Odds are against gambling expanding to cash-payout machines

Ever since Iowa legislators snuffed out TouchPlay nearly four years ago, riding a wave of public outrage over the devices' presence in supermarkets and convenience stores, lawmakers have toyed with finding a replacement that would be profitable for the state and businesses.

As tempting as it would be during the state's fiscal crisis - legislators are even being asked to pay for their coffee - proponents of video-gaming machines in adult-only businesses say the odds aren't in their favor.

Although there are estimates that cash-payout games could generate as much as $30 million a year for the state, interest is weak because “we couldn't ramp up a game quickly enough to help this year,” said Rep. Brian Quirk, D-New Hampton.

Charlie Faulkner, who had four TouchPlay machines at the Fire House bar in Cedar Rapids, doesn't believe adding cash-payout machines would take long at all and says it would help his business immediately.

His two registered amusement devices that offer prizes redeemable for merchandise are busy most of the time. They're not as popular - or as profitable - as TouchPlay, which offered cash prizes.

If the Legislature would allow cash-payout machines, “I'd put in as many as I could, as many as they would allow,” said Faulkner, one of the bar's owners.

“People want a cash prize. It's more exciting than being able to redeem a ticket for a beer or a hamburger,” said Craig Cohoon of Ankeny, a leader in the fight to retain TouchPlay who now is setting up video gambling in Illinois for Best Gaming.

Cash-payout machines also would generate more revenue for the state, he said.

Iowa gets sales tax on the amount customers put into the 6,000-plus registered amusement devices with games such as Monkey in a Barrel or Fruit Bonus. Typically, the bar owner and machine owner split what's left after taxes, Cohoon said.

In Illinois, the state will get 30 percent of net proceeds from the cash-payout machines expected to come online later this year. The state's cut is projected to be $18,000 a day.

“Those are some pretty big numbers,” Cohoon said. “It would certainly help the state, and when you think about it, it's not much of an expansion from the games currently allowed.”

Now, Iowa allows payouts redeemable for up to $50 in merchandise. The Legislature capped the number of registered amusement devices at 6,928, with no more than two in any business or four in a service or fraternal club. There is a $25 annual registration fee on each machine.

Not only lawmakers are wary of changing the gambling playing field, said Larry Elbert of Camden Amusements & Vending Co. in Cedar Rapids and president of the Iowa Operators of Music and Amusements. Many still feel they were burned when the state pulled the plug on 6,000-plus TouchPlay machines

“After what we went through with TouchPlay, I think there would have to be quite a bit of educated discussion about how the state could handle it before anyone would invest in new machines,” Elbert said.

“But we're businesspeople and we have to look at anything that will improve the bottom line, especially in 2010,” Cohoon said. “We would be foolish not to at least listen.”

As much as businesses need a shot in the arm and as much as the state needs revenue, Quirk doesn't sense his colleagues are up for a gambling debate. “It might detract from the bigger issue of getting our fiscal house in order,” he said.

House Majority Leader Kevin McCarthy, D-Des Moines, suggested new gambling revenue might begin to look better as the session progresses.

“If in early March we need $25 million or we start removing kids from health-care rolls, (legislators) may think differently,” McCarthy said.