Gaming Law 2022 Comparisons

In 2021, Missouri had the eleventh highest casino gaming revenue in the United States and, out of the top 15 casino markets nationwide, it is home to two of them: St. Louis City and Kansas City. This is all the more impressive considering that Missouri has been slow to allow gaming expansion and presents various barriers to entry for the latest dynamic industry products. It still does not allow sports wagering, notwithstanding that six out of the eight states that are contiguous with Missouri have adopted it. However, in 2022, the legislature nearly adopted sports wagering while the Missouri Gaming Commission started to focus more heavily on the latest gaming technologies, such as cashless wagering. Consequently, while the Missouri gaming market is well established, dating back to 1994, and is historically slow to change, the current outlook for the gaming industry in Missouri is very promising, with gaming expansion bills likely in 2023.

Riverboat Market Establishment and Development

The Missouri casino market developed relatively early during the expansion of legalised gambling outside of Nevada and New Jersey. In the early 1990s, following the template of Iowa and Illinois, Missouri began to consider a riverboat gambling product.

In 1992, a ballot measure amending the Missouri constitution to provide for riverboat gambling passed with a significant majority. However, the ballot measure was poorly drafted, which allowed gaming opponents to successfully oppose the resulting riverboat gaming statutes at the Missouri Supreme Court level. In 1994, another ballot measure was passed that cleaned up the constitutional language and cleared the way for unfettered development of the industry.

Missouri’s early riverboat gaming law allowed gaming patrons to enter the casinos only after standing in line for a “cruise” ticket and gamble only during two-hour “cruising” segments. Under certain conditions, riverboats were able to obtain variances and remain moored during some of those segments. After the United States Coast Guard expressed concerns regarding crowded vessels routinely navigating the ever-changing river currents, numerous riverboats were allowed to remain permanently moored.

In 1998, after a number of incidents highlighted the dangers of cruising the mighty Mississippi river and the downright scary Missouri river, a measure to amend the Missouri Constitution and allow for the cruising to stop entirely was put on the ballot for the voters to consider. Additionally, this measure would allow land-based casino facilities within roughly 1,000 feet of the rivers, provided that the gaming floor floated.

A timely incident helped the ballot measure pass. A few barges became unmoored and slammed into a riverboat casino on the St. Louis riverfront, sending it into the current with no power. Certainly, an emphatic “yes” vote came from the thousands of unlucky Missouri gaming patrons who were on board for that ride. The only other significant change in Missouri riverboat gaming came in 2008, when the industry was finally able to repeal the USD500 loss limit in exchange for an increase in the gambling tax and a moratorium on additional casinos, such that the state is limited to 13 licensed operations at any given time.

Additional Types of Gaming and Regulatory Authorities

In addition to land-based casino gaming, the Missouri constitution and statutes authorise lottery ticket sales, daily fantasy sports (DFS), pari-mutuel wagering, and charitable gaming through regulated bingo and unregulated raffles and sweepstakes. While the concept of a tribal casino development has been attempted over the years, with the Osage Nation engaged in the latest effort, no tribal gaming exists in Missouri. Likewise, Missouri has the laws and regulations for a pari-mutuel horse racing track, but no horse racing currently or historically active in the state.

The Missouri lottery commission was formed in 1985 to regulate the lottery, which had been adopted in a ballot measure the previous year. The Missouri Gaming Commission (MGC) was formed in 1994 to regulate the newly authorised riverboat gambling. The MGC is known throughout the industry as an extremely effective regulatory agency that diligently enforces the comprehensive set of regulations and internal controls applicable to Missouri gaming operations and their parent companies. In addition to casinos, the MGC regulates bingo and daily fantasy sports operators.

Missouri’s gaming regulatory structure is generally considered one of the most stringent and comprehensive in the world. By way of example, in 2015, when the Saipan government sought the best method to expand their gaming industry in a controlled and compliant fashion, they looked to the regulations and internal controls of the MGC as a template. Moreover, the MGC has developed innovative concepts that attracted international attention. While self-exclusion programmes may not seem novel today, Missouri was the first state to create such a programme, and their framework has been adopted in numerous jurisdictions, both in the United States and internationally.

Going Grey – The Rise of Unauthorised Gaming

In addition to legalised gambling, Missouri has developed a significant grey, unregulated gaming market, thanks in part to the virtual eradication of the “grey” games market in Illinois after the legalisation of over 40,000 video gaming terminals (VGTs) throughout Illinois. These grey games include NCGs, or No Change Games, that take the chance element out of the gaming device by showing patrons the next reel, and various electronic charitable games that attempt to mimic the function of a raffle while presenting as a standard slot product. Estimated numbers of grey machines have reached into the tens of thousands across Missouri for three reasons.

