Slot machines in locations across Missouri violate state gambling laws, a federal jury found Monday in a verdict that Torch Electronics, the most visible operator of “gray market” games, unfairly forced a competitor out of 20 locations.
The case laid bare some of the secrets surrounding Torch, which began placing its games in convenience stores, fraternal halls and other locations starting in 2017. It is the first time any court decision has approached the question of whether Torch’s games violate Missouri gambling laws.
The jury found in favor of TNT Amusements Inc. of Sullivan and ordered Torch to pay $500,000. Jim Turntine, owner of TNT, has been fighting with Torch since at least 2020. He has a pending lawsuit in St. Louis County over some of the issues raised in the federal case.
Over the course of the trial in St. Louis, which consumed most of last week in front of Senior District Judge John Ross, jurors heard testimony about Torch’s claims its games are legal because there is no element of chance in the outcome and TNT’s arguments that those improper claims led retailers to replace its games with Torch games.
In his instructions to the jury, Ross told it to consider whether Torch made false statements to obtain business, including “this amusement device does not fit any definition of a ‘gambling device’ in the state of Missouri and is not prohibited for use.”
If jurors had found that the statement was true, the instruction told them to find in favor of Torch.
Richard Finneran, one of the attorneys representing TNT, declined to be interviewed because the case was not yet final.
“We are grateful to the jury for seeing through Torch’s false advertising,” Finneran said in a statement to The Independent. “Now that the jury has rendered its verdict, we look forward to seeking an official judgment from the court as to the illegality of the Torch devices.”
Torch will appeal the verdict, spokesman Gregg Keller said.
Torch has used high-profile lobbyists, large political donations, contacts with prosecutors and lawsuits against enforcement agencies to protect its market. In 2023, then-Attorney General Andrew Bailey pulled out of defending the Missouri State Highway Patrol in a lawsuit filed by Torch after accepting $14,000 in contributions for his campaign and another $12,000 for his PAC from committees funded by Torch.
So far this year, the company has contributed just under $600,000 to seven political action committees controlled by its chief lobbyist, former Missouri House Speaker Steve Tilley. In 2024, one of the company’s few donations outside the PACs controlled by Tilley was $250,000 to American Dream PAC, which backed Gov. Mike Kehoe.
One of the secrets closely held by Torch has been how much it keeps of the money spent by players.
Games provided to retailers by Torch and its competitors are unregulated by the state, and no reports exist showing how much money is being spent on the games by consumers. The state’s 13 casinos, which must report monthly totals for taxation, reported taking in about $17 billion at slot machines in each of the past three fiscal years and paying out just over 90% as prizes.
By law, slot machines in casinos must return at least 80% of the money bet as prizes. Casino profits are taxed at 21%, bringing in $364 million for public schools in the most recent fiscal year.
The St. Louis Post-Dispatch reported that at trial, Steve Miltenberger, owner of Torch, testified that the payouts of his games are about the same.
Financial records obtained during the case, Ross wrote in a March order, showed that $32 million was spent from 2017 to 2023 at 20 locations, with about 100 machines, where TNT also had games. Torch split $11 million with retailers, leaving about 65% for prizes.
Unlike casino games, there is no special tax dedicated to education from Torch profits.
Evidence obtained for the case shows that Missouri Gaming Commission experts estimate there are about 15,000 Torch machines across the state.
Each one has at least five game themes, with multiple play levels, and whenever a player wants to see the outcome of the next play on that game theme and play level, a button is available to reveal it.
The outcomes are sequential, but with a random starting point whenever the game is first turned on or rebooted.
Torch calls the games “no-chance games” because of the ability of players to view the next outcome and the sequential nature of the prize determinations.
But the number of possible starting points make it an illegal game of chance, according to an opinion of the state gaming commission cited by Ross.
No criminal court has reached a jury verdict on the legality of Torch’s games. But in the March ruling where Ross dismissed claims that Torch was a criminal conspiracy, Ross described the extensive history of criminal and civil litigation involving the games and wrote that it wouldn’t be unreasonable for a jury to find that Torch lied about the legality of its games.
But an opinion letter from a Chicago attorney that the games are legal, and the decision by some prosecutors to turn down law enforcement requests for charges, shielded Torch in the federal case, Ross wrote.
That was “evidence of ‘plausible deniability’ (that) does effectively negate the element of specific criminal intent,” Ross wrote.
The jury’s verdict of $500,000 is to compensate TNT for losses from the unfair competition. In the statement, Finneran said that is a starting point.
“Now,” Finneran wrote, “we will seek disgorgement of the millions in profits that Torch has obtained through falsely advertising its devices as ‘no-chance’ games.”
