Franklin County Courthouse

Court Alleges Illegal Slot Machines

A Sullivan gas station owner is being charged with three counts of class A misdemeanor for possessing illegal slot machines. 

Franklin County Prosecutor Matthew K. Becker has charged James McNutt, owner of the Phillips 66 convenience store at 513 N. Service Road, with possessing three electronic gambling devices that law enforcement officials say violate Missouri law. 

McNutt is president of Midwest Petroleum Co., which operates more than 50 gas and convenience food stores, including the Sullivan station. Midwest Petroleum reported 2019 revenue of $284 million, according to the St. Louis Business Journal.

An arraignment is scheduled for 9 a.m. Wednesday, Feb. 3, 2021, at the Franklin County Courthouse. Charges were filed Nov. 16. Authorities seized the machines in October, according to press reports. Becker said he is not able to comment on a specific case beyond what is made public in court documents while it is pending.

“Every defendant has a right to a fair trial with an unbiased jury,” Becker told The Missourian. “I don’t want to keep people in the dark, but I can’t comment publicly on a pending case.” 

Becker said he is unaware of any other similar cases dealing with gambling machines being filed in Franklin County prior to this one. 

State law prohibits slot machines and similar games of chance anywhere except casinos, bingo games and the state lottery. There are an estimated 14,000 such unlicensed machines violating that law in the state. Because the machines are unregistered, there is no way to tax them. That leads to lost revenue in the category — casino taxes — that the Missouri Gaming Association identified as the state’s fifth-largest source of revenue. 

Of the funds collected in Missouri by gaming and casino taxes, the majority — $7.26 billion since 1994 — have gone toward educational programs. The net effective tax rate, 25.5 percent off the top in addition to other business taxes, is one of the highest-taxed casino jurisdictions in the U.S.

According to the probable cause statement filed with the Franklin County Circuit Court Clerk’s Office, the Missouri Highway Patrol launched an investigation into the machines on Oct. 5. The trooper leading the investigation wrote in a sworn statement that he played “several rounds” of the Bourbon Street Dice game on the machines and after pressing a button was issued a ticket stub that he presented to the cashier for payment. The trooper was paid in cash for the amount displayed on the ticket stub, according to electronic court records.  

In his statement, the trooper wrote that the devices at the gas station contain a pre-reveal icon on the screen, known as “a prize viewer,” which a player can press to preview the outcome of the upcoming play, including whether they are likely to win or to lose the next play.

The outcome, from a player’s perspective is determined by chance, and if a player wishes to take the chance that subsequent outcomes would be more advantageous, the player is required to continue playing. Per his statement, this feature classifies the devices not as games of skill but games of chance. 

The issue of unlicensed gambling machines has been a prominent topic of conversation in the state Senate this year, led largely by Senate President Pro Tem Dave Schatz, R-Sullivan. 

Sullivan is Schatz’s home, and the Phillips 66 in question is the gas station where he visits daily for a fountain soda, but Schatz believes the machines should not be taking state revenue away.

“With the lottery, those dollars get deposited and go directly toward education. So every dollar that’s being diverted toward these illegal games, that dollar is not going into education,” Schatz said. “You’re basically looking at a situation where you’re taking money away from kids. I’m not advocating that the best way for us to raise education dollars is through the lottery, but it is what’s been authorized by the voters. Therefore, we should be maximizing our return and not letting it be taken away by illegal gaming.”

Schatz introduced a bill in January 2020 that would have linked illegal gaming machines to a business’ liquor license. Under the law, the state Department of Public Safety would revoke a business’ liquor license, as well as any lottery game retailer license, if the business was convicted of having an illegal gambling machine. 

The bill never made it out of committee and was declared failed in May.

Schatz told The Missourian he plans to file a similar bill for the next session, and he is hoping his colleagues will have warmed to the bill. He said he also hopes county prosecutors will be less hesitant to charge people in their area, at least in part because by next year prosecutors will have seen examples of how the misdemeanor charges can work. 

In a similar court case to this one, in September in Platte County, the judge ruled three slot machines at a convenience store there were illegal, as they were not in a licensed casino. 

“I think once the Platte County case came out, it gave people the ability to believe the gaming machines are illegal. I always said they were, and then the Gaming Commission, that really is the authority of gambling in the state, (agreed) …,” Schatz said. “We finally have a court order, so I think we’re going to see more and more prosecutors not being able to ignore the fact that it’s going on in their county.”