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UPDATED: Northam amends gambling bill to reiterate ban on 'skill machines'

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skill game

Skill games in a Richmond corner store. The games have popped up in gas stations, convenience stores and bars around the state. 

Gov. Ralph Northam is amending a gambling bill that easily passed the General Assembly to once again specify that so-called skill games would become illegal come July 1, the governor’s office announced Friday.

If the General Assembly agrees, the change could mean the end of the games resembling slot machines that have spread fast among Virginia convenience stores, restaurants and truck stops. Legislators had agreed to ban them last year, but the Northam administration proposed taxing them for one year only to generate money for a COVID-19 relief fund.

It appeared legislators agreed the machines shouldn’t be a part of the state’s growing gambling industry, but language added to a bill late in the 2021 session seemed to grant them legal status until the summer of 2022.

The bill’s sponsor, Del. Don Scott, D-80th, of Portsmouth, said that wasn’t his intent. Nevertheless, gambling lobbyists and others had flagged the bill, meant to give local governments and prosecutors more power to crack down on illicit gambling machines, as potentially doing the opposite of what the General Assembly intended.

When Northam proposed extending the life of skill machines last year as the pandemic began, a top Northam aide explicitly told General Assembly leaders the governor would veto any attempt to continue them past July 1.

Northam’s proposed amendment strikes an entire clause added to the bill that was meant to protect charitable gaming operators, but could have protected for-profit skill games as well.

It remains to be seen whether the skill-game industry, which has mounted a vigorous advocacy campaign to maintain its operations in the state, will quietly pull the plug when that day comes. Before they were temporarily taxed and regulated, the machines existed in a legal gray area, with proponents arguing they required just enough skill by the player that they shouldn’t qualify as a game of chance like traditional slots.

One of the industry’s most prominent companies, Queen of Virginia, also made a concerted effort to build its connections in the state, making more than $450,000 in political contributions and hiring Democratic Party of Virginia Chairwoman Susan Swecker as a paid consultant.

Original post: After giving so-called skill games another year to operate in Virginia late in the 2020 General Assembly session, legislators seemed to decide the time has come to pull the plug on thousands of slots-like gambling machines that have proliferated in convenience stores, restaurants and truck stops all over the state.

But some statehouse watchers think lawmakers may have actually voted to do the opposite.

Confusion recently spread among gambling lobbyists over a little-noticed provision attached to a bill that, on its face, makes it easier for officials to crack down on unregulated gambling.

That language, included at the end of a conference report lawmakers approved overwhelmingly last month in the closing days of the session, appears to create an exception for operators of charitable games like bingo, raffles and poker tournaments, specifying that some activity potentially impacted by the bill can continue until June 30, 2022.

The clause also covers other “regulated gaming” in existence as of February, a category that, if interpreted to mean skill games, could give the industry another year of life.

Because the bill was never explained as potentially sanctioning skill games for another year, some are suspicious the amendment was a ploy by a well-lobbied industry to slip something past policymakers.

In an interview, Del. Don Scott, D-80th, of Portsmouth, the bill’s patron, said that wasn’t the goal of the clause in question. But he too seemed uncertain about its ramifications.

“The way that I constructed the language was in consultation with a lot of the charitable people. And that was my intent to make sure they would not be impacted,” Scott said Friday. “If people are interpreting it another way, that’s on them.”

Scott said he doesn’t think lawmakers should be in the business of “picking winners and losers.”

“I look forward to it being worked out,” Scott said. “That’s why the governor is the final word.”

Gov. Ralph Northam’s administration, now in the process of signing and going over bills passed in the 2021 session, has said it wants the games banned. In a statement this week, Northam’s office hinted that it too sees the bill as potentially broader than publicly advertised.

“Governor Northam expects skill games to end as of July 1, 2021. That has been his consistent position, and it hasn’t changed,” said Northam spokeswoman Alena Yarmosky. “The governor’s action on this legislation will reflect that stance.”

A bill to give skill games another extension failed in the House of Delegates without a committee vote. Representatives for the skill-game industry did not respond to multiple inquiries from the Mercury seeking their interpretation of whether the bill would extend their operations past July 1.

Tom Lisk, a lobbyist for prominent skill-game operator Queen of Virginia, deferred comment to a company spokesman who did not respond to an email and a phone call. Clark Lewis, a lobbyist listed as the point of contact for the Virginia Skill Alliance industry group, also did not respond to requests for comment.

Eleven lobbyists have been retained by Queen of Virginia, according to the Virginia Public Access Project.

The skill-game industry entered Virginia in a legal gray area, with officials taking differing views on whether they should be classified as illegal gambling machines or arcade-style games that have just enough of a skill component to avoid the random chance of traditional slot machines.

Though it began with little to no rules and no gambling taxes assessed on its machines, the industry sought legislation creating a formal regulatory structure allowing it to continue. In the 2020 session, policymakers decided to allow the machines to remain in place temporarily to generate revenue for a COVID-19 relief fund.

Skill game companies and their affiliates launched a public advocacy campaign trying to convince lawmakers to let the machines stay, enlisting some officials and business owners to tout the revenue they generate as too valuable to give up. The advocacy group Virginia Skill Alliance estimates the machines could produce up to $140 million in tax revenues and coronavirus relief money over 12 months.

Much of that advocacy now seems to be happening behind the scenes, some of it seemingly aimed at convincing the governor to get on board.

A recent flier obtained by the Mercury seeks to connect skill games to Northam’s signature G3 plan for tuition-free community college, suggesting another year of revenue from the machines could fund a scholarship program named in honor of the late state Sens. Ben Chafin and Yvonne Miller. The flier describes skill game revenue as “the difference between hope and failure during the pandemic for the owners of thousands of family-run small businesses.”

With Virginia greenlighting casinos, sports betting and expanded horse race gambling in recent years, supporters of the skill machines argue they give small business owners a slice of an industry dominated by bigger companies.

Skill-game critics argue the industry, which donates to politicians on both sides of the aisle, exploited legal loopholes to rush in as Virginia was just starting to consider relaxing its gambling laws, rolling out machines that initially operated with no state oversight as to where they were being installed or how much money was flowing through them.

Despite the regulatory structure in place, there have been several reports of machines still operating outside of state rules and the appearance of mini-casinos where the machines themselves are the main draw.

That’s what the illegal gambling bill the legislature passed was supposed to address. It empowers the attorney general’s office, prosecutors and local government attorneys to go after unregulated gambling machines. Violators could face fines of up to $25,000 for each illegal machine.

In an interview, Sen. Bryce Reeves, R-17th, of Spotsylvania, who sponsored a version of the bill in the Senate and served on the legislative panel that finalized the proposal, said he wasn’t aware of any covert attempt to legalize skill games. Even if skill games are banned under the timeline envisioned by Northam, Reeves said the problem of unregulated machines will continue.

“The illegal stuff’s going to come right back in,” Reeves said.

Northam’s deadline to act on the bill is March 31.

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(1) comment


NEWSFLASH: Gambling involves skill. I guess the politicians would rather have the people getting fleeced by a machine that has been electronically programmed with a predetermined outcome. How sporting of them.

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