Virginia Just Legalized Skill Games at 25% Tax — What It Means for Pennsylvania's 52% Proposal

What Virginia's SB 661 Actually Does

Senate Bill 661, sponsored by Senator Aaron Rouse, establishes the first comprehensive regulatory framework for skill games in Virginia since the state's Supreme Court declared them illegal in October 2023. The bill passed both chambers of the General Assembly on March 15, 2026, and now awaits Governor Abigail Spanberger's signature.

Here's what the final version includes:

• 25% tax rate on gross gaming revenue
• $5 maximum bet per play
• $4,000 maximum payout per play
• 25,000 machine cap statewide
• Virginia Lottery Board oversight — not the Gaming Commission
• 10-mile casino buffer zones
• No minimum payout requirement — machines don't need to return a specific percentage to players
• Mandatory machine inspection by the Lottery Board before deployment

The Virginia Merchants and Amusement Coalition (VA MAC) praised the bill as "a long-overdue regulatory framework that includes critical enforcement measures." Industry advocates note that the 25,000 machine cap provides certainty for operators while preventing market saturation.

The 25% vs. 52% Tax Gap

Governor Shapiro's 2026-27 budget proposal includes a 52% tax on skill games — more than double Virginia's rate. At the March 11 budget hearing, Revenue Secretary Pat Browne defended the 52% figure but acknowledged there's no market impact study backing the administration's $766 million revenue projection.

The gap matters for several reasons:

Factor	Virginia (SB 661)	Pennsylvania (Shapiro Proposal)
Tax Rate	25%	52%
Max Bet	$5	$5
Max Payout	$4,000	Not specified
Machine Cap	25,000 statewide	None proposed
Oversight	Lottery Board	Gaming Control Board
Minimum Payout	None	Not specified
Casino Buffer	10 miles	None proposed

Why Virginia's Model Creates Negotiating Leverage

Before SB 661, skill games advocates in Pennsylvania had no recent, comparable state-level framework to reference. The casino lobby argued that skill games represented unregulated gambling that threatened licensed gaming operations. Now there's a live model next door.

Virginia's approach demonstrates several things Pennsylvania legislators can now point to:

1. A 25% tax rate generates meaningful revenue — Virginia's framework proves states don't need to reach for 52% to benefit from skill games
2. Lottery Board oversight works — Virginia chose to route regulation through its existing lottery infrastructure rather than create new bureaucracy
3. Machine caps provide certainty — The 25,000-machine limit gives operators predictability while addressing saturation concerns
4. Casino buffer zones address competition concerns — The 10-mile restriction creates clear geographic separation

Senate Bill 626, the competing Pennsylvania skill games bill that proposes a 16% tax rate, now has a middle-ground reference point. Virginia's 25% sits between SB 626's 16% and Shapiro's 52%, suggesting room for compromise in Harrisburg.

The Casino Lobby's Position Just Got Harder

Pennsylvania's casino industry has consistently argued that skill games represent a threat to licensed gaming operations and should be taxed at parity with slot machines. Rivers Casino and other operators have lobbied for the 52% rate.

Virginia's bill complicates that argument. The 10-mile casino buffer zone addresses proximity concerns directly. The 25,000 machine cap prevents the "machines everywhere" scenario casinos warned about. And the Lottery Board oversight ensures genuine regulatory accountability.

When Pennsylvania casinos argue that 52% is necessary, legislators can now ask: "Virginia is thriving with 25%. What makes Pennsylvania different?"

What Happens Next in Virginia

Governor Spanberger has not publicly committed to signing SB 661. During the legislative session, she expressed caution about expanding gaming in the commonwealth. However, she has not indicated she would veto the bill.

Key timeline points:

• Governor has 30 days to sign, veto, or allow the bill to become law without signature
• HB 271, which would have created a unified Gaming Commission, was carried to 2027 — meaning the Lottery Board oversight structure stands
• If signed, implementation would begin in 2026 with machine inspections and operator licensing

Implications for Pennsylvania Operators

If you're operating skill games in Pennsylvania or considering entering the market, Virginia's passage changes the landscape in several ways:

Immediate

• The argument that skill games "can't be regulated" is dead — Virginia just did it
• The 52% rate looks increasingly punitive compared to neighboring states
• June 30 budget negotiations now have a concrete alternative model to reference

Medium-Term

• If Pennsylvania passes a 52% tax while Virginia operates at 25%, expect machine migration and border arbitrage
• Operators should track whether PA legislators propose machine caps similar to Virginia's
• The Lottery Board vs. Gaming Control Board oversight debate may resurface

Long-Term

• Virginia's success (or struggles) will directly inform Pennsylvania's regulatory approach
• Manufacturers like Pace-O-Matic and Banilla now have a proven compliance pathway in Virginia that may translate to PA requirements
• Multi-state operators may prioritize Virginia expansion while Pennsylvania's framework remains uncertain

The Bottom Line

Virginia's SB 661 is the most significant skill games legislation since Pennsylvania's debate began. The 25% tax rate, 25,000 machine cap, and Lottery Board oversight create a template that Pennsylvania can either embrace or reject — but can no longer ignore.

For PA operators, the next 90 days are critical. The Supreme Court ruling could drop at any time. The June 30 budget deadline looms. And now Virginia has shown that regulation doesn't require punitive taxation.

The question isn't whether Pennsylvania will regulate skill games. It's whether Harrisburg will learn from Richmond's example — or insist on a path that drives operators and machines across state lines.