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Missouri Lottery Commission faults unregulated machines as detrimental to education funding


JEFFERSON CITY, Mo. — Gaming machines not under control by the state are detrimental to funds meant for Missourians’ education, Missouri Lottery Commission Executive Director May Scheve Reardon testified Thursday. 

The contentious machines — some call them “illegal;” others say they fall into a “gray area” — are spreading throughout the state and are “doing damage” to the lottery profits earmarked for educational needs, Reardon told lawmakers during a Special Interim Committee on Gaming hearing

There are an estimated 14,000 “illegal” machines in Missouri, a number that is “increasing as we speak” across the state, Reardon said. 

She specifically pointed to the I-44 corridor, from St. James to Lebanon, as particularly problematic with the machines. A Missouri Lottery Commission representative from that area saw a drop of $800,000 on her route in a six-month span — an average monthly lottery sale loss per retailer of $90,000, Reardon said. 

She also said she witnessed one retailer unplug a Missouri Lottery sign to power up an unregulated machine in Jonesburg. 

“I believe it has hurt [the Lottery’s revenue], and it has [the] potential to do more damage to profits to education. I believe it’s escalating,” Reardon said. “We really have to pay attention to what this can do down the line.” 

As to why consumers are playing these games in lieu of others regulated by the state, Reardon predicted immediate gratification and higher payouts could be attractive to players. 

“The Lottery is losing revenue here because of these alleged illegal machines, so are the casinos, so is everybody. … The state is losing money because of these,” GOP Rep. Dan Shaul, the committee chairman, said during the nearly two-hour hearing. 

The commission’s advertising budget was also up for discussion during the hearing; lawmakers recently slashed it by 70 percent. 

“You’re saying you had a banner year, but you’re losing money to these ‘gray machines,’ and you couple that with this reduction in the advertising budget. … I’m just trying to balance all this in my mind,” Rep. Robert Ross said. “Are these ‘gray machines’ advertising?’” 

When Reardon said the unregulated machines are not advertised, Ross continued: “You’re losing revenue to these machines which are not advertising at all, so help me understand how your advertising budget is actually effective.”

Reardon said the commission doesn’t have a grasp on how much money the controversial machines are bringing in — but noted they aren’t giving anything to public education. She said the commission operates as a $1.4 billion business with a strategic plan that includes advertising as a way to bring in other players. 

Reardon also pushed for the legalization of sports bettering and video lottery terminals (VLTs) — something under consideration by the General Assembly. She predicted VLTs could provide an additional $170 million to education after a four year ramp up. 

“If you would authorize us to do that, we would be glad to respond and put together a very effective program to oversee it,” Reardon said when asked if the commission would be willing to take VLTs under its purview. 

“I believe that given the right authority and right resources, we’d be able to manage very effectively successful video lottery terminal programs,” she added. 

As for sports betting, Reardon said the commission would be capable of offering a parlay wagering kiosk for customers. 

The hearing was the second to be held during the interim. The next is scheduled for Oct. 10. 

Reardon has led the Missouri Lottery Commission since 2009 and is the first woman to do so. The commission received an “excellent” rating from the State Auditor’s Office last month.