Slot machines hit jackpot in stores around Va.

Across the Richmond area and around the state, more than 4,000 similar machines can be found in gas stations, bars and mostly locally owned convenience stores eager for a new stream of revenue. In a state that has long frowned on gambling, the Virginia Is for Gamblers movement is clearly moving beyond the state-run lottery and parimutuel.

Jeremy M. Lazarus | 7/12/2019, 6 a.m. | Updated on 7/12/2019, 7:37 p.m.

Andrea R. Hill is a self-confessed “slot machine grinder,” but she still hasn’t visited the new Rosie’s Richmond Gaming Emporium in South Side to try her luck on the array of slot-style machines.

Instead, the Richmond resident prefers to get her daily “gambling fix” at a convenience store near her job, the Quick N Easy in the 4100 block of West Broad Street.

Inside, past the chips and snacks and close to the coolers of beer and sodas, Ms. Hill has her choice of seven cash-operated, computer-controlled machines that mimic the push-button slots of Atlantic City and Las Vegas. The symbols revolve on the screen like slot machines.

Every now and then when the symbols line up right, a player can hit for a jackpot of $2,000.

The store has an arrangement that allows players to get their winnings almost immediately from a clerk.

“It’s fun and I win occasionally. Just the other day, I got a $120 jackpot, but it looks like I’ll be giving that back to the store,” said the 39-year-old pharmacy technician.

“Virginia has come a long way. When I was younger, I used to have to drive out of state to play. Now, these machines are everywhere.”

The convenience store, near Thomas Jefferson High School, is just one of the locations in which these machines have popped up in the past two years. Across the Richmond area and around the state, more than 4,000 similar machines can be found in gas stations, bars and mostly locally owned convenience stores eager for a new stream of revenue.

In a state that has long frowned on gambling, the Virginia Is for Gamblers movement is clearly moving beyond the state-run lottery and parimutuel betting on horse races.

The movement got a big boost two years ago when the General Assembly, seeking to revive horseracing, cleared the way for a $1 billion-plus operation involving machines like the ones at Rosie’s. Instead of random numbers, equipment at Rosie’s with slot-machine faces rely on the results of old races to fuel their results instead of random numbers that typical slots use, according to the regulatory Virginia Racing Commission.

But even before that action, ambitious private companies began exploiting a loophole in the anti-gambling laws in various states, most notably Duluth, Ga.-based Pace-O-Matic and its Richmond-based subsidiary, Queen of Virginia Skill and Entertainment, and Coleman Music and Entertainment of Jacksonville, Fla.

Those companies have been closely reading state laws on gambling to find a way to bypass them. In Virginia, they noticed the law only bans slot machines with three factors — a wager, the offer of a prize or cash and a win based solely on chance. Knock out one, and a machine can be legal.

And that’s what these companies say they are doing — creating machines that require “skill.”

For example, many of these machines do not generate wins for the player simply by the press of the play button. Instead, when two symbols of the same kind are visible, the player must touch the screen over a third symbol, usually a “wild card,” to get the third symbol in line to create a win.

It’s pretty simple, said Ms. Hill, but that small action is enough to allow the manufacturers to claim that skill is involved. Players must recognize the situation and act within a short time, 10 seconds or so, to win.

Others require players to use memory. For example, in one game, circles light up in a pattern that the player has to mimic to have a chance to win.

Courts in Ohio and Pennsylvania have ruled in favor of the manufacturers, and in Virginia, the state Alcoholic Beverage Control Board has cleared the Pace-O-Matic machines as meeting the “skill” test.

“A lot of times when people look at these machines, they say, ‘It looks like a duck, it quacks like a duck, so it must be a duck.’ But that’s not always the case. And certainly not when it comes to this equipment,” said Brent Jackson, a Richmond attorney who represents Gracies Technologies, a New York-based company that also distributes machines in Virginia.

The Virginia ABC decision is the main reason virtually all the machines are located in restaurants and stores that have licenses to sell beer and/or wine on and off premises.

In Virginia’s January General Assembly session, the state Senate rejected a proposal that would have created a new regulatory division to monitor the machines in the Virginia Department of Agriculture and Consumer Services.

