House bill would regulate gambling machines

by Sterling Sewell, Missouri News Network

A bill heard by the Missouri House Committee on Emerging Issues on Monday could see the establishment of a regulatory system on video gambling machines.

The machines, formally known as “no-chance” machines, have spread across the state in convenience stores and gas stations. They operate within a legal gray zone with no explicit laws legalizing or prohibiting them.

“I think that what we owe all of the businesses in the state of Missouri is regulatory certainty as to what exactly is authorized by the law, what exactly is not authorized by the law,” Rep. Bill Hardwick, R-Dixon, the bill’s sponsor, said during testimony.

The machines are called “no-chance” because they do not use a random number generator to determine outcome, instead there are a fixed number of outcomes that rotate. Often, customers using these machines can preview the outcome.

Hardwick’s bill would prohibit any new “no-chance” machines in the state. The bill would also create a pathway for owners of “no-chance” machines to replace their current machines with new regulated machines, known as Video Lottery Terminals.

These terminals would be required to function with a random outcome, track play history and be connected to a centralized computer system developed by the state lottery commission, along with other regulations on function.

The bill also seeks to place limitations on who can manufacture and operate these new terminals through a licensing system and provides a mechanism for funding of the Missouri State Highway Patrol to impose these regulations.

Legislation on video gambling machines is not new to the assembly. Two pieces of legislation aimed at legalizing video gambling machines were proposed in 2023 by then-senator Denny Hoskins, and Sen. Karla May, D-St. Louis.

Hoskins’ bill married the legalization of the machines with the legalization of sports wagering. When his bill did not pass, Hoskins filibustered two bills which would have legalized sports betting separate of the machines.

If passed, the bill would allow the State Lottery Commission to require game manufacturers, distributors, operators and retailers to pay an initial nonrefundable license fee for the first year. The license would then be renewed at a lower cost every five years. The money acquired through these licenses would go into the State Lottery Fund.

Additionally, operators and retailers must each pay half of a $1,000 annual fee for each Video Lottery Terminal in service. Two hundred dollars of each $1,000 would go into the State Lottery Fund. The remainder would go toward funding enforcement of the regulations, the Missouri Veterans Commission and the local municipalities the machines operate in.

The bill would also require operators to pay roughly a third of the revenue made from the machines to the State Lottery Commission. The commission would use this money to cover administrative costs. It would give 10% of the revenue generated by the machines within a municipality or county to the general revenue of that county. Any further money would be put in the State Lottery Fund.

The State Lottery Fund is earmarked for use in public education. In the 2024 financial year, lottery proceeds toward the Missouri Department of Higher Education were $95 million and proceeds toward the Missouri Department of Elementary and Secondary Education were $432 million.

During the hearing, several members of the committee questioned a section of the bill which would remove any current regulations on video gambling machines by counties or municipalities. The counties and municipalities would also have to wait one year before being able to add any other regulations on the machines.

Hardwick said that any current laws restricting video gambling machines would not apply to Video Lottery Terminals because the new machines do not exist and current regulations should not apply to them.