EMPORIA – In the evenings, after truck drivers park their cargo trailers for the night, dozens of them gather at Sadler’s Travel Plaza in Emporia, a truck stop with an old-school road-trip vibe right off of Interstate 95 that offers not just gas and food but amenities like showers, a laundromat and several forms of entertainment. The truck stop’s eight electronic betting machines are especially popular among truckers and locals seeking to kill some time. “You come to this place in the evening time and it’s hard to find a game to play,” said operations manager Michael Allen. “Folks are definitely enjoying it.”
Skill games, which have the look and feel of a casino slot machine, are a common sight in restaurants, taverns, convenience stores, and other establishments around the commonwealth. But unlike slots in casinos, these games don’t just rely on chance, but they require a level of human skill or ability for players to win and earn a payout.
And this special status has made them a prime target for lawmakers from both sides of the aisle who in 2020 passed legislation banning the devices effective July 1 of last year – a move that Hermie Sadler, a former NASCAR driver and the owner of Emporia’s truck stop, is currently fighting to have overturned in court.
Sadler alleges that the new law, which he considers “government overreach,” was designed to create an advantage for large, resort-style casinos and gambling chains moving into Virginia.
“They roll out the red carpet for the out-of-state casino businesses, but those profits are mostly going out of state,” Sadler said in an interview with Cardinal News at his office on Emporia’s Main Street last week. “The government is supposed to work for the people, but I had to sue the government to protect my rights as a business person,” he said. “Why is a casino more vital to the commonwealth of Virginia than a convenience store, a restaurant or a truck stop?”
Sadler, 53, a savvy entrepreneur whose family has owned businesses in Emporia for decades, currently operates two convenience stores in the area, plus a racetrack-themed restaurant, and the truck stop.
The Sadlers first began offering skill games in the mid-1980s. Today, they operate a total of 41 machines, including different variations of card-, fantasy-, strategy- sports- and role-playing games, among others.
Since they first emerged in the 1970s, electronic betting machines are sometimes dubbed “gray machines,” because they mostly operate in a legally gray area, functioning like slot machines that pay out winnings to players with skill.
But unlike games of chance, such as the slot machines at the larger casinos, skill games have an interactive component, said Allen, Sadler’s operations manager. “A slot machine is going to spin and you either win or you don’t,” he said. “With skill games, you have to recognize the patterns within a game and you have to know when to click the button. You have to remember up to 30 different sequences, and if you get them all right it will forward you to a different level.”
Allen said that some players are so well trained that they know they are about to hit the jackpot when they see a certain pattern. “They sit here, put another hundred bucks in it and win $5,000 or $6,000,” Allen said. “It’s nothing for us at some of our locations to do payouts of between $5,000 and $10,000 a day. If people know what they are doing, they can win a lot of money.”
Sadler doesn’t own the machines but commissions them from distributors for a share in profits. “We make deals with them, we rent the space to them and they handle all of it. We don’t work on the games, we only split proceeds,” Sadler said. In a good month, one machine makes between $300 and $400 in profits. In a bad month, the distributors take the losses – a win-win for Sadler.
People that come to play skill games at his establishments for the most part are locals that live around the corner or down the street, Sadler said. “They are not the same customer that would load up and drive to Norfolk or Richmond to a casino. They just want to hang out and spend a couple of hours entertaining themselves.”
People like Debra Bookman and her husband Gary, who come to Sadler’s Travel Plaza about twice a week to play games.
“I play here all the time, it’s good entertainment, it’s a lot of fun, it’s a clean place and the people who work here are nice. It’s the best place to play at because it actually does pay,” Debra Bookman said, her eyes fixed on the symbols blinking on the screen of the slot machine before her. “You’re not just sitting here throwing your money in. You have to have skill, you have to know the sequences and how it follows.”
As a frequent patron of the truck stop, Bookman said that she was disappointed about the skill games ban, and she applauded Sadler’s efforts to get the law thrown out. “I just don’t think it’s fair to someone like him when you have people down the road doing the same thing,” she said, referring to Rosie’s Gaming Emporium, a franchise that currently operates five establishments in Virginia and that is working to open another one in Emporia next year. “I’m not planning to go there or anywhere else, I just like to come here and have a good time.”
For years, small business owners were able to operate the machines unbothered by law enforcement. But in 2019, the push to legalize casinos and expand gaming in Virginia began in earnest when the General Assembly passed legislation authorizing the development of resort-style casinos in five localities – Bristol, Danville, Norfolk, Portsmouth and Richmond.
