Audition For Virginia Skill Games Industry Proves Lucrative

Efforts to fight COVID-19 now have an unlikely ally: the beleaguered Virginia skill games industry.

Queen of Virginia Skill & Entertainment operates 5,700 of the slot machine-type games in the commonwealth.

The company recently announced it generated more than $6.8 million in its first month under a new tax system for the controversial games.

Virginia officials will use most of the revenue to combat the coronavirus within its borders.

About the Virginia skills game tax

In April, Virginia Gov. Ralph Northam suggested the implementation of the new state tax for skill games, and the General Assembly subsequently adopted it. However, the tax system will be in place for a maximum of one year, Northam stipulated.

The new temporary tax plan followed the General Assembly’s initial attempt in March to ban the skill games outright. The games are available in approximately 2,000 Virginia restaurants, bars, truck stops and convenience stores.

The initial reason legislators sought the ban?

They believed the electronic games operate in a gray area between illegal games of chance and legal games of skill.

Operators say the games rely on a player’s skill; therefore, they’re legal, they argue. However, critics say the amount of skill needed and its impact on the game results are often negligible.

Additionally, legislators thought the games could cut into the Virginia Lottery profits. The VA Lottery generates revenue for K-12 public education in the Old Dominion state. The lottery generated $595.3 million in its latest fiscal year alone.

However, with COVID-19 threatening Virginia tax revenue in 2020, Northam helped usher in the new tax on the so-called skill games. As a result, game distributors are now subject to a tax of $1,200 per machine per month.

As part of the legislation, 84% of the tax-generated revenue goes to Virginia’s COVID-19 Relief Fund. The additional money is earmarked for localities where the games are located, as well as Virginia’s Problem Gambling Treatment and Support Fund.

Queen of Virginia, a subsidiary of Atlanta-based Pace-O-Matic Inc., produced more than $5.7 million for pandemic efforts and more than $825,000 for Virginia local economies via the new tax, it announced.

Queen of Virginia proud of its tax bill

July was sort of an audition for Queen of Virginia.

The gaming company previously lobbied and hoped to become a legal and regulated form of gambling. However, during the governor-mandated, one-year reprieve, it proved it can be a real revenue generator for Virginia.

However, upon its debut in Virginia, the company installed and operated its games without legal framework or support from legislators. Consequently, those same lawmakers initially dismissed the company’s push for regulation.

Of course, Virginia’s skill games industry will soon have some massive competition. The commonwealth recently legalized gambling in Virginia in the form of sportsbooks and casinos.

The first Virginia sportsbook will likely be online in early 2021. Then, the first of five potential Virginia casinos are expected to open in 2023.

The VA skill games industry still has hopes it too could become legalized. It’s pinning its hope on Virginia’s General Assembly session in January.

For now, Virginia Secretary of Finance Aubrey Layne told the Richmond Times-Dispatch that the new tax on skill games would generate up to $120 million in the next year.

“Good for them for living up to what the legislation said,” Layne said of Queen of Virginia. “… (The revenue) will be put to good use because we are going to need these funds for COVID relief.”