One of my best friends attended a small college in St. Louis, which is on the Illinois-Missouri border. This was back in the 1970s, so fraternity initiations were a little rougher. But that was mitigated by the fact that this was a professional school. So the climax of their ritual came down to asking this question:
Which is the best state?
Either answer – Missouri or Illinois – would bring mock anger from approximately 50 percent of the members, who would shower the poor plebe with epithets and beer.
And, now, Missouri legislators are taking a page from their rivals to the east. They are moving along a measure that would allow as many as five video gambling machines in taverns, convenience stores, restaurants and truck stops. Benevolent organizations, such as the Veterans of Foreign Wars or the Elks Club, could petition for 10 machines.
Casino operators in Missouri are fighting the plan.
Illinois began allowing bars to have machines in 2012. In the 2017 fiscal year, the Illinois machines did more business than the state’s commercial casinos, bringing in $296 million, compared to $270 million at the state’s 10 traditional properties.
“Has the program succeeded? Personally I think it has,” said William Bogot, a Chicago-based partner for Fox Rothschild, LLP. He spoke in January at a meeting of the National Council of Legislators from Gaming States, held in Miami.
Bogot notes that “based on the whole pie,” meaning casino and video gaming, revenues were up 6.4 percent in 2017.
“We do have an expansion of the revenue base,” he said.
Bogot said side improvements include a reduction of “gray” games in the state.
“Cannibalism certainly has affected casinos. I’m not going to deny that,” Bogot said. “But video gaming took out unregulated, illegal, untaxed gambling and turned it to $300 million in taxes overnight.”
The state gets 30 percent of the bar machine revenues, with one-sixth of that returned to the local municipalities; 35 percent goes to the terminal operator and the other 35 percent to the tavern. There are about 28,000 machines across, the state, all connected via the internet to a giant computer, just like at a casino.
The max bet is $2 and the max win $500. So, yes, there is problem gambling, but the amounts are lower.
“You can certainly lose money, but I don’t think you can lose a house overnight,” Bogot says.
Municipalities can opt out, and most notably, Chicago has chosen to do so.
But Carl Sottosanti, executive vice president and general counsel for Penn National Gaming, sees the games as part of a “mounting fiscal challenge.”
“No one had any idea these would proliferate the way they did,” he said, adding that coupled with a smoking ban, two tax increases and the approval of a nearby competitor, “It’s the unpleasant surprises we can’t plan for.”
Missouri has added a twist, though: the sponsor of the video gambling proposal agreed to include a provision allowing casinos to offer sports betting. (Pending the Supreme Court’s ruling on New Jersey’s challenge to the Professional and Amateur Sports Protection Act, of course.) That would put their casinos a step ahead of those in Illinois and give patrons across the rest of the state a reason to drive farther than their local bar to frequent a traditional casino.
And it would give a band of fraternity brothers, a generation removed from college whose beer showers dried up decades ago, yet another point to ponder in their seemingly unsolvable debate.
