Torch Electronics sues city of Springfield over video lottery terminals ban

Video lottery terminals around Springfield have been banned for less than a month, but already, the city is being sued and accused of overextending its power. Springfield City Council passed an ordinance banning devices that offer monetary prizes of any kind on Feb. 12, effectively prohibiting video lottery terminals that city leaders saw as detrimental to neighborhood vitality and public safety.

The lawsuit filed Thursday accuses the city of overstepping its authority and applying the ordinance too broadly. Torch Electronics, which filed the suit, is one of the largest owners of VLT machines in the state. Locally, their machines have been installed in convenience stores like Rapid Robert's and Fast n' Friendly. These machines have been in the spotlight and apparently unregulated due to a loophole in state legislation. Torch describes them as "no-chance games" because they allow players to see the outcome of the next play, though not subsequent plays.

The city's ordinance bans any device that offers a monetary prize regardless of the odds of receiving the prize, focusing on the reward aspect of the game rather than the gameplay or rules of play. The game format falls under the state's authority within its gambling laws. The regulation of VLTs has been up for debate at the state level for a while but has gotten little traction, with the issue being tied to legalization of sports betting.

What the lawsuit claims

The lawsuit filed argues that Torch devices do not offer "prizes" but rather "they give the customer exactly what they pay for and what the customer will get is known to the customer and predetermined." Citing a definition of "prize" from the Merriam-Webster dictionary as something offered in a competition or contest of chance, the lawsuit notes neither apply to the devices.

Torch's attorney Chuck Hatfield said Torch was supportive of the ordinance as a tool to rid of illegal gambling rooms, which subsequently shut their doors, but argues the ordinance has been applied in an overly broad manner by extending it to Torch devices.

"Torch devices are different," he told the News-Leader.

The lawsuit also includes allegations that the ordinance is not yet effective. According to the city charter, ordinances go in effect 30 days after passage, unless otherwise noted. The ordinance did go into effect as soon as it was passed by council, though, with an exception noting the ordinance, "shall be in full force and effect from and after passage."

More: Springfield City Council could ban VLTs on Monday. Could eSports and arcades be impacted?

According to the lawsuit documents, citations were issued starting on Monday and since then Torch machines have been issued at least eight citations.

The ban sets minimum penalties for violations. Each device constitutes a separate offense, and with each offense the punishment becomes harsher. A first offense results in a minimum $500 fine, the second with a minimum $1,000 fine and a third carries a $1,000 fine and 30 days in jail.

Hatfield said these citations are given to the store clerks who are only trying to do their job and have nothing to do with the machines themselves and no authority over their operations. He said the company had noted this and the fact that all responsibility for the machines lies with Torch to the city.

"We're bothered by that," he said about the clerks receiving citations. "This isn't their fault."

He said that upon the passage of the ordinance, Torch communicated to local stores that house the devices that the ordinance does not apply to their devices and that legal action would follow. Hatfield said as far as he knows, the machines are on and operating around Springfield.

This broadness of the language is another point on the long list of accusations in the lawsuit. The suit argues that the ordinance is too vague for people to understand what businesses and devices are impacted by this. While the lawsuit alleges that children's arcades and eSports gaming could fall under this umbrella, city staff assured council prior to passage that those prizes would not fall under "monetary prizes" and the nature of competition in eSports separates the prize from the devices.

The lawsuit asks the Greene County Circuit Court to find that the ordinance does not apply to Torch devices as they are "coin-operated amusement machines" not "entertainment devices that offer a monetary prize" and accuses the city of violating their due process rights as the machines are legally licensed by the city as "coin-operated machines." The lawsuit also accuses the city of enacting laws that impair a person's obligation under a contract as Torch has contracts with local convenience stores.

This is the case for Todd Wilson, chief operating officer of Rapid Robert's, who said the machines will continue to be operated in Springfield stores as "business as usual" until more clarification is provided in order to upheld the license agreement.

"We're in more of a tenant-landlord type of situation, and I particularly do not want to be sued by Torch," he said.

The city's chief spokesperson Cora Scott said the city does not typically comment on ongoing litigation.

What is Torch Electronics?

Based out of Wildwood, Mo., in St. Louis County, Torch Electronics has been at the center of other litigation when it comes to VLTs in the state. According to reporting by the Missouri Independent, the company has been sued, charged criminally with promoting gambling and it sued the Missouri State Highway Patrol to block enforcement actions.

The company has also spent heavily on lobbying efforts to prevent any legislative action from defining its operations as illegal. Torch has not yet made any donations this year, but has donated more than $1 million to politicians since 2018.

Torch and convenience store operator Warrenton Oil sued the MSHP in 2021 claiming that the law enforcement agency was harassing and intimidating the retailers and gamers. The lawsuit was dismissed in October, but the decision is now under appeal.

Marta Mieze covers local government at the News-Leader. Contact her with tips at mmieze@news-leader.com.

This article originally appeared on Springfield News-Leader: Video lottery terminals company sues city of Springfield over ban