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Thursday, July 18, 2024 | Back issues
Courthouse News Service Courthouse News Service

Virginia judge halts enforcement of ban on skill machines

Monday's order from the bench rolls back a five-month-old ban after skill machines were temporarily legalized to raise funds during the Covid-19 pandemic.

EMPORIA, Va. (CN)  — A Virginia judge temporarily blocked the state from enforcing a ban on digital skill games Monday evening.

Judge Louis R. Lerner's bench ruling in Greensville County will allow the so-called "gray machines," which walk the line between gambling and skill gaming, to be turned back on following five months of dormancy after a law allowing their use expired. 

“Whether we are residents of Emporia, Greensville or Hampton, or in these United States of America, the First Amendment exists,” Lerner said, siding with Hermie Sadler, vice president of Sadler Brothers Oil company, who owns a collection of rural South Side Virginia truck stops that operated the skill games during the grace period.

Sadler, represented by Republican State Senator Bill Stanley, started his fight back in June just before the ban went into effect.

Earlier versions of the skill games — which involve a mix of chance and the player's dexterity and offer cash payouts — were fully legal before the state Legislature moved to ban them in 2020. The ban aimed to direct forthcoming gambling revenue to recently approved casinos set to open across the state in the coming years, but economic impacts from the coronavirus outbreak convinced Governor Ralph Northam to amend the effort and also the machines to operate for one year while paying a tax reserved for the state’s recovery. 

The scheme worked, providing almost $130 million in new revenue thanks to the 10,000 registered machines, regulated by the state’s Department of Alcohol and Beverage Control (VA ABC), in gas stations and restaurants like Sadler's. But it ended on July 1, and Sadler sued Northam, Virginia Attorney General Mark Herring and the state agency to stop the ban’s enforcement. 

Attorney Rodney Smolla, also representing Sadler, argued in Monday's injunction hearing the ban was an unconstitutional overreach because of how it sought to associate the skill required to play the games with traditional gambling's use of chance. 

Smolla said the games were more like normal arcade games, or at least similar enough and therefore protected because of the way the user interacts with them.

"The good player — using memory, physicality, mental skills — determines the outcome,” he said.

He argues this interaction amounts to a type of conduct that qualifies these games for First Amendment protection.

“Digital games that look like video slot machines are banned,” Smolla said of the law, arguing that while many of the games' opening sequences resemble the spinning wheels of Vegas-style gambling machines, the comparisons end there.

“It’s the look that makes you a crook,” he added.  

Sadler himself took the stand Monday and compared the year-long legalization to the state agency's main task — enforcing liquor laws — which he argued helped keep a possibly unseemly business from getting out of hand.

“It cut out places that weren’t really great at operating the machines," he said of the agency's check-ins on stores involved in the scheme. "It was good for ABC to know who was operating correctly and who wasn’t.”

Assistant Attorney General Erin McNeill, who defended the state, said the First Amendment argument was overblown. She said the state was clear on the distinctions between games like the claw game and these skill games, and the issue was the cash payout. 

“This isn’t about civil rights, this is about profit,” she said, arguing the Legislature was trying to regulate gambling, not speech. 

“You can have video games where you want, you just can’t offer them for cash prices,” she added. 

But that argument did not appear to convince Judge Lerner.

“Plaintiffs are likely [to succeed],” he said, closing the day-long hearing Monday evening and granting Sadler's injunction request. “This is a constitutional issue; it deals with free speech, it deals with due process and its in the public's interest the injunction be granted.”

Business owners who operated skill gaming machines gather at the steps of the Greensville Courthouse Monday morning to support the fight against the ban. (Brad Kutner photo/Courthouse News)

Stanley was met with applause by other skill game-operating business owners outside the courthouse. 

“This law is so vague and so unenforceable it's rendered unconstitutional,” the senator said. 

The injunction will remain in effect until a declaratory judgment hearing set for May. However the issue is likely to go before the state’s Legislature before then when General Assembly meets in January. 

Stanley said elected officials need to create a more even scheme to support not just recently approved casinos, but also small businesses like Sadler’s.

“The skill games will go back on,” he said. “But we want to make sure there’s a solution that allows small business to compete with the big guys.” 

While the specifics of such an effort are unclear, its passage seems likely.

Final versions of the 2020 bill passed with bipartisan support in both the House and Senate. If the two bodies, led by different political parties, don't act, skill games will continue to operate without state oversight or any tax enforcement.

Monday's hearing was markedly more successful than a similar effort in July when a Norfolk judge upheld the ban despite claims that racial animus inspired lawmakers to enact the ban.

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Categories / Business, Civil Rights, Consumers, Entertainment

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