First, the eradicated grey games industry in Illinois needed someplace to go, and Missouri is just across the Mississippi river. The Illinois VGT industry supported this grey market expansion as they were desperate (and remain desperate) to get VGTs legalised in Missouri and grey markets can be a stepping stone to that goal. Second, the MGC is authorised to regulate only legal gaming and has no jurisdiction over these grey operations. As a result, investigation and prosecution are left to local municipal officers and prosecutors, who generally have more critical priorities or simply do not wish to shut down an otherwise respected veteran's hall. Third, as noted below, Missouri has a very open-ended law on charitable raffles and sweepstakes, so the opportunity to create a slot product that could be certified by a game testing lab as an electronic raffle emboldened charitable grey game suppliers.

Constitutional and Statutory Authority for Each Gaming Sector

In every instance but DFS, the authority to engage in gambling activity in Missouri is derived from the state constitution. The lottery, riverboat gambling, bingo, pari-mutuel wagering, and charitable raffles/sweepstakes are each directly authorised therein. M.O. Const. art. III, §39(a)-(f). The general assembly enacted DFS as it was not deemed to be gambling, so no constitutional amendment was required. Section 313.900, RSMo, et seq. Interestingly enough, the Missouri Fantasy Sports Consumer Protection Act both declares DFS is not gambling and appoints a gaming authority to regulate it. Section 313.910, RSMo.

Each type of gaming other than charitable raffles and sweepstakes includes a set of Missouri statutes and accompanying regulations that provide detailed controls and restrictions on the operation of such gaming. With charitable raffles and sweepstakes, the only guidance comes from the Missouri Constitution, which simply provides that any organisation recognised as charitable or religious pursuant to federal law may sponsor raffles and sweepstakes in which a person risks something of value for a prize. M.O. Const. art. III, §39(f). Even though this section authorises the Missouri general assembly to enact laws to regulate raffles and sweepstakes, it has been disinclined to do so.

Industry Changes Are Finally on the Horizon

With all that is going on (grey market expansion, VGT advocates, tribal developments) and all that is not (lack of sports wagering and dynamic technologies, restrictive regulations, antiquated regulations such as cruising fees and restrictive advertising), the Missouri general assembly has received a tremendous number of bills each of the past five years; up to 20 bills in a single legislative session. There is even a group that proposes a few bills each year to put casinos at the Lake of the Ozarks.

Interestingly, all but one of those bills have been “gutterballs". There are many opportunities to modernise the gaming industry and regulatory structures and to allow for expansion. However, up to this point, the various interested parties have been working against each other’s efforts successfully.

The different factions, whether it is the Illinois VGT industry, Missouri legal operators, the grey game operators, sports wagering advocates, or Osage Nation, have created a deadlock in which each faction kills any gambling bill that does not include what they want. Change in the Missouri market has been a slow process with often a decade in between any substantive legal changes. Regardless, there are so many interested parties pushing for reform and expansion at this time that change is inevitable.

In 2022, the lobbyist began to coordinate more effectively. A continuation of this trend and various changes in senate leadership that are scheduled for the next legislative session could finally produce some results. Indeed, when it comes to Missouri gaming matters, the legislative sessions have come to resemble an episode of “Ozark,” the Netflix series. While it has been very dramatic to watch, it will likely end with an omnibus gaming bill in 2023, which significantly expands the outlook for gaming in Missouri with some truly vertical opportunities.

Pandemic-Related Issues

Due to the COVID-19 pandemic, the MGC closed all Missouri casinos for approximately two and a half months starting in March of 2020. It allowed them to reopen, so long as local municipal operational restrictions were respected, in June 2020. Certain municipalities, such as the City of St Louis, had more restrictive operating parameters than others. Currently, there are no operating restrictions related to COVID-19.

Recent Developments

Missouri’s gaming environment has been stable with very few constitutional or statutory changes since its inception. Remarkably, while the gaming industry at large has changed at a rapid pace, there have only been only four changes of note to Missouri’s gaming laws since its inception in 1994, with approximately a decade between most changes. Below is a brief summary of each change with the most recent enacted this year.

• 1998 – A Constitutional Amendment was passed to allow for land-based gaming operations on floating casino floors within 1,000 feet of the nearest edge of the Mississippi or Missouri Rivers.
• 2008 – A Statutory Change repeal of the USD500 loss limit in exchange for an increase in the gambling tax and a limit on the number of available casino licences to 13.
• 2014 – A statutory change allows Missouri casino operations to offer credit to gaming patrons.
• 2022 – A statutory change allows for the “land-based” casino floors to finally stop floating.