Still, despite the ABC’s decision, the legality of the machines is questioned. To date, Virginia Attorney General Mark R. Herring has not issued a legal opinion, and so far no charges have been brought against businesses that have allowed companies to place machines in their stores.

In Richmond, former Commonwealth’s Attorney Michael N. Herring regularly received information from police and residents about these machines since they began appearing, but declined to take any action.

Assistant Richmond Commonwealth’s Attorney Joshua Boyles, whom Mr. Herring assigned to investigate, stated in response to a Free Press query that “our office hasn’t given a green light to any slot-style machines in the city,” except those now at Rosie’s.

However, he declined to suggest that any machines now operating in stores are illegal.

“Whether use of a given machine amounts to illegal gambling or a permissible game of chance is a very fact-specific inquiry,” he stated.

Mr. Boyles previously told the Virginia Mercury that the legal status of the machines “is uncharted territory.”

The first real test of that legality could come in Charlottesville, where Commonwealth’s Attorney Joe Platania on June 7 deemed them illegal and ordered businesses in that city to remove them within 30 days or face criminal charges.

He has yet to follow through on charges for noncompliant businesses. Pace-O-Matic indicated to a Charlottesville newspaper that it believes its machines meet requirements of the law and that it stands ready to defend its interests.

Still, despite the spread of the machines, they have not generated the kind of buzz that Rosie’s sparked when it opened last week on Richmond’s Midlothian Turnpike. By contrast, empty chairs at the machines are a common sight in convenience stores and lines rarely, if ever, develop with players waiting to play.

The amount of money being wagered in stores also is a far cry from the Rosie’s gusher. With the opening of outlets in Richmond and Hampton, Rosie’s is on track to rake in from players $100 million or more per month before jackpot and tax outlays.

Pace-O-Matic and other companies are not required to report their earnings or the amount of wagering being done on their machines in Virginia.

Based on information Pace-O-Matic released on its website, the company’s machines in Virginia generated about $9 million between October 2018 and June 2019, before the payout of jackpots and taxes.

The split from machine’s revenues is advantageous to stores. Queen of Virginia reports its games return about 92 percent to players in terms of jackpots, which is typical for a slots operation. The remaining 8 percent of the revenue is split three ways: 40 percent to the location and the remainder evenly split between Queen and its parent, Pace-O-Matic.

Despite Virginia’s strict gambling laws, restaurants, bars, and gas stations are adding so-called “skill machines” to draw people who wish to wager money in an attempt to win big. Because the results aren’t left entirely up to chance, these slot-style machines lie in a gambling gray area.

It sits a few blocks from the bustle of Carytown, under a deep blue awning and the gaze of its mascot — a sunburnt moose holding up a pint with a cocked, toothy smile.

When City Beach is nearly empty, the bar is vast and echoey. It appears to defy physics, a deeper space than the building should be able to handle when viewed from the street.

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Past the smokers planted on the front patio and just through the doors stands a little room on the left. When occupied, the room can be loud, with an onslaught of clashing, out-of-time electronic sound effects from four bulky machines. Hands come down hard on buttons, and people yell to each other in frustration — or joy when they win a jackpot.

From the spinning wheels and the colorful cartoon images on the screens to the hands pulling out wallets and feeding in 10s, 20s or even $50 bills, the room looks like a miniature Las Vegas.

The machines look, sound, feel, and act like slot machines, which are against the law in Virginia. But these devices are called “skill machines,” on grounds that they’re not based entirely on chance. For the present moment, skill machines are 100 percent legal, and they’re popping up all over the commonwealth.

Besides the touch screen, each skill machine boasts two big buttons — easy to press, easy to slam: “Play” and “Ticket.” These let the player spin or cash out.

In the little room, a man named Pierce sat slightly slouched back at the closest machine to the doorway. He declined to give his last name. Batting his hand at the play button as he spoke, his attention stayed trained on the game.

Gambling isn’t new to Pierce. His mother is “a slot grinder,” and his stepfather has skill machines in the Pennsylvania bars he operates.

“So I’ve been playing these for years,” Pierce said.

At this point, Pierce’s machine said he was at $95. He had put in $45 to begin and had been as high as $160, but the “Ticket” button sat unpressed as Pierce kept testing his luck — or skill, depending on your point of view.

