Missouri Bar Owner Sues AG Over Crackdown on Grey-Market Gaming Machines

• St. Charles bar owner James Schappe claims Missouri’s attorney general lacks authority to declare grey-market gaming machines illegal
• Lawsuit argues businesses operating non-Torch machines should not be bound by a federal ruling against Torch Electronics
• Case could determine whether Missouri regulators or lawmakers control the future of up to 20,000 gaming devices

A St. Charles, Mo., bar owner has sued Missouri Attorney General Catherine Hanaway (R), alleging she exceeded her legal authority in her campaign against “no-chance” gaming machines.

In his legal complaint, James Schappe, who runs Tuners Bar & Grill on Main Street, argues that Hanaway does not have the power to criminalize the machines without legislative action from the Missouri General Assembly.

Legal? ‘No Chance’

Hanaway announced a crackdown on the terminals after a federal judge ruled in February that those operated by Torch Electronics were illegal under Missouri law. This prompted the AG to step up enforcement against all devices based outside state-licensed casinos.

Schappe complains he does not carry Torch’s machines and therefore should not be subject to the decision, adding that the legislature has made no effort to either prohibit or license and regulate them.

The Attorney General may not fill those legislative silences with her own criminal-law judgments,” argues the plaintiff.

He also complained that the AG “asks retailers to predict what the law means while she reserves the power to decide, after the fact, whose machines are crimes.”

How No-Chance Machines Work

Missouri was home to up to 20,000 gray-market gaming machines prior to the crackdown, many of them located in bars, gas stations, and convenience stores. Marketed as “no-chance” or “skill” games, the devices incorporate a “pre-reveal” feature, allowing players to view the outcome of the next play before deciding whether to wager.

Manufacturers like Torch argue that because the result is disclosed in advance, the games do not involve the element of chance required to constitute gambling under Missouri law.

The machines do not rely on random number generators. Instead, they operate from a predetermined sequence of outcomes, which manufacturers say further distinguishes them from conventional slot machines.

And since users typically play through a series of spins rather than just one, in practice, they’re always paying to see the spin after the next one, which remains unknown.

Gambling Games

In February, U.S. District Court Judge John Ross agreed, determining that Torch’s machines were “gambling games.” The company has agreed to pull the plug on them in Missouri until the legislature decides whether to authorize and regulate the devices.

In the meantime, Schappe is seeking a court order barring future enforcement action against his business, along with a declaration that Missouri’s gambling laws do not apply to the machines he operates.