Video games are protected speech, but does that extend to those which pay out cash prizes?

Virginia Skill Game Ban Prompts First Amendment Violation Claim

Attorneys for a Virginia businessman are arguing that the state’s skill game ban violates the First Amendment. He has taken the commonwealth to court in order to be able to turn his machines on again. Counsel succeeded at stopping the ban for the six months from now until May, when he’ll be able to plead his case in full.

Skill machines occupy a legal gray area. Unregulated gambling is illegal, but definitions of gambling tend to involve the phrase “games of chance.” Skill game companies seek to skirt that definition by adding skill elements to their products.  This is true even for online skill games, like Skillz. Because of that nebulous status, skill games providers end up in court regularly.

The trial begins May 18. Depending on its outcome, other states seeking to ban similar products may face the same free speech argument.

US online casino games are legal, regulated and generating tax revenue for several states. As for Virginia’s legal online wagering marketplace, its online sportsbooks launched in January.

What does free speech have to do with skill machines?

It’s surprising to see a free speech argument invoked in such a case. However, US courts have tended to take a very broad view of what “speech” means.

Lawyer Autumn D. Johnson with the Stanley Law Group is working with lead attorney Sen. Bill Stanley, R-Franklin County, on the case.

Johnson told Online Poker Report:

“We argued that skill games are afforded free speech protection using case precedent from the United States Supreme Court ruling that video games have free speech protection under the First Amendment. Skill games are not like the slot machines you’d see in a casino; instead, they have narratives and themes that further player expression. The law banning skill games was vague and unconstitutional. The judge agreed.”

On Dec. 6, a judge in the Greensville County Circuit Court, Civil Division, did grant plaintiff Hermie Sadler a temporary injunction. However, the injunction isn’t the case’s final ruling.

If the case does go Sadler’s way in the end, the state may have to either accept the presence of the machines or, perhaps, adjust its legal definition of gambling. There could be further-reaching consequences – including for real money online gaming products – if the case works its way up through appeals.

Sadler, a former NASCAR driver, owns convenience stores and gas stations in which skill games fell silent on July 1.

Immediately after the court granted the temporary injunction, Viriginia bars and convenience stores began turning their skill game machines back on, according to WAVY.

Virginia’s skill game income hasn’t returned

Virginia’s Alcoholic Beverage Control Authority (Virginia ABC) isn’t authorized to resume taxing and regulating the skill games as it had been doing before the ban. As a result, the state now isn’t receiving any revenue from the games that restarted on Dec. 6, WAVY says.

As of yesterday, Queen of Virginia Skill & Entertainment (QVS) – which was “powered by” Pace-O-Matic skill game machines – still listed itself at its old revenue total.

The QVS site says:

“All totaled, QVS and other regulated skill game businesses will have contributed $130 million to the state in revenue during the fiscal year that ends on June 30.”

Johnson told OPR:

“The injunction allows skill game operators to turn machines that were regulated by the ABC during the regulatory period back on immediately. It is now up to elected officials in Virginia to craft a permanent solution that supports small businesses like Mr. Sadler’s. For now, there is no ABC regulation and no tax on the machines.

“The government argued that the ban on skill games is not a free speech issue and that the games were all about profit.”

May 18 is already likely circled on many calendars inside and outside of Virginia.

- Heather Fletcher is the lead writer with OnlinePokerReport. She's a career journalist, with bylines in The New York Times, Adweek and other publications. Reach her at [email protected]
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