By:Jason Hancock
Missouri Independent
Legislation creating a state-run video lottery system to replace and regulate “gray market” slot machines that have proliferated for years in gas stations, bars and fraternal halls across the state narrowly cleared the Missouri House Wednesday, winning passage by just one vote.
The bill, which now heads to the Missouri Senate for consideration, is the culmination of years of efforts by lawmakers to rein in the burgeoning industry that has operated in a legal gray area of state law.
Under the legislation, the Missouri Lottery would have authority to license video games for installation in retail locations across the state. The licensed machines would have to pay out at least 80% of the money wagered as prizes and about one-third of the profits would be dedicated to state education programs.
The bill would also impose a 3% tax on video lottery profits to aid local governments and would increase the fee casinos pay for each patron who enters the gaming floor from $2 to $4. On Monday, the House adopted several amendments to the bill, including one adding an annual $250 fee per machine to go towards disability services.
Companies profiting from unregulated convenience store slot machines would have one year to pull their games off the market.
“I think this is the right thing to do for our state,” said state Rep. Bill Hardwick, a Republican from Dixon sponsoring the legislation.
Supporters pitched the bill as a trade: tighter rules, centralized oversight and tax revenue in exchange for a phased removal of the unregulated machines. And the bill gives local governments the authority to ban the games from their communities.
Opponents warned it would legitimize companies that have profited in the shadows and further expand gambling into everyday retail spaces — even as courts and law enforcement have moved to declare many of the existing games illegal outside casinos.
“Why are we changing our laws to help an industry that thumbed their nose at the State of Missouri?” said state Rep. Dean Van Schoiack, a Republican from Savannah.
But even those who don’t agree with the expansion of gambling in the state said Wednesday that the legislation is likely needed.
“I hate these machines with a passion. I don’t like what they do to our communities,” said state Rep. Darin Chappell, a Republican from Rogersville, adding: “But I don’t want them to continue to be gray, which is a misnomer. They’re illegal. But most prosecutors have been unable or unwilling to prosecute the illegal machines.”
If these games are going to exist, Chappel said, they should be regulated and taxed.
Last week, in a civil lawsuit, a federal judge declared slot machines operated by Wildwood-based Torch Electronics are illegal gambling devices under state law. And Missouri Attorney General Catherine Hanaway filed lawsuits against retail shops in Dunklin County alleging the businesses were operating illegal gambling machines on their premises.
Hardwick said his bill would enhance the attorney general’s efforts to go after illegal gambling by clarifying Missouri law and giving Hanaway’s office criminal jurisdiction to go after violators.
The bill’s chances in the Senate remain unclear. On Tuesday, Senate President Pro Tem Cindy O’Laughlin, a Shelbina Republican, questioned the need for the legislation.
“The federal courts have issued a decision that the machines are illegal,” she wrote. “Why are we not just clearing them out?”