With court case stalled, skill

Jun 09, 2023

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Almost two years after Virginia lawmakers voted to ban so-called skill games, two of the colorful, slots-like machines were installed at a Richmond convenience store a block from the state Capitol, unmissable to legislators and political aides popping over for coffee or energy drinks.

Similar machines in at least two other Richmond-area convenience stores recently displayed a message saying some of their revenue goes toward Virginia’s COVID-19 relief fund. It did once. But that claim hasn’t been true since July 1, 2021, when the state stopped regulating and taxing the machines as they were formally declared illegal.

The industry is fighting that ban in court, battling the state to a lengthy standstill that, since December 2021, has allowed the machines to continue operating in a sort of legal limbo, with no oversight from regulators and no public revenue from gaming taxes. That uncertain status was meant to be temporary, but the litigation just hit the two-year mark with no clear end in sight and almost no forward movement in the first half of 2023.

A message displayed on a Queen of Virginia machine at a Hanover County convenience store inaccurately suggests money from the machines still helps with the state’s COVID-19 response. (Graham Moomaw/Virginia Mercury)

The original court injunction that kept skill games running — and raised doubts about the constitutionality of treating them as illegal gambling — was set to expire in May of 2022, with an expectation the case could have been resolved by then. More than a year later, it’s still unclear when and how clarity might come on an issue some see as an ongoing failure by the state to set a clear, enforceable, and legally defensible policy.

Franklin City Manager Amanda Jarratt, one of several local government officials to voice frustration on the matter, said it’s “imperative” that someone makes a final decision on whether the machines are going to be legal or not.

“Having no clear direction on licensure, taxation, or regulation creates a frustrating position for localities,” Jarratt said. “When citizen complaints are filed with the locality, we find ourselves in a position not to be able to provide them with any guidance or resolution to their concerns.”

In late 2021, then-Attorney General Mark Herring unsuccessfully tried to have the court injunction overturned. At the time, his office argued that instead of preserving the status quo while the lawsuit proceeded, what the lower court had done amounted to “an immediate and complete deregulation from the bench.”

“It is now legal in Virginia for a child of any age to go to a corner store and gamble on so-called video skill games,” the state wrote in its failed 2021 petition to have the Supreme Court of Virginia intervene to fix what the state described as an urgent problem.

Many skill machines still have stickers indicating minors are not allowed to play them, but it’s unclear how strictly those rules are enforced by convenience store cashiers, who are often the only ones in a position to supervise the machines.

During the last court hearing in the case in December, the retired judge who issued the injunction indicated proceedings in the Greensville Circuit Court would resume in April or May once the legislative session was concluded. There’s been little action since that hearing apart from the litigants arguing over what Judge Louis Lerner’s last preliminary ruling meant. The two sides will be back before the judge for a status update on July 28.

Lerner has indicated he sees merit to the industry’s contention the ban violates free speech by outlawing a particular type of video game due to its resemblance to traditional gambling. Skill-game proponents insist the games shouldn’t count as gambling because they’re based primarily on skill, not chance. Backers have also said if the state is going to allow casinos, it should give smaller businesses a chance to get in on a new industry.

Attorneys for the state have raised doubts about whether free speech concerns should even apply and have insisted the ban falls well within the state’s powers to regulate and restrict gambling. Supporters of the skill-game ban note that, unlike other gambling interests, the industry aggressively moved into Virginia without asking the General Assembly for permission until the games started to draw attention.

The court records don’t clearly indicate what might be delaying the lawsuit, and the office of Attorney General Jason Miyares said it can’t comment on pending litigation.

The General Assembly’s recent habit of not passing a budget bill on time and the involvement of Sen. Bill Stanley, R-Franklin, in the case were factors previously cited in discussions over the case’s timing. Retired judges are often brought in to handle cases involving a sitting lawmaker, and General Assembly members who work as lawyers have the power to postpone court hearings they’re involved in while the legislature is in session. Stanley, who is representing skill game supporters challenging the ban, has not formally invoked those powers to postpone proceedings. However, Lerner has indicated Stanley’s involvement requires the court to work around the General Assembly’s calendar to some degree.

Georgia-based Pace-o-Matic, the parent company of prominent skill-machine brand Queen of Virginia, also declined to comment on why the litigation is taking longer than anticipated.

Asked why some Queen of Virginia machines inaccurately say some of the money players might lose will go toward the state’s COVID-19 response, a spokesperson for Pace-o-Matic said the company’s hands are tied by the terms of the court injunction that kept the machines running.

