COAMs Reform: Good For Georgia, Bad For Owners

COAMs reform bill will heavily tax owners

COAMs (Coin Operated Amusement Machines) still aren’t a legal means to gamble in Georgia. They’re more gambling adjacent, as we recently explained.

Regardless of their true status on the gambling spectrum, one fact remains: They’re a goliath when it comes to revenue generation.

With House Bill 1424 clearing the Senate Regulated Industries and Utilities Committee at the end of March, Georiga COAMs are poised to bring the state of Georgia even more money.

In the meantime, COAMs are filling the gambling void in the Georgia marketplace. They’re incredibly popular and generated $3 billion in revenue in 2020.

And as Georgia flirts with gambling expansion, COAMs are the possible kickstarter for the Peach State.

House Bill 1424 would boost state earnings by 20%

HB 1424, if passed, will raise the state tax on COAM owners as well as on the establishments that house them. Currently, the state receives a 10% earnings share on COAMs. Should HB 1424 clear its final hurdle in the House and pass, that share would jump to 30%.

The impetus for the bill itself is the popularity of COAMs throughout Georgia. In their infancy, COAMs generated $2 billion in revenue. They now rival the Georgia Lottery by topping $4.5 billion today.

In context, were the state to have taxed that $4.5 billion at the proposed 30% rate in House Bill 1424, it would have netted $360 million for the Georgia education system.

The state obviously wants a larger share of the pie.

Reform may push COAM owners under the table

Lobbyists for the COAM industry waged a fight against House Bill 1424’s passage, citing Georgia’s rank atop the list of state fees assessed for gaming licenses.

Les Schneider, a lobbyist for the Georgia Amusement & Music Operators Association, put it plainly:

We pay more than any other COAM operation in the United States of America

Capitol Beat

Other arguments against the proposed legislation state that increasing the state tax on COAMs to 30% would only encourage store owners to continue paying out cash for COAM wins under the table — a fight that the state is already fighting.

Legislation has been proposed to offer gift cards to COAM winners to discourage illegal cash payouts. And HB 1424’s detractors fear the increased tax burden will only hurt the parallel bill’s attempt to nix illegal payments.

House Bill 1424 would also limit gift card payouts to the location where the COAM win occurred, greatly impacting the gift card prize payout’s ability to work as “a great equalizer,” as Sheila Humberstone of the Georgia Association of Convenience Stores stated:

Our members are at a competitive disadvantage when the convenience store across the street pays out cash.

The state of disarray

The Georgia Legislature seems to be creating solutions where COAMs are concerned and then injecting new problems into the equation.

Regardless of the COAM reform bill’s ultimate passage or failure, with its deluge of consistent revenue, it’s blindingly apparent that they’re wildly popular with Georgians. You can’t expect that popularity to fade based on arcane legalese.

Georgians are hungry to gamble, even if it means a gas card or a gift card as a payout. But the state continues to muddy the waters on its stance regarding legalized gambling. It inches ever closer to making it a reality and then scurries to make legislation as confusing as possible.

Photo by: Michael Warwick/Shutterstock