RICHMOND, Va. (CN) — Lawsuits challenging Virginia’s recently amended gambling laws are forcing elected officials to reckon with issues legislators from both parties say are self-made.
Among those arguing in public and in court is Republican state Senator Bill Stanley, who said Thursday morning that recent rulings on charitable gaming and electronic skill games have left both activities in a legal gray area without state oversight.
"These court rulings demonstrate a need for the legislature to fix the problems that it alone created," he told Courthouse News via text message.
The struggles started when state lawmakers temporarily legalized and then banned so-called skill games, slot-like digital machines that require a level of skill but offer cash payouts. The owner of a chain of Southside Virginia gas stations, Hermes Sadler, challenged the ban and prevailed before a rural state court judge who said it violated his First Amendment rights.
Stanley, who represented Sadler in Greensville County Circuit Court, praised the early December ruling from Judge Louis R. Lerner but was less thrilled to see Democratic Attorney General Mark Herring file an appeal with the Supreme Court of Virginia on Tuesday.
Deputy Solicitor General A. Anne Lloyd wrote in the state's petition for review that even Sadler expressed appreciation for the regulatory scheme used on the games, one that generated over $130 million in revenue for the state, but noted the injunction blocking the law legalized the machines without acknowledging the state’s regulatory system was no longer in place.
Until the ban went into effect, the Virginia Department of Alcohol and Beverage Control, or ABC, collected taxes on the devices and kept the machines and its users from being abused. But when the ban went into effect, it also rolled back the agency’s regulatory authority. Under Lerner's order, Lloyd wrote, “it is now legal in Virginia for a child of any age to go to a corner store and gamble on so-called video skills games.”
“The circuit court’s injunction has resulted in immediate and complete deregulation from the bench,” she wrote in her request for the state's highest court to throw out the injunction.
Beyond the ongoing skill game dispute, a charitable gaming nonprofit called Cheers dragged the Virginia Department of Agriculture and Consumer Services, or VDACS, into court after changes made to the state’s charitable gaming laws allowed Texas Hold ’Em-style poker tournaments that raise funds for charity. While the activity was decriminalized, the agency’s oversight regulations were scrapped before they could go into effect.
Cheers' June 2021 complaint was more administrative, dealing with the failure of VDACS to respond to permitting requests from the company before new timelines for permitting went into place, but the company prevailed.
While that case's fallout might be limited, Democratic Virginia Senator Chap Petersen, who represented Cheers in the Richmond City Circuit Court dispute, said it shined a light on the same issue facing skill games: they’re technically legal with zero agency supervision.
“Texas Hold 'Em, if you’re a qualified charity, is decriminalized,” Petersen said in a phone interview Thursday morning. “The agency vacated all the rules for regulating the games, but they can’t recriminalize it; that would take a legislative step.”
Stanley thinks there was a more nefarious element to the recent gambling regulation changes, suggesting out-of-state casino companies are currying favor with lawmakers and hoping to limit Virginia-based small businesses. Passed in 2020, the casino gaming law empowers legislators to give localities the right to build a casino following a public referendum. Such efforts were approved in four of the five cities that asked and full-blown casinos are expected in the coming years.
Stanley pointed to an amicus brief filed in the Sadler case by Colonial Downs Group, a longtime, locally run horse track that was bought in 2018 by Peninsula Pacific Entertainment and Revolutionary Racing. Not quite a casino, the former horse track's cavernous halls now operate as a gaming parlor stocked full of skill games along side historic horse race betting. In theory, it faces competition from mom-and-pop gas stations.
“The curtain has finally been pulled back,” Stanley said this week of the brief by Colonial Downs. “The attempt to ban skill games was never about good government policy; it was about money and greed, and the big casinos were behind it.”
A spokesperson for Colonial Downs Group emphasized that their company is currently owned and operated out of the Richmond office of Peninsula Pacific Entertainment, a multistate investment group, after the dissolution of the Chicago-based Revolutionary Racing. But other casino projects approved in 2020 have out of-state ownership. In rural Danville, for instance, the Nevada-based Caesars Entertainment was slated to break ground on Caesars Virginia by the end of 2021.
Petersen, who admitted he voted for the skill game ban due to an "institutional position" that allowed them for one year only, said he saw some truth in Stanley’s theory.
“For almost 20 years Republicans did not want charitable gaming to expand because they thought gambling was evil,” he said. “Now it's coming from a different corner; there’s an institutional bias against charities and small operators while we’re handing licenses out to casinos to do this on a mass basis.”
Ironically neither legislator, nor Republican state Senator Ryan McDougle, who was co-counsel on the Sadler case, will be able to vote on the issues in their respective cases due to ethics concerns, but Democratic Senator Joe Morrissey brushed aside the favoritism claims.
“Maybe there’s some discrimination on a smaller front, I don’t know, but in my Senate district there’s gambling parlors, convenience stores with skill games and a would-have-been casino in Richmond,” he said of what he’s already seeing, including the failed effort to build a casino in the state’s capital city. Each gambling outlet has its own clientele, he argued, and concerns about cannibalizing business are overblown.
Since the Richmond casino effort failed, Morrissey has started pushing for another casino in Petersburg, still squarely within his district.
“I believe in competition, it makes you better; in sports, as a legislator, as a pastor,” he said. “And as long as I’m in the legislature, we’ll have it in the gaming industry.”
The Virginia Legislature begins its 2022 session on Jan. 12.
Follow @@BradKutner
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
Additional Reads
-
-
Homes, businesses damaged as tornadoes pummel Midwest April 26, 2024
