Casinos plan appeal of ruling in unregulated slot machine lawsuit

Slot Machines

(Missouri Independent) – An appeals court will be asked to take another look at whether a trade association for Missouri casinos can sue a company that puts video games offering cash prizes in convenience stores and other retailers across the state.

The Missouri Gaming Association said in a news release Wednesday that it will appeal the decision that dismissed its claims against Torch Electronics. That same decision, issued Monday by Cole County Circuit Judge Daniel Green, also dismissed the case raised by Torch and convenience store operator Warrenton Oil accusing the Missouri State Highway Patrol of harassing the company by investigating its games.

“Torch Electronics is an illegal competitor and its illegal gaming devices are harming our members,” the gaming association said in its statement.

Chuck Hatfield, the attorney for Torch and the other plaintiffs said in a text message he will also file an appeal of Green’s decision. 

“We look forward to our day in court and a determination that these amusement devices are legal,” Hatfield said.

Torch filed the lawsuit in early 2021 when it faced felony charges of promoting gambling in a Linn County case. That charge was dropped early this year by a newly elected prosecutor.

In a written decision issued late Monday, Green said that there were other venues, aside from his court, where Torch could raise its objections to the patrol’s investigations.

“(T)he controversy is not ripe and plaintiffs have adequate remedies at law,” Green wrote.

He also ruled he didn’t have the power to grant what Torch wanted.

“(T)he relief sought is outside the jurisdiction of this court in which it is asked to invade/limit the exercise of legitimate police power by the defendant the Missouri State Highway Patrol,” Green wrote.

Green dismissed the case the afternoon before a four-day trial was scheduled to begin. If an appeals court revives the case, it would most likely order Green to conduct the trial rather than rule on any of the substantive issues involved.

Torch and other vendors in 2018 started placing video games offering cash prizes in retail locations around the state. In court filings, Torch calls the games “amusement devices” and the state and the gaming association call them illegal slot machines.

Torch argues that a “pre-reveal” feature, showing the outcome of the next play, makes its games legal because it allows players to walk away from the game if they would lose money. The company also argues that because the outcomes are not generated randomly the games do not violate state law.

One vendor of the games, Integrity Gaming, was convicted of felony promotion of gambling in 2021 in Platte County. The company paid a fine and pulled its machines from the state. 

The patrol since 2019 has been investigating complaints and seeking charges in hundreds of cases, usually seizing games made by Torch and other manufacturers as illegal gambling devices. But few prosecutions have been filed and almost none have continued to a final verdict.

The case before Green was seen by many as a way to get a definitive answer on the games’ legality. Efforts by leading lawmakers to clarify the law to define the games as illegal have failed. The legislative question has become mixed into the debate over sports wagering and authorizing the Missouri Lottery to offer video games that would replace the so-called “gray market” machines.

Taxes on casino profits and the lottery’s net after paying prizes and vendors are used to support education programs. Surplus funds from the state’s portion of a $2 entry fee paid by casinos for every person who enters the gambling floor is used to pay operating costs at state veterans’ nursing homes.

Almost 40 million customers entered casinos during the fiscal year that ended June 30, 2018. Only 28.9 million gamblers entered casinos in the most recent fiscal year, which ended June 30. The average amount lost by each patron has increased by 51% in the same period, keeping casino revenue stable despite the lower numbers and indicating that small-dollar patrons have stopped visiting.

“Torch’s illegal gaming devices take money away from veterans, local cities and education in the form of lost tax revenue and admission fees, and this needs to be stopped,” the gaming association said in announcing the appeal.

Rudi Keller

Rudi Keller covers the state budget, energy, and the legislature. He’s spent 22 of his 30 years in journalism covering Missouri government and politics, most recently as the news editor of the Columbia Daily Tribune. Keller has won awards for spot news and investigative reporting.