While the adoption of DFS in 2016 could perhaps be seen as gaming expansion, it is technically not considered gambling in Missouri as noted above. The only truly recent change is the change that benefited land-based gaming operations in 2022. Senate Bill No. 987 was adopted to repeal sections 313.800 and 313.805, RSMo, and to enact two new sections relating to “nonfloating” excursion gambling boat facilities. While quite an oxymoron, this addition to the definition of an excursion gambling boat is a big help to the industry. Prior to the passing of this bill, Missouri gaming facilities could be land-base as long as they were in 1,000 feet of the nearest edge of the Mississippi or Missouri rivers and the area inside such facility on which gaming took place actually floated.

A non-floating facility need only contain 2,000 gallons of water beneath or inside the facility. Finally, after years of engineering and architectural acrobatics to create impounded barges and artificial basins inside otherwise normal looking structures, Senate Bill No. 987 allows operators to simply house some water at the facility.

This legislation passage is fairly remarkable as all gaming related bills had been stalled for the previous four years due to a deadlock among parties interested in various kinds of expansion, such as sports wagering, video lottery terminals, new casinos and restricting grey market expansion.

Other than DFS, all forms of online gaming, including online lottery ticket sales, are illegal in Missouri. Social gaming is not regulated in Missouri. The only form of online gaming with the potential for legalisation is online sports wagering, most likely following in-person registration.

As noted in 1.1 Current Outlook, riverboat gaming, lottery ticket sales, bingo, charitable raffles/sweepstakes and DFS have all been legalised in Missouri, with all but DFS being authorised through Missouri constitutional amendments. The Missouri Gaming Commission (MGC) was created by the Missouri Riverboat Gambling Act and is granted regulatory authority over riverboat gaming operations in Missouri, including the issuance of gaming licences to owners, operators, suppliers and certain affiliates of riverboat gaming facilities. However, the MGC has also been charged with regulating bingo and DFS. The Missouri State Lottery Commission regulates lottery activity.

Riverboat Gaming

Missouri’s 13 riverboat gaming operations are authorised to offer all customary forms of casino gaming and are subject to extensive regulation under Missouri’s Riverboat Gambling Act and the rules and regulations promulgated thereunder. While some of the latest game technologies have not been approved, the MGC has approved various electronic gaming devices (EGDs), poker rooms and all standard table games, including craps/roulette, blackjack, Baccarat, and house poker.

Each gaming operation is required to maintain a Class B riverboat gaming licence issued by the MGC. Each Class B licence entitles a licensee to conduct gambling activities at a specific location that may not be altered without significant MGC involvement.

Lottery

The Missouri lottery manages standard lottery product sales as well as virtual pull tab machines at various retail locations throughout the state. The lottery commission recently hired a new director after a vocal resignation of the previous director due to

• the cuts by the Governor to the lottery advertising budget; and
• the lack of action by the legislature as noted in 1.1 Current Outlook to address the grey machines which compete with the lottery products at many retail locations.

Bingo

The MGC regulates a diminishing bingo market in Missouri. The natural desire of charitable organisations to participate in the more lucrative grey market has resulted in fewer bingo licences.

Daily Fantasy Sports

The MGC regulates the eight licensed DFS operators in Missouri with stringent segregated account requirements.

The authority for the lottery, riverboat gambling, bingo, pari-mutuel wagering, and charitable raffles/sweepstakes comes directly from the Missouri constitution. M.O. Const. art. III, §39(a)-(f). These constitutional provisions expressly allow the legislature to enact statutes to further define and regulate each type of gaming. The Missouri general assembly has enacted statutory frameworks for each type of gaming except charitable raffles and sweepstakes.

The statutory sections on riverboat gambling, bingo, pari-mutuel wagering and DFS each empower the MGC to adopt a regulatory framework for such operations. Section 313.005, 313.500, 313.800, 313.900 RSMo, et seq. The MGC has adopted elaborate regulatory frameworks and detailed internal controls and continues to adjust and add to this regulatory framework annually. 11 CSR 45-1.010, RSMo, et seq. Similarly, the statutory section for the lottery empowers the State Lottery Commission to adopt regulations. Section 313.200, RSMo, et seq. These regulations provide the framework for lottery ticket sales. 12 CSR 40-50.010, RSMo, et seq.

