Skill machines got a reprieve in Virginia, as the state legislature on Wednesday approved amendments by Gov. Ralph Northam to keep the games in the state for one more year to help raise funds for COVID-19 relief.
The state Senate voted 32-8 and the House followed with a 76-16 tally to agree to Northam’s proposal on Senate Bill 971. Last month, legislators agreed to ban the unregulated gaming devices that had popped up in bars, trucks stops, convenience stores, and other businesses across the state.
However, that was before the spread of the novel coronavirus grew exponentially across the country, forcing states to shut down various business sectors in an effort to limit the spread of the virus. As the bill sat on Northam’s desk, the governor – who had been a proponent of regulating the games instead of banning them – proposed slapping a $1,200 per month tax on machines for a year starting in July, with most of that revenue going to a COVID-19 relief fund for the state.
Lawmakers sought a ban saying the games took away millions in revenue from the Virginia Lottery, whose proceeds are used to fund public education in the state.
However, given the current state of affairs, bill sponsor state Sen. Janet Howell (D-Reston) told her colleagues she “almost reluctantly” backed the change to keep the machines going for now.
Sometimes I think of them unseemly, but mostly I think they are kind of sleazy, and I resent what they have done to taking moneys away from our public education systems,” Howell said. “But when we left here after the regular session, we also had a great economy.”
Officials expect the tax to generate about $150 million for COVID-19 relief funding. Localities, the state’s problem gaming fund, and Virginia Alcohol Beverage Control Authority (ABC) would also receive funding from the tax.
Lobbyist Says Games Will Help Businesses Recover
On July 1, 2021, the machines will become illegal in the state. Howell said she had it in writing from Northam that he would veto any bill next year that would allow skill machines to continue operating after that date.
However, a spokesman for a skill game manufacturer told Casino.org they will look to discuss allowing the machines to remain in operation after the year-long stay when the time is appropriate.
As of now, Michael Barley, Pace-O-Matic’s director of government affairs and public relations, said in an email that those games will allow Virginia businesses to generate a consistent revenue that will help them through the reopening process.
“Today, Pace-O-Matic of Virginia’s goal is to effectively operate our business to ensure that the maximum amount of tax revenue can be generated from the play of skill games to help support Virginia’s COVID-19 Relief Fund and local municipalities,” Barley said in a statement earlier this week. “It is also important to note the important role our skill games play in the economic recovery in Virginia. Our games support thousands of small businesses, particularly bars and restaurants, in the Commonwealth. Many of these small businesses are suffering great economic harm at the moment, and they are unsure if they will even be in a position to reopen.”
Skill games, sometimes referred to as “gray machines,” had been illegal in the state until the ABC allowed them in 2017. Last year, the state’s Attorney General’s office ruled that it was up to the Commonwealth’s Attorney to determine the machines’ legality at the local level.
Currently, according to Northam’s estimates, there are about 15,000 such machines across the state.
The new law allows arcades to operate such machines even beyond June 2021, as long as players cannot exchange prizes for cash.
‘Wild West” Coming to Virginia?
Michael O’Connor, the president of the Virginia Petroleum and Convenience Marketers Association, told Casino.org his trade group fought to have the machines licensed and taxed instead of banned.
He added that it’s too early to predict what will happen when lawmakers reconvene in Richmond next year. But he foresees some trouble ahead, especially as the state gets ready to expand gaming.
“This is going to create a Wild West situation in July 2021, as the first brick-and-mortar casinos are likely seeking to open temporary locations,” he said.
O’Connor said he has concerns that gaming interests will continue to spend money to lobby lawmakers to bring “mini-casinos” on every street corner in the state.