Missouri legislators are looking to clarify the legal status of gaming machines installed in retail stores and hospitality venues.
The Show-Me State House passed a bill last week that would legalize video lottery terminals (VLTs) under the oversight of the state lottery, after a federal court judge ruled that unregulated machines currently available in many locations are illegal.
Federal judge rules existing VLTs illegal
On Feb. 13, U.S. District Judge John Ross ruled against Missouri-based gaming machine company Torch Electronics, saying that their game-of-chance machines qualify as gaming devices under state law.
The gaming machines in question are sometimes referred to as “no-chance” machines because the outcome is not selected randomly like a casino slot but is based on a series of predetermined outcomes. Torch and other operators label them as games of skill under the law. Missouri law defines a gambling device as a machine on which a player risks money on the outcome of a game of chance and where the result cannot be fully determined by the player’s skill.
Ross ruled that the machines meet Missouri’s statutory definition of a gambling device because players risk something of value upon the outcome of a contest of chance. The judge noted that the games use mechanics such as random number generators and shuffled pools of prizes, meaning outcomes depend “in a material degree upon an element of chance.”
“Given this central fact that Torch Devices do indeed involve an element of chance, the devices clearly meet the definitions of gambling device,” read Ross’ ruling in the lawsuit brought against Torch by TNT Amusements, a company that owns and leases traditional arcade games and similar non-gambling amusement equipment in retail locations throughout Missouri. “Necessarily, then, outside of a licensed casino, the devices are prohibited in the state of Missouri. They are illegal.”
Missouri Attorney General Catherine Hanaway has publicly frowned upon the products and earlier this year vowed to work with other authorities to shut them down across the state. The court ruling may embolden her office to take firm action.
HB 2989 would legalize lottery-run VLTs
Meanwhile, lawmakers have advanced a bill that would regulate and tax VLTs, in-store machines that would be connected to a central system and generate random outcomes. House Bill 2989, the Missouri Video Lottery Regulatory Act, passed in the state House last week by an 83-66 vote and has been sent on to the Senate.
The bill would give the Missouri Lottery the authority to issue licenses to companies to operate VLTs. The machines would have to pay out at least 80% of the money gambled on the machines as profits to players and around one-third of the profits made by the operators would be dedicated to state education. Operators not licensed to offer such products would have one year to shut down all of their machines in the state, as long as they provided certain documented records to the state.
The bill’s sponsor, Rep. Bill Hardwick, said that the state owes it to business owners to “clarify the law” on in-store gaming machines.
However, another state politician, Republican Rep. Dean Van Schoiack, cited the court decision as a reason for not supporting the bill, stating that the judge’s ruling shows that slot machines are “already illegal.”
“Why in the world are we changing our laws for an industry that knows the laws of the state of Missouri and says, ‘You can’t keep us from doing this, we’re going to do it anyway,’ and so now we want to make it legal?” he asked fellow state representatives, as quoted by the Columbia Missourian. That media outlet also reported that Republican leaders have suggested that the bill is unlikely to pass in the Senate.
Gov. Mike Kehoe told FOX 2 that he would defer to the legislative process on HB 2989 but that he is keen to explore other avenues for revenue generation. “We want to look at things that are out there right now that aren’t operating legally, that could provide a revenue stream through some sort of regulation.”
