Legislature considers amusement machine industry reform

ATLANTA — A state lawmaker is renewing a bipartisan push to reform Georgia’s coin-operated amusement machines (COAM) industry.

House Bill 353, sponsored by Georgia Rep. Alan Powell, would award non-cash redemption gift cards to winners that could be redeemed anywhere in the state for any legal product. Under current law, COAM winners can redeem their prizes only for merchandise sold in the store where the machine they played is located.

With taxes from the popular COAM machines already making up the Georgia Lottery Corp.’s fastest growing source of revenue for education, gift cards would generate even more tax funds for HOPE scholarships and the state’s pre-kindergarten program, Powell, R-Hartwell, told members of the House Higher Education Committee Thursday.

“You will see the proceeds explode,” he said. “It will bring in more money to the lottery.”

During an initial hearing on his bill, Powell recounted the “checkered” history of the COAM industry in Georgia, replete with retailers paying out cash to winners.

“These machines are for amusement … non-cash redemption,” he said. “They got absolutely out of control with video poker.”

After video poker was outlawed in the early 2000s, the Georgia Lottery Corp. took over regulation of the COAM business.

While the lottery has brought new technology to bear that is able to track what every COAM machine in the state does, Powell said the gift cards are needed both to boost revenue and dissuade retailers from making illegal cash payments to winners.

Powell said the lottery corporation has been experimenting with gift cards in portions of the state through a pilot project. Retailers who have participated in the project like the idea, he said.

A state Senate committee approved legislation last year that would have increased state taxes on COAM machine owners and retailers from 10% to 30%. But the bill didn’t reach the Senate floor for a vote.

Powell suggested the legislature keep the tax rate at 10% — divided evenly between machine owners and retailers — for now and only consider raising it later if awarding gift cards drives up revenue to the extent he is predicting.

Powell’s bill was transferred from the Higher Education Committee to the House Regulated Industries Committee, which he chairs.

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