Georgia’s illegal gaming machine payoffs raise probability of new limits

Sen. Larry Walker, a Perry Republican, said counties in his middle Georgia district have had problems with illegal cash payouts and "criminal activity surrounding sort of the bad actors in this industry." Screenshot of Georgia Senate livestream

A push to curb illegal cash payouts for slot machine-like gaming is bringing state lawmakers and industry players together to mull potential regulatory changes.

At issue are gaming machines that resemble those clustered in abundance at casinos, but in Georgia, they are found at VFWs, convenience stores, restaurants and other locations. Unlike the machines in Las Vegas, a player in Georgia is not supposed to walk away with cash winnings.

But Sen. Larry Walker says that is what is happening back in his middle Georgia district. In Georgia, winners playing on any of the nearly 25,000 machines in the state are only eligible for credits that can be redeemed for lottery tickets, fuel and store merchandise. The winnings cannot go toward alcohol, cigarettes, firearms and other off-limits items.

“The counties I represent – Laurens, Bleckley, Pulaski and Houston in middle Georgia – we’ve had problems with cash payouts and criminal activity surrounding sort of the bad actors in this industry,” Walker said at a meeting held Wednesday. “It’s been a problem for a quite a while.”

Some state lawmakers called on their colleagues to expand gambling in Georgia during the 2020 General Assembly. But now lawmakers find themselves in the legislative off season contemplating whether they should tighten up the rules for coin-operated amusement machines.

Walker, a Perry Republican, sponsored a bill this year that would let cities bar any location from having more than three machines. Today, as many as nine machines are allowed at any one spot.

His proposal also aimed to increase the amount of gaming proceeds dedicated to public education through the Georgia Lottery Corporation by dipping into the share of the money going to the license holder and local operator.

All told, the Georgia Lottery chipped in $1.2 billion to education last year – with $91 million of that coming from the lottery’s 10% take from the machine gaming. The state lottery funds pre-K education and HOPE college scholarships.

Players spent more than $3 billion on the games last year and about $2.1 billion was redeemed.

Walker’s bill made it out of a Senate Committee in March before the session was interrupted by the COVID-19 pandemic. When lawmakers returned in June, they opted instead to send the matter to a study committee. That panel, which started its work Wednesday, could offer up recommendations for the legislative session that starts in January.

The machines have been around in Georgia for decades, often tucked in the back of convenience stores, and they have not always been regulated. The industry has been overseen by the Georgia Lottery since 2013.

Gretchen Corbin, who is the lottery corporation’s president, said the agency hands off potential criminal cases to local and state law enforcement. The Georgia Bureau of Investigation, for example, announced this summer that it conducted a raid in Valdosta and Boston and found businesses that were doling out cash to winners.

The corporation has rolled out a pilot program that lets players load their winning credits onto an official Georgia Lottery gift card. Corbin said she hopes the gift cards will tamp down on the illegal cash payouts.

“Our responsibility is to serve as regulator and our desire is to be the best regulator possible, to hold up the statute that is provided to us while being the best business-friendly business partner that we can be,” said Corbin, who has led the Georgia Lottery since 2018.

The state agency collected $9.3 million in fines and fees last year, up significantly from previous years because of a couple settlements. Violations include offering cash payouts, a store earning more than half of its revenues from gaming “redemptions” and manipulating the machines.

The state also collected $11.2 million in licensing and fees from gaming operators last year.