Inside The Illegal Machines That Are Holding Up Missouri Sports Betting

Concerns abound regarding 'gray market' machines that dent the bottom line of the state's 13 casinos
Missouri Sports Betting Illegal Machines

It’s a little after 1:30 on a bright, sunny midweek afternoon at Overland Food Mart & Liquor. A steady trickle of customers enters the shop along a busy stretch of Page Avenue in a working-class town in St. Louis County.

The store sits next to a doughnut shop with a broken front window, just a little west of St. Louis city limits and a little south of St. Louis Lambert International Airport.

One young man with sagging jeans buys a couple of mini-bar size José Cuervo bottles. A 70-something man in sunglasses and a navy cap purchases a bottle of Remy Martin and two 40-ounce cans of malt liquor.

Three machines that look an awful lot like slot machines sit in the far corner of the liquor store. The bearded young man working the register, who declines to share his name, says customers play the machines throughout the day. Some days, they are waiting outside for him to unlock the doors at 6 a.m.

Stephen Beal, a middle-aged part-time landscaper with a shaved head, scruffy beard, and neck tattoo, is playing one of the machines that says, “NCG Deluxe.” He says he has won as much as $225 from the machines in one sitting, but has lost far more than he has won over the years. He has a friend who is hooked on them.

“Her boyfriend takes care of her and the house and the bills and stuff like that, so her money is just her money to play the slots,” Beal said. “I’ve seen her lose $500 in one sitting. I try to tell her sometimes, ‘You got to take the small wins. That way you’ve got it for later.’ But she’s like, ‘It’s got to hit. It’s got to hit sooner or later.’ I’m like, ‘No, it don’t. It does not have to hit.’”

The machines have become a big topic of conversation about two hours west of the store, in the Missouri capital of Jefferson City.

Machines proliferate over last six years

The Missouri Gaming Association, which represents the 13 legal casinos in the state, estimates there are roughly 10,000 of the type of machines Beal was playing last week, machines that often are referred to as “gray market” machines, but in court rulings have been consistently found to be illegal. Two class-action lawsuits on behalf of individuals who have lost money playing the unregulated, high-hold machines have been filed in Missouri seeking damages from an operator of the machines and the gas stations that house them.

Due to a lack of enforcement as well as the inability of the Missouri Legislature to address the proliferation of the machines, they have been steadily eating into casino revenue in the state.

“Over the last, let’s say, six to eight years, we’ve seen more and more of these machines in a wide variety of locations across the state,” said MGA Executive Director Mike Winter. “They’re in close proximity to our casinos, which I think has a direct impact on the conditions we’re seeing. If you look at admission numbers over the last six or seven years, they’ve been declining, and I happen to believe part of it is the easy access of these slot machines that are now available to the public at convenience stores, truck stops, bars, and restaurants.”

Sports betting held hostage

But that’s only half the battle for the MGA and its member casinos, which also are doing some last-minute lobbying to help support the passage of sports betting, which has been held up due to one Missouri state senator’s insistence that it be linked to the issue of off-casino slot machines in the state.

Denny Hoskins, a Republican from Warrensburg, isn’t advocating for the legalization of the type of gray-market machines Beal was playing. Instead, he would like to see Missouri legalize and regulate slot machines off casino grounds, similar to what neighboring Illinois has done with its legal video gaming terminals (VGTs). Casino operators are as adamantly opposed to that effort as they are to the inaction on the part of Missouri law enforcement to crack down on the illegal machines. Winter said casino revenue is off 20 to 25% in Illinois since that state legalized the VGTs in 2009.

According to the Illinois Gaming Board, there were 8,291 locations offering video gaming and a total of 45,573 machines in operation in the state. Missouri casinos combined have 14,494 slot machines, so the casinos fear the legalization of any slot machines outside casino grounds. They also would love to see state leaders do something about the lack of enforcement around the illegal machines.