Section 572.010 RSMo, et seq, provides the definition of what constitutes “gambling” and penalties for promoting gambling in the first degree and second degree. A person commits the offence of promoting gambling in the first degree if theyknowingly advance or profit from unlawful gambling or lottery activity by:

• setting up and operating a gambling device to the extent that more than USD100 of money is gambled upon or by means of the device in any one day, or setting up and operating any slot machine;
• engaging in bookmaking to the extent that he or she receives or accepts in any one day more than one bet and a total of more than USD100 in bets; or
• receiving in connection with a lottery or policy or enterprise. Section 572.020, RSMo (emphasis added).

"Gambling" is defined as follows: “a person engages in gambling when he or she stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his or her control or influence, upon an agreement or understanding that he or she will receive something of value in the event of a certain outcome.” Section 572.010, RSMo. This definition not only includes a requirement of chance, which can be removed in NCGs, but also allows for exceptions for outcomes that are under the control or influence of the game patron.

The definition of gambling allows just enough wiggle room for grey markets to thrive. As noted in 3.7 Recent or Forthcoming Legislative Changes, numerous bills have been proposed to close these loopholes.

Notably, Missouri’s illegal gaming statute specifically excludes any constitutionally authorised activities, which include lottery, riverboat gambling, bingo, pari-mutuel wagering and charitable raffles/sweepstakes. “Nothing in this chapter prohibits constitutionally authorized activities under Article III, Sections 39(a) to 39(f) of the Missouri Constitution.” Section 572.015 RSMo.

The loose language of the Missouri constitution that provides an open-ended allowance for raffles/sweepstakes conducted by non-profit organisations set the stage for the grey charitable games market. Savvy manufacturers were able to get EGDs that resemble standard slot machines certified by testing labs as electronic raffle machines. Over the last five years, this unregulated market has expanded very rapidly and is impacting the legal bingo market. The MGC will not allow bingo licensees to have these EGDs notwithstanding their “grey” status, so bingo licensees have been relinquishing their licences to avoid the scrutiny.

There is no separate definition of land-based gambling.

There is no separate definition of online gambling in Missouri. It is considered illegal based on the definition of gambling set forth in 3.2 Definition of Gambling.

Entity and individual Missouri licensees may be investigated and disciplined for any act that is injurious to the public health, safety, morals, good order and general welfare of the people of the state of Missouri, or that would discredit or tend to discredit the Missouri gaming industry or the state of Missouri, including without limitation:

• failing to comply with or make provision for compliance with the legislation, the rules promulgated thereunder or any federal, state or local law or regulation;
• failing to comply with any rules, order or ruling of the MGC or its agents pertaining to gaming;
• receiving goods or services from a person or business entity who does not hold a supplier’s licence but who is required to hold such licence by the legislation or the rules;
• being suspended or ruled ineligible or having a licence revoked or suspended in any state or gaming jurisdiction;
• associating with, either socially or in business affairs, or employing persons of notorious or unsavoury reputation or who have extensive police records, or who have failed to cooperate with any officially constituted investigatory or administrative body and would adversely affect public confidence and trust in gaming;
• employing in any Missouri gaming operation any person known to have been found guilty of cheating or using any improper device in connection with any gambling game;
• use of fraud, deception, misrepresentation or bribery in securing any licence or permit issued pursuant to the legislation;
• obtaining any fee, charge or other compensation by fraud, deception or misrepresentation; and
• incompetence, misconduct, gross negligence, fraud, misrepresentation or dishonesty in the performance of the functions or duties.

The statutory penalties for unlawful gambling or possession of an illegal gaming device are generally substantial but vary with the severity of the offence. For instance, promoting gambling in the first degree is a felony.

The issue related to penalties in Missouri is due to the lack of enforcement of illegal gaming restrictions. The MGC has jurisdiction only over legal forms of gaming. Illegal gaming enforcement is left to municipal police and prosecutors who are often disinclined to engage.

As noted in the introduction, Missouri is on the cusp of market-altering legislation. Substantial changes in the Missouri general assembly membership and leadership are scheduled for next year and the legislators, lobbyists and their constituents are showing significant fatigue with five years of failed bills due to a deadlock between opposing groups. With this backdrop, it appears likely that in 2023, there will be a path for a successful omnibus gaming bill that addresses a number of the following initiatives that have been pushed over the last few years.

Disrupting the Grey Market

The increase in illegal and “grey” market gaming has caused increasingly intense calls from Missouri legislators, casino operators and the general public to revise the weak Missouri definition of an electronic gambling device (EGD) and provide some enforcement tools. There has been significant expansion in “No Chance Game” devices or NCGs which resemble slot machines but purport to fall outside of Missouri’s definition of illegal gaming. Lawsuits in various municipalities in Missouri have attempted to establish the illegality of NCGs.

