Missouri Seeks Solution To Grey-Market Games, No Love For Virginia's Skill Game Ban

December 8, 2021
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Despite overwhelming opposition from the Missouri gaming industry, a veteran state senator will continue his efforts in the next legislative session to legalize video lottery terminals in bars and truck stops to replace thousands of unregulated devices.

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Despite overwhelming opposition from the Missouri gaming industry, a veteran state senator will continue his efforts in the next legislative session to legalize video lottery terminals (VLTs) in bars and truck stops to replace thousands of unregulated devices.

Missouri has struggled for several years to find a solution to the proliferation of skill-based or grey market games, even as state law enforcement agencies in recent years have conducted several high-profile seizures of illegal games from local retailers.

Currently, authorities estimate there are 14,000 to 20,000 of these games in Missouri. State law is clear it is illegal to have VLTs, slot machines or skill-based games outside a casino.

Republican state Senator Denny Hoskins pre-filed Senate Bill 906, known as the Video Lottery Control Act, that would replace the illegal gaming machines with VLTs regulated by the Missouri Gaming Commission (MGC).

It is the second consecutive session that Hoskins has introduced a measure to legalize VLTs. He has also unsuccessfully tried to get lawmakers to agree to legalize sports betting in the Show Me State since the U.S. Supreme Court overturned the federal ban more than three years ago.

Hoskins efforts to legalize the terminals earlier this year were strongly opposed by Republican Senate President Pro Tem Dave Schatz, whose bill granting the MGC authority to go after grey-market machines failed to gain traction during the legislative session.

In April, the Senate reached an impasse on Senate Bill 98, sponsored by Hoskins, that would have licensed up to 10,000 VLTs in bars and truck stops, with no location allowed more than five machines.

The bill would have allowed the MGC to license the state’s 13 casinos to offer sports betting.

Hoskins’ bill, which he filed last week, restricts the commission to no more than 15,000 VLTs state-wide with 36 percent of the gross receipts directed to the state’s education system. The maximum wager would be $5, while the maximum cash payout would be capped at $1,000.

“We can’t be certain just how much money is being generated by illegal devices, but I’m confident it is in the multiple millions,” Hoskins said in a statement.

“Other states have adopted legislation similar to what I am proposing, and their experience has produced a solid revenue stream and has eliminated fraud and tax evasion.”

Currently, nine states — Illinois, Louisiana, Montana, Nevada, New Mexico, Oregon, Pennsylvania, South Dakota and West Virginia — have legalized and regulate VLTs outside traditional commercial and tribal casinos.

Hoskins said his proposal requires a central communication system to oversee the placement and movement of VLTs in Missouri. The system will also maintain accounting of the operations, play, fund-in, payouts, and revenue.

He also wants VLTs to be tested by an independent entity.

“Currently, Missouri is the Wild West of illegal gaming devices,” said Hoskins, who chairs the Senate Economic Development Committee.

“Nobody knows what the payouts are and nobody knows if the consumer is protected.”

Hoskins’ bill would also legalize retail and mobile sports betting in the state. Retail and interactive providers would pay a 21 percent tax rate, $50,000 application fee, and includes one skin per casino operator.

It is unclear if Hoskins can garner enough support among his colleagues when they return to the State Capitol in Jefferson City on January 5 for the 2022 session.

Hoskins also pre-filed Senate Bill 642, a bill focused solely on legalizing VLTs, while Senate Bill 643 is a sports betting and raffles bill.

In the House of Representatives, Republican Phil Christofanelli has filed House Bill 1666 that would allow for state-wide mobile and retail wagers tethered to casinos. Christofanelli’s bill sets the tax rate at 6.75 percent and does not include a league data mandate, but does allow the leagues to request that certain bets be banned.

Mike Winter, executive director with the Missouri Gaming Association, believes there would be enough time during the five-month session to deal with any number of gaming bills that are filed.

“We’ve got to deal with redistricting early in the session. That has to get taken care of,” Winter said. “We also have appropriations to allocate some of the federal dollars Missouri has received.”

Winter told VIXIO GamblingCompliance he did not express support for any of the pre-filed measures but said the association want to try and get a standalone sports-betting bill and not get bogged down with other issues that have been in previous bills such as VLTs or skill-based games.

“We are opposed to skill-based games,” he added. “We are hopeful we can get some movement on a sports betting bill. We have no interest in internet gaming, we are taking sports betting.”

Virginia Judge Blocks Skill-Game Ban

Virginia’s ban on skill-based or grey-market games has been temporarily set aside by a Greenville Circuit Court judge who will hold a trial on the issue in May. A spokeswoman for attorney general Mark Herring said Tuesday (December 7) they had nothing to add at this time.

The Virginia General Assembly voted in 2020 to ban the machines from July 2020 until Governor Ralph Northam, a Democrat, insisted upon a 12-month reprieve to raise money through monthly fees for a coronavirus relief fund.

According to the Virginia Alcoholic Beverage Control Authority, retailers paid more than $88.2m to the commonwealth during that one-year reprieve.

The lawsuit seeking to overturn the ban was filed earlier this year by Hermie Sadler, a former NASCAR driver who operates a truck stop. Sadler argued that the ban was unconstitutional and has adversely impacted small businesses.

“We remain hopeful that skill games will achieve a solid footing and that skill games are permitted to continue operating in the Commonwealth for a long time,” Pace-O-Matic of Virginia, a manufacturer of the games, said in a statement.

The Richmond-based company noted that the court’s injunction would allow their games “to go back online immediately.”

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