Virginia VGT machines have been the subject of a lot of scrutiny over the past year, and that probably won’t change anytime soon.
In fact, VA Sen. Joe Morrissey plans to press the issue at his first opportunity to do so.
Morrissey is one of four Virginia legislators who recently went on a trip to observe the video gambling terminal industry in Illinois. He’s returned ready to push for a final settlement on an issue that has stirred controversy for months.
Morrissey on board with Virginia VGT machines
Earlier this month, Morrissey went on the trip, organized by a lobbyist for companies that operate and sell the terminals. The other three members of the state assembly were:
- Sen. John Bell
- Sen. Jeremy McPike
- Del. Will Morefield
Morrissey’s review of the regulatory landscape he observed is nothing but glowing.
“Just speaking for myself, I don’t know how the other legislators felt about this, but I felt my visit was very purposeful and productive,” Morrissey told PlayVirginia. “I came away extremely impressed with the VGT industry – the professionalism, their sense of responsibility, their commitment to doing what is right for the public.”
The timing of the quartet’s trip is interesting because it comes in the wake of a state ban on skill-based machines (“gray machines“) in VA taking effect. On July 1, convenience stores, grocers, and truck stops across the commonwealth started risking a fine and other penalties if they continued to offer the machines to customers.
That’s due to part of the state’s latest gambling expansion law that authorized casino referenda and the implementation of Virginia sports betting. The owners of the businesses that formerly offered skill-based machines didn’t accept the new ban without a fight. They have a new ally in Richmond, of sorts.
Morrissey prefers VGTs to skill-based games
Just prior to the skill games ban taking effect, a lawsuit from an operator of the machines and a complaint to the state’s attorney general tried to block the restriction. However, both ultimately failed. While those parties say they haven’t given up yet, Morrissey isn’t necessarily pushing for the restoration of those games, which have a questionable “skill” aspect to them that previously allowed the games to skirt the law.
“The way the VGT machines are regulated and the way they could be regulated in Virginia, I’m leaning toward supporting the VGT machines,” Morrissey stated. “My main concern is that my business people, the ones who operate the convenience stores, the truck stops, etc., that they get those machines in their stores. A game of skill or a VGT machine, let’s be clear, they’re both the same thing. They’re slot machines. You can call them whatever you want.”
Morrissey seems convinced that having access to VGTs is imperative for the success of businesses in his district as well.
“It makes a huge difference,” Morrissey explained. “It’s usually their entire profit line for the year; $1,200-$1,700 a month, up to six machines if Virginia follows the pattern that Illinois did, is huge for my mom-and-pop grocery stores in my district.”
The numbers seem to support Morrissey’s math. Virginia has already gone through a “trial run,” so to speak, with regulating the skill-based games.
Financial impact of skill-based games on VA
Last summer, current VA Gov. Ralph Northam proposed allowing businesses to register and then legally operate their skill-based games for a year. The legislature agreed and implemented the system.
Not only did the included taxes generate $100 million for the commonwealth, but their presence didn’t significantly detract from Virginia Lottery sales, either. Morrissey thinks the regulated status of VGTs could inspire the same consumer confidence.
“The VGTs are very upfront,” Morrissey elaborated. “‘We’re regulated. We’re taxed. We don’t cheat. We play by the rules.’
“In Illinois, all the VGTs licenses are held by publicly held companies traded and regulated very carefully, and they’re not going to cheat. That’s huge. That’s what we need in Virginia: a well-regulated industry.”
As far as whether Virginia VGT machines could deliver that revenue on a consistent basis if legalized, that might have more to do with how the commonwealth regulates them than whether it does. Morrissey values a crucial component of that regulatory framework.
Can Virginia improve on Illinois’ model?
A 2019 ProPublica report lays out how the VGT system in IL has failed to deliver the benefits to the state it promised:
Within months of the law’s passage, the state began borrowing hundreds of millions of dollars against the anticipated revenue. Bond documents claimed video gambling machines would raise $300 million each year to help cover the debt payments.
It wasn’t until 2017, eight years after the legalization of video gambling, that the state came close to collecting that amount. By then, video gambling had brought in less than $1 billion to pay the bond debt, $1.3 billion short of what lawmakers anticipated.”
Why? Regulatory expenses far exceeded expectations, for starters. However, a follow-up report lays out how one company has essentially established a state-protected monopoly in the space. Despite those facts, Morrissey’s positive review of what he saw in the Prairie State continues.
“My first major takeaway was that the way the Illinois Gaming Board has set things up, it is impossible to game the system with the VGT machines,” Morrissey said. “You simply cannot cheat the localities out of their taxes. That was my major takeaway. Given the regulation that exists there, I was very impressed with the level of competition. The more competition that you get into an industry, the better it is for the consumer. For the consumer, that’s measured by the payout. My third takeaway was just the cleanliness of where the VGT machines were located. While we didn’t visit a truck stop, which I hoped to, we visited convenience stores, bars, restaurants, and they were neat, orderly, and that left a lasting impression on me.”
Morrissey is also clear about his plans to push VGTs into the overall framework of legal gambling in VA as well.
Morrissey ready to raise issue in Richmond
A change isn’t going to happen this year, as far as action in the Virginia General Assembly goes, anyway. Barring any action from the courts, the debate on another round of expansion will take place next year.
“We wouldn’t have an opportunity to (pass a bill this year),” Morrissey explained. “Although we are going into a special session for five days, perhaps slightly longer, we’ll only be taking up budget matters. This bill will come up in the 2022 session for a new governor.”
It isn’t clear how the next governor will perceive Virginia VGT machines. Former VA governor and current Democrat nominee Terry McAuliffe worked for a law firm that represented gambling companies. However, no gaming interests are among his top 20 campaign donors.
McAuliffe’s Republican opponent, Glenn Youngkin, also doesn’t count any gambling companies among his top donors. Morrissey is more focused on his colleagues in the Assembly, though. He expressed that the three members he shared the trip with share his policy positions.
“I went out there specifically to learn about VGT and what I learned, it was all positive” Morrissey added. “I’m going to share that with my fellow colleagues in the Senate and tell them that we will be missing the boat if we don’t bring VGT to Virginia.”
Morrissey’s success would mean the ship would sail for skill-based games. However, he wants to cut in the same businesses that offered those machines into a system based on VGTs.
