The electronic game devices that have appeared in stores and gas stations all over Louisa County look a lot like gambling machines. You could spend a few dollars on a game and walk away with a hundred in your pocket.
But whether you succeed would be a matter of your skill, not luck, according to the company that makes many of the games.
That’s Queen of Virginia Skill and Entertainment, one of several companies with a foothold in the state’s “gray machine” market, so called because they occupy a gray area of the law. The games are popular with residents looking for a little fun, and maybe a reward.
“It’s something to do for people who live in the sticks,” said Melissa Chisholm, who manages Route 33 Quik Mart in Bumpass. “People come down and enjoy playing together. They don’t spend the night, but they might stay and play for an hour.”
Other than a small number of prosecutors, including Charlottesville’s, few local or state officials have suggested thus far that Queen of Virginia’s tic-tac-toe-style game constitutes illegal gambling.
In 2017, the state Alcoholic Beverage Control Authority permitted machines made by one company, stating the games require significant levels of skill. More recently, State Attorney General Mark Herring said it was up to local commonwealth’s attorneys to decide if gray machines are legal.
In response to an order last summer by Charlottesville Commonwealth’s Attorney Joe Platania to remove the machines from stores, Queen of Virginia filed a court complaint in which it defended the tic-tac-toe-style game.
“You can literally win every time you play,” Thomas Lisk, a Queen of Virginia representative, said during a panel discussion on gaming at the Virginia Press Association in Glen Allen on Dec. 5. “So I take exception to calling them gray machines.”
A report on gambling released last month by the state Joint Legislative Audit and Review Commission (JLARC) notes that gray machine games typically start like a slot machine-style game. Manufacturers say that after the initial spin, players on gray machines can adjust the symbols to create a winning pattern. After losing a game, they can complete a memory-style game in an effort to win back their original bet. Because players can adjust the outcome, game makers say, the games are based on skill rather than chance.
Lisk said, however, that some of the company’s competitors in the state may be operating machines that are not entirely skill-based. He encouraged state officials to implement regulations so that local commonwealth’s attorneys can know whether machines are legal or not.
Part of the state’s mandate would be not just to watch the game makers, but also to ensure players have the information they need before they put their money into games.
“The consumer can’t tell the difference” between gambling slot machines and games of skill, state Secretary of Finance Aubrey Layne said during the VPA panel discussion. He said he is also concerned with the potential for an increase in “problem gambling”—frequent gamers becoming addicted, for example, and turning to crime to feed their habit.
A related question facing the state is how to regulate gray machines, which are neither permitted nor prohibited in Virginia’s gaming statute. The JLARC report says the machines may number more than 9,000, and continue to spread. But so far, there is no mechanism to license or tax the gaming revenue.
The state is worried the machines are having a significant negative impact on revenues produced by the Virginia Lottery. The same convenience stores that have gaming machines also typically sell Lottery tickets. Some $600 million from Lottery ticket sales goes to public education annually, including $1.9 million to Louisa County Public Schools in fiscal year 2019.
“The impact on the Lottery has been negative,” said Layne. He estimated grey machines are projected to lower Lottery revenues by $40 to $50 million during the current fiscal year.
The effect on money for public education is unclear. For many years the General Assembly has reduced the dollars it appropriates for education each year by an amount similar to what is derived from the Lottery, according to David Baker, Louisa County Public Schools’ finance director.
Chisholm, the store manager, said she isn’t sympathetic to the Lottery.
“You scratch the bottom of a lottery ticket and you’re done,” she said. “I see people going broke buying those tickets. I don’t see how gaming is any worse than that.”
A preliminary estimate by state researchers is that if gray machines were taxed, they could reap as much as $468 million in revenue annually.