“Pace-O-Matic is operating 100% in compliance with the temporary injunction, which states that we are not to make any updates to the software,” said Christina Freundlich, a public relations consultant working with the company. “This includes any messaging featured on-screen.”

The court injunction didn’t explicitly say the company must freeze its software and screens in place, but Freundlich said that’s how the company interprets a court order that only protected “those games” taxed and regulated before the 2021 ban took effect. Company representatives have also claimed the injunction allows for previously regulated Queen machines to be moved to new locations, which would explain why machines are showing up where they didn’t exist before.

Though the General Assembly’s official stance is that skill games are a form of unsanctioned gambling, both Republican and Democratic politicians have continued to accept donations from skill-game companies as both sides scramble for campaign money in an important election year.

A PAC tied to Pace-o-Matic made $141,750 worth of political donations to both parties in 2023 alone, according to the Virginia Public Access Project. That included $30,000 to House Majority Leader Terry Kilgore, R-Scott, after the influential Republican-sponsored an unsuccessful bill to reverse the state’s skill-game ban and restore a regulatory system for the machines. The PAC, Va Operators for Skill, gave to about 30 incumbent legislators this year, roughly evenly split between Republicans and Democrats. Organizational paperwork the PAC filed with the state last year listed a Pace-o-Matic official as its treasurer.

Pace-o-Matic, which has contributed more than $930,000 to Virginia political figures since 2018, also donated $20,000 to Gov. Glenn Youngkin’s PAC in March after contributing over $100,000 to both Youngkin and former Democratic Gov. Terry McAuliffe during their 2021 gubernatorial matchup. The governor’s office declined to comment on the status of the lawsuit.

The company also attempted to make a $25,000 donation to the inaugural committee for Miyares in early 2022. However, that contribution was refunded after a slip-up led to the funds being deposited during the General Assembly session, when legislators and statewide officials are prohibited from fundraising.

In another indicator of the industry’s political ties in Virginia, Pace-o-Matic recently confirmed that Democratic Party of Virginia Chairwoman Susan Swecker continues to work for the company as a paid consultant.

Swecker is not one of the company’s registered lobbyists, but Pace-o-Matic now lists former Virginia public safety secretary Brian Moran, who held that law enforcement-focused role in the administrations of both McAuliffe and former Gov. Ralph Northam, as part of its lobbying team in the state.

Freundlich, a Democratic political operative who worked for McAuliffe’s campaign in 2021, indicated the company is still hoping to work with the General Assembly to find a workable path forward in Virginia.

“It has been no secret that we are working with the General Assembly to regulate skill games in the Commonwealth formally,” Freundlich said in an email. “Last session, the House Majority Leader carried legislation to regulate skill games, provide tax revenue to the Commonwealth and provide funding to law enforcement to root out illegal gambling. We look forward to our continued work together during next year’s session.”

by Graham Moomaw, Virginia Mercury

Virginia Mercury is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Sarah Vogelsong for questions: [email protected]. Follow Virginia Mercury on Facebook and Twitter.

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Partnerships Strengthened as Illegal Narcotics Seized and Hundreds Arrested

In a triumphant update from Richmond, Governor Glenn Youngkin announced the remarkable results achieved through Operation Bold Blue Line – a collaborative effort between the Virginia State Police (VSP) and various local law enforcement agencies. This robust partnership, which began in mid-December of last year, has taken dramatic strides in battling illicit activities within the Commonwealth, successfully making Virginia streets safer.

Since its inception, Operation Bold Blue Line has seen the confiscation of an astounding 2,060 pounds of illegal narcotics, boasting a street value of over $31 million. Among these drugs, an alarming 47 pounds of the lethal drug fentanyl was included. Financial assets linked to unlawful operations, totaling over $2.7 million, have also been seized, punctuating the success of the operation. The joint efforts between state and local law enforcement agencies have culminated in 857 felony arrests and 721 misdemeanor arrests.

Governor Youngkin expressed his gratitude and admiration for the diligent efforts of all law enforcement personnel involved. “We’re making significant headway in our joint mission to eradicate illegal drugs and weapons from our streets, paving the way for safer communities in Virginia,” he commented.

Secretary of Public Safety and Homeland Security, Terry Cole, commended Governor Youngkin and his team’s unwavering commitment to fortifying the already successful Operation Bold Blue Line. Drawing from his extensive experience in drug enforcement, Secretary Cole highlighted the operation’s role in diminishing the clout of global criminal syndicates that threaten Virginia’s communities with violence.

