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Feb. 21, 2024 |  By: Rudi Keller - Missouri Independent

Missouri Treasurer faces scrutiny over state advertising on unregulated slot machines

vivek malek

By Rudi Keller - Missouri Independent

A southwest Missouri lawmaker blasted state Treasurer Vivek Malek Wednesday for refusing to answer questions about new ads for the state Unclaimed Property Program appearing on unregulated games that offer cash prizes.

Malek declined to appear at a hearing of the House Subcommittee on Appropriations – General Administration, angering Chairman Scott Cupps. 

Cupps said he refused an offer to meet privately with Malek, and vowed to schedule a committee hearing every day until Malek appears.

At issue are gaming machines operated by Torch Electronics. The machines have been controversial for years, with some Republican lawmakers and state gaming officials arguing they are illegal gambling devices. 

Cupps took photos of several machines in southwest Missouri that were adorned with advertisements for Missouri’s unclaimed property program, which is run by Malek.

Torch is the largest purveyor of the games offering cash prizes that have proliferated in Missouri convenience stores, truck stops and other locations since 2018. The company has been sued, charged criminally with promoting gambling, and it even sued the Missouri State Highway Patrol to block enforcement actions, but no final court decision on the legality of Torch’s machines has come from any court.

The company  has also spent heavily on lobbying to prevent any legislative action to define its games as illegal and donated more than $1 million since 2018 to politicians in both political parties.

Cupps, who called the Torch devices “illegal gambling machines” during Wednesday’s hearing, said Malek has to answer for his office’s partnership with the company.

 “If you are trying to hide something or you are not willing to talk about something funded with taxpayer dollars, openly and publicly, then that right there is the red flag that there’s something nefarious taking place,” Cupps, a Republican from Shell Knob, told other members of the committee.

On the games themselves, the advertisement is a small sticker that promotes searching the unclaimed property for lost cash, with an image of the state seal, a website and QR code and Malek’s name. On a redemption machine placed near the games in some locations, the advertisement fills the screen.

“This is the state seal bigger than Dallas on these machines and it says, Vivek Malek,” Cupps said. “If there’s anyone that should be able to answer every single question as to how all of this takes place, it is him.”

Cupps said the only explanation given by Malek’s office was that he had another commitment. But just minutes before Cupps explained to committee members why he wanted Malek to appear, the treasurer was in another House committee hearing testifying in favor of a bill requiring state and local governments to divest any investments in countries labeled “foreign adversaries.” 

Cupps even went to that hearing room to request Malek’s appearance.

“I don’t think there’s one of 6.3 million people that shouldn’t have a pretty extreme problem with one of our highest level elected officials saying no, I’m not going to go talk about this to the Appropriations Committee,” Cupps said.

The Unclaimed Property program currently holds more than $1.2 billion in unclaimed assets, collected from financial institutions, businesses, government agencies, and other organizations unable to locate a person owed money or property. Entities required to turn over assets to Unclaimed Property do so after there has been no document transaction or contact with the owner for five years.

Every state treasurer regularly promotes the program to get the assets returned. 

“The Treasurer’s Office is happy to work with small business owners to help raise awareness for Missouri’s unclaimed property, so that more folks can get their money back,” Malek said in a statement to The Independent. “Promotions for Unclaimed Property at retail outlets cost the state nothing.”

Malek’s office declined to answer questions about how the advertising platform was chosen or whether the legal questions surrounding the games was considered before the decision was made.

Gregg Keller, a spokesman for Torch, said in a statement that Malek approached the company in an effort to expand that outreach. Torch is not being paid for the advertising.

“Torch Electronics has been happy to make our No-Chance Game Machines available in a volunteer effort to assist Missourians in locating unclaimed property,” Keller said. “This is a new effort, initiated at the request of Treasurer Vivek Malek’s office and is an awareness-raising practice in which Torch has no financial stake.”

Torch has argued in court that its games are legal because every player has a chance to see whether they have won a prize before playing. 

In the legislative halls, efforts to legalize sports wagering have been derailed by lawmakers who want to also allow the Missouri Lottery to offer video gaming. Torch, through its lobbyist Steve Tilley, works to defeat any bill that would declare its games illegal.

In 2021, Torch and convenience store operator Warrenton Oil sued the Missouri State Highway Patrol, claiming that the law enforcement agency was engaged in a campaign of “harassment and intimidation” against its games and retailers. The lawsuit was dismissed in October, a decision that is now under appeal.

Despite those patrol enforcement efforts, a review by The Independent in 2021 showed that of 190 cases the patrol submitted to local prosecutors in 2019 and 2020 requesting charges for illegal gambling, only a handful of cases were actually filed. 

Local governments are trying to crack down on the machines as stand-alone gambling parlors proliferate. 

Springfield recently passed an ordinance banning “any entertainment device that offers a monetary prize to any person regardless of the frequency with which a monetary prize is conferred or the odds of any individual user realizing a monetary prize.”

The ordinance effectively shut down stand-alone gambling parlors in the city but Torch is arguing its devices do not violate the ordinance and refusing to remove them from retail locations, KY3 television reported.

Torch’s questionable legal status makes state advertising on the games upsetting, Cupps said. It creates an impression that the games are legal and have a state permit, he said, or are even operated by the state. And Malek, he added, needs to explain what he did.

“I will not accept,” Cupps said, “a statewide elected official telling this appropriations committee that they will not make themselves available for questions to this committee about how the money is being spent out of their advertising budget.”