The state Senate got its first taste of the newly proposed “skill” game legislation on Monday. In a procedural victory for advocates of the machines, a bill to legalize the electronic games passed the Committee on Commerce and Labor and will head straight to the Finance Committee after a 10-5 vote decided not to refer it to the General Laws Committee.
SB 212 is the proposed reintroduction of the electronic games back to convenience stores, restaurants and truck stops around the state after the General Assembly outlawed them in 2020. A year later, a court injunction in Greenville County challenged the law. The Supreme Court of Virginia then lifted the injunction last October.
“As lawmakers it’s not every day we get to put our name behind legislation with this much bipartisan support. By supporting the most vulnerable small businesses in our commonwealth, we’re supporting the little guy,” the bill’s sponsor, Sen. Aaron Rouse, D-Virginia Beach, said to the committee. “This is something we can all get behind, common ground to support the little guy. This is a small business issue that affects many first generation Americans trying to achieve the American dream.”
The proposed bill requires an Alcoholic Beverage Control license for businesses offering these machines. It also limits the number of machines to five in convenience stores and 10 in truck stops. The machines have a $5 maximum play level and $5,000 maximum winnings per play, all at a set 15% tax rate, said Rouse.
According to Kunal Kumar of the Virginia Asian-American Store Owner Association, these machines were the “lifeline” of small businesses during the pandemic. Rouse said the machines brought in over $137 million during the year they operated and expects them to generate another $200 million a year for the state.
“These skill games truly were a lifeline for small businesses. They allowed us to stay open throughout the pandemic. They also allowed us the opportunity to keep competitive wages and keep hiring,” Kumar said to the committee. “Senate Bill 212 is not just a piece of legislation, it is a beacon of hope for thousands of businesses.”
As of now, only two states — Pennsylvania and Wyoming — and the District of Columbia offer skill games to the extent the bill proposes, Rouse said.
Throughout the hearing, members of the committee asked many questions, but the main concerns stemmed from revenue and age verification.
Under the proposed bill, someone needs to be 18 before they can use the machines. However, there is no requirement to verify a player’s age until they collect their winnings.
“In addition to being able to view an individual at the game and being able to tell them they can’t play, to redeem any of the value of these games you have to show an ID,” former Secretary of Public Safety Brian Moran, now a lobbyist for the bill, told the committee.
Some senators suggested a system that uses a player ID card, where someone would have to scan their ID in order to get a card that allows them access. Another solution proposed putting the games in a room that requires an ID to enter, but none of those ideas were written into the bill.
According to a study done by the American Gambling Association in August, underage usage is one of the main concerns of those opposed to these machines. Of those surveyed, 64% said they are too easily accessible to children and over 70% said they feel skill machines lack the protections that are available to those who play in casinos.
Scott Johnson, who spoke on behalf of the Bristol Casino, was against the bill and said he was also concerned about gambling that goes on outside of casinos.
“Two numbers, the first is 6,000. That is approximately how many gaming machines there are in our casinos today plus how many historical horse racing machines,” he told the committee. “In Senator Rouse’s legislation you’re approving, on a conservative note, 91,000 more machines. How can ABC stand to enforce that in six months?”
Other questions were raised about a monitoring system for revenues from the machines. Under the current proposed bill, the state would rely on the stores to report their own usage and income of skill games on a monthly basis.
According to Sen. Bill Stanley, R-Franklin County, electronic real-time reporting systems can be built into the machines but are not currently required in the bill.
“There is a device in which all of that is kept track of, money in, money out,” Stanley said. “It’s a part of the deal with not only the producer of the game but the operator and store itself to determine what collections are there in the store and what is taxed.” Stanley represented Emporia truck stop owner Hermie Sadler in a lawsuit to overturn the state’s ban on the games.
After a few years in the courts, the problem now returns to the General Assembly after almost 500 small business owners sent a letter to state lawmakers asking them to tax and regulate the machines as a part of the 2024 General Assembly session.
However, the determination of whether any skill is required to play these games has always been a question because of their similarity to slot machines.
According to that same AGA study, of those surveyed, over half said the machines had a random outcome regardless of skill.
“Two-thirds (65%) of those who are familiar with ‘skill’ games say that they are no different from slot machines where wins are based on random chance, and that even a skilled player cannot reliably influence the outcome,” the study said.
Monday’s vote was considered a procedural victory for game advocates because it eliminates one step in the process, and avoids a committee that was expected to try to make changes to the bill. Instead, the measure goes straight to Senate Finance, which is chaired by one of the bill’s co-sponsors, Sen. Louise Lucas, D-Portsmouth.
Del. Cliff Hayes, D-Chesapeake, has introduced a companion version of the bill in the House — HB 241 — with Dels. Terry Kilgore, R-Scott County, and Karrie Delaney, D-Fairfax County, as co-sponsors.
