Legalizing slot machine-like skill games – possibly the hardest-fought battle of the 2024 General Assembly session — raised big questions for Gov. Glenn Youngkin. However, in the end, he decided some proposed amendments could make it more palatable.
Youngkin’s amendments would toughen state oversight of the games significantly — boosting the taxes they pay, dramatically raising the licensing fees that stores and truck stops pay and granting cities and counties the authority to ban the machines.
The initial reaction from the measure’s sponsor suggests the battle will continue when the General Assembly returns April 17 to take up Youngkin’s vetoes and amendments to legislation.
The amendments “are a slap in the face to thousands of Virginia small businesses,” said state Sen. Aaron Rouse, D-Virginia Beach, sponsor of Senate Bill 212.
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The bill the General Assembly finally passed after weeks of heavy lobbying was a compromise to legalize electronic skill games, imposing a set of regulations and taxes on the slot machine-like games the legislature tried to ban in 2020.
Convenience stores, restaurants and truck stops, hit hard by the pandemic, say they have relied on income from skill games to stay in business.
“Food’s up 33 to 49% … wages are up 18%. ...We really need the machines,” Rich Kelly, owner of Hard Times Cafés in Northern Virginia told legislators during the session. Kelly is president of a small-business group that has been lobbying for the bill.
Youngkin’s amendments would increase the state tax on skill games, from 25% in the final version of Rouse’s bill to 35%.
The amendments say the games have to pay out at least 80% of the money people wager, and that cities and counties can adopt ordinances or hold a referendum on banning the machines. The maximum payout would be capped at $500.
The amendments also boost the license fee for stores and truck stops, from the $250 in Rouse’s bill to $9,000 for a convenience store and $21,000 for a truck stop.
Stores would only be allowed to host three games, instead of the four in Rouse’s bill, while truck stops would be limited to seven, instead of 10. The money hosts get from the machine would not be allowed to exceed 20% of their total gross revenue.
Manufacturers of the games would have to pay a license fee of $250,000 a year. They were not subject to a fee under Rouse’s bill.
The Lottery, rather than the Alcoholic Beverage Control Authority, would be responsible for regulating skill games and there would be a centralized monitoring system tracking what the games take in, what they pay out and what taxes are due. The games’ promoters had opposed that when some legislators unsuccessfully proposed the idea during the session.
The agreement would cut the number of skill games in Virginia convenience stores, restaurants and truck stops and increased the tax rate from what Rouse originally proposed.
Youngkin has said he has serious reservations about the measure the legislature passed.
Youngkin press secretary Christian Martinez said Tuesday that the amendments “represent necessary changes and the added protections to the legislation address his serious concerns with the regulatory structure, tax rates, the number of machines, impact on the Virginia Lottery and broader public safety implications of the proposal.”
While Martinez said Youngkin consulted with stakeholders, Rouse said he was disappointed that Youngkin waited until Saturday to discuss the bill.
The amended bill “demonstrates why he has failed to produce a single bipartisan deal this session – he can’t work with members of his own party, let alone Democrats,” Rouse said.
Rouse’s bill passed the Senate on a 31-9 vote. It passed the House on a narrower 51-45 vote, with both bipartisan support and bipartisan opposition.
“My co-sponsors, our bipartisan coalition, and I will work together to make sure the harmful provisions put into place by Governor Youngkin do not advance, and we will do everything possible to make the interests of small businesses – not casinos or massive out-of-state corporations – a priority,” Rouse said.