(Missouri Independent) – Nestled between the offices of a small loan company and an insurance brokerage, Hot Shots Internet Cafe offers neither internet access nor any sort of nourishment.
But what Hot Shots does offer is more than a dozen games that look like slot machines offering cash prizes to anyone willing to risk a dollar.
The storefront represents a new wave in the unregulated marketing of “pre-reveal” games that have proliferated in Missouri since 2018. While most games are found in convenience stores or other locations where gambling is not the primary business, at Hot Shots and similar locations popping up around the state, slot machine-like cash games are the only business.
Himansh Patel of Edgewood, Georgia, owner of Hot Shots, said in an interview with The Independent that he has one similar business in Warrenton. Patel said he also owns convenience stores in Arkansas, Georgia, Missouri, and Tennessee.
He contracts with JK Games, also a Georgia company, to place the machines in his storefronts and convenience stores.
Patel said he picked Moberly because it seemed like a profitable market after he visited the city. There are pre-reveal games in several locations around the community, he said.
“I am trying to give (people) more opportunities to play,” Patel said, “and, you know, just to have some fun for everybody.”
Whether these gaming parlors remain in business could be decided by a lawsuit that was originally scheduled to go to trial Tuesday but was dismissed Monday afternoon by a Cole County judge.
Filed in 2021 by Torch Electronics, a major supplier of the so-called “gray-market” games, and Warrenton Oil Company, a convenience store company that hosts Torch games, the lawsuit accused the Missouri State Highway Patrol of a campaign of “harassment and intimidation.”
The Missouri Gaming Association intervened with a counterclaim arguing Torch operations caused “a loss of business for association members (licensed, regulated casinos) and undermines the public policy of legal, regulated, licensed gaming.”
But on the eve of the trial, Cole County Circuit Court Judge Daniel Green dismissed the lawsuit and all counterclaims. The decision is expected to be appealed.
The patrol since 2019 has been investigating complaints and seizing games made by Torch and other manufacturers as illegal gambling devices. While only a few prosecutions have occurred, and Torch itself is not currently facing charges, the companies hoped Green would declare the games are legal and order the patrol to cease its investigations.
“This lawsuit arose because defendants have engaged in a sustained campaign of threats and harassment against plaintiffs for licensing and housing Torch amusement devices,” Torch attorneys wrote in a recent court filing.
The state asked the judge to tell Torch to raise its arguments if and when the company faces criminal charges.
“Brazenly, Torch wants this court to declare and enjoin MSHP/DPS from its law enforcement duties with respect to electronic gaming devices that are illegal,” attorney Scott Pool, who is representing the state after the attorney general recused himself, wrote in his pre-trial brief.
If a court ultimately finds that the games are illegal gambling devices, Patel said, he will close Hot Shots.
“I am fully legal,” Patel said. “Whatever I do in business is fully legal.”
The stakes
The most obvious element at risk for Torch in its lawsuit is its revenue stream. It has disclosed its annual receipts to the state as part of the lawsuit, but those numbers were sealed prior to trial under an order from Green.
But with thousands of the machines in place, the numbers are substantial. Pool wrote that Torch hasn’t been harmed by enforcement efforts because “profits have increased every year.”
There is, of course, a lot of money at stake. Casinos took in $1.9 billion in fiscal 2023, and the Missouri Lottery sold $1.8 billion in tickets in fiscal 2022, the most recent year available.
But the verdict, whatever the outcome, will also have an impact in courtrooms, legislative chambers, and political campaigns.
In August, St. Louis County Councilman Ernie Trakas called for a crackdown on “illegal gambling” occurring “in plain sight at our local convenience stores, bars, taverns, restaurants, gas stations and beyond.”
No concise estimate is available, but there are likely hundreds, if not thousands, of the devices deployed in the state’s most populous county.
