The CEO of the American Gaming Association (AGA) brought his campaign over “grey-market” machines, or skill-based games, to the heart of the Deep South on Wednesday (May 4) to urge support for a campaign to ban the products that have proliferated in gas stations and convenience stores in recent years.
Still, it is unclear if the opposition of the AGA to these machines will move the needle on ongoing efforts in several states to ban them, as supporters of a prohibition are forced to negotiate with fellow lawmakers who see the machines as a new form of tax revenue.
Currently, any efforts to deal with unregulated games in Missouri have stalled as supporters of legalizing video lottery terminals (VLTs) have filibustered a sports-betting bill on the Senate floor.
Republican Senator Denny Hoskins, who supports legalizing VLTs to replace unregulated grey-market games, wants language permitting the terminals in the state included in the sports-betting bill, with any action on alternative legislation to tighten the state's laws on illegal gambling seemingly on hold.
The Missouri legislature adjourns on May 13.
Missouri has legal gambling in the form of a state lottery, 13 casinos, charity bingo and raffles. The unregulated “grey-market” machines have proliferated since 2019, with lottery officials estimating some 15,000 to 20,000 machines are in convenience stores and other retail locations.
Unregulated gaming machines in Missouri and other states are “one of the biggest threats to our industry, and one that unites all facets of the regulated gaming industry (from) tribal, commercial operators and suppliers,” Bill Miller, president and CEO of the AGA, told delegates at the Southern Gaming Summit in Biloxi, Mississippi, on Wednesday.
“Unregulated skill-game machines, offshore sportsbooks and casinos put consumers at risk and infringe on our business,” Miller said.
Miller reminded gaming regulators and casino executives that “bad actors” enjoy enormous competitive advantages over licensed gaming operators by not paying state or federal taxes or compliance costs, while making no investments in problem gambling programs.
“[The] illegal market undermines confidence in legal operators and harms consumers,” he said. “They prey on the most vulnerable … [are] tied to criminal activity, including money laundering, drug trafficking, and violent crime.”
Miller noted he recently submitted a letter to U.S. attorney general Merrick Garland asking the U.S. Department of Justice (DOJ) to educate consumers about illegal gaming and clarify that skill-based machine manufacturers must still comply with Johnson Act registration requirements and anti-money laundering (AML) standards.
The Johnson Act of 1934 is a broad federal law that prohibits the shipment of gambling devices across state lines. The law does, however, allow shipments of gambling devices to states or localities that have passed legislation that specifically exempts that jurisdiction from provisions of the federal law.
After its passage, the law was amended by the Gambling Devices Act of 1962, which clarified the kinds of devices covered and the reporting requirements for dealing with those gaming devices.
Miller said Wednesday he also asked the attorney general to pursue aggressive enforcement actions against those that do not fully comply with federal law.
He also said states need to strengthen laws to close loopholes that undermine regulations.
“Blatant disregard for the law, regulation and taxation creates a competitive disadvantage for the tax-paying, law-abiding operators who play by the rules,” Miller said.
Lawmakers in Kentucky were close to passing a measure banning skill-based games this short but came up short as the House did not take up an amended bill last month on the last day of the 2022 legislative session.
In Pennsylvania, a measure to ban skill-based games remains in limbo as its waits to be considered by a Senate committee. In Virginia, Republican Governor Glenn Youngkin recently signed two bills to tighten Virginia’s laws related to illegal and unregulated gaming and create a gaming enforcement coordinator within the Virginia state police.
“It’s long past time we put an end to it,” Miller said.
In his speech on Wednesday, Miller also told attendees that elevating gaming’s leadership on environmental, social and governance (ESG) issues, and promoting an environment where gaming can thrive, remain key priorities for the industry.
“Expectations of businesses have increased,” Miller said. “[It’s] no longer just about job creation and revenue. Investors, lawmakers, activists, customers, employees want to know more about how companies are operating, commitments they’re making.”
He said the AGA and its members are committed to environmental sustainability, diversity, equity and inclusion, community partnership, and responsible leadership.