The machines, however, are making other state officials nervous. May Scheve Reardon, executive director of the Missouri Lottery told the Post-Dispatch that she fears the terminals could divert money from the lottery’s games, which generate money for public schools.
May Scheve Reardon, executive director of the Missouri Lottery told the Post-Dispatch that she fears the terminals could divert money from the lottery’s games, which generate money for public schools.
JEFFERSON CITY — In the latest attempt to slow the rapid-fire spread of untaxed and unregulated slot machines in Missouri, state gambling regulators have deemed the terminals illegal.
In a July 3 letter obtained by the Post-Dispatch, the lead attorney for the Missouri Gaming Commission ruled that the terminals contain functions that make them “gambling devices,” which are prohibited outside of licensed casinos.
The ruling came in response to a question by the St. James Veterans of Foreign Wars Post 5608, which asked if having one of the terminals in their facility would jeopardize the organization’s state-issued bingo license.
After testing the machine, the gaming commission said it would.
“Therefore, setting up and operating these devices at your VFW Post would be illegal,” the memo notes. “The Missouri Gaming Commission maintains a zero tolerance for illegal gambling and will take immediate action to revoke the bingo license of any organization that engages in any form of criminal activity.”
Although the gaming commission’s findings only apply to establishments that have bingo licenses, the decision comes as state and county officials are investigating what to do about the machines.
The terminals work like slot machines. A player inserts money, selects a game and decides how much to wager. Players who win money can cash out and get paid by the store cashier.
Similar machines have been popping up across the state in truck stops, gas stations and other places that have liquor licenses. But, so far, most prosecutors have not taken steps to prosecute the companies or the businesses hosting the machines.
In Platte County, Prosecutor Eric Zahnd has taken a supplier to court in a case that could determine whether the rest of the state can shut down the spread of the machines.
But, a resolution to that case could take two years, leaving state officials to watch as more machines flow into the state.
Despite the gaming commission's findings, a spokesman for Attorney General Eric Schmitt said the Republican is monitoring the Platte County case and is refraining from further comment.
The machines, however, are making other state officials nervous.May Scheve Reardon, executive director of the Missouri Lottery told the Post-Dispatch that she fears the terminals could divert money from the lottery’s games, which generate money for public schools.
Senate President Dave Schatz, R-Sullivan, also has pushed for legislation that would prohibit the machines and strip businesses of their liquor licenses if the terminals are present.
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In the House, Speaker Elijah Haahr, R-Springfield, earlier formed a special committee to meet over the summer and fall to look into the issue of unregulated gambling. The panel has not begun meeting.
Gaming Commission Executive Director Dave Grothaus said there have been discussions about whether state officials, like the commission, could use their licensing powers to strip businesses of their ability to sell lottery tickets or alcohol if they have the slot machines on their premises.
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“Certainly that would be an administrative tool that the state could use to address the problem,” Grothaus said.
In its ruling, the commission pointed to other states that found similar games were illegal.
In particular, the Iowa Supreme Court found that the devices were illegal, as did the attorney general in Wyoming.
In the meantime, Schatz said he hopes the commission’s ruling also helps prod local prosecutors to take action against the companies.
“We would like to have them go out and seize these machines,” Schatz said.
Gambling in Missouri
Charitable gambling, which has been legal in Missouri since 1980, paved the way for raffles and bingo halls. The state lottery was approved in 1986 by a public vote, in which it was supported by 70% of the voters. This led to a gradual easing of gambling laws, with riverboat casinos becoming legal in 1992.
After several hurdles, riverboat casinos began to operate in 1994. They could offer table games, slot machines, certain games of chance and poker. A 1998 amendment made it possible for casinos to be set up on artificial ponds or moats.
There are now 13 riverboat casinos operating in Missouri. The largest is owned by Pinnacle Entertainment and operated under its Ameristar brand. This casino, in Kansas City, has a 140,000-square-foot floor containing over 2,200 slot machines, a poker room, and 66 table games.
Since the end of the federal ban on sports betting, there has been talk of legalizing the activity in Missouri. Several sports betting bills have been, but without much progress yet.
Issue of video gambling terminals
Video gambling terminals are in something of a gray area in Missouri. There are 14,000 lottery machines across the state in places like grocery stores and gas stations. However, there is no taxation, regulation, or oversight of these machines.
In February, Senator Denny Hoskins introduced the Video Lottery Control Act to establish regulation of the video gambling sector. It would generate about $36m (£28.4m) in annual tax revenue for the state. A regulatory framework would be created along with a self-exclusion program for problem gamblers. While this bill drew a lot of interest, it was not passed by the legislature.
New lawsuit hits the video gambling sector
A prosecutor from western Missouri has brought a lawsuit against a major video gambling machine operator. Eric Zahnd, Platte County’s prosecuting attorney, accuses Integrity Gaming LLC, which is based in Kansas, of allegedly installing a couple of illegal gambling machines in two convenience stores in Parkville. The suit could end these video gambling terminals throughout the state.
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Police seized five such machines in October 2018. The store owners claim these machines were set up by the company. The way the games work is very similar to slot machines, with the person cashing out and getting the money from the cashier at the store.
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The company claims that the machines are not betting devices because the outcome of each game is pre-determined. They say that there is no element of skill. Zahnd disagrees and is willing to let the court decide this issue. The case is scheduled to be heard in December.
In the most recent legislative session, lawmakers went back and forth about whether they should legalize slot machines and/or sports betting. The lucrative tax revenues are a plus but concerns about rising levels of problem gambling is also a key consideration. Those in favor of legalization want the tax revenues to go mostly toward funding education programs.
One person who is against the spread of these gambling terminals in the state is Senate President Dave Schatz. He said: “They are starting to pop up more and more. We’re trying to figure out what’s the appropriate way to move forward.”