The Uncertain Future of Skill Games in Virginia

Convenience stores, restaurants, and truck stops in Virginia, like many small businesses, faced significant challenges during the COVID-19 pandemic. Skill games, which were allowed in these establishments, provided a crucial source of revenue during this difficult time. However, the future of skill games in Virginia is now uncertain, following the rejection of Governor Glenn Youngkin's proposed amendments to the legislation regulating these machines.

The original bill, SB 212, aimed to provide a regulatory framework for skill games, recognizing their importance to small businesses. Governor Youngkin's amendments sought to impose stricter regulations, including prohibiting skill games within certain distances from gambling venues, schools, and churches, as well as raising the small business tax rate. These amendments were met with resistance from businesses and legislators alike, leading to the bill's return to the governor's desk.

Now, businesses that depend on skill games for revenue are anxiously awaiting Youngkin's decision on whether to veto the bill or negotiate a compromise during a special session. The outcome will have significant implications for small businesses and their ability to survive and recover from the economic impacts of the pandemic.

Key Takeaways:

1. Virginia’s Skill Game Ban: Virginia’s skill game ban was initially passed in 2020 but wasn’t enforced until July 2021 due to the COVID-19 pandemic closures. However, the ban got postponed for almost two years as the skill game industry fought it in court. The Virginia Supreme Court reinstated the ban in late 2023, leading to the current debate over regulations.
2. Senator Aaron Rouse's Legislation: Senator Aaron Rouse sponsored the skill games legislation (SB 212) to support Virginia's small businesses. Many of these businesses heavily rely on operating skill game machines for revenue, and the legislation aims to provide a regulatory framework for their operation.
3. Governor Youngkin's Amendments: Governor Youngkin's amendments to SB 212 included stricter regulations, such as prohibiting skill games within a 35-mile boundary around existing gambling venues and within 2,500 feet of schools or churches. Additionally, the proposed changes raised the small business tax rate from 25% to 35%, with proceeds supporting the PreK-12 Priority Fund.

What Happens to Virginia Skill Games Now?

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1. Veto by Governor Youngkin: The governor could veto the bill, which would likely maintain the ban on skill machines, as enacted under former Governor Ralph Northam. This would lead to continued uncertainty for businesses relying on skill games for revenue.
2. Negotiated Compromise: A compromise on the bill could be negotiated during a special session planned for later this spring. Senator Aaron Rouse urged Governor Youngkin to support small businesses, emphasizing their critical role in the state’s economy.

Senator Rouse stated, “I recognize that this bill faces an uncertain future if it goes back to the governor’s desk. But… I stand with small businesses in every corner of our commonwealth urging the governor to do right by small businesses and sign this bill.”

Impact on Small Businesses:

Convenience stores, restaurants, and truck stops, which were severely impacted by the pandemic, rely on income from skill games to stay operational. They fear that tougher measures could lead to store closures, impacting not only business owners but also their employees and local economies.

The Virginia Merchants and Amusement Coalition organized protests across hundreds of state convenience stores, with businesses refusing to sell lottery tickets and closing stores during their busiest hours. The protests aimed to urge Governor Youngkin and General Assembly members to reverse the amendments to Virginia’s SB 212 and support small businesses.

“Skill games have been a lifeline for many small businesses in Virginia, especially during the challenges posed by the COVID-19 pandemic. It's crucial that we find a solution that supports these businesses while ensuring responsible regulation.”

Nearly 500 businesses participated in the protests, demonstrating the potential economic impact of their closures on lottery sales and tax revenue. These protests underscore the significance of the issue to small businesses and the broader community, highlighting the need for careful consideration and dialogue between stakeholders.

As Virginia grapples with the regulation of skill games, the future of these machines remains uncertain, with significant implications for small businesses and the state's economy. Finding a balance between regulation and supporting small businesses will be crucial in determining the outcome of this debate.