For instance, a Franklin County lawsuit determined that NCGs were illegal, yet various similar lawsuits brought by other prosecutors have been dismissed. No definitive state law or court precedent has developed to clarify the illegality of NCGs state-wide. As the MGC only maintains jurisdiction over legal gaming, there has been inconsistent enforcement of the state statute on illegal gaming, allowing for both NCGs and clearly illegal games to spread.

The Missouri Gaming Association, comprised of representatives of operators and various members of the general assembly, have proposed and supported bills over the past five years to allow for greater clarity and enforcement of NCGs and charitable raffle games that resemble standard EGDs. These bills have not passed, in part due to opposition to various groups pushing for a video lottery bill in Missouri.

Sports Wagering

In addition to the bills regarding illegal gaming, Missouri legislators have been pushing for legalised sports betting since January 2018, even before the abolishment of the Professional and Amateur Sports Protection Act. Numerous competing bills have been filed, including from the sports leagues. However, in every event, the bills failed due to influence from groups pushing for a video lottery terminal (VLT) bill. Most of these groups are actively engaged in the Video Gaming Terminal industry in Illinois and have been attempting to create a similar industry in Missouri.

With so many years of reviewing proposed bills, the general assembly has been exposed to all the key industry considerations, including integrity fees, numbers of skins, online security and underage concerns. The bills would allow Class B gaming licensees to conduct sports wagering, including on mobile devices, so long as such devices are located within the state of Missouri and the wagering activity was technically conducted on servers located on the Class B premises. Some constitutionally questionable provisions would allow betting at professional sports venues as well.

While the legislature is out of session, the last attempt in the summer of 2022 ended with a draft bill that allowed for no integrity fees, a 15% tax rate, a USD1,25 million annual fee per skin, three skins per casino company and one skin per each professional sports team. In December 2022, the legislative session kicks off with the pre-filing of bills at which time the fight for legalised sports betting is sure to restart.

Video Lottery Terminals

The VLT groups have been actively and aggressively pushing for VLTs in Missouri. In the VLT bills, the authority granted to the general assembly in M.O. Const. art. III, §39(a) to create a statutory framework for the state lottery would be used to create new statutes authorising VLTs regulated by the State Lottery Commission. The most recent versions of these bills include provisions for the MGC to assist the State Lottery Commission with managing suitability investigations and regulating the industry. The bills have generally allowed for up to five VLTs at truck stops, certain retail establishments and veteran/fraternal organisations.

While the VLT bills propose the adoption of a “Video Lottery Control Act,” the proposed gaming product is more accurately called a Video Gaming Terminal or VGT. The machines do not provide a lottery experience but rather a standard slot machine or VGT experience. As the Missouri Constitution only allows that such gaming within 1,000 feet of the main channels of the Mississippi and Missouri rivers, the VLT groups understand that to achieve widely dispersed gaming without a constitutional amendment, they will have to establish a tenuous relationship with the lottery statute.

As with sports wagering, a VLT bill is expected to be pre-filed this December, reigniting the battle between the gaming industry, VLT groups and grey market operators that has raged for five years. It is unlikely that Missouri can remain a premiere gaming market with no sports wagering. Along with other pressures, 2023 will likely be the year when the warring factions finally compromise and enact an omnibus gaming bill that includes provisions to disrupt the grey games market, legalise sports wagering and allow a limited VLT market to develop.

Additional potential legislation

Several additional proposed bills pending before the Missouri general assembly require:

• adjusting the amount of wagering tax imposed on adjusted gross receipts of licensees;
• restructuring admission fee calculations;
• allowing for a ballot measure to amend the Missouri Constitution to allow additional riverboat gaming facilities at or near the Lake of the Ozarks; and
• revising the riverboat gaming statutes to allow for the deductibility of promotional credits.

All these issues and some issues yet to be contemplated may become part of the compromises that should result in an omnibus gaming bill in 2023.

The MGC is comprised of five commissioners appointed by the governor, an executive director appointed by the commissioners, executive staff members, and investigators. The investigators fall into two categories: civilian financial investigators, who are often former IRS agents, and Missouri State Highway Patrol members, who are assigned to the gaming division of the patrol.

The state lottery is managed by its director who is appointed by the Missouri State Lottery Commission. The director has sweeping authority over lottery operations

The MGC requires strict compliance and imposes strict liability in order to encourage the highest integrity industry for gaming patrons in the state.

The MGC will likely need to expand its staff and operations if an omnibus gaming bill is passed in 2023.

