Fax (434) 432-7903 R. BRYAN HASKINS (434) 432-7900 emai bryan haskins@pitgoxorg — CQMMONWEALTH’S ATTORNEY COUNTY OF PITTSYLVANIA (629) Sonat P.O, Box 1068 Chatham, VA 24531 March 14, 2022 Emily Ragsdale, Director Pittsylvania County Community Development 53 N. Main Street Chatham, Virginia 24531 Re: Whether gaming devices qualify as “illegal gambling devices” Emily: This letter is in response to your request for an opinion on the current legality of “skill games” as well as other more traditionally banned gaming devices. The current law in the Commonwealth of Virginia states that “skilll games” are also included in the definition of illegal gambling devices. The law currently operates as a complete ban on the operation of any “skill game” as well as other more traditional gambling devices (for example, a non-skill game “fish table.”) See the relevant portions of Virginia Code §18.2-325: 1 “Illegal gambling" means the making, placing, or receipt of any bet or wager in the Commonwealth of money or other consideration or thing of value, made in exchange for a chance to win a prize, stake, or other consideration or thing of value, dependent upon the result of any game, contest, or any other event the outcome of which is uncertain or a ‘matter of chance, whether such game, contest, or event occurs or is to occur inside or outside the limits of the Commonwealth. “Illegal gambling” also means the playing or offering for play of any skill game, "Gambling device” includes: a Any device, machine, paraphernalia, equipment, or other thing, including books, records, and other papers, which are actually used in an illegal gambling operation or activity; b. Any machine, apparatus, implement, instrument, contrivance, board, or other thing, or electronic or video versions thereof, including but not limited to those dependent upon the insertion of a coin or other object for their operation, which operates, eithercompletely automatically or with the aid of some physical act by the player or operator, in such a manner that, depending upon elements of chance, it may eject something of value or determine the prize or other thing of value to which the player is entitled: provided, however, that the return to the user of nothing more than additional chances or the right to use such machine is not deemed something of value within the meaning of this subsection; and provided further, that machines that only sell, or entitle the user to, items of merchandise of equivalent value that may differ from each other in composition, size, shape, or color, shall not be deemed gambling devices within the meaning of this subsection; and . Skill games. Such devices are no less gambling devices if they indicate beforehand the definite result of one or more operations but not all the operations. Nor are they any less a gambling device because, apart from their use or adaptability as such, they may also sell or deliver something of value on a basis other than chance. 6. "Skill game” means an electronic, computerized, or mechanical contrivance, terminal, ‘machine, or other device that requires the insertion of a coin, currency, ticket, token, or similar object to operate, activate, or play a game, the outcome of which is determined by any element of skill of the player and thai may deliver or entitle the person playing or operating the device to receive cash; cash equivalents, gift cards, vouchers, billets, tickets, tokens, or electronic credits to be exchanged for cash; merchandise; or anything of value whether the payoff is made automatically from the device or manually. ‘Thus, to continue to operate, each machine which fits these definitions must have an exemption to this otherwise complete ban. ‘The first such exemption arose when a 2020 General Assembly special session dealing with the impact of the COVID virus granted an exemption to allow certain "skill games” to operate from July 1, 2020 until June 30, 2021. It was only a partial exemption, however. ‘The location of these machines was limited (primarily to gas stations and truck stops), and the number of machines was limited. Each machine which was allowed to operate was required to be registered and regulated by the Virginia Alcoholic Beverage Control Authority (hereafter ABC) as of June 30, 2020. Further, a tax was assessed of $1,200 per month per machine. The purpose of this arrangement was to allow a limited number of machines to operate and pay tax revenue into a COVID relief fund. Every machine outside of this registration system became an illegal gambling machine per the code section cited above. Those machines which qualified as of June 30, 2020 were allowed to operate under the legislatively created one year exemption. The General Assembly did not act to allow any “skill game” to continue to operate as of July 1, 2021. Thus, every machine which had been operating under license with the ABC Board became an “illegal gambling device” on July 1, 2021, and as of that date every “skill game” was considered an illegal gambling device.The above history is pertinent to what has become a temporary second exemption from enforcement. This exemption comes from a lawsuit which was filed in Greensville County Circuit Court challenging the regulatory scheme declaring these games to be illegal gambling devices. On December 6, 2021, that Court entered a temporary injunction against enforcement of the “skill game” ban. However, the temporary injunction is limited. The