In Missouri, gaming authorities estimate some 14,000 unregulated gambling machines are currently operating in the state – despite the simultaneous presence of some 19,000 regulated slot machines inside the Show-Me State’s 13 licensed riverboat casinos.
Missouri is not an outlier.
In Pennsylvania, lawmakers were told roughly 40,000 unregulated slot machine-like games cost the state $95 million in tax revenues in 2018. In Virginia, 5,000 unregulated slot machines caused the legal state lottery to lose out on an estimated $140 million in revenue.
Notice a trend?
Association of Gaming Equipment Manufacturers Executive Director Marcus Prater said there could be as many as 200,000 unregulated slot machines in the U.S., considering Texas alone said in 2015 it had roughly 150,000 of the games scattered throughout the state.
The figure might seem like a drop in the bucket, considering there are roughly 1 million legal and regulated gaming devices in North America. Yet in January, Missouri lottery officials told the National Council of Legislators from Gaming States conference in San Diego that the machines cost the state at least $50 million last year in lost revenues.
And it’s not just the money: AGEM and the American Gaming Association want gaming patrons to understand that uncertified machines don’t give them a fair shake.
The trade groups are joining in an effort encouraging states to crack down on the unregulated market.
The two associations have formed a coalition with 20 additional gaming organizations in an effort to stamp down on the unregulated gambling machine market, which has seemingly flourished despite the expansion of legal and regulated gaming over the past two decades.
Prater, whose membership is the most adversely impacted by the unregulated market, said the group will take its message to state and local policy makers, law enforcement, legislators, regulatory agencies and media outlets.
“The spread of these machines represents a serious threat to the overall regulated market that has invested billions in infrastructure while also creating thousands of jobs and substantial tax benefits in the communities they serve,” Prater said in statement. “Moreover, unregulated machines prey on confused players, who see slot machine symbols and think they’re getting a fair chance when they absolutely are not.”
Having the backing of the Washington D.C.-based AGA helps drive home the message.
“It’s important that the gaming industry and policymakers get a handle on this issue,” AGA CEO Bill Miller wrote on Twitter in announcing the partnership. “This collaborative effort is a step toward creating a safer market for consumers.”
The centerpiece of the campaign is the six-page “Unregulated Gaming Machine Fact Sheet” that outlines the distinctions between the unregulated machines and the mainstream, regulated casino industry, which, according to the most recent AGA produced State of the States, generated $41.7 billion gaming in revenue in 2018 that resulted in $9.7 billion in gaming taxes paid to state and local governments.
How much did unregulated gaming machines produce in tax dollars?
Zero.
Prater and Miller said the initial campaign will target Pennsylvania, Missouri and Virginia, “where the spread of unregulated machines has been particularly egregious.”
The goal is to provide “factual clarity to stakeholders,” helping to the stop the spread of misinformation that has allowed unregulated machines to proliferate.
But there are challenges. For example, in Missouri, where regulators and law enforcement have attempted to crack down on the use of unregulated devices, the state’s governor has accepted campaign contributions from manufacturers of the games.
Progress, however, is being made. Last week in Virginia, lawmakers overwhelmingly voted to crackdown on unregulated games, forcing restaurants, truck stops and retail stores across the state to remove the devices by July 1.
Miller recognized Virginia’s efforts and called on other states take up a similar initiative.
“Unfortunately, other jurisdictions where these machines have become pervasive may believe their only recourse is to regulate and tax them,” Miller said. “Rewarding bad behavior is not the answer, and we hope our education efforts will make it clear that the only real solution is to stop the spread of these devices.”
#commentary – Unregulated slots do damage to the industry; AGEM and AGA call for a halt to the proliferation. –@howardstutz, Executive Editor, CDC Gaming Reports. https://t.co/aVBv78DE3l @AmericanGaming #CDCgaming
— CDC Gaming Reports (@CDCNewswire) February 19, 2020
Eight states have legalized video slot machine gaming away from casinos, allowing the activity inside bars, taverns, restaurants, fraternal lodges and convenience stores – Illinois, Nevada, Oregon, South Dakota, West Virginia, Pennsylvania, Montana, and Louisiana.
Outside of Nevada’s long-standing slot route business, Illinois has shown the most success in the video gaming market, with more than 33,000 regulated games in 7,200 location generating $1.7 billion in revenue and $503 million in taxes last year.
All of it legal.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
