Exclusive: Top skill game company putting new machines in Richmond area despite attempted ban

Pace-O-Matic, one of the biggest skill game companies in Virginia, has created a new version of its slots-like machines that it says can be operated legally despite the state’s ban on skill games, according to a company memo obtained by The Richmonder.

Three of the new Queen of Virginia machines were in operation Thursday at a sports bar in Henrico County, a sign the machines are already returning to the Richmond region. 

Depending on where the company rolls out the revised machines, prosecutors and law enforcement agencies across Virginia could be forced to decide whether they agree with the company’s view that the General Assembly left a glaring loophole in the skill game ban.

In correspondence from late August between a Pace-O-Matic executive and a lawyer who was asked to assess the legality of the new machines, the company said its revised system is legal because players no longer insert cash directly into the machines.

“Pace-O-Matic has launched new, legally compliant skill game technology that supports Virginia small businesses by allowing them to earn supplemental revenue today,” Pace-O-Matic spokeswoman Rachel Albritton said in a statement. “Pace-O-Matic has never and will never operate outside the law. Virginia legal experts have thoroughly reviewed our new product and have confirmed that the games fully comply with current statute.”

The company didn’t respond when asked to verify the authenticity of the document The Richmonder obtained, but the memo has been circulating among legislators and lobbyists involved in the skill game issue. The Queen of Virginia machines seen in Henrico didn’t accept cash, which matches the memo’s description.

Pace-O-Matic’s machines, which closely resemble traditional slots but require players to spot a pattern of symbols and touch the screen in order to win, were found at numerous convenience stores and restaurants in the Richmond region before the state banned them. 

Skill game supporters have portrayed the machines as a form of entertainment that also generates revenue for the small businesses that host them. Opponents see them as a predatory form of gambling designed to evade state laws and operate without the same type of regulatory safeguards applied to casino slots.

Pace-O-Matic and a large group of Virginia convenience store owners have spent most of this year lobbying the General Assembly to lift the skill game ban. That effort has been unsuccessful, which apparently led the company to change course and try to work around a ban it was unable to repeal.

Nick Larson, a spokesman for the anti-skill game group Virginians Against Neighborhood Slot Machines, called the move “an act of sheer desperation.”

“They have given up all hope for operating legitimately in Virginia and are returning to their original playbook of sneaking in the back door,” Larson said. “Virginia lawmakers should call out this action for what it is: A slap in the face and a blatant attempt to disregard the clear authority of the General Assembly.”

Larson’s group, funded by casino interests that see skill games as a more loosely regulated threat to their industry, led an advocacy campaign against the skill game legalization bill this year.

Pace-O-Matic has become a major political donor to Virginia politicians, giving to Republican and Democratic leaders alike and cultivating ties with influential General Assembly members.

Throughout the skill game debate, Pace-O-Matic and its supporters have argued legalizing the machines would help root out bad actors in the industry and ensure skill games are taxed and well-regulated.

Because the legalization bill failed, there are no taxes or regulations on any skill games currently in operation.

The main change in the new Queen of Virginia machines, according to the memo that refers to the tweaked system as “QVS2,” is how cash is handled.

“In order to play the game, a customer must communicate with the cashier who is working at the convenience store, truck stop or restaurant where the game is located,” Pace-O-Matic Chief Administrative Officer Frank Fina wrote in an exchange of memos with a lawyer for the company. “The customer tells the cashier how much money he or she wants to play on the QVS2 skill game and hands the cashier cash currency.” 

The cashier then uses a remote touchscreen to give the player credits on the machine, according to the document.

The company claims the new play system is legal because Virginia law defines a skill game as a device that “requires the insertion of a coin, currency, ticket, token, or similar object to operate, activate, or play a game.” Because a cashier or bartender acts as a middleman holding the money in a “secure cash box or bag,” the document suggests, the new machines no longer meet the state’s skill game definition.

“The insertion of an object is a foundational requirement of the definition of a skill game,” wrote Pace-O-Matic lawyer Jason Hicks, who works in the Charlottesville office of Womble Bond Dickinson.

That law firm was involved in an earlier Pace-O-Matic effort to challenge Virginia’s skill game ban in 2021 by arguing the state was outlawing a form of speech instead of regulating gambling. 

That argument was rejected by the Supreme Court of Virginia last year, but a lower court’s ruling in late 2021 allowed the skill game industry to continue operating in Virginia for nearly two years as the court case slowly moved forward.

State Del. Paul Krizek, D-Fairfax, a skill game opponent who co-chairs a legislative subcommittee on gambling regulation, said he disagrees with Pace-O-Matic’s interpretation of the law.

“The legislature was fully aware of the evolving technology used by gaming companies, such as remote activation systems,” Krizek said. “The decision to retain the language requiring ‘insertion’ was not an oversight but rather a deliberate choice to limit evasive practices.”

After the skill game legalization effort failed earlier this year, skill game supporters floated the idea of having the General Assembly return to Richmond to try again.

It’s unclear if that’s still an option after Pace-O-Matic’s decision to roll out its new machines.