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Virginia Ban of Skillful Arcade Games Survives Early Challenge

Claims that racial animus inspired Virginia lawmakers to ban a type of video-gaming machine common in Old Dominion convenience stores failed to snare an injunction Friday from a state judge.

NORFOLK, Va. (CN) — Claims that racial animus inspired Virginia lawmakers to ban a type of video-gaming machine common in Old Dominion convenience stores failed to snare an injunction Friday from a state judge.

The fight impacts thousands of slot-machine-style contraptions that began popping up around the state following their legalization in 2018. Not long after the state opened a narrow door to the machines said to require more skill than luck, however, lawmakers approved a ban in early 2020. 

Before the state could begin removing the machines, the emergence of the coronavirus pandemic led to a shift in legislative priorities. Amid figures from the Virginia Alcoholic Beverage Control Authority that there were more than 10,000 machines generating up to $100 million a year in tax revenue, Governor Ralph Northam agreed to give operators one more year.

For the last year, the tax on machines generated Covid-relief funds that support schools and small-business grants. On July 1, now that the state’s aggressive vaccination campaign has put the virus in retreat, the ban finally came into force. Not incidentally, the move also coincides with plans for Virginia's first legal casinos.

Part of the trouble is differentiating between electronic gambling or slot machines, which are illegal, and machines that rely on skill that still pay out cash winnings.

Norfolk Circuit Judge Junius Fulton denied a temporary restraining order Friday, ruling in a case filed the week prior by Mike Joynes and state Delegate Steve Heretick. Joynes, a Virginia Beach-area attorney, and Heretick, a Portsmouth Democrat, contend that legislators made racist remarks during the lawmaking process, evincing racial animus in violation of the state’s Human Rights Act.

Southeast Asian business owners in particular have voiced upset after Senate Minority Leader Tommy Norment called a competing effort to keep the games “the Ali Baba bill,” and Senate Finance Chair Janet Howell referred to the campaign as “sleazy.” Norment is a James City Republican; Howell a Fairfax Democrat.

Finding their argument unpersuasive, Fulton noted Friday that the state’s nondiscrimination law does not offer a right of action against the state because it’s not a “person” as required under the statute. 

Fulton also dinged the shop owners for running to court rather than following the administrative process that would require the state to investigate first. 

Since the law change also ended the Covid-era tax scheme, Fulton noted as well that it would be the state that was harmed if machines were allowed to continue. 

"In the absence of independent regulation and oversight, businesses and customers cannot be certain of the fairness of skill machines," the judge wrote. "Weighing the relative harms to plaintiffs and the Commonwealth, plaintiffs have not established that their harms in the absence of an injunction outweigh the harm to the commonwealth."

Joynes did not return a request for comment. 

Friday’s ruling in Norfolk is only one piece of the puzzle. 

Several entities that benefit from the convenience store games filed a separate complaint on June 21 in Greensville County Circuit Court, painting the legislative ban as a violation of their freedom of speech. 

Senator Bill Stanley, a Franklin County Republican who is representing Hermie Sadler and his collection of truck stops in the dispute, noted the new law impacts not only skill games but also touchscreen bar games, arcade cabinets and claw machines that have long been legal in Virginia. 

“When they were doing it they were picking winners and losers, allowing shiny casinos but taking away the ability of small mom and pop shops from participating in the gambling industry and I thought that was unfair,” Stanley said.

“If you’re going to allow gambling, let's rip the Band-Aid off and let our small businesses do it,” he added.  

Sadler, vice president for development for Sadler Brothers Oil Co., which operates multiple truck stops, convenience stores and restaurants around south-side Virginia, said in his complaint the ban carves out exceptions for “family entertainment centers” but fails to properly clarify exactly what that distinction means. He says the compulsion for him to label his business as such violates the First Amendment. 

So for now, the machines lay dormant with a sign asking people who miss them to contact their local legislators.

The Sadler dispute is on hold pending a motion to transfer to Richmond City Circuit Court, as the district is home to Governor Northam and the state’s Alcoholic Beverage Control Authority.

Sadler, who has had games of skill in his truck stops for more than two decades, said he hopes the court sees his request as one on behalf of similar rural small businesses just looking to even the playing field. 

“I enjoy gaming and casinos, and I go when I can,” he said in a phone interview. “It’s the fact they’re trying to take away our business and give it to the casinos coming in.”

Virginia’s Attorney General Mark Herring did not return a request for comment about either legal dispute. Northam meanwhile released a statement that blamed disagreement in the Legislature for mucking up his interest in developing a “robust system” of skill-game regulation. 

“Governor Northam respected their decision,” a spokesperson for the Democrat said in an email. “The governor is grateful that the [legislators] agreed to delay the ban by one year to allow the convenience stores, truck stops, restaurants and other establishments a year to prepare for their phase-out.”

Stanley is taking Friday’s opinion in stride. He said Sadler’s freedom of speech claim is different enough from the racial-animus claim that a judge will side with him going forward. 

“I don’t think it hurts our chances one bit,” he said.

And Sadler isn't the only one with shuttered skill games. At a Lucky gas station just of I-95 in downtown Richmond, Patrice Smyre said her once-packed machines provided a sense of security at the often busy late night spot.

"People always pop in and pop out," she said. "But they provided company; someone was always there playing the games."

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