A bill to authorize video gambling machines commissioned by the Missouri Lottery got off to a fast start in the Missouri House, clearing a committee just 12 days after it was introduced in late January.
The bill then stalled on the next step, and a month passed before the House Rules-Legislative Committee approved it for placement on the calendar for debate. Now, as April is about to begin and lawmakers have only seven weeks to complete their work, it is uncertain whether that debate will take place.
The bill has the backing of House Speaker Jon Patterson of Lee’s Summit, but he’s not sure the rest of the GOP caucus is ready to follow him.
“It’s a matter of, do we have a majority of the people in the chamber that feel the same way?” Patterson said Thursday at the weekly House Republican news conference. “That I don’t know.”
For more than five years there have been legislative efforts, ultimately unsuccessful, to expand legal gambling through video lottery games and sports wagering — and to shut down unregulated games offering cash prizes that can be found in bars, truck stops and convenience stores across the state.
The proliferation of what are called gray market machines is one of the best arguments for authorizing video lottery games, Patterson said.
“If people are doing it, I would rather have them regulated and taxed and to make sure that kids aren’t doing it,” he said. “So I’m in favor of the bill itself.”
The legislation sponsored by state Rep. Bill Hardwick, a Republican from Dixon, has been revised since it was introduced and another major revision is awaiting action on the House floor. To win votes, an amendment Hardwick intends to propose would cut the number of machines allowed at each location to eight and add provisions allowing local governments — cities for incorporated areas, counties for unincorporated locations — to conduct votes on whether to allow video lottery terminals.
He also removed all provisions of the bill that would have eliminated the gray market machines. Instead of phasing them out six months after video lottery is launched, retailers could keep them if they prefer rather than become lottery outlets.
They could not have both.
Last week, Hardwick had a pad of lined paper in hand, going from member to member on the floor to see if he had enough votes.
“I think that we can pass it out of the House,” Hardwick said. “I think that we should pass it out of the House.”
The best argument he has for the bill, Hardwick said, is its potential to produce revenue for state education programs. Gov. Mike Kehoe didn’t recommend a $300 million increase in the state public school formula that would fully fund the program, calling it too expensive.
According to the fiscal note, video lottery would produce $112 million in the first year and almost $350 million a year when fully operational.
There is a substantial surplus currently in the state general revenue fund, but revenues are not growing and the Republican majority wants to cut state income taxes.
“A lot of my members are thinking about the fact that the state’s going to have some tough budget times ahead, and by making a few regulatory and structural changes, we could change revenues without raising taxes on people,” Hardwick said.
For several years, the issue of gambling was a triangular debate.
Casino companies and professional sports teams eager for the revenue from sports wagering opposed the video game vendors pushing for the new form of lottery game. Both were opposed at times by lobbyists for Torch Electronics, the largest of the gray market operators and a prolific political giver.
Torch didn’t want any bill that would make the law clear on the legality of its games.
It has been active both in the legislative halls and the courtroom, where it unsuccessfully sued the Missouri State Highway Patrol to block criminal investigations of its machines.
A representative of Torch declined to comment on the revised bill.
A campaign organized by major sports teams and bankrolled by online betting platforms in November won approval of sports betting for Missouri. While that issue is off the table, casinos aren’t backing down from their opposition to video lottery games.
The number of people visiting Missouri’s 13 casinos in the final six months of 2024 was down 25% from the same period of 2019, which is about the time the unregulated machines were making their debut. The remaining casino gamblers are each losing more, on average, and net winnings for the casinos have gone up 8% in that same period.
What the figures say is that small-dollar players are choosing to play the unregulated machines, said Michael Winter of the Missouri Gaming Association.
The association considers the unregulated machines to be criminal gambling devices and the proposal for video lottery to be unconstitutional. The only place slot machines are legal, he said, is in the 13 casinos licensed by the Missouri Gaming Commission.
“I don’t think the market has stopped growing when you look at either illegals or the potential that putting in more slot machines than every location around the state could have on our properties,” Winter said. “So we think there’s still more downside and revenue we could lose if bills like this are passed.”
The bill’s controls on improper play, such as by people under 21, are too loose, Winter said.
“They don’t have set aside rooms,” he said. “They don’t have licensed personnel overseeing the machine. You’ve got a person at the counter who’s in charge of making sure that only 21-year-olds play the machines.”
The changes in Hardwick’s proposed amendment are essential to winning passage, said Andy Arnold, a lobbyist for J & J Ventures, a vendor for video lottery games.
He thinks a bipartisan majority of the House can be assembled to pass the bill, but it would be close. To get to the Senate, a bill must win 82 votes from the 163-member House.
A provision that requires the games to be in a place “distinct and divided from the primary business operation area” was important to calming fears that minors may be playing the games.
Arnold has been working to get video lottery legalized for 10 years. The arguments from the casinos are more about market share than legality, he said.
“It’s just a matter of time before people see through and see that it’s nothing more than competition,” Arnold said. “They don’t want the competition. But they’ve already got the competition from the illegal machines.”
