New effort to legalize games of skill in Virginia

A new effort to revive so-called games of skill, or gray machines, in Virginia is taking center stage as the Virginia General Assembly returns to Richmond this week.

A news conference is scheduled for Tuesday morning in Richmond to unveil legislation aimed at legalizing and taxing the controversial electronic slot machine-style devices.

Last October, the Virginia Supreme Court voted to uphold a previous General Assembly ban on the machines, which are currently illegal for work or play.

A bipartisan group of lawmakers from both the House and Senate appear poised to boost regulation, taxation and enforcement of gaming, which a previous study by Virginia’s Joint Legislative Audit and Review Commission generated $2.2 billion annually.

As of Monday afternoon, no legislation had been filed.

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The machines are not currently taxed or regulated.

Last year, Del. Rep. Terry Kilgore, R-Gate City, introduced a bill to legalize and tax games of skill, but lawmakers chose not to proceed because the matter was in court in Greensville County. That lawsuit, filed by business owner and former NASCAR driver Hermie Sadler, was dismissed a few weeks after the Supreme Court decision.

The owners of the Bristol Casino, the future home of the Hard Rock, opposed this effort to legalize gaming, saying in part, “The proponents’ argument that they want to reduce ‘illegal gaming’ by allowing such prohibited activity defies logic and is troubling, particularly in light of the Commonwealth’s strong fiscal position and the inadequate guarantees they purport to provide.

Sadler’s lawsuit argues that the machines provide significant income for small business owners and the state should reinstate a tax system used when lawmakers agreed to temporarily allow the machines to operate.

These arguments are expected to be at the heart of this new effort to legalize gaming once and for all.

Pace-O-Matic, a Georgia company that makes the machines, has hired 14 lobbyists from eight different Virginia firms to promote its cause, according to the Virginia Public Access Project.

At the end of 2022, Pace-O-Matic spokesman Michael Barkley estimated the state was missing out on $100 million in annual tax revenue from the machines.

State law currently allows law enforcement to seize machines and impose a civil penalty of “up to $25,000 per device.” Playing such a machine is a Class 3 misdemeanor punishable by a fine of up to $500 for a first offense.

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