Missouri Bill To Legalize VLTs Passes First House Committee

A bill by Missouri state Rep. Bill Hardwick that would legalize video lottery terminals (VLTs) passed out of its first House Committee on Monday.

HB 2989 passed by an 8-5 vote in the Emerging Issues Committee and now heads to the Legislative Committee. The committee heard testimony about the bill last week, which led to a series of amendments being introduced. Most amendments were technical in nature and then rolled into a substitute bill the committee passed.

The path to legalizing VLTs in the Show Me State has been a long one. Current Missouri Secretary of State Denny Hoskins — a long-time proponent — tried, when he served as a state representative, to couple such legislation with legalizing sports wagering. That essentially blocked both until a 2024 ballot initiative narrowly legalized sports wagering, which finally launched Dec. 1.

The VLT legalization process also remains an uphill one considering a similar bill last session barely passed in the House but failed to advance out of committee in the Senate.

Multiple moving parts to VLTs

VLT discussion has come to a head in Missouri considering the terminals fall into the definition of "gray machines," an area where their legality comes into question. As Hardwick tries to find a legal path, Missouri Attorney General Catherine Hanaway feels the games are currently illegal and is willing to take action if legalization does not occur.

“What I’m super concerned about is that they are wholly unregulated in Missouri,” Hanaway said in an interview with Fox 2 in St. Louis last week, referencing the growing amount of machines in places including gas stations. “They’re not taxed. ... And whatever [legislators] decide, that’s fine, we’ll just enforce the law. But right now, the law is not being enforced and that creates a super dangerous situation.”

There is also the question of the constitutionality of Hardwick's bill. Missouri lawmakers have been barred by the state constitution since 1875 from creating laws that “authorize lotteries or gift enterprises for any purpose.” Voters have approved exceptions for charitable bingo, the Missouri Lottery, casino gambling, and most recently, sports wagering.

Proponents of the bill argue Hardwick's bill can legalize VLTs since regulation would fall under the authority of the Missouri Lottery.

Missouri Chamber of Commerce stridently opposed

Jared Hankinson, vice president of the Missouri Chamber of Commerce, testified in opposition to the bill, citing concerns about creating a "parallel regulatory structure" that could potentially increase high-risk gambling throughout the state.

“We don’t impose lighter environmental standards on small operators," Hankinson testified. "We don’t relax workplace safety laws based on business model, and we shouldn’t fragment gaming oversight either. If gaming is legal, it should be regulated consistently, transparently, and evenly across the industry.”

Testimony slips in favor or opposition of the bill were nearly split 50-50, with the Missouri Gaming Association submitting slips of opposition through counsel Marc Ellinger and Executive Director Mike Winter.

Proposed tax rates

Hardwick's bill proposes a 31% tax rate on adjusted gross revenue. After administrative costs, the balance would be split evenly amoung public elementary and secondary education and public institutions of higher education.

There is also a 3% local "municipality and county administration" tax that would be remitted directly to the Department of Revenue.