injunction prohibits “enforcing the ban on skill games...with respect to those games that were taxed and regulated as “skill games” by the Virginia Alcoholic Beverage Control Authority prior to July 1, 2021." (See a copy of the inunction which is attached to this letter.) Thus, the only “skill games” which are currently exempt from enforcement as “illegal gambling devices” are those specific machines which were approved by ABC and in locations approved by ABC prior to July 1, 2020. Further, this temporary enforcement ban is set to expire on May 18, 2022 absent some further Order of the Court in the case. ‘The Code of Virginia's civil and criminal penalties regarding illegal gambling remain the law of the Commonwealth unless and until they are overtumed by a court. No court has done so yet. The only exception is those machines which fall within the temporary injunction entered by the Greensville County Circuit Court. It is possible that a court will declare this regulatory scheme unconstitutional, and that such a ruling would be upheld by the Virginia Supreme Court. But until that happens the law remains in full force and effect, and any activity which lies outside the narrow limits of the temporary injunction can be enforced through civil and/or criminal sanction. Therefore, it is my opinion that: 1, Every “skill game” machine operated within the Commonwealth remains defined as an “legal gambling deviee.” 2. At present there exists a temporary injunction which prohibits enforcement of the “skill game” ban on machines which had been operating within the ABC regulatory framework in existence from July 1, 2020 to June 30, 2021. These machines are allowed to operate without enforcement due to the temporary injunction against enforcement of the ban which~absent further order of that Court--will expire on May 18, 2022. 3. Every other non-ABC approved “skill game” machine is an illegal gambling device for which there is no exception prohibiting enforcement of the statutorily created ban, even if the device is being operated within a location previously approved under the ABC regulatory scheme. 4, Every other non-ABC approved location is an “unregulated location” and the operation of any “skill game” or other gambling devices is prohibited and the ban against machines in these locations may be enforced. 5. Finally, any other machine (for example, a non-skill game “fish table”) remains defined as an illegal gambling device for which the criminal and civil penalties can be enforced regardless of where the machine is operated within the Commonwealth. None of these machines was ever exempt under the ABC regulatory framework, and thus they cannot fall within the protection of the temporary judicial injunction,The criminal and civil penalties imposed for illegal gambling vary and can be extreme. See the following statutes: § 18.2-326. Penalty for illegal gambling. — Except as otherwise provided in this article, any person who illegally gambles or engages in interstate gambling as defined in § 18.2-325 shall be guilty of a Class 3 misdemeanor. If an association or pool of persons illegally gamble, each ‘person therein shail be guilty of illegal gambling. § 18.2-328. Conducting illegal gambling operation; penalties. — The operator of an illegal gambling enterprise, activity or operation shall be guilty of a Class 6 felony. However, any such operator who engages in an illegal gambling operation which (i) has been or remains in substantially continuous operation for a period in excess of thirty days or (ii) has grass revenue of $2,000 or more in any single day shall be fined not more than $20,000 and imprisoned not less than one year nor more than ten years. As used in this section, the term "gross revenue” means the total amount of illegal gambling transactions handled, dealt with, received by or placed with such operation, as distinguished from any net figure or amount from which deductions are taken, without regard to whether ‘money or any other thing of value actually changes hands. (See also the definition: "Operator" includes any person, firm, or association of persons, who conducts, finances, manages, supervises, directs, or owns all or part of an illegal gambling enterprise, activity, or operation. Virginia Code § 18.2- 325) § 18.2-329. Owners, etc., of gambling place permitting its continuance; penalty. — If the owner, lessee, tenant, occupant or other person in control of any place or conveyance, knows, or reasonably should know, that it is being used for illegal gambling, and permits such gambling to continue without having notified a law-enforcement officer of the presence of such illegal gambling activity, he shall be guilty of a Class 1 misdemeanor. § 18.2-330. Accessories to gambling activity; penalty. — Any person, firm or association of persons, other than those persons specified in other sections of this article, who knowingly aids, aabets or assists in the operation of an illegal gambling enterprise, activity or operation, shall be guilty of a Class 1 misdemeanor. § 18.2-331. Megal possession, etc., of gambling device; penalty. — A person is guilty of illegal Possession ofa gambling device when he manufactures, sells, transports, rents, gives away, places or possesses, or conducts or negotiates any transaction affecting or designed to affect ownership, custody or use of any gambling device, believing or having reason to believe that the same is to be used in the advancement of unlawful gambling activity. Violation of any provision of this section shall constitute a Class 1 misdemeanor.