Just hours from his midnight deadline to take action on the remaining legislation on his desk, Gov. Glenn Youngkin on Friday vetoed another 48 measures, including a bill to legalize skill games and create a regulatory framework for the electronic devices in Virginia.
However, when speaking to reporters after an impromptu signing ceremony for the state’s bipartisan spending plan at the state Capitol earlier this week, Youngkin signaled a willingness to consider a new proposal on skill games that lawmakers hope to deliver to him in the coming weeks, “in the same spirit that we made a commitment to work on this budget.”
The General Assembly convened for a special session Monday to pass a budget for fiscal years 2024-26, ending a stalemate between Youngkin and Democrats that began in early March when the legislature adjourned its regular session. But the budget compromise did not include the skill games legislation that was awaiting the governor’s action after both sides had failed to work out a compromise.
“I know there is a lot of interest in it, one of the recommendations that was made during the negotiations was that we could in fact work on skill games going forward, and I have been clear that I was willing to do that,” Youngkin said at the budget-signing ceremony.
In his veto statement released Friday night, Youngkin said that in recent years, the commonwealth has authorized casinos, sports betting and parimutuel wagering, on top of longer-standing gaming options like the Virginia Lottery, horseracing and charitable gaming.
“When it comes to additional gaming options, such as games of skill, we must proceed with a robust set of safeguards,” Youngkin said.
“I sent over a package of amendments which addressed my many concerns with the bill. While it is regrettable that my recommendations were not adopted, I remain open to working with the General Assembly going forward on this subject.”
But opponents of electronic betting machines have made it clear that they would rather not see another legislative effort to legalize the devices.
“The amount of oxygen being wasted on convenience store slot machines is truly embarrassing for our commonwealth,” said Nick Larson, a spokesman for the grassroots organization Virginians Against Neighborhood Slot Machines.
Larson cited a new poll commissioned by his group showing that 87% of Virginia residents believe the General Assembly should focus on other issues such as reducing crime, boosting the state’s economy and providing property tax relief. The survey of 500 registered voters also found that Virginians oppose legalizing skill games by 56% to 36%.
At the heart of the legislative efforts to legalize skill games is SB 212, sponsored by Sen. Aaron Rouse, D-Virginia Beach, and Sen. Timmy French, R-Frederick County, among others, which passed in the Senate 32-8 and in the House 51-45 during the regular legislative session earlier this year.
The measure, which will likely serve as a starting point for a do-over proposal, sought to establish a regulatory framework and tax structure for skill games, benefiting small businesses and generating an estimated $200 million in tax revenue for the commonwealth.
But despite the bipartisan support for the legislation, Youngkin sent the proposal back to the General Assembly with a wide slate of amendments that would have made it more difficult and costly for small businesses to offer skill games and for patrons to find places where they can play the games.
For example, Youngkin proposed banning the operation of these games within a 35-mile radius of licensed casinos or a Rosie’s Gaming Emporium, which would make it impossible for convenience stores in many cities — including Roanoke, Bristol, Danville and Martinsville — to operate electronic betting machines.
Skill games would also be banned within 2,500 feet of schools, day care centers and places of worship including churches, mosques and synagogues.
Dharmendra Patel, the owner of the Quick-ette and Happy Food Marts in Fincastle and seven additional convenience stores around Roanoke, Clifton Forge, Rural Retreat and Bedford County, said that if Youngkin’s proposed amendments became law, only one or two of his businesses would qualify to host skill games.
“It’s as good as having the bill vetoed all together,” Patel said in a phone interview Wednesday.
All of his stores make on average between $4,000 and $6,000 per month from skill games, which Patel said helps pay for utilities, rent and other overhead expenses.
While small-business owners welcome Youngkin’s renewed openness to reach a compromise on skill games, “there is a little bit of skepticism about whether he is just buying time or if he is serious,” Patel said.
The ability to offer skill games is “extremely critical” for most convenience store owners across the commonwealth, Patel added. “In addition to skill games, there is extra foot traffic at mom-and-pop type of businesses, because people come in and play the games and on top of that they buy products like cigarettes, sodas and everything else,” he said. “So since the skill games have disappeared, other sales in stores have gone down as well.”
