Virginia would open the door for state-regulated slot machines under a new legislative proposal that would end the legal distinction between games of skill and chance.
Sen. Jeremy McPike, D-Prince William, chairman of a Senate subcommittee on gaming, introduced a new proposal on Thursday that would turn the debate over electronic gaming machines on its head.
The proposal would legalize “video gaming terminals” in restaurants licensed by the Virginia Alcoholic Beverage Control Authority, as well as truck stops and — under an amendment insisted upon by the subcommittee — convenience stores.
The machines would be certified and inspected by the Virginia Lottery, which would directly monitor their sales, subject to a 36% tax, with the revenues primarily dedicated to state support of education and a portion for local government.
In an interview after the three-hour meeting on a variety of gaming issues, McPike said he has “an agnostic approach” to the distinction between legal games of skill and illegal games of chance that has defined an often-bitter debate over thousands of unregulated gaming devices that the state blames for hurting lottery profits.
“I’m done with it,” he said. “I don’t care.”
Instead, McPike proposed a plan that was embraced by a new coalition of “video gaming terminal” companies, including Las Vegas-based Golden Entertainment, that want to bring slot machines to Virginia and a framework for regulating them.
“Whatever you call it, you can’t escape the regulatory process,” said Richmond lawyer Stephen Baril, who represents Golden and four other gaming companies.
In their world, he said, distinguishing between games of skill and chance “is like believing in the tooth fairy.”
In contrast, the lead lobbyist for Queen of Virginia Skill & Entertainment insisted that the roughly 7,500 machines it has installed across the state operate by skill, with the opportunity for players to win every game if they know how.
“We’re talking about real money to the state without putting gambling devices in every store and restaurant,” said Tom Lisk, who represents the company’s parent, Pace-O-Matic.
Both approaches offer the state hundreds of millions of dollars in revenue to offset losses by the Virginia Lottery, but the slot machine coalition said McPike’s proposal would generate $450 million in revenue to the state by the third year of operation through a 33% state tax and a 3% tax for the locality in which the games operate.
The physically weary subcommittee did not endorse any of four proposed bills for regulating what have become known as “gray machines” because of ambiguity over whether they are legal under current state law, which allows games of skill.
“It is a true gray area,” said Henrico Police Chief Humberto Cardounel, who endorsed McPike’s proposal as a way to make enforcement easier for police departments and sheriff’s offices.
In the House of Delegates, Del. Lamont Bagby, D-Henrico, has proposed legislation on behalf of Gov. Ralph Northam to regulate the machines, tax them at 35% of gross profits, and use almost all of the money for public education.
Sen. Monty Mason, D-Williamsburg, said he thought the Senate was heading down a similar path, but after hearing McPike’s proposal, “it seems like we’re launching a spaceship here.”
The subcommittee agreed to advance McPike’s bill and three other proposals for regulating and taxing electronic gaming devices without recommendation to the full Senate Committee on General Laws and Technology.
Ultimately, however, the final legislation is “going to be crafted” by the Senate Finance Committee, said Sen. Tommy Norment, R-James City, a former co-chairman of the committee.
The subcommittee rejected Norment’s proposal to ban the electronic gaming devices entirely, but he also has a proposal for their regulation that will go before the full committee next week. The committee also will consider similar regulatory approaches proposed by Senate Finance Chairwoman Janet Howell, D-Fairfax, and Sen. Frank Ruff, R-Mecklenburg, who led the subcommittee while McPike presented his bill.
Earlier, the subcommittee endorsed bills that would:
allow online betting on professional and collegiate sporting events, as allowed under a U.S. Supreme Court decision almost two years ago;
permit the Virginia Lottery to sell its traditional tickets over the internet instead of solely through retail stores and vending machines; and
loosen restraints on charitable gaming operations to help them compete against other forms of gaming that have cut deeply into traditional money raisers, such as bingo.
The decision to allow online sales of lottery tickets, using a system that would guard against use by minors, raised concerns for some retailers, especially 7-Eleven stores.
Chuck Duvall, a lobbyist for 7-Eleven, said allowing the lottery to sell tickets online would hurt the retail giant by reducing foot traffic and discretionary purchases in the 740 stores it operates in Virginia.
“You’re putting the burden of their success on us,” Duvall said.
However, Norment, who sponsored one of the bills to allow lottery sales online, said the lottery operates in 4,500 retail outlets in addition to those owned by 7-Eleven. Online sales would allow the state lottery to “operate in the modern marketplace” with greater safeguards against underage purchases than store vending machines.
“Welcome to the 21st century,” he said.