Virginia’s ban on electronic skill games is scheduled to take effect next week, but a truck stop owner and former NASCAR driver is racing to head off the law in state court, with a state senator as his attorney at the wheel.
Sen. Bill Stanley, R-Franklin County, filed a lawsuit in Greensville County Circuit Court on Monday on behalf of Hermie Sadler, owner of Sadler Travel Plaza in Emporia and 10 other retail stores that say the state law would unconstitutionally strip them of a major source of revenue that has enabled them to survive the COVID-19 pandemic.
The lawsuit names Gov. Ralph Northam, Attorney General Mark Herring and the Virginia Alcoholic Beverage Control Authority, but it’s aimed squarely at General Assembly leaders who pushed for the ban last year. They reluctantly agreed to the governor’s proposed one-year delay to allow the state to tax the so-called skill game machines and help thousands of small businesses that say they rely on them.
“What we did in the General Assembly was wrong,” Stanley said at a news conference outside the Capitol in Richmond on Monday.
“They have chosen to pick on the small businessman because they’ve decided that skill games are unseemly, and they’re not,” he said. “They are the backbone of what has allowed these small businesses to thrive in a pandemic.”
The General Assembly voted last year to ban skill games, rather than regulate and tax them. At the same time, it approved legalized gambling at up to five casinos, including one in Richmond; mobile sports betting; internet sales by the Virginia Lottery; and relaxed rules for charitable gaming operations.
“In spite of the fact that we’re opening our doors to gambling in the commonwealth, we feel like as small-business operators that we’re being unfairly targeted and picked out,” Sadler said at the news conference.
“They’re doing away with skill games for us to pave the way for the casinos coming in in two or three years,” he said. “To me, I don’t think that’s fair.”
The lawsuit alleges that the ban would deprive Sadler and other businesses of their constitutional rights, while favoring other forms of “actual gambling” over electronic games that rely on skill rather than chance.
“The General Assembly and Governor cannot pick and choose winners and losers in such a manner, especially when free speech and due process rights are at issue,” the suit states.
The ban would deprive Sadler’s businesses, including two in Petersburg, of more than $750,000 in annual net revenues from 41 skill game machines, according to the lawsuit, which said the income helped offset the economic losses caused by the pandemic and the public health restrictions that the governor imposed on businesses to prevent the spread of the coronavirus.
Those businesses have offered skill games for many years, including 25 years at the truck stop in Emporia, he said.
“They have served as a tremendous lifeline to us to help us in times like these,” Sadler said.
The ban posed a political quandary for Northam, who had championed an unsuccessful bill during the same legislative session to regulate and tax the machines. After the public health emergency began, he persuaded the General Assembly to approve a one-year delay that allowed the state to collect more than $100 million in new taxes on the machines while protecting income for small businesses that house them.
However, the governor first had to promise assembly leaders — including Senate Finance Chair Janet Howell, D-Fairfax, and Senate Minority Leader Tommy Norment, R-James City, who had pushed for the ban — that he would not support any legislation to extend the operation of skill games beyond July 1 and, if necessary, would veto it.
Northam fulfilled the promise early this year, when he proposed to eliminate a provision that skill game operators had succeeded in attaching to a separate bill that would have allowed the electronic games to continue operating for another year, until July 1, 2022.
The provision appeared in a new version of the legislation that came out of a conference committee that included Stanley and Sen. Joe Morrissey, D-Richmond, who also has advocated for allowing businesses to continue offering the games.
Queen of Virginia Skill & Entertainment, the largest skill game operator in the state, has confirmed working for the provision to be included.
Norment said Monday that he is confident that the law banning the machines will survive legal and constitutional challenge, and reminded Stanley that language in the state budget, which also bans the machines, “overrides general law.”
“While a lawsuit of this nature may make good headlines, it advocates poor public policy that Senator Howell and I have consistently objected to,” he said in a text message.
The Senate approved the governor’s amendment by a 28-11 vote, over the objection of Stanley, who accused the state of bending to political pressure by lobbyists for casinos and other gaming interests that wanted to block competition by electronic skill games at small businesses.
“We have chosen casinos over small businesses,” he told the Senate.
The lawsuit makes the same allegation and asks the Greensville court to approve an injunction to prevent the ban from taking effect on July 1.
It alleges that the law violates Sadler’s right to free speech and due process by banning skill games in his truck stop and other businesses, while allowing exceptions for family entertainment centers that offer pinball and other arcade games marketed to children rather than adults.
Already, the state has treated electronic skill games differently by regulating and taxing them, but not games offered in local restaurants and family entertainment centers, the suit alleges.
Stanley said he doesn’t support gambling personally or politically, but said the state “picking winners and losers is un-American and un-Virginian.”
He accused the state of supporting “shiny casinos and slot machines” while forsaking those who would prefer to spend their money on electronic games in local businesses.
“These small-business men and women are the ones who are being hurt the most by this decision of the commonwealth,” he said.