Riverboat Gaming

Each of the 13 casinos in Missouri must obtain and maintain a Class B riverboat gaming licence issued by the MGC. In order to own and/or control a Class B licensee as its ultimate holding company, a company must complete a riverboat gaming application form requesting a Class A licence. The riverboat gaming application form is comprised of comprehensive questions regarding the nature and suitability of the applicant. Manufacturers, distributors and gaming technology suppliers for Class B licensees must apply for a supplier’s licence.

Whether seeking a Class A, Class B or supplier’s licence, each applicant will undergo an extensive background investigation by the MGC. In addition, each key person associated with the applicant (including directors (including independent), officers, managers and owners of a significant direct or indirect interest in the Class A or Class B licence applicant) must complete a key person and Level 1 application – Personal Disclosure Form 1 –and undergo a substantial background investigation.

Certain key business entities closely related to the applicant must undergo a similar application process and background check. An applicant for a Class A or Class B licence will not receive or be allowed to retain a licence if the applicant and its key persons, including key business entities, have not established and maintained good repute and moral character.

Each Class B licence granted entitles a licensee to conduct gambling activities at a specific riverboat gaming operation. Each Class A licence granted entitles the licensee to develop and operate a Class B licensee or, if authorised, multiple Class B licensees. The MGC also licences the serving of alcoholic beverages on riverboats and related facilities operated by the Class A or Class B licensee.

Daily Fantasy Sports

DFS operators must apply to the MGC for a Fantasy Sports Contest Operator License Application and a FSCO Personal Disclosure form for all associated key persons. The commissioners will consider granting the licence upon the completion of a suitability investigation.

Bingo

Bingo licensing requirements are more limited. Operators and bingo equipment suppliers work with the small staff at the MGC assigned to bingo oversight to complete the licensing protocols, which have been streamlined over the years.

No new Class B licences will be made available unless the general assembly modifies current law. Bingo, DFS and supplier’s licences are unlimited.

Initially, both Class A and Class B licences are for two one-year terms and then four-year terms. In conjunction with the renewal of each licence, the MGC requires the filing of a riverboat gaming renewal application form and renewal fees. In conjunction with each renewal, the MGC may conduct an additional investigation of the licensee with specific emphasis on new information provided in the riverboat gaming renewal application form.

The MGC also possesses the right to periodically conduct a comprehensive investigation on any Class A, Class B, supplier or key person licensee since the date on which the last comprehensive investigation was conducted.

The MGC does not accept the multi-jurisdictional gaming application and requires responses to all application questions before an entity or individual application will be accepted. The Missouri forms are similar to but slightly more in depth than most riverboat gaming jurisdictions.

In determining whether to grant and allow the continued possession of a gaming licence, the MGC considers the following factors, among others:

• the integrity of the applicant;
• the types and variety of games the applicant may offer;
• the quality of the physical facility, together with improvements and equipment;
• the financial ability of the applicant to develop and operate the facility successfully;
• the status of governmental actions required by the facility;
• the management ability of the applicant;
• compliance with applicable statutes, rules, charters and ordinances;
• the economic, ecological and social impact of the facility as well as the cost of public improvements;
• the extent of public support or opposition;
• the plan adopted by the home dock city or county; and
• effects on competition.

With respect to individual licensing, the MGC is particularly sensitive to negative affiliations.

With the moratorium, there are no new Class B riverboat gaming licence applications expected. If a Class B licensee is acquired, the new parent company would need to obtain a Class A riverboat gaming licence prior to consummation of the acquisition. The MGC staff may be stringent, but they are very dedicated to working with applicant timeframes. Consequently, a new Class A applicant can expect a four to seven month licensing process depending on the complexity of the structure and number of affiliated key persons and entities.

The application fee for a Class A Riverboat Gaming License is the greater of a) USD50,000 or b) USD15,000 per key person/key business entity. The application fee for a Class B Riverboat Gaming License is USD50,000. Each Key Person and each key business entity affiliated with a particular Class A or Class B licence must complete a Level I/Key Person License Application and submit the same along with a USD15,000 application fee.

The application fee for a supplier’s licence is USD10,000. Each key person and each key business entity affiliated with a supplier licensee must complete a key person licence application and submit the same along with a USD1,000 application fee. In each case, the applicant shall be assessed fees, if any, to cover the additional costs of the suitability investigation not covered by the applicable application fee.

The annual fee for a Class A licence and a Class B licence shall be USD25,000 each. The annual fee for a supplier’s licence is USD5,000. For Class A and Class B key person/key business entities, the annual fee is USD250. For supplier key person/key business entities, the annual fee is USD100.