The legislature then directed the Virginia Joint Legislative Audit and Review Committee to review the casino gaming laws in other states, evaluate the commonwealth’s current and potential gaming governance structures and project potential revenues from expanding legal forms of gaming. Allowing casinos to eventually open in the commonwealth was made contingent on the JLARC review and approval by the 2020 General Assembly.
The 202-page JLARC study projected that casinos in these five locations would generate about $970 million annually in net gaming revenue and approximately $260 million in gaming tax revenue for the state, with about one-third of total casino revenue to be generated by out-of-state visitors, while creating about 3,500 new jobs.
The study also found that skill games – referred to as “unsanctioned gaming ventures” due to their unregulated status – were already generating between $83 million and $468 million in annual revenue, although the committee conceded that the numbers were based on estimates because the betting machines weren’t taxed by a government authority.
During the same 2020 session when the General Assembly greenlighted the local referendums on casinos, the legislature also passed Senate Bill 971, sponsored by Sen. Janet Howell, D-Fairfax, which banned skill games in the commonwealth. Lawmakers said at the time that this move would help increase revenue for the Virginia Lottery which then expected to lose nearly $140 million in sales in fiscal 2020.
However, after the coronavirus pandemic shuttered thousands of businesses in the commonwealth, lawmakers agreed to a one-year reprieve for the operations of the electronic skill games operating across Virginia – but only after taking a promise from then-Gov. Ralph Northam that he would veto any future legislation to extend the industry’s life.
In the meantime, the Virginia Alcoholic Beverage Control Authority took on regulating about 6,000 of the estimated 8,000 betting machines in the commonwealth, labeling each with a yellow sticker. For the Authority, regulating games of skill was a time consuming effort, VABC spokeswoman Valerie Hubbard said in an email.
“Because we were tasked with this as a one-year responsibility, we used a paper system as the short time period did not warrant the expense to create new technology for the process, which is outside the scope of ABC’s mission,” Hubbard said.
After the ban went into effect on July 1, 2021, a Norfolk Circuit Court judge denied a request from a group of Virginia business owners for an injunction that would allow the continued operation of skill games at their establishments, stating that the plaintiffs failed to prove that they had been “irreparably harmed” by the ban. The group had argued that the legislation was discriminatory and a violation of Virginia human rights law because many businesses operating skill games are owned by ethnic and religious minorities.
But in December, a judge at the Greensville County Circuit Court issued a temporary injunction blocking the enforcement of the ban after Sadler filed a suit against Northam, Mark Herring, then the attorney general, and the Virginia ABC.
For his effort, Sadler enlisted Sen. Bill Stanley, R-Franklin County, a trial lawyer in Moneta. “Hermie and I have been friends for a long time, and at the time when skill games were being debated to be banned in Virginia in the General Assembly, Hermie came to me and talked about it,” Stanley said in a recent phone interview.
Although he was personally against gambling and voted against the casino referendums, Stanley agreed to take on the case. “We already passed laws allowing casinos and other forms of sports betting and gambling like that. If you rip the bandaid off, why not allow the small businesses in Virginia to participate in this emerging industry, especially when it seems like the deck is stacked against them,” Stanley said.
Banning skill games while allowing casinos to operate is unconstitutional, Stanley argued, and he and Sadler won a first victory when the judge in Greensville County granted the temporary injunction.
“I think what the government did in SB971 was government overreach, because what it was doing was picking winners and losers,” Stanley said. “If you go to a Chuck E. Cheese and you play ring toss or Skee-Ball, or you play a video game and you put in a quarter, and if you are good enough you get free replays, that takes skill, and we have allowed those games to exist in Virginia forever. But the government is trying to do surgery with a hatchet rather than a scalpel and eliminate a certain type of skill game.”
Sadler said that after the ruling, he received letters and emails from hundreds of businesses across Virginia, thanking him for his effort that allows them, for the time being, to continue to legally operate their machines.
“Most people just think it’s about Hermie and the Sadlers getting to operate their games and making a few dollars. But there are hundreds of small businesses, mostly mom and pop stores and little hole-in-the-wall bars that have just one machine, and the revenue from that machine keeps them afloat,” he said.
Mike Barley, chief public affairs officer at Pace-O-Matic, a skill games manufacturer headquartered in Duluth, Georgia, that operates about 5,500 games in the commonwealth, said that Virginia small businesses are already suffering from higher prices due to inflation and difficulties arising from hiring employees.
“Skill games are the main reason many small businesses can keep their doors open. During one year of regulation and taxation, skill games delivered nearly $140 million in tax revenue for the commonwealth and localities,” Barley said. “We are eager to work towards a legislative solution to regulate and tax our games. Until then, we are awaiting the results of the current litigation.”
