Virginia plans rules for electronic, Texas Hold 'Em gaming

New regulations go into effect this month for the electronic games that fraternal organizations, veterans groups and other charitable bodies use to supplement the old bingo games that were the mainstays of their fundraising efforts.

They will be followed by new rules for the in-person Texas Hold ‘Em poker tournaments that charitable groups want to use to freshen up their fun-while-fundraising pitches.

“People were saying ‘bingo is getting boring,’ and they wanted something more exciting,” said Del. Paul Krizek, D-Fairfax, who chairs the General Assembly joint subcommittee studying charitable gaming issues.

The technology of electronic bingo and pull tab devices fits the bill. At about the same time, some charitable groups began to run gaming at places far from their home bases as decades-old General Assembly resistance to gaming began to crumble.

Electronic games — unregulated by the state, unlike traditional bingo and paper pull tabs — boomed.

From an electronic pull-tab “handle” — the jargon term for the money bettors lay down — of just under $107 million in 2013, gambling with those devices jumped to a peak of more than $964 million in 2019. That was the year the first new regulated way of betting — historical horse racing — got underway, after the General Assembly authorized electronic devices that allow people to bet on replays of horse races.

“It was beginning to look like charitable gaming was a business. ... We don’t want poker halls on every street corner,” Krizek said.

“Now, I think we’re getting back to where we were before,” with the new regulations, he said.

How much goes to charitable purposes

The new rules for electronic games set a new minimum level for how much of the handle has to go for charitable purposes. They also make sure the state Department of Agriculture and Consumer Services is able to track and ensure that charities and bettors get a fair deal.

The minimum for electronic games differs from the traditional 10% of gross receipts from a bingo or traditional pull-tab game — it is 20% of adjusted revenue, or the money left over after bettors are paid off.

VDACS, which regulates charitable gaming, had sought a 40% minimum. It figured that percentage of the post-payout total was roughly the same as the 10% of the gross receipts for traditional games because of the fees social organizations pay to lease electronic divisions, regulatory records show.

But operators of the games and their suppliers said that percentage was too high — that there would not be enough money to go around to make the odds for bettors attractive and to cover equipment costs — so VDACS agreed to cut the amount back.

It may mean that the actual percentage of the money bettors lay down that goes to charity is below 10%. But while the $16.5 million that went to charitable purses in 2020 represented 12% of the handle from regulated charitable games — those old-fashioned bingo and pull tabs — when just the sums VDACS tracked for electronic pull tabs are added in, less than 2% of what organizations took in went for charitable purposes.

“I think we’re going to see a lot more money for charities,” Krizek said. “And the public will have a better sense of where their money goes.”

Liam Gray, spokesperson for the Virginia Charitable Bingo Association, said the group supports fair regulation of electronic gaming and Texas Hold ‘Em tournaments.

“It is our hope that, just as VDACS was so receptive to public feedback in the crafting of electronic gaming regulations, these comments will be given serious consideration so that the final poker regulations will be shaped in a way that works best for the charitable organizations, the playing public and the commonwealth as a whole,” Gray said.

“The draft poker regulations include numerous problems that are unfair both to the playing public and to the charities, trade organizations and social clubs that host them,” he said, adding that they are inconsistent with current law and with the rules of the games themselves.

$12.4 billion spent on gambling in 2022

Regulated gambling is booming in Virginia, with the money bettors lay down soaring from $3.4 billion in 2018 to $12.4 billion in 2022.

In 2018, the only legal betting was through the Lottery, live horse races and charitable gaming. At that point, the regulated take from charitable gaming was $260 million, while the unregulated electronic pull tabs were taking in $790 million.

Now, after historical horse racing’s 2019 start, internet Lottery sales in 2020, sports betting in 2021 and the opening of Virginia’s first casino in Bristol last year, regulated gaming is booming.

The General Assembly authorized Texas Hold ‘Em in 2020, but it has not started yet. Meanwhile, casinos are in the works in Norfolk, Portsmouth and Danville. Richmond voters rejected a casino, but Mayor Levar Stoney hopes they will get a chance to reconsider. Petersburg is seeking permission to open one and it trying to keep Richmond from taking that route.

Meanwhile, an injunction remains in effect blocking enforcement of a state ban on skills games: electronic consoles that look like slot machines but for which payouts are not strictly a matter of chance, involving what is usually a small action by the bettor for a win.

Before the 2021 ban, Virginia’s $1,200 per-machine, per-month tax was set to generate $130 million a year in taxes.

One concern for Krizek is that three different state agencies regulate gaming — the Racing Commission for horse racing; the Lottery, for casinos and sports gaming; and VDACS for charitable gaming.

His concern is that gambling can sometimes be something other than a fun pastime; problem gambling is a growing issue, and all three regulators have different fees to fund education and support problems.

“This is important,” he said. “It can be addictive.”