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LEGAL


Convenience Store Gaming Machines May Present BSA Question for Banks By Keith Thornburg, Vice President and General Counsel


The Missourian   Te misdemeanor charges were brought by the county prosecutor following an undercover investigation by the Missouri State Highway Patrol. Te article noted there are an estimated 14,000 unlicensed machines in Missouri (emissourian.com/local_news/charges- filed-against-sullivan-gas-station-operator/article_e7ab1178- 344e-11eb-80cb-b7b8775190ce.html).


Te issue of unlicensed gaming machines in Missouri has presented a controversial topic in the Missouri General Assembly. Senate President Pro Tem Dave Schatz, R-Sullivan, is quoted in the article criticizing these machines, which are not taxed or regulated. He asserts the machines take money away from education because they compete with lawful and regulated gaming in Missouri, including the state lottery program and the state’s regulated casino industry. Te Missouri Gaming Commission maintains a complaint form (mgc.dps.mo.gov/ MOGamingCrime/ReportGamingCrimeForm.aspx) that the public can use to report suspected illegal gambling machines.


A significant prosecution in Platte County (Case No. 19AE- CR00948-01) presented felony gambling charges against Integrity Vending LLC, a Kansas company that supplies gaming machines to convenience stores in Missouri. Te Missouri Department of Public Safety issued a statement (https://atc.dps.mo.gov/IndustryCircular/circular-no-chance- gaming-devices-or-gray-machines.pdf) following the case that advised liquor license holders of the finality of the court’s decision, indicating that the presence of these machines places the liquor license in jeopardy.


In February 2021, another company leasing similar machines in Missouri filed a declaratory judgment action against the state and the Public Safety Department. Torch Electronics LLC requested a ruling that their “no-chance” machines are not gambling devices and seeks to enjoin the state from prosecuting or disciplining liquor license holders who have leased space to the company for its machines. Te state has moved that the


case (Case No. 21AC-CC00044) be dismissed because Torch and convenience store owners can present their arguments when, and if, prosecuted and because a declaratory judgement action is not allowed in matters of criminal law. Te Missouri Gaming Association filed a motion to intervene in the case to support the state’s position.


Companies like Torch and Integrity assert that their amusement games are not illegal “gambling” devices because the machines “pre-reveal” the outcome of the wager and allow the player to discontinue playing and obtain a refund. Te machines also are pre-programmed for payouts rather than using randomized algorithms. With the pre-reveal feature and nonrandom payouts, the companies assert their machines present no element of chance and are not gambling devices as defined under Section 572.010 RSMo.


Legislation has been proposed in recent legislative sessions to clarify the status of “no-chance” machines. One legislator has proposed that the Missouri Lottery Commission be authorized to place similar gaming machines in retail stores throughout Missouri as a form of a legal lottery to disincentive and displace the unlicensed promoters. Tese legislative proposals have not been able to advance, with the legal gaming industry and the “no-chance” gaming interests engaging lobbyists to advance their position and oppose their opponents.


FinCEN regulations implementing the Bank Secrecy Act require a bank to report “any suspicious transaction relevant to a possible violation of law or regulation” (31 CFR Section 1020.320). Although the facts and Missouri law of whether “no-chance” gaming machines are illegal gambling devices is disputed, the conviction of a gaming device supplier in Platte County Circuit Court and the public position of the Department of Public Safety, Missouri Gaming Commission and the Missouri Division of Tobacco and Liquor Control suggests a “possible violation of law” by businesses that supply or lease space for these machines.


If your bank has customers who possess these machines on their business premises and offer their use to the public, this activity may require the filing of a suspicious activity report.


THE MISSOURI BANKER 9


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