RICHMOND, Va. (WRIC) – The Supreme Court of Virginia has brought back the state’s ban on so-called skill games, a decision that will impact convenience stores, gas stations and other businesses with the slots-like betting machines.
The high court’s order, first reported by The Virginia Mercury, comes amid an ongoing legal battle between the state and businesses in the industry, led by truck stop owner and former NASCAR driver Hermie Sadler, over Virginia’s ban.
In its order, the state Supreme Court found Sadler’s challenge is unlikely to succeed on its argument that the machines deserve the same free speech protections as video games, ruling that a lower court “abused its discretion” when a Greensville County judge found otherwise.
“Although at times it is difficult to determine where a particular activity falls on the speech/conduct continuum, no such difficulty is present when the activity being regulated is gambling,” the order from Justices Teresa M. Chafin, Stephen R. McCullough and Wesley G. Russell Jr. reads. “We long have viewed gambling as conduct that may be heavily regulated and even banned by the Commonwealth as an exercise of its police powers.”
The Virginia General Assembly voted for the so-called skill games ban, but lawmakers agreed to delay the ban at the request of then-Gov. Ralph Northam (D) so the tax revenue from the machines could help fund state needs amid the COVID-19 pandemic.
The ban, which took effect in July 2021, came as state lawmakers approved legislation to make way for up to five casinos and mobile sports betting in Virginia.
But the Greensville County Circuit Court judge overseeing Sadler’s lawsuit blocked the commonwealth from enforcing the ban with an injunction, leaving the devices largely unregulated.
“It’s disappointing,” Sadler said about the order in a phone interview Friday. “What’s not being talked about is how today’s order impacts the rights of small businesses in Virginia. It’s the main reason I filed [the lawsuit]. It’s tough.”
Sadler told 8News there is “a lot more at stake than the games,” repeating his concerns over protecting the free-market system and government overreach. He also spoke out against the state’s casino legislation, accusing Virginia of getting behind only one sector of the industry.
The electronic betting machines, sometimes called “gray machines” because they function in a gray area of the law, look and pay out winnings like slot machines. The industry and manufacturers of the machines argue skill is involved — hence the name “skill games.”
Supporters of skill games, including distributors, have argued that the machines give small businesses much-needed income and would provide millions in tax revenue for the commonwealth, including public education funding, if allowed to remain.
“We are very pleased with the Supreme Court’s decision upholding the constitutionality of the skill games law,” Victoria LaCivita, a spokeswoman for Virginia Attorney General Jason Miyares, said in a statement. “The Commonwealth of Virginia has regulated gambling for centuries, and the skill games law is an ordinary exercise of the General Assembly’s authority to protect the public from dangerous gambling devices. The law is now in effect, and Commonwealth’s Attorneys are free to enforce it.”
The attorneys for Pace-O-Matic, the skill-games developer behind the Queen of Virginia games, “are currently reviewing the opinion and assessing next steps,” spokesperson Christina Freundlich said in a statement.
“This vacating of the temporary injunction that has been in place for nearly two years is unfortunate, and we believe not correct, so we are disappointed by today’s ruling by only three of the seven justices of the Supreme Court,” state Sen. Bill Stanley (R-Franklin County), Sadler’s attorney, said in a statement.
“While we are currently evaluating the temporary effect of the ruling, our trial still remains on course, and we are confident that we are going to win this very strong case when we go to court in December,” Stanley continued. “Hermie Sadler, along with myself and the other members of our legal team are undaunted, and we will continue to fight to protect the constitutional rights of our Virginia small business owners from government overreach and monopolistic out of state business interests.”
Sadler’s lawsuit is expected to go to trial in Greensville County Circuit Court in mid-December, records show. Sadler told 8News he’s still waiting on guidance from his attorneys on the next steps, including when businesses are expected to comply with the ban.