Georgia looks to gift cards to clean up video gambling machine issues

Owners of convenience stores and restaurants featuring coin-operated amusement machines (COAMs) would be able to sell gift cards to players under legislation the Georgia House of Representatives passed Monday.

The use of gift cards would go a long way toward cleaning up the industry by discouraging the illegal cash payouts that have long plagued COAMs, said Rep. Alan Powell, R-Hartwell, chairman of the House Regulated Industries Committee and House Bill 544’s chief sponsor.

Powell’s bill, which the House passed 110-54, also includes regulations aimed at ensuring fair competition among the companies that own the machines and the retail businesses that house them, prohibiting machine owners from offering inducements to retailers to house their machines and imposing late fees when license holders fail to renew their licenses.

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

The Georgia Lottery Corp., which has overseen the COAM industry since 2013, is currently conducting a pilot project selling gift cards at 198 locations. Powell’s bill would expand the gift card program statewide.

Under existing law governing the industry, the companies that own the machines receive 45% of the proceeds, and the retailers where the machines are located get 45%. The lottery gets the remaining 10% and dedicates it to the HOPE Scholarships program.

COAMs are a big business in Georgia. Players of the games spent more than $3 billion in the Peach State during the last fiscal year. After players redeemed prizes valued at $2.1 billion, that left $900 million in net revenue for COAM license holders, the retailers and the state to divide.

Some House Democrats argued Monday the state’s 10% share of that pie – $90 million – isn’t enough to justify permitting COAMs in Georgia.

“Ten percent is grossly too low,” said Rep. Winfred Dukes, D-Albany. “If we’re going to give [COAM companies] an opportunity to come into this state, you’ve got to give me more money. … The children of our state are being short-changed.”

Rep. Stacey Evans, D-Atlanta, expressed hope the state’s share of COAM proceeds would be raised when the bill moves over to the state Senate.

“This industry … attracts things we don’t want in our community. It’s a very addictive form of gambling,” she said. “[But] we’re willing to accept the ills if we get a benefit for our citizens. … Let’s make sure we’re not giving away something for nothing.”

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