Missouri House committee votes to legalize video slot machines

JEFFERSON CITY — Torch Electronics and other purveyors of unregulated video slot machines that pay out cash prizes would have up to 18 months to convert to regulated lottery games or shut down under a bill approved Monday in a Missouri House committee.

By an 8 to 5 vote, with several members saying they voted “yes” with reservations, the House Emerging Issues Committee approved a bill sponsored by Republican state Rep. Bill Hardwick of Dixon to authorize video lottery games.

State Rep. Matthew Overcast, a Republican from Ava, said he had unanswered questions and said his vote to move the bill out of committee “is not reflective of how I will vote on the floor, and I am not making a commitment.”

State Rep. Barry Hovis, a Cape Girardeau Republican, voted against the bill, saying the bill needs more work.

“We have not done the due diligence that I think is necessary, and I’ve got probably about four things that are still not clear in my mind on whether we let this go forward,” Hovis said.

Committee Chairman Brad Christ, a St. Louis Republican, agreed.

“Without regulation, we continue to be the wild wild west,” Christ said. “And so I thought this was a fair start.”

For more than five years, Wildwood-based Torch has fought legislative efforts to outlaw its machines and used civil litigation to counter law enforcement attempts to prosecute the company and retailers where the games operate. The company benefited from the tension between casinos, eager to legalize sports wagering, and video lottery game vendors, who wanted to participate in a legal, regulated market.

Torch has also made hundreds of thousands of dollars in campaign contributions during the past five years, funneling the money through PACs associated with former House Speaker Steve Tilley, now a lobbyist. The company claims its machines are legal because there is no element of chance involved. A player can, if they wish, learn the outcome of an upcoming game before they place their bet.

Now, with voter-approved sports wagering set to begin this summer, there is a different dynamic to the debate. The Legislature could, as it has in the past, do nothing and wait for a definitive court decision that settles the legality of the machines.

But that case has been elusive, leaving the remaining question of whether to legalize video lottery to force the replacement of the unregulated machines, or to pass a specific law outlawing the no-chance games.

Torch lobbyist Tommy Robbins declined to comment after the vote.

Andy Arnold, the lobbyist for JJ Ventures, an Illinois video lottery vendor, said Hardwick’s bill does not represent a marriage — at least not a voluntary one — between his company’s interests and those of Torch.

“Litigation is going to continue,” Arnold said. “If we don’t do something, then no chance wins.”

Casinos want to limit slot machine-type games to their 13 licensed locations, said Mike Winter, lobbyist for the Missouri Gaming Association.

“We will oppose any bills that legalize VLTs or have a mechanism to make illegal games legal,” Winter said.

No one knows exactly how many no-chance games can be seen in convenience stores, bars and truck stops across the state. Estimates in the past have generally been in the neighborhood of 10,000 to 14,000. There is no data available to determine how much each machine collects or pays out.

If legal games are an indicator, the amount is likely hundreds of millions of dollars annually. The Missouri Lottery reported $1.7 billion in sales in fiscal 2024 and casinos reported handling $1.9 billion in wagers.

Under the bill, the Missouri Lottery would be given the job of licensing video lottery terminal vendors and regulating their use in retail locations.

No-chance game operators such as Torch would be required to spend $25 for a sticker to show each game has been reported to the state. The games in place as of Aug. 28 would be allowed to remain in place until the lottery launches video lottery games, which would start a 180-day period where the games must be removed.

In an interview after the vote, Hardwick said his chief goals are to put the games under a regulated structure and capture a portion of the revenue for state education programs.

“It’s mainly been my effort to try to come up with a kind of a comprehensive regulatory structure that everybody can live with,” Hardwick said.

The bill splits the net winnings three ways, with close to an equal share for the state and local governments, the companies providing the terminals and retailers. Administrative costs would be paid by licensing fees.

The deal is better than the 95% share for the state from lottery ticket sales — which prizes are paid from — and 5% retained by retailers, Hardwick said.

The fiscal note prepared for the bill estimates that when the games are fully deployed, video lottery would generate $404 million in government revenue, with about 10% going to local governments.

Most of the state’s revenue would be earmarked for education programs, such as proceeds from other legal gambling.

The revenue from no-chance games is often split between businesses and making them immediately illegal would cut off that revenue, Hardwick said.

“My bright lines are regulatory clarity for businesses so that we know exactly what’s legal and not legal and that we set up our local businesses, which includes our VFWs, our convenience stores, for success,” Hardwick said. “And that we raise more revenue for schools.”

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