Virginia legislators are in the midst of a contentious battle over the potential legalization of “gray machines” – arcade-style games that resemble traditional slot machines with an added element of skill.

Competing legislative proposals aim to introduce these machines into various establishments across the Commonwealth, such as truck stops and convenience stores. The Associated Press reported that this has led to a heated debate as stakeholders struggle to establish a regulatory framework for the devices, which have proliferated despite being banned in 2020.

Manufacturers argue that these games require skill from players, but their operation exists in a legal grey area, prompting debates on oversight and taxation. One proposal, led by Sen. Aaron Rouse and co-sponsored by Sen. L. Louise Lucas, seeks to establish a regulatory structure overseen by the Virginia Alcoholic Beverage Control Authority. Under this plan, establishments with ABC licenses could host a limited number of terminals, with revenue taxed at 15%. Proponents argue that this move would generate significant revenue for the state and benefit small businesses, especially those owned by first-generation Americans.

Another bill, put forth by Democratic Sen. Jeremy McPike, takes a different approach. This proposal seeks to regulate both skill games and slot-like video terminals under the Virginia Lottery Board, with a higher tax rate of 34%. McPike’s bill affords local governments the discretion to prohibit these machines and mandates player identification requirements.

However, opponents, including casino interests, have raised concerns about the potential societal impacts of expanded gambling. Critics fear a surge in gambling addiction and associated social problems, citing reports of crime linked to similar devices in other jurisdictions. Additionally, questions remain about the adequacy of oversight mechanisms, with some advocating for stricter monitoring and reporting standards to prevent potential abuse.

In October, the Supreme Court of Virginia reinstated the state’s ban on slot-like skill machines, signaling ongoing enforcement efforts despite pending lawsuits. The decision underscored the state’s authority to regulate gambling and protect the public, highlighting the challenges faced by skilled game operators like Pace-O-Matic in Virginia and beyond.

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