1, 2021. The Governor is grateful that the G.A. agreed to delay the ban by one year to allow the convenience stores, truck stops, restaurants and other establishments a year to prepare for their phase-out.

Alena Yarmosky, spokesperson for Gov. Ralph Northam

Michael Barley serves as the public relations vice president for Pace-O-Matic, a leading developer of games of skill. Barley supports the push to crack down on illegal gaming but he believes Scott’s bill will have unintended consequences.

“My fear is, with the ban they have planned, responsible operators will get out of the state but others will back fill. So without enforcement, you’re going to see a lot more illegal gaming,” Barley said.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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