IN JULY, Virginia Lottery officials announced that the lottery had brought in a record $650 million in profit for the commonwealth on sales of over $2.29 billion. This form of organized gambling run by the state was sold to the public as a painless way to raise millions of dollars for Virginia’s public schools. And so it has, to the tune of $9 billion, but only after a constitutional amendment approved by voters in 2000 required that all lottery profits be spent on K-12 education.
But in September, just two months later, those same officials warned that the lottery stood to lose $140 million in sales during the rest of the fiscal year, reducing the revenue all those scratch-offs were expected to raise for education by some $40 million.
The main culprit? So-called “games of skill” approved by the General Assembly, which are eerily similar to the slot machines that are ubiquitous in Las Vegas, with bright lights, spinning symbols, cash prizes and names like “Loot” and “Lucky Fruit.” Although the machines’ manufacturers insist they are totally different than one-armed bandits (Queen of Virginia, the Richmond subsidiary of “Pace-o-Matic,” says its software relies on players’ memories and fast reactions to win instead of chance), they share a common objective with still-banned-in-Virginia slots: to part gamblers with their money.
Only one state agency, the Alcoholic Beverage Control Authority, opined in a 2017 letter that it did not consider these machines illegal gambling devices. But ABC Deputy Chief Thomas Kirby also noted that “this decision is obviously not binding on the multitude of other agencies or elected officials that may have jurisdiction in this arena and reach a different conclusion.”
Attorney General Mark Herring’s office has yet to weigh in on the issue, even though literally thousands of these “games of skill” are popping up in bowling alleys, sports bars, internet cafes and convenience stores all throughout Virginia—the same places the Virginia Lottery relies upon for its sales.
“What’s alarming here, beginning in spring, is the acceleration of the deployment of these machines into the retail spaces where we conduct the overwhelming majority of our business,” Lottery Executive Director Kevin Hall told members of the House Appropriations Committee in September, warning that the 6.5 percent drop in lottery ticket sales during the first two months of fiscal 2020 could be a harbinger of things to come.
“The $650 million in profit we just handed over? A year from now it could be substantially less than that,” Hall warned.
Unlike the lottery, these “games of skill” are unregulated and fall under a murky legal interpretation of the law which Herring’s office has done nothing to clarify. Due to his inexplicable inaction, over 4,000 of these gambling machines have already been installed in some 1,800 venues throughout the commonwealth, reducing the amount of revenue generated for education by the voter-approved Virginia Lottery. A just-released report by the Joint Legislative and Review Commission recommends after the fact that these machines be inspected, their numbers limited, and their revenue taxed. But that’s getting ahead of the need to first clarify their legality.
If slot machine gambling is still illegal in Virginia, are these so-called “games of skill” really so materially different from slots that they deserve their own category? If so, the bigger question—do Virginians want them to be legal even though they demonstrably reduce lottery revenue?—remains unanswered while state officials like Herring continue to look the other way.