He was playing a game called “Pirates” — his favorite on this machine. Different games have different themes, sounds and cartoon garnishes, but in essence, they all are similar: They are all variations on tic-tac-toe, meaning a certain image has to connect across all three rows, for the player to win.

Bets range from 40 cents to $4. The higher the bet, the higher the payout.

Players are presented a set of three-by-three rows and the goal of making a pattern like tic-tac-toe. Each play costs a bet and spins the rows. The hope is to line up at least two of the same images because once the spin is over, you can place a “wild” anywhere on the board to finish the row.

“So here’s another thing about this game,” Pierce said. “You can hit ‘next puzzle’ and see if the next one’s a winner or not.”

The “next puzzle” option feels like a cheat code to some players, and yes, it’s as straightforward as it sounds. At any point, a player can see the results of their next spin, whether they’ll win thousands of dollars or absolutely nothing. Knowing the next puzzle can help players make their decision: pull out or keep playing. But ultimately, the “next puzzle” is only second in an endless line of puzzles, and many players are keenly aware of this caveat. So they keep betting to see what might be around the corner.

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This extra piece of information is the argument for why the machines should be called skill machines and not slot machines. It’s why people like Pierce can step into a bar any night of the week and risk some of their cash in hopes of hitting it big.

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Short of hitting a jackpot by lining up the three cartoon tiles assigned to the most money, players tend to hope for a “bonus” win. These are specialty tiles that often specifically say “bonus” on them. They can give the player extra spins or queue a simple minigame, such as opening virtual suitcases or spinning a wheel.

Players’ reactions reveal that these types of wins are exciting, and it’s easy to see why. They are much more attainable than the standard jackpot win, but they can still draw some serious money.

After a few minutes, Pierce hit a bonus, giving him 10 extra automatic spins.

“Oh, look!” he yelled, jumping out of his seat to call down the hallway. “Let’s go, we got the big bonus!”

The rows started spinning rapidly, possessed, and people in the room gathered to watch over Pierce’s shoulder.

Pierce excitedly circled the ice in his drink and yelled a few more times, but as the spins started to run out, he calmed down.

“Ah, it’s not going to be anything crazy, man,” he said, with a tinge of disappointment.

The bonus spins depleted, numbers flew to the center of the screen to calculate the winnings: $50, putting Pierce’s overall money in play at $136 and some change.

“I put $45 in. If I cash out now I’m up $90,” he estimated.

Pierce tapped around on the screen, checking the next puzzle for the bet amount he was playing on. Nothing. Eventually, he pressed the “Ticket” button, and the machine discharged a warm, freshly printed receipt, which Pierce took to the bar and traded for cash.

Soon, somebody else sat at Pierce’s machine. Sure, Pierce had made money, but he hadn’t hit the jackpot. The amount, thousands of dollars, taunted from the screen. It was still anybody’s game.

The legal and corporate perspective

Currently, gambling is restricted in Virginia. State law allows betting on horse races at licensed locations, and charitable gaming, such as a limited number of bingo games and raffles that benefit nonprofit groups.

During the General Assembly’s 2019 session, legislators introduced bills to legalize casinos, authorize sports betting and expand charitable gaming. Most of those proposals failed.

However, skill machines fall into a legal loophole, allowing bars and other establishments to install — and profit from — the devices.

Queen of Virginia Skill & Entertainment, the company that makes the skill machines used in Virginia, says its devices aren’t illegal because there’s an element of skill.

“Our machines’ software take out that element of chance and add skill because, based on the player, they can actually win more money than they put in every single time they play our game,” said Kevin Anderson, the director of compliance for Queen of Virginia Skill and a former enforcement agent for the Virginia Alcoholic Beverage Control Authority.

The software originated in Pennsylvania, where it went through several court systems, Anderson said. He said Queen of Virginia Skill machines are the only ones checked by a government entity.

Attorney General Mark Herring has not filed a complaint against the skill machines. A spokesperson for his office said Herring will let each jurisdiction decide whether to allow the machines.

