HAMPTON ROADS, Va. — Billions of dollars are at stake and everyone wants their part of the pie when it comes to gaming in the state of Virginia. There has been an explosion of gaming and it is causing some to question how the state will regulate all the different games.
In Virginia, you've got more ways to take a chance with your money than ever before including sports betting, charitable gaming, horse racing, and the lottery, and now, casinos are on the way in Portsmouth and Norfolk.
Hotly debated skilled gaming machines seen in restaurants, truck stops, and convenience stores are helping small businesses like Mona Lisa Pizza in Norfolk stay alive, according to the owner Tommy Posilero.
“It helped me big time. I would’ve lost my restaurant over a year ago if these Queens hadn’t come into my life,” said Posilero.
But some people are fighting against the Queen Machines in court. Recently, a judge in Greensville County extended an injunction that now allows skilled gaming machines to continue to operate for the time being but they’re currently not being regulated or taxed. The next court hearing is scheduled to spring 2023.
“We're not getting anything right now from skilled games because of the court case and everything else so if you look at it from a revenue standpoint from the state, we're losing millions upon millions of dollars," said Virginia Senator Bryce Reeves (R) said.
There are different skilled gaming machines in operation throughout the Commonwealth, some of which are illegal, according to experts.
Meanwhile, a News 3 investigation revealed that some localities are interested in pursuing their own action toward certain skilled gaming machines that they deem illegal. One city doing this is Chesapeake.
Through the Freedom of Information Act, News 3 requested copies of the cease-and-desist letters sent out to businesses that the city believed were operating illegally. They “denied” News 3's request, citing that this is part of a criminal investigation, but they did state in their response that there were “five letters responsive to our request”.
Senator Reeves said he supports localities taking action on their own if they deem illegal activity is going on in their city.
“If more localities do those sorts of things, we have Commonwealths Attorneys and prosecutors going after these things and eventually we're going to get it pretty cleaned up,” said Reeves.
Charitable organizations have been making money from gaming for years but are now facing new rules that some find unfair.
Brooke Archambeau is the Inner Guard for the Virginia Moose Association Board of Officers. She said the new regulations went into effect this July and take too much money away from the charitable organizations trying to do good for the community. She said the regulations make it difficult for her organization. In the past, they would traditionally host Bingo but charitable gaming has evolved and now there are electronic pull tabs and other types of games.
“We’re having to abide by these new regulations and struggling to keep up to do so and it’s very frustrating when you go out you see these skilled games and everything else who don’t have those regulations,” said Archambeau.
She said they’ve had these machines since about 2015, but it wasn’t until this summer that they started facing the new strict rules.
“This has always been not our sole source of fundraising but it’s a big source of fundraising and to cut it basically in half and regulate it into oblivion, it’s just not going to work for us at all,” said Archambeau.
Senator Reeves said the new regulations were needed due to the problem of too many fake charities taking advantage of the system. He said groups were pretending to operate as charities in order to be able to have gaming machines and were lining their pockets and not actually giving money to the charities.
Some of these operations, Reeves said, were racking in millions of dollars and not paying taxes. He said he understands the new regulations have made it a bit difficult for some of the legitimate charities.
“We're trying to fix that," Senator Reeves said. "The biggest challenge that we have right now is enforcement of illegal games. It's the biggest challenge, and we keep getting complaints.”
“What Virginia was not prepared for, and I hate the word explosion but the explosion of these machines or the machines like this across the Commonwealth and how to regulate them,” said Archambeau.
There is a ton of money at stake and a study from the Joint Legislative Audit and Review Commission (JLARC) found that in 2021 Virginians wagered $9.4 billion dollars which is almost triple what it had been three years prior. Plus, they estimate that by 2025 it will rise to $21 billion.
But who will regulate all of this?
The Virginia Lottery regulates and operates the state lottery and regulates casino gambling and sports betting. The Virginia Department of Agriculture and Consumer Services (VDACS) regulates all charitable gaming. The Virginia Racing Commission (VRC) regulates live horse racing and associated wagering and HHR, according to the study.
Right now, the three different government agencies regulate the various forms of gaming but leaders with the JLARC study would like to see the Virginia Lottery be in charge.
“They have the capacity to do it. They just need to apply equal rules to all industries and not pick winners and losers in the economy" said Delegate Tim Anderson (R).
But others think the Virginia Lottery has a conflict of interest.
“What we would like is to form the Virginia Gaming Commission, which would be an umbrella over all those different silos,” said Senator Reeves.
The General Assembly is expected to come up with solutions in the coming months.
Some would like a more even playing field.
“It's wrong. The whole thing is wrong," Anderson said. "Either we're going to allow gambling in Virginia, and we should license it, and we should regulate it, and everybody should participate or we're not.”
As for small business owners like Posilero, they are glad his skilled gaming machines bring in extra money for now.
“The landlord wants his rent every month. He doesn’t care what you’re going through. The city wants their electric paid for,” said Posilero.
Posilero said the Queen Machines have helped him pay the bills and helped him pay his employees.
A new trial date for skilled gaming machines is expected in the spring of 2023.
News 3 reached out to the Virginia Lottery to request an interview, but they declined and provided the following statement:
"We agree with JLARCs recommendation that the Lottery’s mission and expertise make it best positioned to become Virginia’s central gaming agency. As the report noted, the Lottery has seamlessly transformed from an enterprise agency focused on operating a lottery to an agency with the additional core mission of regulating gaming. We have done so while maintaining a positive workplace culture and with no shortcoming in agency operations."
"We would apply the same high standards to drive successful results if assigned additional forms of gaming regulatory oversight. To safeguard the success of lottery operations and profits to support K-12 education and the continued constructive rollout of casino and sports betting oversight, the appropriate time and resources would be critical for success."
"If the goal of decision-makers is to ensure effective and efficient regulation across multiple forms of gaming, with one agency serving as a single point of contact, the Virginia Lottery stands ready to assist in accomplishing that mission."
We also requested an interview with the Virginia Department of Agriculture and Consumer Services which is currently in charge of charitable gaming. They also declined an interview, and said there have been legislative changes to Charitable Gaming in Virginia and regulations are currently being developed, and as a result, claimed that it would be inappropriate for them to comment at this time.