At the Sept. 19 meeting of the St. Louis County Board of Police Commissioners, chairman Brian Ashworth said the question is under review, “looking for a comprehensive solution that includes but is not limited to the police department. We have sought legal guidance on the issue.”
In the legislative halls, efforts to legalize sports wagering have been derailed by lawmakers who want to also allow the Missouri Lottery to offer video gaming. Torch, through influential lobbyist Steve Tilley, works to defeat any bill that would declare its games illegal.
And for political campaigns, a ruling that the games are illegal under Missouri law would force them to consider what to do with the $1.3 million in contributions made since 2018 by Torch and Warrenton Oil – most of it through political action committees controlled by Tilley.
Those contributions have already had an impact on the trial. Pool was hired to represent the patrol and the department in April when Attorney General Andrew Bailey withdrew from the case.
Bailey, appointed to office in January, has not stated a reason for his recusal from the case, but it occurred after he accepted large campaign contributions from the PACs linked to Tilley.
His opponent in the 2024 GOP primary, Will Scharf, said in an interview that he will make Bailey explain why he isn’t organizing prosecutions of the games instead of sitting out the lawsuit.
“These machines are blatantly illegal,” Scharf said. “The Attorney General’s Office does have primary jurisdiction over the prosecution of certain illegal gambling practices, and I think it’s outrageous that the Attorney General’s office is not involved here.”
He sees the machines everywhere in the state, Scharf said. There are often minors watching parents play – something not allowed in casinos – or playing themselves.
“It’s a damning indictment of our political system in this state that this sort of illegal practice has been allowed to go on for as long as it has,” Scharf said.
The prosecutions
There are three criminal charges that Missouri prosecutors have used in cases involving pre-reveal machines.
There is felony promotion of gambling first degree, used 20 times statewide since the start of 2019; a misdemeanor version of that law used on one occasion; and the misdemeanor possession of a gambling device used in 56 cases. Not all gambling charges involve pre-reveal games but many do.
There have been a handful of guilty pleas but only one case has gone to trial. Integrity Vending, a Kansas-based firm, was found guilty of felony promotion of gambling in September 2020 in Platte County and fined $7,500.
Rather than appeal, Integrity Vending removed its games from all locations in the state.
Torch was charged with felony promotion of gambling in Linn County but the case was dropped this year after the prosecutor’s office changed hands. The new prosecutor, Tracy Carlson, told The Independent in March that he didn’t think the law was clear enough to obtain a conviction.
“I wish that the legislature would make a decision that these devices are clearly legal or clearly not legal,” Carlson said at that time.
In many instances when the misdemeanor charges are filed, the convenience store owner or manager is the person arrested. On May 1, two counts were filed in Texas County against Daniel Salyer of Salem, managing officer of the Sinclair convenience store in Cabool, after patrol Sgt. Jason Trammel found five games in the store.
They were all pre-reveal games, Trammel wrote in a probable cause statement seeking charges, but the only question for the player is whether to continue or not.
“Knowing the outcome in advance does not remove the chance-based determination,” Trammel wrote.
A review by The Independent in 2021 showed the patrol had sent prosecutors 190 cases in 2019 and 2020 requesting charges for illegal gambling and that only a handful of cases were actually filed. Torch has cited that article repeatedly in its court filings to show that there is a consensus among prosecutors that its games are legal.
“Torch has only been charged two times and (Torch and Warrenton Oil) have never been successfully prosecuted for any crimes relating to the operation of Torch’s amusement devices,” Torch attorney Chuck Hatfield wrote in an August filing.
In Moberly, Patel applied for his business license in January, he described Hot Shots as an “arcade.” Prosecuting Attorney Stephanie Luntsford, in a statement to The Independent, said she was aware of the business and other locations where pre-reveal games were in operation.
“I have had some discussions with law enforcement about that facility as well as other gaming machines in the county,” Luntsford wrote.
As of Sunday, Hot Shots was still in business.
(Photo by Rudi Keller – Missouri Independent)
