(Missouri Independent) – Missouri Attorney General Andrew Bailey’s office withdrew last week from a Cole County lawsuit accusing the Missouri State Highway Patrol of harassment and a “concerted campaign of threats” against companies that profit from video games offering cash prizes.
Bailey, who is seeking a full term in office in 2024, has in recent months accepted large campaign contributions from political action committees linked to Steve Tilley, a lobbyist for the two companies that brought the lawsuit against the state — Torch Electronics and Warrenton Oil.
The highway patrol and the Department of Public Safety will now be represented by Scott Pool, a Jefferson City lawyer hired regularly when the attorney general’s office has a conflict of interest and cannot represent a state agency. Reached by telephone Monday, Pool confirmed he was hired because of a conflict but said he was not told the nature of the issue.
Pool is a former assistant attorney general. He will be paid the standard rate for outside counsel, but Bailey’s spokeswoman, Madeline Sieren, would not give an exact amount.
Pool was hired in 2021 to represent Gov. Mike Parson’s office and was paid $140 an hour.
Sieren would not address the nature of the conflict that inspired the attorney general to withdraw from the case.
“Our office followed our longstanding practice of retaining conflict counsel to avoid any appearance of impropriety,” Sieren said.
The only thing that has changed in the case since the lawsuit was filed in February 2021 is the occupant of the attorney general’s office. Bailey was inaugurated in early January, taking over from Eric Schmitt, who won election last year to the U.S. Senate.
Since 2014, the attorney general’s office has had a policy that it will not accept contributions from any company targeted for investigation. Schmitt returned contributions received in June 2021 from Torch owner Steven Miltenberger and his wife, Sondra Miltenberger, after criticism that, because of the ongoing litigation, they could be a conflict of interest.
In mid-April, Bailey reported raising $305,000 so far for his campaign committee, including $14,125 in contributions from five political action committees linked to Tilley.
Liberty and Justice PAC, which is supporting Bailey’s bid for a full term through independent spending, has raised $644,000, including $25,000 from those same Tilley-linked PACs and $1,000 directly from Warrenton Oil.
The five PACs – Mo Majority, Missouri Senior, Missouri AG, Missouri C, and Missouri Growth – accepted $961,665 during the 2021-22 election cycle, with Torch providing $361,665 and Warrenton Oil pitching in $140,000, or a combined 56% of the total.
Torch Electronics, founded in 2015, has placed thousands of its video games in convenience stores, truck stops, and other locations across the state. Warrenton Oil, which operates more than 50 convenience stores, has Torch machines in many of its locations.
Starting in 2019, the patrol began a focused enforcement effort on the belief that the machines violate state gambling laws. In 2019 and 2020, the patrol sent more than 200 cases to local prosecutors alleging violations of state gambling laws.
Few criminal cases have been filed, however, and the Cole County lawsuit seeks to quash any future investigations. Torch argues through attorney Chuck Hatfield that its machines are legal.
Under current state law, a game is considered to be gambling if the player risks something of value on a contest of chance or event outside of their control with the expectation of receiving something of value “in the event of a certain outcome.”
Lawmakers have tried unsuccessfully for several years to revise the statute so there is no doubt the games are illegal. The change has been blocked as the legislature has been unable to reach an agreement on other gambling issues, including sports betting and authorizing video lottery terminals.
That is a strong argument in Torch’s favor, Hatfield said in an interview with The Independent.
“The fact that the legislature has considered bills to clarify the law tells you that the law does not clearly define what is and is not gambling,” Hatfield said. “If the legislature wants to outlaw these machines, they have the right to do that.”
Torch contends its machines are legal because a player can learn the outcome of any particular game, with any particular wage amount, before risking their money. There is also no chance in any particular outcome, Hatfield wrote in a 2021 court filing.
“Torch amusement devices do not have a metered randomizer or any other random number generator,” Hatfield wrote. “All outcomes on Torch’s amusement devices are pre-determined, finite, and in sequential order. These pre-determined outcomes cannot be altered.”
While Schmitt was in office, the attorney general accused Torch of improperly seeking to delay criminal investigations through the lawsuit.
The only way to truly determine if the games are illegal is through a criminal prosecution, not a lawsuit to block prosecution, Schmitt’s office wrote.
“Plaintiffs cannot seek equitable relief because they have unclean hands,” assistant attorney general Ross Kaplan wrote in a 2021 filing. “In choosing to conduct a criminal enterprise, despite knowledge of the criminal laws of the state, plaintiffs have subjected themselves to the criminal justice system of the state.”
The lawsuit in Cole County is not the only venue where Torch has gone to court to block prosecutions. In Linn County, Torch sued the local prosecutor after being charged with a felony; both cases were dropped earlier this year after a new prosecutor was elected.
In Greene County, a lawsuit to prevent prosecution was filed after a raid where Torch machines were seized. That case has been dismissed.
Torch itself is being sued in federal court in a case that accuses the company of federal racketeering and state consumer protection law violations. The federal case also names two convenience store companies – Mally Inc. and Warrenton Oil Company – and three individuals as defendants.
The Cole County case is scheduled for a trial beginning July 31. Both Pool and Hatfield said the change of attorneys should not delay the case.
Missouri Attorney General Andrew Bailey (Photo by Annelise Hanshaw – Missouri Independent)