For Sadler, his fight got personal when Rosie’s Gaming Emporium announced its bid to come to Emporia. The local investor, Richmond-based Colonial Downs Group, has vowed to invest $29 million in the city of under 6,000 residents. The groundbreaking took place last month, and Rosie’s is set to open in April 2023.
According to the website of Peninsula Pacific Entertainment, the company owning the franchise, Rosie’s will “provide great jobs, with more than 100 team members.” The Emporia Rosie’s will have “150 state-of-the-art slots like games and a stage for musical entertainment.”
Sadler believes that Rosie’s owners have joined forces with the big casinos to lobby in Richmond with the goal of shutting down skill games in Virginia because they want to eliminate all competition – even that as small as a local dive bar with one slot machine.
“Rosie’s has every right to expand and to come in with their casinos. But they are targeting us, and we’ve had skill games at our truck stops in Emporia since the 1980s. This only became an issue when the casinos started rallying their troops together to find an entry into Virginia,” Sadler said. “They want to get rid of the skill games in convenient stores, truck stops, restaurants and bars, so when they come in, they are the only show in town. It’s about power.”
According to VPAP, a nonprofit tracking money in Virginia politics, several gaming businesses and political actions committees have given money to lawmakers between 2019 and 2021, when the push for the expansion of gaming in the commonwealth gained more steam.
Howell, the state senator who sponsored SB971 banning skill games, in November received $2,500 from Caesar’s Entertainment, a casino and hotel company based in Nevada. But she also accepted a $10,000 donation from J&J Ventures Gaming, a video game terminal producer from Illinois, and, in October 2019, $5,000 from Queen of Virginia Skill & Entertainment, an amusement machine supplier from Henrico County, her financial disclosures show.
A spokeswoman for Howell on Thursday said that the senator was “unable to comment” due to her role in the ongoing budget negotiations.
Sen. Tommy Norment, R-Williamsburg, the Senate minority leader and co-patron of SB971, and his Virginia Way PAC between 2019 and 2021 received a total of $101,500 from Betting on Virginia Jobs, a PAC associated with Bristol-based businessman Jim McGlothlin, who has been spearheading an effort to bring the Hard Rock Hotel & Casino, a $400 million resort, to the Bristol Mall. The Virginia Lottery Board has already issued a facility operator’s license to Hard Rock Bristol to operate Virginia’s first casino.
According to a story in the Richmond Times-Dispatch from April 22, 2020, Norment on the day of the Senate vote on the skill games ban said that “I absolutely deplore these machines,” likening the skill gaming industry to “Ali Baba and the Forty Thieves.”
A spokesman for Norment did not respond to emails asking for comment last week, and an assistant for McGlothlin did not return phone calls.
Lawmakers like Norment and Howell and the casinos have “a dog in the fight,” Sadler said, “and we don’t really know what it is. Why won’t they figure out how to create a fair and equitable tax and regulation system for our games?’”
In the meantime, Sadler and Stanley have asked the court for a continuation of their hearing initially scheduled for May 18 because of rumors that lawmakers might write something into the state budget trying to ban or overregulate skill games. “There were no bills in the General Assembly addressing the skill games issue, but we heard constantly that certain lawmakers wanted to either regulate or ban skill games through putting statutory language in the budget,” Stanley said last week.
Stanley added that “all parties agreed that the trial date should be continued, so that we would not have to try the matter twice, thereby taking up the court’s time unnecessarily on the same subject matter.” All parties filed a consent motion to continue the case, he said.
The judge granted the motion, postponing the hearing until Nov. 2, while also prohibiting the government – for the time being – from enforcing the ban of the machines that were previously yellow-stickered by the VABC.
The Virginia Mercury reported last week budget leaders in the Virginia General Assembly won’t say if they’re considering changing the state’s contested ban through the budget. “Let’s keep ’em guessing,” House Appropriations Chairman Barry Knight, R-Virginia Beach, told the Mercury when asked for a response to the claim the budget could include a revised policy on skill games, either to tighten the existing ban or to lift it.
Gov. Glenn Youngkin hasn’t taken a position on the issue until last week, when his spokeswoman Macaulay Porter said in an email that Youngkin is not opposed to the responsible expansion of skill gaming in the commonwealth, “as long as it is carefully regulated.”
For Sadler, the delay of the hearing is another victory in his battle to overturn the ban. “Is anybody going to recognize the fact that because of this month’s continuation small businesses across the commonwealth of Virginia are going to be able to continue to legally operate these games and get this revenue that has been a lifeline for them?” Sadler said.
While his fight isn’t over yet, Sadler remains hopeful that he will win the war. “I’m proud of what we are doing, and we are going to fight until the very end, whenever that might be,” he said.
This story originally appeared 05/24/2022 on Cardinal News.