Gambling for Prizes is Still Gambling

Commentary by Jim Day

On April 20th the Republican-led Missouri Senate passed SB913, a seemingly innocuous bill which excluded so-called “amusement devices” from being labeled as “gambling devices.” The ‘devices,’ which the Senators were trying to protect, look and play like real slot machines but instead of paying out cash they dole out coupons that are then exchanged for prizes. They’re known as “slots for tots” because they’re played primarily by young children and can be found in a lot of Chuck E Cheese pizza parlors. They’re also totally unregulated.

The gambling industry loves these machines because they know that if they can psychologically hook kids on gambling at an early age there’s a high probability that they’ll be coming back when they’re old enough to play the real machines for real money.

Fortunately, thanks to the efforts of Mark and Pat Andrews of CasiNO Watch, Abram Messer with Missouri Family Network, and some 30 teens and parents of Phyllis Schlafly’s Teen Eagles, SB913 was stopped dead in its tracks in the House.
In addition to the ‘slots for tots’ there are a number of other unregulated machines which can be found in bars and truck stops across the state. These are video games similar to slot machines which also offer prizes. Fortunately, these machines were the topic of a special meeting on July 31st held by the Joint Committee on Gaming and Wagering chaired by State Senator John Loudon R-Chesterfield.

Thanks to CasiNO Watch and Senator Loudon, Ernest Raub, an enforcement officer with the Missouri Gaming Commission, spent some 40 minutes testifying before the committee and really opened some eyes to the criminal problems with these machines. As a result of Raub’s testimony a letter was sent to Governor Blunt asking him to make shutting down illegal slot machines a high priority. The following is the press release from Senator Loudon’s office.

August 1, 2006

Senator John Loudon, R-Chesterfield, has encouraged Gov. Matt Blunt to make shutting down illegal slot machines in Missouri a high priority of his administration. Revelations of the presence of as many as 1,000 such illegal machines, often unfairly rigged against patrons, sparked a unanimous call for Gov. Blunt’s help. In a unanimous decision, the Joint Committee on Gaming and Wagering, which is chaired by Loudon, asked the Governor to implement a strict definition of illegal gambling devices.

“Illegal gambling machines have a negative impact on Missouri’s economy and are strictly prohibited under state law,” Loudon said. “Nevertheless, distributors of these devices are rarely prosecuted. That needs to change.”

Illegal gambling devices include any gambling machines in which a game of chance is tied to a valuable reward. They are not overseen by the state and are, therefore, not subject to taxation. State gambling laws, and prosecutions against offenders, are under the oversight of the Missouri Attorney General, according to Section 572.110 of the Missouri Revised Statutes.

Ernest M. Raub, a gaming enforcement manager for the Missouri Gaming Commission, testified to the committee, at Loudon’s request, that illegal gambling machines typically pay out an average of $100-200 per day, and some average up to $500.

The business model has machine manufacturers or owners acting as distributors who aggressively seek establishments in which to place the machines. The proprietor will pay nothing for the machine, but will split the take with the distributor.

“This is a business where everyone involved has tricks to cheat everyone else,” Raub said. “It’s ripe for all kinds of abuse and crime.” Payment of taxes on these profits is considered a rarity.

While illegal gambling devices operate under Missouri’s legal and economic radar, they also offer unhealthy opportunities for gambling addicts. The more than 10,000 Missourians who have willingly signed up for the Missouri List of Disassociated Persons, which bans individuals from being allowed into Missouri casinos, are provided an opportunity to relapse due to illegal, unregulated and unaccountable devices.

“The List of Disassociated Persons is a tool to keep problem gamblers from being allowed to feed their addiction,” Loudon said. “However, tolerating the existence of these devices in virtually every county in the state is a dereliction of our duty to help people as they try to help themselves. Illegal gambling devices allow individuals who have worked to beat their addiction to come in through the back door.”

Loudon called on Missouri officials to take cues from their Illinois counterparts. Loudon cited Southern Illinois federal court decisions from the 1990s involving an illicit gaming network that included Amiel Cueto, Thomas Venezia and the B&H Vending Corporation.

“Illinois officials have won prosecutions for racketeering, obstruction of justice and conspiracy to defraud the United States,” Loudon said. “There is no reason why Missouri should show less resolve than our neighboring states in prosecuting individuals who are clearly in breach of state and federal laws. This is a rampant corruption that we appear to be tolerating in Missouri.”

Governor’s Office Replies

Governor Blunt’s spokesman Spence Jackson responded by stating that the attorney general had jurisdiction over the matter and would be the proper source for a legal opinion.

Peter Lobdell, state supervisor of the Division of Alcohol and Tobacco Control, said his agency had no authority to arrest people or seize illegal gambling machines. He said the Missouri Gaming Commission’s enforcement powers were limited to places that serve alcohol and to licensed gambling facilities. Lobdell also stated that the division is working on recommended changes in law to clarify responsibility, but that it supports allowing and licensing of certain machines and gambling activities for fraternal and religious organizations or similar nonprofit groups. According to Lobdell, such a change would make it easier for law enforcement to pursue and seize illegal gambling machines.

Officer Raub however disagreed and said the scope of the problem is elusive because there’s no centralized system for reporting illegal gambling activity or the results of such tips and cautioned against legalizing gambling machines outside of casinos. “Many of these machines are programmed to cheat the player. I don’t think the state should be legalizing machines that cheat the player,” he said.

Raub continued by stating that there would be a ton of problems with legalizing these machines and said that allowing individual machines in many locations would make it impossible to control or regulate them.

Gambling for prizes is still gambling. Hopefully our elected officials will do the right thing and make all of these prize awarding machines illegal. I guess we’ll see.