Judge Rules Gray Machines for Virginia Gaming Can Keep Operating

Judge Rules Gray Machines for Virginia Gaming Can Keep Operating
By Keith Stein
Fact Checked by Jim Tomlin

An estimated 9,000 skill game machines, also known as gray machines, will continue to operate in Virginia. The machines were in danger of being banned depending upon the outcome of a court hearing in Greensville County.

Greensville County Justice Louis Lerner decided Monday to extend an injunction that allows skill games to continue operating in Virginia. A new trial date is being planned for the spring of 2023. However, during the ongoing injunction, the state is not collecting tax revenue on the games like it is for sports betting in Virginia and on casinos.

What Are Gray Machines in Virginia?

Gray machines are slot-machine-style electronic games that have appeared at restaurants, gas stations, and convenience stores around the state and are unregulated in Virginia. The name “gray machines” refers to the notion that the machines operate in a gray area of the law where they are neither legal nor illegal and operate untaxed and unregulated.

In 2020, the Virginia governor and General Assembly legalized gray machines for one year to generate proceeds for a special COVID-19 relief fund. During that time, the Virginia Alcoholic Beverage Control regulated gray machines, and each gray machine distributor was required to pay the Department of Taxation $1,200 per machine each month in taxes.

Ultimately, tax revenue from gray machines generated $109 million in revenue, which was used to provide $76 million in direct aid to public education, $2 million in legal aid services for Virginians facing evictions, and $25 million in Rebuild Virginia Grants to small businesses.

Following support for the COVID-19 relief fund, a ban on skill games took effect on July 1, 2021.

However, in December 2021 a circuit court judge issued a temporary injunction on the ban because of a lawsuit filed by a company that hosted gray machines at several truck stops. The machines will now continue to operate in Virginia unregulated throughout the state. There are no Virginia online casinos.

What's The Delay?

Judge Lerner declined to dismiss a lawsuit claiming Virginia’s ban on slots-like skill machines violates free speech and indicated Senator Bill Stanley's (R-Franklin) involvement in the case means it won’t go to trial until after the 2023 General Assembly session is over, according to the Virginia Mercury.

Lerner also rejected a claim the General Assembly violated the Virginia Constitution by adding legislation to the most recent state budget that sought to reinforce the purported illegality of the machines.

The plaintiff in the lawsuit is Hermie Sadler, a former NASCAR driver who owns a truck stop in Emporia that has benefited from skill-game machine revenue.

Support For Virginia Skill Games

“We are pleased that legal skill games will continue operating in Virginia and providing much-needed revenue to small business owners across the state,” said Michael Barley, spokesman for Pace-O-Matic, which markets their Queen of Virginia Skill games in the commonwealth.

“We anticipate the final court decision will uphold the legality of skill games in the commonwealth,” Barley added. “If these games were important enough to support small businesses during COVID, they certainly are important now with the economic slowdown and should be allowed to continue operating in a regulated market today and in the future.”

Virginia's Gambling Market Still Very Young

Virginia's gambling landscape has undergone dramatic changes over recent years, including the all-mobile Virginia sportsbook apps. Legal online sports betting launched in January 2021 and the state's first casino opened in July 2022 in Bristol, along with the first Virginia retail sportsbook.

Next month a second retail casino will open in Hampton Roads, Rivers Casino Portsmouth. Two additional casinos are under construction; those will be in Norfolk and Danville.

The best Virginia sports betting bonuses are here at BetVirginia.com so check them out before placing a wager.

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Contributors

Keith Stein is a Virginia-based writer for BetVirginia.com who covers sports betting and casinos.

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