Virginia State Police Colonel Gary Settle spotlighted the exemplary collaboration and rapport the VSP shares with local police departments and sheriff’s offices across the state. This unity, further solidified by Operation Bold Blue Line, is a testament to their joint dedication to identifying and neutralizing threats that endanger Virginians. Colonel Settle emphasized their collective pride in the outcomes thus far and their enduring pledge to amplify the safety measures for all citizens.

Chesapeake Police Department Chief, Mark Solesky, expressed profound gratitude for the invaluable resources and support provided through Operation Bold Blue Line. The enhanced partnership with the Virginia State Police, he noted, has been instrumental in curbing crime rates in the City, fostering a safer environment in the Hampton Roads region.

In conclusion, the tremendous accomplishments of Operation Bold Blue Line are a beacon of hope, assuring Virginians of their security and well-being. As the operation continues to flourish, one thing is certain: through unity and collaboration, Virginia will become an even safer place for all its residents.

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The long-running lawsuit over Virginia’s ban on slots-like gaming machines will be decided in a three-day trial the week before Christmas, according to a new court schedule laid out Friday.

Lawyers for the two sides held a conference call Friday with the retired judge overseeing the case, but officials at the Greensville County Circuit Court said the telephone meeting was not open to the public. After the status conference, online court records for the case were updated to reflect the schedule the parties apparently agreed to Friday morning.

So-called skill machines, which proponents say don’t count as a type of gambling because they have a small element of skill that makes them different from traditional slot machines, have been a perennial sticking point for Virginia policymakers as the state has legalized more types of gambling. The General Assembly voted to ban the machines in 2021, but the industry has mounted a largely successful legal challenge that led retired Judge Louis Lerner to block the state from enforcing the ban through an injunction issued in December 2021.

That injunction was temporary, but the slow progression of the case has given the skill-game industry substantially more time to profit from machines that are now completely unregulated and don’t produce any state or local gaming taxes. Skill-game companies have made substantial political donations in Virginia to both Republicans and Democrats.

Supporters of skill games say they give small business owners a chance to benefit from the state’s looser approach to gambling instead of allowing big casinos to dominate the industry. The legal challenge — brought by Southside Virginia truck stop owner Hermie Sadler with assistance from Sen. Bill Stanley, R-Franklin, and attorneys working with skill-game company Queen of Virginia —argues the ban violates free speech by singling out a particular type of video game based on the machines’ mostly aesthetic resemblance to slots.

Lawyers from the office of Attorney General Jason Miyares argue the ban falls well within the state’s power to regulate gambling because, unlike other video games, skill machines offer cash payouts to winners. Critics of skill machines have also cast doubt on the industry’s claims that exceptionally skilled players can always win money because the machines’ profitability relies on players putting more cash into the machines than they get out.

The trial is scheduled for Dec. 18, Dec. 19 and Dec. 20.

The lawsuit was filed on June 21, 2021.

by Graham Moomaw, Virginia Mercury

Virginia Mercury is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Sarah Vogelsong for questions: [email protected]. Follow Virginia Mercury on Facebook and Twitter.

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Revolutionizing Education: VCU and CodeRVA Collaboration Set to Empower Next Generation of Computer Science Enthusiasts

Virginia’s strides in modern education took a giant leap as the Virginia Board of Education announced its unanimous approval for the state’s first lab school. Backed by a $100 million initiative, this endorsement solidifies Governor Youngkin’s commitment to pioneering advanced educational facilities in the state.

Collaborating for this significant milestone, the Virginia Commonwealth University (VCU) and CodeRVA Regional High School have established the VCU x CodeRVA Lab School. This educational institute, while catering to a broad spectrum of students, will emphasize computer science and offer a platform for training teachers. Furthermore, the lab school aims to bridge academic pursuits with real-world applications, propelling Virginia’s educational landscape into the future.

Governor Glenn Youngkin envisions these lab schools as pivotal in reshaping Virginia’s educational ecosystem. “This initiative breaks the mold of conventional teaching methods and embraces creative, diverse avenues for learning,” Youngkin stated. Echoing this sentiment, Secretary of Education Aimee Guidera expressed her optimism, saying, “Such progressive models will redefine how students perceive and assimilate knowledge.”

The Visionaries Behind the Change

Dr. Kim McKnight of VCU emphasizes the venture’s goal of unlocking potential in young computer science enthusiasts, leveraging successes from both VCU’s teacher residency program and CodeRVA’s academic prowess. Dr. Kume Goranson of CodeRVA also highlighted the mentorship opportunities presented through this union, which promises to set a benchmark for teacher training.