See 4.4 Types of Licences for the requirements for a Class B licence, which permits the holder to operate a casino at a specific location.

There are a number of potential changes that could occur to the Missouri market as shown in 3.7 Recent or Forthcoming Legislative Changes.

There is no authorised online gaming in Missouri.

There is no authorised online gaming in Missouri.

There is no authorised online gaming in Missouri.

There is no authorised online gaming in Missouri.

Missouri's mobile sports wagering prospects are described in 3.7 Recent or Forthcoming Legislative Changes.

There is no authorised online gaming in Missouri.

In 1997, Missouri created and implemented the first self-exclusion programme in the United States. Section 313.813, RSMo. The statute empowered the MGC to create regulations that would allow a problem gambler to voluntarily exclude him/herself from an excursion gambling boat. Thereafter, any person that self-excluded would be guilty of trespassing in the first degree pursuant to Section 569.140, RSMo if such person enters a casino.

Moreover, the gaming operators can be fined if a self-excluded person is not efficiently removed from the casino or if advertising is sent to a self-excluded individual. In addition, the MGC regulations contain various responsible gaming rules, such as age restrictions, advertising limitations and gambling-addiction notifications and postings. Likewise, bingo, DFS and the state lottery has adopted similar rules to protect patrons of those products.

The MGC self-exclusion programme originally resulted in a lifetime ban. After a modification to the regulations, self-excluded individuals may petition the MGC for removal from the self-exclusion list after five years. 11 CSR 45-17.060.

The MGC routinely reviews the problem gaming systems employed by each gaming operation in connection with licence renewals.

Missouri’s anti-money laundering legislation is a stand-alone criminal provision with no explicit connection to the MGC or gaming industry. The offence of money laundering is classified as a class B felony and, along with other penalties provided by law, may be punished with a fine of not more than USD500,000 or twice the amount involved in the transaction, whichever is greater. Section 574.105, RSMo.

There are no proposed bills impacting the current legislation.

The MGC requires gaming operators to follow all applicable federal regulations. The Missouri gaming operations generally follow the AML/FinCEN compliance guidelines produced by the American Gaming Association.

The Missouri Attorney General enforces state consumer protection provisions. In practice, the MGC is the main enforcement agency for the gaming industry as the Missouri gaming regulations explicitly restrict any false or misleading advertising, contests or promotions. 11 CSR 45-5.181.

The MGC focuses on promotional giveaways and tournaments. A promotional giveaway is a promotional gift or item given by a licensee to any person meeting the licensee’s promotional criteria, where the person provides no consideration and there is no chance or skill involved in the awarding of the promotional gift or item, and all persons meeting the criteria receive the same promotional gift or item. 11 CSR 45-5.181.

The MGC regulations restrict advertising and promotional events that are targeted at individuals under 21 or self-excluded or disassociated persons. Moreover, an operator may be disciplined for failing to conduct advertising and public relations activities in accordance with decency, dignity, good taste, and honest and fair representation. 11 CSR 45-5.053. This broad and subjective standard results in numerous disciplinary actions each year by the MGC for promotion violations.

The MGC is particularly keen on ensuring that all promotions, promotional drawings and tournaments are conducted in strict compliance with the published rules.

Advertising, coupons and tournaments are heavily controlled with specific regulatory requirements. 11 CSR 45-5.181.

The MGC penalties for promotional violations can be particularly severe, especially where a pattern of recurring violations can be shown. The MGC will escalate fines for repeat offences.

Notwithstanding the strictly enforced current rules, the MGC regulations have actually loosened considerable over the years. Originally, an attorney licensed in Missouri was required to sign an affidavit in connection with each set of promotional rules issued by an operator.

Missouri gaming operations, suppliers and affiliated parent companies must notify the MGC in connection with certain acquisitions in excess of 5% as described in 10.2 Change of Corporate Control Triggers. Further, a change in control of such entities may not be implemented unless prior approval from the MGC is obtained as more fully described in 10.2 Change of Corporate Control Triggers.

Like many jurisdictions, the MGC regulations include a comprehensive set of corporate changes and “material” changes that must be disclosed, generally within 10 days for an applicant and 30 days for a licensee. 11 CSR 45-10.020. These disclosure obligations apply to key persons as well. A non-standard regulation requires that licensees notify the MGC in connection any investigation, which can be burdensome for international operators and suppliers. 11 CSR 45-10.100.