“PENN adamantly opposes any effort to legalize so-called ‘skill’ machines that are proliferating on street corners on every main street in Missouri,” said Jeff Morris, vice president of public affairs and government relations at PENN Entertainment, which owns Hollywood Casino St. Louis, River City Casino, and Argosy Casino in Riverside. “These companies should not be rewarded for operating outside the bounds of the state’s robust regulatory system. We will continue to urge lawmakers, law enforcement, and the courts to crack down on their operations that are multiplying in broad daylight next to schools and houses of worship with no regard for the safety of the citizens of Missouri.”

At the moment, Winter and his colleagues are concentrating on sports betting, hoping to add it as part of an amendment to another bill, now that Hoskins has twice blocked passage of legal sports betting and two bills this year appear to be withering on the vine in committee. Of the eight states surrounding Missouri, six have implemented legal sports betting and Kentucky is preparing to do so. This is the final week of the current Missouri legislative session, and no one thinks it’s looking particularly promising for the state to pass sports betting in 2023.

“We’re running out of time, and both chambers have pretty much moved on,” Winter said.

Hoskins doesn’t disagree with his legislative adversary on this particular point.

“I think it’s an uphill battle to pass sportsbook or any gambling bill this session,” Hoskins said in a recent interview with KMOX radio in St. Louis.

Why Hoskins is so adamant about tying the fate of the machines to sports betting is a bit of a mystery to many of the people looking into the matter. An amendment introduced by Sen. Nick Schroer to Senate Bill 30, one of the sports betting bills, failed, but Hoskins hasn’t given up the fight. He says legalizing the machines would contribute roughly $250 million in new taxes for K-12 education and to help improve veterans homes, a cause dear to his heart.

“In my mind, when we talk about gambling, I think it’s all one discussion,” Hoskins said, “whether we’re talking about the unregulated VLTs that are in these places in Missouri, whether we’re talking about having sportsbooks in the state, or whether we’re talking about legalizing video lottery terminals, a regulated form of what we see out there today.”

Part of Hoskins’ insistence, some believe, stems from campaign contributions from the makers of both types of machines — the unregulated machines Missouri already has and the regulated machines across the Mississippi River in Illinois. The latter is where the real money has come into Hoskins’ war chest.

Public records supplied by the Missouri Ethics Commission indicate Hoskins has gained significantly from campaign contributions from the machine makers since 2018, either directly via Citizens for Hoskins or via his political action committee, Old Drum Conservative PAC. Among the largest donations were $35,000 from the MO Coalition for Video Lottery PAC last June and $10,000 from the same PAC in December 2021. J & J Ventures Gaming, which operates VLTs in Illinois, kicked in $5,000 to his campaign coffers in October 2018.

“I don’t want to make the assumption it’s campaign-contribution driven,” Winter said. “Sen. Hoskins has always talked about wanting to help veterans and other organizations who would receive additional funding from one of these measures, so I take it on face value that that’s one of his goals as well.”

Support for sports betting appears robust

Meanwhile, casino operators looking to start up sportsbook operations in the state, teams eager to sign partnership deals with them, and the state’s would-be sports bettors are left in the lurch. Brett Koenig of Wentzville, Missouri, was so frustrated by having to drive roughly an hour from his home to make sports bets in Illinois that he and his friend, Dale Ludwinski, launched a blog and social media presence called “Let MO Play,” in which they have interacted with several Missouri legislators about the delay in legalizing sports betting.

Koenig said he sees the illegal machines at a gas station near his house every day and marvels that such a nuisance crime could be the thing holding up Missouri from adopting legal, regulated sports betting.

“I think for myself and a lot of sports fans and sports bettors, that’s the most frustrating part. It doesn’t feel at this point like it’s a matter of foresight holding it up,” he said. “It seems like the vast majority in the legislature want to do what they can to get it passed, but there are a few bad actors holding up the show.”

Photo: Mark Saxon


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