§ 18.2-331.1. Operation of gambling devices at unregulated locations; civil penalty. — A. In addition to any other penalty provided by law, any person who conducts, finances, manages, supervises, directs, or owns a gambling device that is located in an unregulated location is subject to a civil penalty of up to $25,000 for each gambling device located in such unregulated location. B. The Attorney General, an attorney for the Commonwealth, or the attorney for any locality ‘may cause an action in equity to be brought in the name of the Commonwealth or of the locality, as applicable, to enjoin the operation of a gambling device in violation of this section and 10 request an attachment against all such devices and any moneys within such devices pursuant fo Chapter 20 (§ 8.01-533 et seq.) of Title 8.02, and to recover the civil penalty of up to $25,000 per device, C. In any action brought under this section, the Attorney General, the attorney for the Commonwealth, or the attorney for the locality may recover reasonable expenses incurred by the state or local agency in investigating and preparing the case, and attorney fees. D. Any civil penalties assessed under this section in an action in equity brought in the name of the Commonwealth shall be paid into the Literary Fund. Any civil penalties assessed under this section in an action in equity brought in the name of a locality shall be paid into the general fund of the locality. (See also this definition: "Unregulated location" means any location that is not regulated or operated by the Virginia Lottery or Virginia Lottery Board, the Department of Agriculture and Consumer Services or the Charitable Gaming Board, the Virginia Alcoholic Beverage Control Authority, or the Virginia Racing Commission. Virginia Code § 18.2-325) In addition there is another code section which allows the Commonwealth's Attomey to bring a civil action for an injunction against any person violating the above statutes. Itis extremely unusual forme to issue a legal opinion on possible criminal or civil sanctions for conduct. However, the temporary injunction entered in Greensville County Circuit Court has led to a considerable amount of confusion. It appears that many people believe that any machine, whether a “skill game” or other machine which is also deemed an “illegal gambling device,” are allowed to operate in Virginia. This is simply not the case, and as can be seen from the above statutes operating an illegal gambling device can subject a person to a felony offense. Therefore, because of the confusion surrounding the reporting on the Greensville County Circuit Court’s temporary injunetion I have decided to provide to you this opinion of the current state of the law as regards to this matter. I would suggest that your office inform the operators of these machines of this opinion, and that you give them an amount of time to cease operations voluntarily pending the final outcome of the Greensville case before we seek to bring criminal charges and/or civil fines against the operators of these illegal gambling devices.‘As always, please do not hesitate to contact me if you have any questions regarding this matter. Sincerely. A Bryan Haskins Commonwealth’s Attomey ce: Mike Taylor Sheriff, Pittsylvania CountyVIRGINIA: IN THE CIRCUIT COURT FOR THE COUNTY OF GREENSVILLE SADLER BROTHERS OIL COMPANY, SLIP-IN FOOD MART, INC. CHN, LLC Plaintifis, Case No. CL 21-207 )MMONWEALTH OF VIRGINIA, } RALPH NORTHAM, in his official capacity) as Governor of the Commonwealth of) Virginia, MARK HERRING, in his official) capacity as Atomey General for the ) Commonwealth of Virginia, and THE VIRGINIA ALCOHOLIC ) ) BEVERAGE CONTROL AUTHORITY, ) Defendants. } TEMPORARY INJUNCTION THIS CAUSE came to be heard on Plaintifis’ Updated Motion for Temporary Injunction (“Motion”) on December 6, 2021. Upon consideration of argument of counsel, the evidence presented, the motion and its supporting brief, and the entize record herein, it is hereby ORDERED that: 1. Plaintiffs" Motion is GRANTED: 2. Defendants the Commonwealth of Virginia. Governor Ralph Northam, Attomey General Mark Herring, and the Virginia Alcoholie Beverage Control Authority are temporarily enjoined from enforeing the ban on skill yames encompassed in Chapters 1217 and 1277 of the 2020 Acts of Assembly (a/k/a SB 971 or HB $81) with respect tothose games that were taxed and regulated a jeverage Control Authority prior to July 1, 2021 3. This Temporary Injunction shall expire on & date a final hearing and ce’ of the merits shall be Oo tu. ENTERED this, oe day IN TESTIMONY, that the foregoing Is a true ‘copy ‘eken from the records of said Cour, |, Linda B, Edwerdis Clerk thereof, set my hand and affix the Seal of sald Court This the" dey of_ Dec 20231 7 oLERK 1 games” by the Virginia Alcoholic oo 37209) Autumn D, Johnson (VS! The Stanley Law Group, PLL 13508 Booker T, Washingt joneta, VA 24121 540.721.6028 bstanley @vastanleylawgroup.com Rodney Smolla (VA State Bar #32768) 4601 Concord Pike Wilmington, DE 19803 elephone: (864) 373-3882 Email: rodsmolla@ gmail.com Counsel for Plaintit’s Jason C, Hicks (VSB No. 46961) Womble Bond Dickinson (US) LLP 201 E. Main Street, Suite P Charlottesville, VA 22902 Telephone: (202) 857-4536 Email: Jason. Ticks @wbd-us.com Counsel for Plaimift Slip-In Foad Marts, Ine