Gov. Glenn Youngkin isn’t saying no to legalizing slot-like games of skill in Virginia, but he’s proposing significantly stricter regulations than what the General Assembly approved earlier this year.
In a quick vote Friday, the Virginia General Assembly approved a bill to legalize games of skill
Ann amended bill governor, sent Monday night, will give local citizens the power to ban the machines in their communities, limit the number of machines allowed statewide to 20,000 and ban the operation of games of skill within a certain distance of casinos, horse racing facilities , schools, kindergartens and places of worship such as churches, mosques and synagogues.
Youngkin spokesman Christian Martinez said the governor “appreciates the extensive work done by the General Assembly on this issue this session.”
“His proposed amendments represent the necessary changes and added protections to the legislation address his serious concerns about the proposal’s regulatory structure, tax rates, number of machines, impact on the Virginia Lottery and broader public safety implications,” Martinez said.
Youngkin’s proposal drew swift condemnation from Sen. Aaron Rouse, D-Virginia Beach, a supporter of the skill game, who called the governor’s actions “a slap in the face to thousands of Virginia small businesses.”
“My co-sponsors, our bipartisan coalition, and I will work together to ensure that the harmful regulations put in place by Governor Youngkin do not move forward, and we will do everything we can to protect the interests of small businesses — not casinos or massively public corporations — a priority,” Rouse said in a news release.
A sizable group of shop owners, many of them South Asian immigrants, advocated for the bill to legalize skill games, telling lawmakers that the extra money they earned hosting the machines was essential to their survival. during the COVID-19 pandemic. Although the machines bear an aesthetic resemblance to slots, Virginia policymakers have struggled with how to classify them.
Supporters of skill games are asking Youngkin to fulfill a pledge to support their industry
Because they require players to interact with the machine more than traditional slots, proponents of games of skill argue that they should not technically be considered a form of gambling. Virginia gambling addiction experts disputed that claim, saying data from calls to the state’s problem gambling hotline show that people can become addicted to the machines just as they can to traditional slots.
Pace-O-Matic, a Georgia-based skill game company that has donated more than $1 million to Virginia politicians’ campaigns since 2018, also lobbied for Virginia’s legalization bill.
The General Assembly will consider Youngkin’s amended bill on April 17, when lawmakers return to Richmond to act on the governor’s veto and bill recommendations passed in the legislative session that ended March 9. If the General Assembly rejects some or all of the game-changing skills, then Youngkin could sign or veto his returned bill. If no bill is passed, games of skill would be banned in Virginia under a ban first passed by lawmakers in 2020.
Youngkin’s version also delays the regulatory process to allow the machines to be turned back on after a Virginia Supreme Court ruling forced them to be disabled late last year. Instead of the Virginia Alcoholic Beverage Control Authority temporarily overseeing the machines starting July 1, Youngkin’s amendments give regulatory authority to the Virginia Lottery.
The lottery will begin accepting applications on Jan. 1, 2025, but licenses for games of skill won’t go into effect until the lottery implements a “central, real-time accounting system” giving government officials a more direct view of how they are performing the machines and how much money they make. The lottery will also be tasked with creating “age and identity” verification mechanisms before a player can use the machines, a system that is likely to block anyone under 21 from playing and exclude people with gambling problems who they want to ban themselves from spending money on games of skill.
Youngkin also proposed increasing the tax rate on machinery to 35 percent from 25 percent in the bill approved by the Legislature. In the governor’s plan, truck stops could have no more than seven machines instead of the 10 the legislature called for. Convenience stores and gas stations would be limited to three, compared to four in the bill sent to the governor.
Youngkin’s proposal states that venues hosting games of skill must be licensed to sell lottery tickets, a departure from the original bill that allowed restaurants and sports bars to host machines if they had an ABC retail license.
In perhaps the most significant change, the Youngkin Amendments give city and county governments the ability to ban games of skill in their jurisdictions. If a city council or county council chooses not to act, local voters will have the option to initiate a referendum by collecting 5,000 petition signatures or support from at least 2.5% of registered voters in their locality.
It is not clear how many Virginia localities may adopt positions for skill play. The bill approved by the General Assembly would allow the machines statewide, with no room for local decision-making.
Location-based restrictions can also be a headache for the skill gaming industry, which has repeatedly accused the casino industry of trying to discourage competition from skill games “to protect casino profits. Representatives of Virginia casinos and Rosie’s horse racing franchise, operated by Churchill Downs, opposed the skill gaming bill, arguing that their larger gambling facilities come with more capital investment and job creation that could be threatened if every neighborhood convenience store is allowed to have slot-like machines. A casino-funded group called Virginians Against Neighborhood Slot Machines waged an intense advocacy campaign against the skill game bill.
Virginia Explained: The Endless Battle of Skill Games
Youngkin’s amended bill would ban games of skill within 35 miles of a licensed casino or Rosie’s horse racing facility, which mostly feature electronic machines that also look like slots but are powered by an archive of past horse races.
After Virginia legalizes casinos in certain areas in 2020, casinos are already operating in Bristol, Danville and Portsmouth, with two more planned in Norfolk and Petersburg.
In addition to the Colonial Downs racetrack in New Kent County, there are Rosie’s locations in the cities of Richmond, Hampton and Emporia, as well as the town of Vinton in Roanoke County and the town of Dumfries in Prince William County.
A 35-mile radius around all of these facilities would put a significant portion of Virginia’s map off-limits for games of skill, regardless of any other local efforts to ban the machines.
The Virginia Merchants and Entertainment Coalition, a group of business owners advocating for the skill game bill along with Pace-O-Matic, called the governor’s amendments “devastating.”
“In another effort to protect out-of-state gambling interests, it effectively banned games of skill by banning games of skill within a 35-mile radius of all gaming establishments,” said group president Rich Kelly, owner of the Hard Times Cafe.
Youngkin’s fixes require games of skill to have a payout rate of at least 80% in cumulative “monthly payouts,” a rule intended to give players a minimally fair shot at winning money. Traditional casino slot machines in Virginia are supposed to have a payout rate of over 84%. Although the skill game industry insists that talented players can win every time they play because the machines involve skills like spotting patterns and memorizing sequences, 2022 State Survey skill-locked games have a lower payout rate (77%) than other types of chance-based electronic gambling.
Youngkin’s amended bill also directs the lottery to come up with rules designed to promote security and deter crime at businesses that host games of skill.
Del. Paul Krizek, D-Fairfax, who tried to add stricter provisions to the skill game bill on its way through the General Assembly with mixed results, said he is still reviewing Youngkin’s amendments but sees them as “favorable.”
“This is a major policy change for the community, and it’s being implemented in a sensible way under the right regulatory authority while allowing these small businesses to generate revenue from up to three games at their venues,” Krizek said.