Dr. Lisa Coons, Superintendent of Public Instruction, hailed the collaboration as a “national exemplar on innovation,” praising the blending of two robust programs to forge a roadmap for academic success in Virginia and potentially the nation.

The Future of Education in Virginia

The lab school isn’t just an isolated achievement. The Virginia Department of Education reveals plans to collaborate with over 20 additional lab school partners aiming to commence in 2024. With a curriculum blending theory, real-world experience, and the chance to earn an associate degree alongside the standard high school diploma, students at VCU x CodeRVA Lab School are poised to become frontrunners in the technology and AI industries.

Virginia’s educational frontier, with this groundbreaking addition, offers a promising glimpse into the future, where innovation, real-world challenges, and high-quality teaching intersect to craft the leaders of tomorrow.

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Four years after Virginia transitioned its Department of Alcoholic Beverage Control into an authority in an effort to make the state agency run more like a business, Gov. Glenn Youngkin’s administration says ABC isn’t generating the additional funding for Virginia as originally intended.

Administration officials told ABC’s Board of Directors last week that the authority’s profits and contributions to state coffers have declined in recent years while operating costs have increased $135 million since 2017.

Virginia Chief Transformation Officer Eric Moeller said ABC’s contributions have declined from a peak of $229 million in 2021 to $227 million in 2022 and $221 million in 2023 even as revenue generated by the authority increased by nearly $100 million over the same time period.

“All that growth has not resulted in bottom-line cash to the economy,” said Moeller at the July 20 Board of Directors meeting.

While ABC officials say they don’t dispute the administration’s findings, they argue the authority’s financial transfers to Virginia’s general and other funds continue to “exceed the expectations” of General Assembly budget projections. Additionally, they say the rising costs can be attributed to investments in authority operations and employees that are intended to yield long-term benefits.

“We understood that doing these investments would come at a cost for reduced profit growth,” said ABC CEO Travis Hill during the meeting. “It was certainly understood that it was going to help us in the long term.”

Key to the administration’s criticism of ABC last week was what it described as several years of declining profitability and rising costs to the Commonwealth.

According to the administration, ABC’s annual profitability has been steadily declining ever since peaking in 2019. At the same time, annual operating costs increased by $123 million, and revenues grew from $903 million to over $1.2 billion.

Virginia Deputy Chief Transformation Officer Tony Lee told the Board of Directors ABC should be able to currently achieve greater profitability because “the company has grown, stores have grown, and the inflation on alcohol prices has exceeded the inflation at the operating cost level.”

While Moeller acknowledged that ABC has undergone significant change in recent years, he said the authority needs to justify how money is being spent.

“Investments should have a return,” he said, adding, “I don’t know that we’ve always had a rigorous process for ensuring they’ve been evaluating the priority before, during, and after the investments that we really got a return on all the things that we’ve done.”

“Whatever we’ve done – whether they were right or wrong – it’s water under the bridge, and the money’s been spent,” he continued.

While ABC had previously proposed a budget of nearly $340 million for the next fiscal year, the Youngkin administration put forward a proposal for $21 million less, a suggestion that received particular pushback from Board of Directors member Mark Rubin and was ultimately rejected by the board on a 3-2 vote.

“I saw today there’s $5.2 billion of additional money in Virginia,” Rubin said to Moeller at the July 20 meeting. Losing $21 million in the authority’s budget “may make us less productive and take us off of the path we’re on in terms of the future,” he continued.

Moeller replied, “With all due respect, it’s not your money. It belongs to the people of Virginia, and there are a lot of things to do with it at this time.”

“I haven’t heard anybody in the state say what we need to do is put more money into the alcoholic beverage commission,” he added.

ABC officials agreed with the administration that the authority’s goal is to generate increased amounts of profit for Virginia but emphasized investments were and are still needed for long-term success.

Hill told the Board of Directors that ABC required major investments after transitioning to an authority to address issues like technical debt, outdated information technology systems, and an inefficient distribution center.

The CEO said the authority’s investment “has succeeded” in terms of decreasing employee turnover, increasing transfers to the commonwealth, and ensuring ABC remains a competitive employer.

ABC Chief Administrative Officer David Alfano told the Mercury that employee salaries and benefits are one of the biggest contributors to ABC’s expenses and increase every year.

Despite these rising costs, Alfano said ABC has transferred $40 million more to Virginia than General Assembly projections called for since 2021 – contrary to data presented by Moeller during the board meeting showing a decline in transfers.

