JEFFERSON CITY — A court case in western Missouri could help decide whether the state can shut off a pipeline of potentially illegal gambling machines flooding into the state.
At the same time, the legal action brewing in Platte County could help determine the path of a long-sought expansion of gambling in the Show-Me State.
After a legislative session that saw no agreement on whether to legalize sports betting and slot machines, Platte County Prosecuting Attorney Eric Zahnd’s case against a Kansas-based supplier of gambling devices is now in the spotlight.
The case started in October 2018, when Parkville police seized five video poker-like machines from two convenience stores. The owner of each store said the machines had been placed in their establishments by Integrity Gaming LLC.
The machines 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 court records, company officials say their terminals are not gambling devices because the outcome is each game is predetermined.
“The games have no element of skill,” a March 20 police report notes.
Zahnd sees it differently.
“We believe these sorts of machines are illegal under Missouri law,” Zahnd said.
A court date has been set for December.
“Ultimately, the court is going to have to decide,” Zahnd said.
In the meantime, places like the Fast Lane gas and convenience store in Ashland have cleared space to allow companies to place terminals in their businesses. On a recent Friday afternoon, an Ashland police officer stood less than 10 feet away from two of the machines as he paid to gas up his cruiser.
The proliferation of such devices in Missouri has triggered alarm bells among lawmakers, who have been weighing whether to expand gambling.
After the U.S. Supreme Court lifted a ban on states’ allowing wagering on sports, lawmakers began eyeing the potential tax revenue an expansion could bring.
But, gambling industry players have not been able to find a middle ground.
If casinos are going to get revenue from having sports gambling in their venues, gas stations, truck stops and bars want to see revenue from video poker machines like the ones that have been legal in Illinois since 2012.
The Missouri lottery also stands to benefit if the gambling machines are replaced with legal slots that generate tax revenue. But, with many of the machines in stores that also sell lottery tickets, agency officials have been reluctant to make formal complaints.
“We do not want to in any way affect that relationship,” lottery chief May Scheve Reardon told the Post-Dispatch.
In December, Reardon made it clear to her board of directors that the agency wants a piece of the action in order to generate revenue for education. In response, the commission approved a motion that calls for the lottery to maximize its revenue by being included in future gambling expansion plans.
The lottery also wants to make sure people aren’t spending their money on the possibly illegal machines and cutting into what they normally would pay to buy lottery tickets.
Reardon said one lottery sales route along Interstate 44 near Rolla saw an $800,000 drop in revenue over a six-month period. She believes the machines are to blame.
“We know that this will impact our sales in the future,” Reardon said. “It’s going to drastically affect the money that’s being returned to education.”
Senate President Pro Tem Dave Schatz is among state officials who are searching for a way to get the terminals out of Missouri.
In the closing days of the Legislature’s annual session, the Sullivan Republican pushed hard on a legislative proposal to give the Missouri Gaming Commission the power to enforce criminal provisions against businesses with the machines. It also would allow the state to strip businesses of their liquor licenses and lottery licenses if found guilty.
The measure moved out of a committee, but it did not advance to the floor for debate before the General Assembly’s May 17 adjournment.
Since the end of the legislative session, Schatz has met with the attorney general’s office, the lottery, the Missouri Gaming Commission and the governor’s office, seeking to find a way to stop the spread of the machines.
“We continue to see a proliferation of them throughout the state. They are starting to pop up more and more,” Schatz said. “We’re trying to figure out what’s the appropriate way to move forward.”
In the House, Speaker Elijah Haahr, R-Springfield, has formed a special committee to meet over the summer and fall to look into the issue of unregulated gambling.
The chairman of the panel, Rep. Dan Shaul, R-Imperial, said he wants to assess the industry and determine if the state has a problem with potentially illegal machines.
“If we do, what do we do to fix it?” Shaul said. “Where do we go from here?”
At the same time, he wants to ensure fraternal organizations that have long relied on the machines are not penalized.
“It’s not a witch hunt,” Shaul said.
The lottery also is looking for a solution.
Later this month, the lottery commission will be asked to approve a study seeking to show how the machines have diverted money away from state coffers.
“It’s very frustrating to us because we’ve run an incredible business for 33 years,” Reardon said.
Zahnd and Schatz said the growth in the number of terminals is directly tied to the push to bring video poker to Missouri.
Legislation that would allow for truck stops, bars and fraternal organizations to have a set number of terminals also was debated by lawmakers, but it did not advance because of disagreements between the casinos, sports betting interests and lobbyists for the video gambling industry.
“Obviously the two issues are tied together. I believe these are placeholders. The companies that are doing it are establishing relationships,” Schatz said.