New Skill Game Machines Don’t Violate the State’s Ban, Two Former Virginia Attorneys General Say

A new version of slots-like machines that one of the biggest skill game companies in Virginia has begun introducing in the commonwealth does not violate the state’s ban on the electronic betting machines, according to a joint legal opinion by two former state attorneys general and two regulatory attorneys with substantial gaming experience.

Dubbed Queen of Virginia machines (“QVS2 games”), the new cashless devices manufactured by Pace-O-Matic, a software company from Duluth, Ga., were first spotted in the Richmond region at a sports bar in Henrico, The Richmonder first reported last week. Shaun Kenney, a spokesman for Virginia Attorney General Jason Miyares, said in an email Monday that his office is looking at “whether this company is in compliance with the law.”

Because the machines do not require — or even allow for — the insertion of a coin, token or any other form of currency for the user to play the games, they fall outside the definition of a prohibited skill game under Virginia law, according to the joint statement that was signed by former Attorneys General Jerry Kilgore and Tony Troy, as well as attorneys Jason Hicks and Stephen Piepgrass.

“The current Queen of Virginia games are clearly games of skill, and games of skill have historically been legal in Virginia. Recently enacted laws make certain skill games illegal, but only if they are operated by the ‘insertion of a coin, currency, ticket, token or similar object’ to play. The new QVS2 Games are not activated or played by inserting any object and thus are presumptively legal in Virginia,” the statement said.

Kilgore and Troy are no strangers to the controversy over skill games.

Kilgore, who served as attorney general from 2002 to 2005, was a registered lobbyist for Pace-O-Matic from May 2023 until April of this year. Troy, Virginia’s top prosecutor from 1977 to 1978, lobbied for the company from May 2017 to April 2018.

Troy was also one of the attorneys representing former NASCAR driver and Emporia-based entrepreneur Hermie Sadler in his lawsuit seeking to restore the operations of skill games in the commonwealth.

Pace-O-Matic has not yet disclosed how many of the new machines are already operating in Virginia, but the company is currently beta-testing the new games and will “evaluate any potential market expansion as the testing period progresses,” according to a company representative.

Skill games remain illegal in Virginia, but some businesses are evading the ban

Each of the QVS2 gaming terminals is cashless and players will first have to check in with an attendant before they play. Pace-O-Matic has also instituted a self-imposed age restriction of 21 — previously it was 18 — to reflect the state legislature’s most recent proposed regulation. The games’ outcomes are still based predominantly on the skill of the player, as were the original games.

Skill games had existed in Virginia unregulated for decades until in 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 the casino industry seeking to set a foothold in the commonwealth.

But after the coronavirus pandemic shuttered thousands of small businesses – including those offering skill games — lawmakers agreed to a one-year reprieve for operations of the roughly 6,000 legal electronic betting machines statewide. After the Alcoholic Beverage Control Authority’s regulatory oversight ended two years ago, businesses across Virginia continued operating skill games in murky legal territory.

That changed 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 enforcement of the ban.

Pace-O-Matic spokeswoman Rachel Albritton said in a statement that the company “has never and will never” operate outside the law.

“Pace-O-Matic has launched new, legally compliant skill game technology that supports Virginia small businesses by allowing them to earn supplemental revenue today,” Albritton said. “Virginia legal experts have thoroughly reviewed our new product and have confirmed that the games fully comply with current statute.”

While working to introduce the new machines, Pace-O-Matic has continued to lobby for legislation overturning the state’s ban on skill games.

But a bipartisan effort to create a regulatory framework and tax structure for the electronic devices during the 2024 General Assembly session failed when the state Senate in April soundly rejected a far-reaching slate of amendments to the legislation proposed by Gov. Glenn Youngkin.

Proponents of the measure, which was sponsored by Sen. Aaron Rouse, D-Virginia Beach, and Sen. Timmy French, R-Shenandoah, among others, believe that it would benefit small businesses and generate an estimated $200 million in tax revenue for the commonwealth.

Opponents like the nonprofit group Virginians Against Neighborhood Slot Machines, however, have pushed back against lifting the ban, accusing Pac-O-Matic of using “a back-door approach and blatantly disregarding the authority of the Virginia General Assembly and Governor Glenn Youngkin,” according to Nick Larson, the group’s spokesman.

“Even legislative supporters of the industry must ask themselves, is it okay for an out-of-state company wanting to do business with the commonwealth to repeatedly make a mockery of its legislative and regulatory authority? Can such a company be trusted as a good actor?”

 Pace-O-Matic, Larson said, has has spent the last year developing the new machines specifically “to try to thwart Virginia law” and operate while avoiding regulation and tax.

“The company has said repeatedly that they want to do things the right way and be regulated, unless the regulations are real. Virginia lawmakers should call out Pace’s action for what it is — a slap in the face.”

by Markus Schmidt, Virginia Mercury

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