Virginia House votes to ban ‘skill machines,’ despite governor’s call to tax and regulate them

Capitol Connection

RICHMOND, Va. (WAVY) — The odds don’t seem to be in the favor of slot machine-style “skills games” you see in convenience stores in Virginia.

Wednesday afternoon, Virginia’s House of Delegates voted 80-15 to ban the machines. The Senate Finance Committee also approved similar legislation earlier in the morning.

“I am concerned about the convergence of casino gaming, gray machines, pari-mutuel betting…. all of this coming together in… a very short period of time… I find it hard to believe these will all be harmonious in the market place,” Senate Minority Leader Sen. Tommy Norment, (R-James City), said Wednesday. “They have been detrimental to the lottery.”

The Virginia Lottery points to the increase in “gray” or “skill” machines as the reason they expect to lose nearly $140 million in sales by June.

Often found in bars, convenience stores, gas stations, and restaurants across the state, the machines have been given the term “gray machines” because they operate in the gray area of Virginia law, according to the Virginia Joint Legislative Audit and Review Committee.

They are not regulated or taxed. It is estimated 9,000 units are currently in operation throughout the commonwealth.

Games on the devices typically start like they would on a slot machine. But after the initial spin, players on gray machines can adjust the symbols to create a winning pattern, manufacturers told JLARC. Players also can complete a memory-style game after losing a game in an effort to win back their original bet.

Operators claim there’s skill involved, which makes them legal.

However, under the approved bill, a skill game, defined as an electronic machine that requires money, a ticket or token to operate and will pay out cash, gift cards or credits for merchandise, are illegal.

There are exceptions for “family entertainment centers” that have arcade or other games that may fall under this category.

“Look … I don’t want the gray machines in Virginia interfering with my casino. Bottom line. End of subject,” State Sen. Louise Lucas, (D-Portsmouth), said last year.

Lucas has been championing the effort to legalize casinos in the state to help revenue strapped Portsmouth.

But Del. Steve Heretick, (D-Portsmouth), voted against the ban.

“To sort of suggest that just by waving our magic wands here in Richmond that we can make [gray machines] disappear throughout the commonwealth I think this is naive,” Heretick said. “I think what we need to do is we need to regulate them, we need to make sure those games are fair, that they pay out like they are supposed to do, and we need to apply the taxes on them that we are losing through the lottery that goes to our education funding.”

However, the complete ban is far from a done deal. The legislation backed by Democratic Gov. Ralph Northam would have regulated the machines and dedicated 94 percent of revenues to education.

That bill died in committee.

“The Governor did include revenue from that legislation in his introduced budget,” said Alena Yarmosky, Northam’s spokesperson. “While the General Assembly continues to debate this issue, any legislative action must address school funding. The Governor has made it clear that taking money away from schools is unacceptable.”

Queen of Virginia Skill & Entertainment is the largest owner of the skill machines and released the following statement:

“Queen of Virginia Skill & Entertainment strongly disagrees with efforts to ban our legal skill games. While we understand and share the legislature’s concern with the proliferation and operation of illegal slot machines, we believe the better solution would be to regulate and tax the skill game industry. Regulation and taxation of the skill game industry will protect Virginia jobs, eliminate the proliferation of illegal slot machines and provide hundreds of millions of dollars to the Commonwealth in additional tax revenue.

“Our team is committed to continuing to work on a path with the administration and the state legislature to regulate and tax the skill game industry. Our independent economic study shows that our industry, if regulated and taxed, will provide well over $300 million in recurring revenue to the Commonwealth each year. Revenue that Governor Ralph Northam has included in his budget as a means to provide much needed financial support to Virginia schools and children.

“Make no mistake about it, a ban on skill games will result in significant job loss in the restaurant, bar and convenience store industry and puts countless small businesses in jeopardy of closing. The skill game industry impacts thousands of Virginia small businesses and a ban will hurt many in the Commonwealth. In contrast, the Commonwealth is advancing plans to legalize casino gaming backed by big out-of-state corporations. Legislators are currently putting the interests of Las Vegas casino owners over Virginia small business owners.

“Queen of Virginia Skill & Entertainment stands ready to protect the countless small businesses and jobs that depend on our legal skill games.”

Queen of Virginia Skill & Entertainment

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