A Missouri House committee heard testimony Tuesday evening on legislation that would legalize and regulate video gaming machines found in gas stations, fraternal organizations and other locations throughout the state.
Lawmakers discussed the bill for about three hours, hearing arguments to advance or reject it. Proponents of legalization say the machines should be regulated and taxed, while some opponents say that local communities don’t want them.
Rep. Bill Hardwick, R-Dixon, sponsored the legislation this session as well as last year.
“This gaming is happening throughout the state with no rules, regulations. I think that people in the state overwhelmingly would like to see at least some rules and regulations, some confines to it,” Hardwick said. “And if that activity is happening, they would like to see it taxed in a way similar to the way we think gambling should be taxed.”
The legislation requires the State Lottery Commission to create a system of video gaming machines as well as issue licenses to manufacturers, distributors, operators, handlers and retailers.
Under the bill, no one entity would be responsible for implementing the system.
The terminals themselves would be connected to a centralized control system that is either developed or obtained by the lottery commission. Those machines must be always connected to that system.
Additionally, the legislation includes a maximum wager limit of $4 per game. The bill limits the number of machines an operator may have at any one retailer location to eight. People under the age of 21 would be barred from playing.
Rep. Emily Weber, D-Kansas City, expressed concerns over enforcing the age limit.
“Let's say a 16-year-old goes in there, puts some money in, or puts a debit card, wins, and then we find out it's a 16-year-old. Who's in trouble?” Weber said.
Operators of the machines must pay the lottery commission 31% of the adjusted gross gaming revenue. Of that revenue, the commission is to keep the amount necessary to cover administrative expenses. The rest would be split evenly between public elementary and secondary education and public institutions of higher education.
The operators must also pay to the Department of Revenue a “municipality and county administration” tax. That tax is 3% of the adjusted gross gaming revenue.
Counties and municipalities would have the ability to decide whether they want to ban the machines. The legislation allows any counties and municipalities to adopt an ordinance banning the machines within 90 days after the bill goes into effect.
Some legislators on the committee want to change that time period.
“My experience with those kinds of local governments is they don't operate that quickly, in general, so I would consider looking at making that a bit longer,” said Rep. George Hruza, R-St. Louis County.
Currently, the legislation has a delayed enforcement period of one year after the bill goes into effect.
For years, legislation legalizing and regulating video gaming terminals was tied to bills that legalized sports betting. Attempts to pass bills that contained both measures ultimately failed.
Now, with sports betting in Missouri’s constitution, there remains a push to regulate the gaming machines.
The machines, sometimes called video lottery terminals or VLTs or gray machines, have created confusion for the state due to the ambiguity of their legality.
Hardwick said that ambiguity is a reason he has worked on this bill.
“There’s a need for action, for the legislature to clarify what’s legal and illegal,” Hardwick said.
Some proponents, like Eric Zahnd with the Missouri Association of Prosecuting Attorneys, want a clear statute that would make their jobs easier.
“I don't care what the law is, make them legal, make them illegal, but do something because the law right now doesn't work. You guys get to decide, are they legal or are they not legal?” Zahnd said.
Meanwhile, Jared Hankinson with the Missouri Chamber of Commerce, said the bill does multiple problematic things at once.
“It creates unequal regulation within the same industry, it retroactively legitimizes unlawful operators, and it expands high-risk gambling into vulnerable communities without adequate safeguards,” Hankinson said.
Last session, House members ultimately passed the legislation with a tight vote of 83-73. However, the legislation did not go far in the Senate, with the bill not making it out of committee.
Even if the House passed the legislation again this year, it would face an uphill battle in the Senate.
Senate Majority Floor Leader Tony Luetkemeyer, R-Parkville, said before the session began that he did not believe there was an appetite to pass legislation legalizing the machines in the Senate.
Luetkemeyer referenced a failed vote taken a couple of years ago that would have added the legalization of the machines onto a sports betting bill.
“I think that vote probably reflects the sentiments of the majority of the senators, and I just don't see a realistic path for that,” Luetkemeyer said.
The legislation is HB2989.