Small businesses operated skill games in Virginia for decades until 2020, when the General Assembly passed legislation banning the machines after some lawmakers expressed concern that they could pose a threat to the profitability of several planned casinos in the commonwealth.
But after the coronavirus pandemic shuttered thousands of businesses, the legislature agreed to a one-year reprieve for operations of the electronic games. After the expiration of the Virginia Alcoholic Beverage Control Authority’s regulatory oversight ended on June 30, 2022, businesses across the state operated skill games in murky legal territory.
That ended last fall, when the Supreme Court of Virginia reinstated the state’s ban on slots-like skill machines, overruling a decision by a lower court that had issued a temporary injunction blocking the enforcement of the ban.
Rouse’s proposal sought to put an end to the confusion by legalizing skill games effective July 1 of this year. But in his amended legislation, Youngkin rejected a provision tasking the ABC with regulating the games on a temporary basis starting that day. Instead, he wanted to hand regulatory power to the Virginia Lottery, which would begin accepting applications on Jan. 1, 2025 — and would have to begin building a regulatory framework from scratch.
Patel, the convenience store owner in Fincastle, said that a start date this summer is critical because a lot of small businesses wouldn’t survive for another year or two.
“It’s important for us to have skill games start back up on July 1, not next year or the year after,” he said. “Between 10 and 20% of those mom-and-pop stores will shut down if skill games don’t start back up by then.”
Talking with reporters on Monday, Rouse, the sponsor of the original bill, was cautious about predicting what Youngkin would do with it.
“The governor hasn’t told us that he will veto the bill on his desk, but we expect him to take action on it. I think we all can probably understand what that means,” Rouse said. “But what we do have is a good faith effort to come back into special session to work on a [new] skill gaming bill.”
Del. Terry Kilgore, R-Scott County, echoed Rouse’s remarks.
“We and the governor are going to attempt to come up with a solution to help our small-business owners across the commonwealth, and we believe that we will be working on that pretty quickly. We are waiting on the speaker and the president of the Senate to assess some dates to when we will come back,” Kilgore said.
When lawmakers will eventually reconvene to tackle a new skill games bill, they will also likely grapple with an amendment that limits the number of permits for businesses to operate the games to 20,000 statewide and sets licensing fees that advocates for the betting machines consider prohibitive for small businesses.
Youngkin proposed that convenience stores would have to purchase a nonrefundable $9,000 license, plus pay $750 per year per electronic gaming device, capped at three per store. Applicants that meet the definition of a truck stop would have to pay a $21,000 licensing fee, with a cap of seven devices.
But the biggest sticking point in the negotiations likely will be the perimeters set in Youngkin’s amendments that would ban skill games within a 35-mile radius of licensed casinos and 2,500 feet from schools, day care centers and places of worship.
Kilgore said he believes that the perimeter provision will be “off the table” by the time lawmakers have drafted a new bill.
“The market is going to take care of a lot of these issues,” Kilgore said. “We also believe that our bill will help us regulate this market. It will reduce the number of games in the commonwealth, but it will also allow our small businesses to continue to operate. We think the bill could be a win for those who want to regulate and those who want to support small businesses.”
Lawmakers are “very much hoping for a July 1 start date,” Kilgore added, “because the responsible small businesses have shut down these games. There are some that are still running out there, but they are the ones we would want to shut down anyway.”
And Sen. Bryce Reeves, R-Spotsylvania County, said that legalizing skill games is a critical step toward shutting down illegal gambling in Virginia.
“You have to regulate, license and tax it, you have to put money away for problem gambling, and then you need to go ahead and incentivize small businesses,” Reeves said in an interview.
“If you want to clean up gambling in Virginia, that’s how you do it. Until we can solve the enforcement side, we’re not going to do anything to solve this problem gambling. You license skill games, you fix that problem immediately.”
It wasn’t immediately known Friday when the General Assembly would reconvene to vote on a skill games bill, but the legislation would have to come before the body by June 28.
But Youngkin earlier this week hinted that his administration was ready to resume discussions with lawmakers spearheading the proposal, “particularly with regards to the perimeter provisions that were in the package of amendments.”
His previously proposed changes to the legislation, Youngkin added, addressed his concerns with regards to the regulatory framework and giving citizens a voice to make sure that the measure would address some of the potential criminal aspects that might arise.
“But what we decided was that we would pick that up another day,” Youngkin said.