Administration officials told the Mercury their figures appear smaller than what’s listed on ABC’s annual reports because they didn’t take into account the “noise” of non-operating activity – like the sale of the authority’s old Hermitage Road warehouse in Richmond – in order to provide a more accurate picture of operating profitability.

Hill told the Board of Directors ABC needs to “strike a balance between achieving even greater profitability” while “making sure we keep pace with business investments” so that the authority doesn’t find itself in a similar situation with the administration next year.

Board Chair Tim Hugo said concerns will continue to be raised about ABC if its profitability does not stop declining.

“If you explode your costs and explode your cost structure and your profitability goes down, people are going to ask the question why,’” Hugo said. “And they’re not going to stop and they’re going to start looking under every rock you’ve got.”

by Meghan McIntyre, Virginia Mercury

Virginia Mercury is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Sarah Vogelsong for questions: [email protected]. Follow Virginia Mercury on Facebook and Twitter.

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The Virginia Court of Appeals overruled a man’s misdemeanor conviction for fleeing from police after ruling the Lynchburg police officer who attempted to make the arrest didn’t get close enough to the suspect to have a realistic chance of grabbing him.

In an opinion revealing what the court described as a legal quirk unique to Virginia, the court found that an officer telling someone to stop from 20 yards away doesn’t satisfy a rule requiring officers to have the “immediate physical ability to place the person under arrest.”

The opinion applies mainly to foot chases, not a separate eluding law that criminalizes fleeing police in a motor vehicle.

The ruling arose from a 2022 case in which Lynchburg police officer M.D. Iazzi attempted to arrest Jessi Ryan Hackett during a snowstorm. After arriving at a home in uniform to try to make the arrest, Iazzi found Hackett standing outside. When Hackett spotted the officer, court records say, he “took off running” into the woods. The officer then told Hackett to stop and said he was under arrest, to which Hackett, still running, replied: “I didn’t do anything wrong.”

The same officer found Hackett nearby about an hour later and, from about 50 yards away, again told him to stop. Hackett ran off a second time but was later arrested and charged with fleeing from law enforcement. He was subsequently convicted of the charge and sentenced to 90 days behind bars, with 60 days suspended.

In the opinion overruling the conviction, Judge Stuart A. Raphael wrote that a distance of 20 yards was simply too great to meet the criteria for fleeing the General Assembly specified when writing the law.

“There was too much time and space separating them to conclude that Iazzi had the immediate physical ability to arrest Hackett,” Raphael wrote. “Put another way, Hackett was not within Iazzi’s ‘immediate span of control’ when he fled.”

The appellate court noted that the immediate proximity rule appeared to originate from the General Assembly’s attempts to broaden earlier versions of the law to allow authorities to charge someone with the offense of fleeing law enforcement even if they weren’t physically in the “custody” of police.

The court’s opinion noted that many other states don’t criminalize fleeing from an impending arrest and those that do “typically focus on the defendant’s act of fleeing.” Virginia, the court said, “appears to be the only state in the country” that requires close physical proximity to an officer as an element of the crime.

by Graham Moomaw, Virginia Mercury

Virginia Mercury is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Sarah Vogelsong for questions: [email protected]. Follow Virginia Mercury on Facebook and Twitter.

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Funds to Bolster Telehealth Services, Mental Health Treatment, and Vital Medical Equipment

In a significant move for rural Virginians, U.S. Senators Mark R. Warner and Tim Kaine announced the release of a whopping $10.968 million in federal funds to amplify healthcare accessibility in the Valley and Southwest regions of the state. The sum was sanctioned under the U.S. Department of Agriculture’s (USDA) Community Facilities Emergency Rural Health Care Grant Program, an initiative aiming to magnify health services and nutrition support in underserved areas.

This funding has been rendered possible thanks to the American Rescue Plan, legislation both senators backed in 2021. Their collective stand is crystal clear: regardless of their address, every Virginian deserves top-tier, dependable health care.

Here’s a detailed look into the distribution:

The senators’ commitment to healthcare has been steadfast, particularly for rural communities. Their recent introduction of the CONNECT for Health Act of 2023 is a testament to their dedication. This act aspires to extend telehealth services coverage via Medicare, uphold the telehealth liberties established during the pandemic, simplify patient-doctor connections, and ultimately, uplift health outcomes. Another commendable initiative was the Save Rural Hospitals Act, launched earlier this year, targeting the sustenance of hospitals in rural belts by ensuring apt reimbursement for their services.

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