A video company that provides skill game machines to businesses throughout the state has added courthouses to its list of frequent stops. Queen of Virginia has around 150 lawsuits on file around the commonwealth. Graham Moomaw for Virginia Mercury recently tracked the litigation.
Some of the lawsuits are more active than others, but Queen of Virginia thinks businesses partners violated their contracts by:
- Terminating their relationship with the skill game company prematurely or
- Adding competing skill game machines from other companies.
Queen of Virginia set up games like “Fishy Loot,” “Lucky Fruit” and “Living Large” in convenience stores, bars and restaurants. The skill game cabinets look a lot like video slot machines. But, the gaming company insists players win by skill — not by chance.
The businesses keep 40% of game revenue. Virginia Queen and third-party distributors divide the remaining 60%. Business operators who made room for Queen of Virginia games typically earned between $2,000-$7,000 per month.
Some lawmakers think skill games violate Virginia’s gambling laws. The state allowed retailers to keep machines as a revenue source during the pandemic. Now, they want them gone.
The distinction between skill games and illegal gambling devices is also making its way through the court process. That big lawsuit impacts the Queen of Virginia’s 150 smaller ones.
Are the skill game machine contracts illegal?
Defendants say the skill game company is violating the Virginia Antitrust Act with its forceful non-compete clauses.
The 5-year contracts state that competing machines:
- Can’t be put in by the business during the contract’s life,
- Can’t be put in until one year after the end of the contract,
- And, the restriction applies not only to the business itself, but to any jointly-owned location within a 50-mile radius.
- Plus, the Queen of Virginia decides whether or not another company’s gaming machine qualifies as a competitor.
The business have to send a written notice of termination via certified mail within 180 days. If they don’t, the Queen of Virginia contract renews automatically for another five years.
“Like most companies, we vigorously defend our contractual terms,” said Pace-O-Matic spokesman Michael Barley. The corporation is the parent company of Queen of Virginia.
Attorneys Stephen Faraci Sr. and Robert Drewry represent the businesses. They argue the contracts are “potentially unlawful” because they unfairly limit competition and force competitors out of the market.
Virginia legislation is impacting skill game agreements
The state of Virginia seemed to give skill games the go-ahead in 2017, saying they were not games of chance.
The Virginia Lottery, on the other hand, says skill games directly impact state gambling revenue. Virginia doesn’t get a share from the unregulated skills game machines.
State regulators claimed a victory in July 2021, when the Virginia General Assembly banned the machines.
The owner of a Virginia truck stop successfully challenged the ban. A judge delayed enforcement of the law. To this day, it remains an unresolved issue.
“I think there’s a lot of lawsuits because the law is in flux,” said Richmond lawyer Todd Knode, who is defending business owners in several cases.
Queen of Virginia letter could impact the 150 lawsuits
Courts will have to decide whether a letter from Queen of Virginia GM Jeanna Bouzek lets the bars, restaurants and convenience stores off the hook.
Before the truck stop owner got a judge to delay the skills game ban, Bouzek told businesses to shut down the Queen of Virginia games.
She sent the letter to Queen of Virginia’s store owner partners in June 2021. It instructed partners to shut down machines ahead of the ban. She even warned the businesses that they could face fines if they didn’t comply.
The letter stated:
“We appreciate the business we have enjoyed with you and take pride in knowing we assisted small businesses (to) survive during the pandemic.”
“My defense is that once that letter went out the contract was over,” Knode said. “And Queen of Virginia is now trying to revive it.”
Queen of Virginia attorneys told the court Knode is using flawed logic.
“Acceptance of defendant’s argument would also have the effect of voiding every contract related to any game that awards prizes. Such as carnival games or any crane game or coin-pusher of the type found at Dave & Buster’s or Chuck-E-Cheese.”
Multiple Queen lawsuits are ongoing. Meanwhile the court will hear arguments about the temporarily lifted ban on Nov. 2.