Industry-friendly Va. skill games bill could get caught in arena fight

RICHMOND — A bill to bring slots-like gaming machines to neighborhood stores and restaurants across Virginia hangs in limbo, approved by the General Assembly but awaiting action from Gov. Glenn Youngkin.

The Republican has been on a tear with vetoes since the legislature adjourned March 9 without authorizing his plan to build a $2 billion publicly financed sports arena in Alexandria for the Washington Capitals and Wizards. Youngkin hinted weeks ago that the “skill games” bill — championed by the legislature’s chief arena roadblock, Sen. L. Louise Lucas (D-Portsmouth) — could be a target. He ramped up the threat Friday with a post on X claiming that Democrats’ vision for Virginia is “a pot shop on every corner and … a slot machine in every 7-Eleven.”

Advocates on both sides of skill games, wary of getting caught up in the arena fight, have been left wondering: Is the governor really giving a heads-up about a pending veto, or merely using that threat as a bargaining chip as he tries to revive his potentially legacy-making arena plan? Skill game supporters fear Youngkin, who has until April 8 to act on the measure, might veto it out of spite, while critics of the industry worry he might go along with it as part of a deal to get the arena.

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Youngkin, who can revive the arena plan when the legislature reconvenes April 17 to consider his vetoes and amendments to bills, did not answer directly when asked at an appearance in Chesapeake on Monday if he would use skill games as a bargaining chip. He said he did not need to bargain to get a better state budget — a bill he is widely expected to amend by adding language for the arena plan. He also reiterated concerns about underage players and safety related to skill games.

A handful of legislators met behind closed doors last month in the homestretch of the General Assembly session to iron out differences between two bills to bring the gaming machines — which look and operate much like video-style slot machines — to restaurants, stores and gas stations across the commonwealth.

Among the many points of disagreement: The House version would have allowed each truck stop to host up to five skill games, while the Senate version would have allowed seven. The surprising compromise they eventually struck upped that number to 10.

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While it also sets a 25 percent tax on game revenue and requires a central monitoring system to make sure the state gets its full share, the compromise bill is widely seen as favorable to an industry that since 2020 the General Assembly has twice seen fit to ban.

In the version sent to Youngkin, the legislation would shield most of the people involved in skill games from the kinds of background checks imposed top to bottom on the casino industry. It requires no local referendum for the games to be installed in neighborhood locations and imposes no statewide limit on the number of machines; a 15,000-machine maximum in an earlier version got scrapped. The bill contains weak provisions for guarding against play by minors and problem gamblers compared with those governing casinos.

“If this comes to pass, we’re going to look a lot more like Nevada than Virginia,” said Ronnie Jones, a longtime Louisiana State Police official who led that state’s Gaming Control Board for seven years and became active in the fight against skill games after moving to Norfolk two years ago. “The fingerprints of the industry are all over the compromise that came out. There are too few guardrails.”

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Legislators who have led the charge for the games stand by their support for “skill” or “gray” machines — so called because they occupied a legal gray area before the state banned them and because operators claim that winnings depend on a player’s skill, not pure chance like conventional slots. Supporters call the games a financial lifeline for mom-and-pop convenience stores, a source of new revenue for the state — and a matter of economic fairness, because they would let small businesses get a piece of the gaming action dominated by the state’s casinos and “historical horse racing” parlors, which feature a video horse-racing game similar to slots.

“The skill game legislation that’s now before the governor helps small businesses survive in these tough economic times, and it’s only fair to let Virginia small businesses participate and not allow an out-of-state [casino] monopoly in the gaming industry to persist,” said state Sen. William M. Stanley Jr. (R-Franklin), who as a private attorney represented truck-stop owner and former NASCAR driver Hermie Sadler in an unsuccessful lawsuit challenging the state’s ban on the machines.

Stanley — who also has a racecar team and podcast with Sadler, both sponsored by Pace-O-Matic, the largest maker of skill games — was not the author of the bill but was on the conference committee that hashed out the compromise. The state’s Conflict of Interest and Ethics Advisory Council determined Stanley could debate, vote and otherwise participate in legislation related to skill games as long as the measure would apply to the industry as a whole, not just Pace-O-Matic.

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House and Senate bills — sponsored by Sen. Aaron R. Rouse (D-Virginia Beach) and Del. C.E. “Cliff” Hayes Jr. (D-Chesapeake) — started out identical. Both would have allowed the games to operate after a simple registration with the Virginia Alcoholic Beverage Control Authority (ABC), no background checks required. They would have allowed five games in ABC establishments and 10 in truck stops and imposed a 15 percent tax on the revenue generated.

The bills diverged sharply after Del. Paul E. Krizek (D-Fairfax) successfully pushed for a rewrite of the House version as chairman of the chamber’s gaming subcommittee. His version sought to hold skill games to a standard closer to casinos, putting them under the direction of the Virginia Lottery, which regulates casinos. It also would have required criminal background checks for anyone directly involved in the “manufacture, distribution, operation, or hosting of any electronic gaming device.”

His bill would have required the Lottery Board to deny or revoke skill game licenses to anyone who has been convicted of a felony, illegal gambling or a crime of moral turpitude, or has been “found to have engaged in conduct prejudicial to public confidence in electronic gaming devices.” Krizek’s bill also would have given the lottery director discretion to refuse a license to someone who “lacks good character, honesty, or integrity.”

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“I can tell you this is a cash business, and when this much cash is involved, bad things are going to happen if you don’t do strict scrutiny on the people who are involved,” said Jones, the former Louisiana gaming board official.

But backers of the compromise version contended that the background checks could be too onerous for mom-and-pop stores and restaurants, perhaps making it hard for them to find employees. The compromise bill calls for background checks, but only for the individual who files the application for skill games.

Krizek, a vocal skeptic of skill games, said he hopes Youngkin amends the bill to look more like his substitute, with more robust regulations — including more expansive background checks.

“If he does amend it, we’ve given him a really good road map,” Krizek said.

Gregory S. Schneider in Chesapeake, Va., contributed to this report.

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