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The manufacturer of a new style of gaming terminal found gas stations and convenience stores has turned them off in Kentucky after the state attorney general issued an advisory warning that the risk-free play games were illegal.
Prominent Technologies deployed the new style of gaming machine earlier this year believing they were not covered by the state’s ban on skill games, but Attorney General Russell Coleman’s advisory memo makes it clear he believes the terminals violate the law enacted by the Kentucky General Assembly in June 2023.
“The law is clear, grey machines and other games like them are illegal gambling devices that have no place in Kentucky,” Coleman said. “Along with our law enforcement and prosecutorial partners across Kentucky, we will uphold the law as passed by our Commonwealth’s policymakers in the General Assembly.”
Bob Heleringer, a Louisville-based attorney for Prominent Technologies, told Vixio GamblingCompliance that the company disagrees with Coleman’s advisory but had advised all locations to shut them down while the company tries to resolve the issue.
“We will resolve it probably in the courts,” Heleringer said Thursday (September 5). “We have to protect our investment, our employees and what we are doing in the state. We are going to do that.”
Prominent Technologies and Pace-O-Matic were the two manufacturers and distributors of skill games that began operating at convenience stores, gas stations and bars in Kentucky in 2021. Both companies disconnected their skill-game terminals after the ban took effect last year but immediately challenged the new law in court.
One lawsuit challenging the constitutionality of House Bill 594 was filed in Jefferson County and the other in Franklin County. In June, Franklin Circuit Court Judge Phillip Shepherd sided with Coleman in upholding the ban.
Shepherd ruled that Pace-O-Matic had not proven its claim that the law violated the constitutional right to free speech by banning the company's so-called Burning Barrel machines because of their content. Shepard wrote that lawmakers enacted the ban “to target the conduct of unregulated wagering”.
The Jefferson County lawsuit was voluntarily dismissed, while Pace-O-Matic has appealed Shepherd’s ruling to the Kentucky Court of Appeals.
Rachel Albritton, a spokeswoman with Pac-O-Matic, told Vixio the company was aware of the attorney general's latest advisory but does not currently have any games in operation in Kentucky.
Coleman stressed there was “no stay” of Shepherd’s judgment in effect pending the outcome of the appeal; therefore, the ban is “valid, constitutional and may be enforced”.
In his three-page advisory released September 3, Coleman also highlighted the spread of the new “risk-free play” style of machine appearing in locations across the state. Currently, more than 500 of the devices have been placed in retail locations, but Coleman reiterated that these machines are illegal under state law.
Heleringer said Prominent Technologies informed the attorney general’s office in January that it was distributing a new type of game, and attorneys for the company met in Frankfort with staff from Coleman’s office in August.
“The best we were hoping for is they would be neutral,” Heleringer said.
The so-called risk-free machines tell the player whether their next game will win money or lose money, which Prominent Technologies believes removes the risk from playing the games.
But Coleman wrote that the machines are illegal in Kentucky because the player still does not know the outcome of future games beyond the next one.
“Thus, the game lures the player into continuing to play on the chance that the next game play will result in a win worth more than he will have to pay for the current play,” Coleman wrote. “This hope that the subsequent game play will be a winner is the 'element of chance' that makes these so-called 'Risk-Free Plays' games illegal gambling devices.”
“There is no safe harbor in Kentucky’s gambling laws for this kind of game,” Coleman added.
Heleringer told Vixio that Prominent Technologies also disagrees with Coleman's view that risk-free play games were illegal pursuant to a 1918 Kentucky Supreme Court ruling in Welch v Commonwealth that found the “defendant operated a slot machine which, for a nickel, would always provide the player with each game play a stick of gum worth five cents”.
Heleringer added that any player can withdraw their money if the game tells them the next play is not a winning game.
“Thus, there was no chance that the player could 'lose', as every nickel play always returned a product worth a nickel,” Coleman wrote. “But the game also included an up-side chance of returning to the player a redeemable 'chip' worth between five cents and a dollar. Before every game play, the machine told the player if he would receive a redeemable chip and what it would be worth.”
The state's Supreme Court then concluded that the games constituted gambling because what “attracts the player is the chance that, ultimately, he will receive something for nothing”.
That "chance" lured players “into continuing to play in the hope that the next” play would result in more money than they had paid into the machine, Coleman wrote.