“We have our games in almost all jurisdictions in Virginia,” Anderson said. He said the machines are located only in ABC-licensed facilities. That would include bars, restaurants that serve alcohol and gas stations that sell beer and wine.

Anderson said that Queen of Virginia Skill asked the ABC to examine its machines and software and that the agency gave a favorable review.

Officials at the Virginia Lottery also weighed in, saying they are not worried about skill machines. However, when asked whether the machines are legal, they declined to comment.

“We were watching closely as they appeared across the state,” said Virginia Lottery spokeswoman Jennifer Mullen. “As of now, we have no concerns.”

This spring, the Virginia Lottery is adding a feature to its app to allow consumers to play lottery-type games through their phones at any retail location in which they connect through a Bluetooth connection, Mullen said.

Trent Hazelwood, a server at New York Deli and a casual skill machine player, said he believes the new lottery app was designed to compete with the skill machines; however, the Virginia Lottery said there is no correlation.

For restaurants and bars, skill machines can provide a new revenue stream. The hosting businesses keep 40 percent of the money that the machines take in. Omni online casino review. Thirty percent of the revenue goes to the companies in charge of distributing and maintaining the machines, and 30 percent goes to Queen of Virginia Skill & Entertainment.

The personal perspective on skill machines

According to Brice Slack, general manager at Buffalo Wild Wings on West Broad Street in Henrico County, a community has emerged among skill machine players who move from place to place, hoping to hit a jackpot.

“There’s regulars amongst the Queen machine community that kind of hop from establishment to establishment,” Slack said.

Slack doesn’t believe players will have much luck trying to outsmart the machines.

“It is just a series of spins,” Slack said.

In theory, industry officials say, skillful players should be able to win on any machine equally. It’s the distinction that makes the machines legal and popular.

“Players can WIN every time based on skill & not chance,” Queen of Virginia Skill & Entertainment says in a bulleted entry on its website.

But some people who work with the machines daily aren’t convinced.

“Is it really skill? Not really, no. It’s still chance either way,” said Miles Murdock, a server at New York Deli.

Working just a few feet from his restaurant’s machines, Murdock said he is a frequent player. He even remembers the day they appeared at his workplace. He said his boss framed them as a surprise, a gift of sorts to the employees.

Unlike some of his customers, Murdock plays with extra money — his tips — and he views the skill machines as entertainment. The machines aren’t paying his rent or buying his groceries. They’re just for fun, he said.

“We get a lot of people in here who see it as pretty much a revenue source,” Murdock said. “I’d rather just take the money I earn and count on a sure thing.”

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But then again, Murdock said some people are much luckier than he is. They come in, win big and often, and have their own little rituals to keep the money flowing, he said.

Hazelwood, Murdock’s coworker, offered an example.

I’m just going to tell you about this one guy,” Hazelwood said. “He pushes the buttons a certain way. He taps the screen a certain way. And he is convinced that, like, the way that he taps the button or presses the screen means that it will trigger something.

At City Beach, Pierce, too, has a ritual: He said he won’t put even dollar amounts into the machines. If he wants to risk about $100, he said, “I’ll put in $105.”

The community of skill machine players can take the game very seriously. At first, some businesses worried about hosting such activities in establishments that serve alcohol. But local businesses have had few problems with skill machine patrons.

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“Drunk people and gambling, there’s no way that this can end well,” Murdock remembered thinking when the machines arrived at New York Deli. “However, I was proven wrong.”

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Murdock said he occasionally finds parents letting their kids play, which he immediately prohibits — “Participants must be at least 18,” notes a bold, red screensaver as customers sit down to play. Once, a patron told Murdock the machine ate their money.

“Beyond that, we’ve had no problems,” he said. “No disruptive customers.”

Hazelwood described the machines as a “loophole in the law,” and Slack called them “a gray area.”

Virginia has shown reluctance to fully embrace gambling. But at least for these skill machines, those populating bars and restaurants — the servers, managers and people sitting down to play with a drink in their hands — are showing less reluctance.

Care to try your luck? Find a map of skill machine locations in Richmond at http://bit.ly/skill-mach-map

By Benjamin West and Emily Holter, Capital News Service. Top photo: Queen of Virginia skill machines at New York Deli in Carytown, by Benjamin West