Georgia Pols Hope Gift Card Plan Will Eliminate Illegal Machine Payouts

Posted on: March 10, 2021, 02:34h. 

Last updated on: March 10, 2021, 08:36h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

Georgia’s coin-operated amusement machines (COAMs) have surged in popularity since the state lottery began licensing and regulating the games in 2013.

Georgia COAM
State Rep. Alan Powell (R), shown last year during a meeting of Georgia’s House of Representatives. The long-serving Republican says his bill would make offering illegal cash payouts “as dumb as mud.” (Image: AJC.com)

Georgians wagered $3 billion during the last fiscal year on COAMs, which are like slots, but also employ simple elements of skill. But many of the convenience stores and restaurants that typically host the machines have been flouting state law by offering illegal cash payouts.

COAMs are tolerated in one of America’s least gambling-friendly states. That’s because players are only supposed to win lottery tickets or vouchers that can be used to buy products in the establishment where the COAM is located.

But according to the Georgia Bureau of Investigation, cash payouts have become ubiquitous, which moves the machines into the realms of illegal commercial gambling.

More Purchasing Power

Now, a bill sponsored by Rep. Alan Powell (R-Hartwell) and passed by the state House this week proposes the introduction of lottery-branded gift cards onto which COAM payouts can be loaded.

Illegal cash payouts have become prevalent because machines in stores that offer them are more popular with players, thereby increasing each machine’s profitability.

It’s hoped the gift cards would redress the balance by offering wins “in a manner consistent with ordinary purchasing/consumption patterns, rather than all at one time or all in one place,” according to the Georgia Lottery Corp.

Efforts to prosecute stores for paying cash have been largely unsuccessful. A court ruled last year that a COAM was not automatically a “gambling machine” just because it was being used for gambling purposes.

That meant authorities could only charge the store clerks who handed the cash over — and only with a misdemeanor offense — and not the owner of the business.

Trial Underway  

The Georgia Lottery is currently piloting the gift-card program at around 200 locations. But Powell’s bill would mandate their use statewide.

This tightens up all controls,” Powell said, as reported by Capitol Beat News Service. “Anybody would have to be dumb as mud to do [cash] payouts.”

Under current law, the companies that distribute COAMs and the stores that host them get 45 percent each of the proceeds, leaving 10 percent for the state, which goes towards the HOPE Scholarship program.

Of the $3 billion gambled on the machines last year, $2.1 billion was returned to players. The state’s cut of the remaining $900 million was $90 million, which some lawmakers think is too little a reward for the potential social costs involved.

“Ten percent is grossly too low,” said Rep. Winfred Dukes (D-Albany) during a debate in the House Monday. “If we’re going to give [COAMs] an opportunity to come into this state, you’ve got to give me more money… The children of our state are being short-changed.”