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Friday, May 24, 2024

In Quick Friday Vote, Virginia General Assembly OKs Bill Legalizing Skill Games

(Ned Oliver/Virginia Mercury)

RICHMOND — After a rapid turnaround on what was thought to be a complex piece of legislation, both chambers of the Virginia General Assembly voted Friday to approve a bill repealing the state’s ban on slots-like skill games.

The votes were a major victory for a large coalition of gas station and restaurant owners, who said the ban had deprived them of badly needed gambling revenue that they believe helped many small businesses survive the COVID-19 pandemic.

Explaining the final bill on the Senate floor, Sen. Aaron Rouse, D-Virginia Beach, described it as a compromise that leaves no one fully happy but still achieves the goal to “help small businesses and optimize revenue for the commonwealth.”

The proposal passed the Senate 31-9 and cleared the House of Delegates by a narrower vote of 49-43.

The legislation now heads to Gov. Glenn Youngkin, whose office previously said he had “serious concerns” about the pending skill game legislation but has not yet weighed in on the final version approved Friday.

“This skill game bill will allow Virginia’s small business owners, many of whom are first-generation Americans, to keep their doors open, their employees working, and continue contributing to the community,” restaurant owner Rich Kelly, president of the pro-skill game Virginia Merchants and Amusements Coalition, said in a news release applauding Friday’s votes.

The legislation includes a 25% tax rate on the machines’ gross receipts, and would allow up to four gambling machines in business licensed by the Virginia Alcoholic Beverage and Control Authority and up to 10 machines in truck stops.

Skill games could be reactivated on July 1, according to the terms of the bill, under a temporary licensing system overseen by ABC that would then transition to a fuller regulatory structure under the Virginia Lottery in 2027.

The measure does not require voters to approve skill games in their communities through ballot referendums, a rule that was imposed on casinos and Rosie’s gambling facilities tied to horse racing. Local governments also would not have the ability to ban skill games if they so choose.

As the proposal passed the House, Del. Terry Kilgore, R-Scott, noted that local referendums weren’t required for sports betting, which mostly takes place on digital apps.

“We only did that where there was infrastructure that would need to be addressed in local communities such as roads and highways and things of that nature,” Kilgore said, suggesting referendums were more about land use than gambling.

The Virginia Lottery, which didn’t present infrastructure concerns, was approved via a statewide voter referendum in 1987.

The bill’s passage is also a win for Pace-O-Matic, a prominent skill game company based in Georgia that mounted a vigorous lobbying effort to keep its machines legal and made substantial political donations to General Assembly leaders in both parties.

In a letter to Youngkin urging him to veto the bill, a group of Virginia pastors organized by a group called Faith Wins America said supporters of the bill were glossing over the reality that any extra money going to small business owners is coming right out of the pockets of other Virginians.

“It’s the wealthy out-of-state corporations behind these machines who stand to benefit, preying on vulnerable communities and perpetuating cycles of poverty and despair,” the faith group wrote.

The Senate and House had passed dramatically different versions of the legislation earlier in the session. In an unusually short turnaround, the small group of lawmakers appointed Wednesday evening to work out the differences in those bills finished that job in a little more than a day.

That group included Sen. Bill Stanley, R-Franklin, a lawyer who has worked closely with Pace-O-Matic but was assured by the state’s ethics council that his ties to the company didn’t create an impermissible conflict of interest. Stanley also has legal and business ties to Hermie Sadler, a Southside Virginia truck stop owner who hosts skill games and sued the state over the ban that took effect in 2021. The skill game bill that originally passed the Senate only allowed seven games at truck stops, but that number was bumped to 10 in the final version.

That change drew the notice of Del. Barry Knight, R-Virginia Beach, who said the bill “wasn’t ready for prime time.”

“On the House version you were allowed five of these machines at a truck stop. In the Senate version, seven,” Knight said. “This compromise now brings us to ten. That looks like it’s outside of the scope of a compromise.”

Knight also questioned how lawmakers could explain to their constituents that they left no ability for local decision-making.

“Can you envision yourself going back and someone asking you: ‘You voted for this, why didn’t you allow me to have input?’’”

Pro-skill game lawmakers said the bill struck a balance between allowing financialopportunities for business owners with the need to effectively regulate the machines, prevent underage play and mitigate the harms of gambling addiction.

Del. Sam Rasoul, D-Roanoke, said he didn’t like the final bill but was voting for it because he saw an “equity issue” with small businesses being shut out of the state’s emerging gambling market. He said the tax revenue shouldn’t be the state’s top concern given the broader impact gambling can have, particularly on young people.

“Vice taxes are not the way to pay for the most important things in our society,” Rasoul said.

The final bill doesn’t include the player card system envisioned by the House that would’ve required players to verify their identity before accessing skill machines. However, it includes criminal penalties for any business that “knowingly” allows those under 21 to play and some provisions meant to mitigate gambling addiction.

The bill calls for a “voluntary exclusion program” allowing people with gambling problems to ban themselves from playing skill games. It’s unclear how it would apply to the machines without any mechanism for verifying players’ identities and checking them against the list of people who asked to be excluded.

The speed with which the newly written bill was being put to a vote Friday drew opposition from at least one lawmaker in the Senate.

Sen. David Suetterlein, R-Roanoke, said the body should be given at least some time to read what it was about to vote on.

“I don’t know why we’re doing conference reports on Friday when we have a full docket of bills and we also have judicial interviews,” Suetterlein said. “I think it makes sense that we allow these conference reports to be out here and us [to] be able to look at them instead of running so quickly.”

The Senate agreed to a temporary delay but moved forward with the Friday vote.

In another sign speed was a priority for the bill’s backers, Del. Cliff Hayes, D-Chesapeake, the lead sponsor of the legislation in the House, was absent from the Capitol Friday and unable to vote on a major piece of legislation he’s been working on.

Kilgore said Hayes had asked him to present the bill instead.

“‘I know he’s disappointed because he’s worked so hard on this issue,” Kilgore said.

The governor will now sign the bill, veto it or suggest amendments prior to the General Assembly’s April 17 reconvened session.

Virginia Mercury is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Sarah Vogelsong for questions: Follow Virginia Mercury on Facebook and Twitter.

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