No investor may increase holdings above 25% without triggering a change in control that requires prior approval by the MGC. The MGC may grant a petition to approve a change in control if the petitioner proves that:

• the transfer is in the best interest of the state of Missouri and would have no potential to affect suitability of the gaming operation;
• the transfer is not injurious to the public health, safety, morals, good order, or general welfare of the state;
• it would have no material negative competitive impact; and
• it would not potentially result in any significant negative changes in the financial condition of the licensee.

In addition, any sale, transfer or lease of the Class B’s real estate (outside of the normal course of business) shall trigger a change in control that requires prior approval by the MGC. The petition to approve a change in control in such an instance will be considered by the MGC using the same criteria set forth above for an ownership interest change in control.

Any transfer or issuance of ownership interests in a publicly held gaming licensee or its holding company that results in an entity or group of entities acting in concert owning, directly or indirectly, an aggregate ownership interest of 5% or more in the gaming licensee must be reported to the MGC within seven days. Further, any pledge or hypothecation of, or grant of a security interest in, 5% or more of the ownership interest in a publicly held gaming licensee or its holding company must be reported to the MGC within seven days. The MGC will impose certain licensing requirements upon a holder of an aggregate ownership interest of 5% or more in a publicly traded Missouri Class A or Class B licensee, unless such holder applies for and obtains an institutional investor exemption in accordance with the Missouri gaming regulations.

The executive director of the MGC may grant a waiver to an institutional investor that holds up to 10% of the outstanding equity of the Missouri licensee. The MGC itself may grant a waiver to an institutional investor that holds up to 20% of the outstanding equity of the Missouri licensee. Unlike numerous jurisdictions, Missouri does not define what type of entities, or even individuals, are allowed to apply for passive investor status. The entity or individual need only be capable of making the passivity representations and covenants in the institutional investor exemption form.

The MGC is empowered by statute to enforce all gaming laws, regulations and internal controls by conducting investigations and presenting findings to the commissioners. The discipline process usually begins when an entity or individual receives a notice of investigation (NOI) from an MGC staff member assigned to compile a report regarding a suspected violation. The MGC staff member will submit the completed report to the Disciplinary Review Board, comprised of members of the MGC executive staff, which determines if and what discipline is appropriate based on the report and the licensee’s violation history.

At the majority of the MGC monthly meetings, the MGC staff present various investigation findings to the commissioners along with the recommended discipline. The commissioners can reject, adopt or modify such proposed discipline. Once the commissioners resolve to discipline a gaming licensee, whether an entity or an individual, such licensee may request an administrative hearing on the matter. The hearing officer presents a hearing recommendation to the commissioners at which point the commissioners can again reject, adopt or modify such recommendation. This final MGC decision may be appealed by the licensee to the state court of appeals for the Western District of Missouri. Section 313.840, RSMo.

The commissioners have the power to impose financial penalties, suspend a licence or revoke a licence for any violation of Missouri gaming statutes, regulations or internal controls and for any of the key offences described in 3.5 Key Offences.

The MGC will utilise any level of fine it deems appropriate to encourage compliance, but the typical range is between USD2,500 and USD50,000. The MGC enforcement perspective could be described as strict liability. Even situations in which simple and honest mistakes are made and self-reported can result in a fine. Moreover, an operating entity licensee may be fined in situations where an individual employee engages in misconduct that such operating entity would be hard pressed to have stopped; failure to properly train is generally implied.

Generally, individual licensees receive suspension (which amounts to a financial penalty) or, in more extreme violations, revocation.

Social casino websites continue to expand unregulated in Missouri.

Esports are not a prominent activity in Missouri.

There are no recent changes in the DFS industry.

Skill gaming is not a prominent activity in Missouri.

While the bill failed, House Bill 2672, introduced in 2022, would have exempted cryptocurrency from property taxation at the state, county and municipal levels. There are no current statutes directed at regulating cryptocurrency.

The Missouri Riverboat Gambling Act imposes a 21% wagering tax on adjusted gross receipts (generally defined as gross receipts less winnings paid to wagerers) from gambling games. In Missouri, 10% of the proceeds from the wagering tax are given to the local government where the “home dock” is located, and the remainder is given to the state.

According to the Missouri Riverboat Gambling Act, Class B licensees are also required to pay the MGC an admission tax of two dollars for each person admitted to a two-hour synthetic gaming excursion; however, no Missouri casinos have yet engaged in such excursions. One dollar of the admission fee goes to the state of Missouri, and one dollar goes to the home dock city in which the licensee operates. The licensee is required to maintain public books and records clearly showing amounts received from admission fees, the total amount of gross receipts and the total amount of adjusted gross receipts. In addition, all local income, earnings, use, property and sales taxes are applicable to licensees.

No tax reform is anticipated.