Kentucky Attorney General Advises Making ‘Risk-Free’ Gaming Illegal Gambling

Kentucky Attorney General Russell Coleman issued a warning to local prosecutors this week warning that new games resembling slot machines and claiming to be “safe” are actually illegal gambling devices.

“There is no safe harbor in Kentucky gambling law for this type of gaming,” Coleman said.

Kentucky Public Radio was the first to report the news. in March about new “risk-free” games that began spreading at gas stations across the state earlier this year. Officials say there are now more than 600 games operating in Kentucky.

Kentucky General Assembly Passes Bill ban so-called “grey machines”” last year. The slot machines numbered in the thousands and offered cash payouts at gas stations, bars and other stores across the state. The companies that created and leased the games claimed they were “games of skill,” saying that players’ success depended on their actions and that they were not games of pure chance.

Pace-O-Matic and Prominent Technologies — Kentucky’s two largest arcade game manufacturers — pulled the plug on their machines after the new law went into effect, while also filing a lawsuit seeking to have the law declared unconstitutional.

However, Prominent went back to the drawing board and created a new game that he claimed was not banned by the new law, and began introducing them back to gas stations in early 2024..

Calling them “risk-free” or “risk-free” games, lawyers and company representatives pointed out that the new machines told people before each game whether they would win on the next spin. The company even notified the attorney general’s office about the new games in January and offered to demonstrate them.

In his warning this week, Coleman challenges the company’s interpretation, saying risk-free gaming is as illegal as the gray slot machines that were in Kentucky stores in 2023.

“The game lures the player into continuing to play, hoping that the next play will yield a win greater than the amount he has to pay for the current play,” Coleman wrote. “This hope that the next play will be a win is the ‘element of chance’ that makes these so-called ‘Risk-Free Plays’ illegal gambling devices.”

Coleman goes on to provide guidance to local prosecutors, stating that “you and your office have the discretion to investigate and prosecute any violations of the commonwealth’s gambling laws, including those related to ‘gray machines,’” while also offering assistance from his office.

Bob Heleringer, an attorney for Prominent, told Kentucky Public Radio on Wednesday that they were disappointed with Coleman’s advice but would follow it. The company has notified all gaming stores across Kentucky to disconnect by 5:30 p.m. Wednesday.

Heleringer added that Prominent would spend the coming days “exploring legal options” in the wake of the warning. Prominent sued to block a ban on gray machines in 2023 but withdrew the lawsuit this summer.

“It’s just a shame that people can’t come here, invest in Kentucky, hire workers and grow their businesses without having legal obstacles put in place that we don’t think are justified,” Heleringer said.

In an accompanying press release issued Wednesday, the attorney general’s office said “more than 500” secure gambling devices have already appeared in Kentucky.

Prominent previously said in March that it had games in more than 100 locations across Kentucky. Heleringer said Wednesday that there are now 600 to 700 games in about 70 counties in the state.

Heleringer says prominent company officials met with the attorney general’s office three weeks ago to make the case for making risk-free gaming legal, citing the aforementioned figures regarding the number of their games available in stores.

In his opinion, Coleman cited a 106-year-old Kentucky Supreme Court ruling to justify why risk-free gaming is illegal, as the high court found nickel games, which included rubber in each game, to be illegal. Heleringer responded that this was not a proper comparison of the two games.

Prominent isn’t the only company offering risk-free slots in stores across the state this year, as many gas stations are now offering similar games, albeit without any clear branding from the company.

One company called Friendly entertainment has games at gas stations in Louisville. Its website tells potential store owners that the games are legal because they don’t involve any risk to the player.

This summer, the Kentucky Department of Alcoholic Beverage Control took very few enforcement actions against stores hosting risk-free gaming.

The state agency responded this week to a request from Kentucky Public Radio to release all of its citations to stores that had illegal gambling devices. The agency has issued just nine warnings to gas stations and convenience stores this year. Only three of the notices mentioned Prominent’s “Wildcat” brand, all in February.

Although Prominent withdrew its lawsuit to block the 2023 gray machine ban this summer, Pace-O-Matic’s lawsuit is still pending. A Franklin Circuit judge dismissed the company’s lawsuit this summer, but Pace-O-Matic has appealed the ruling to the Kentucky Court of Appeals.

The law banning arcade games was passed in 2023 after one of the most expensive lobbying fights in the history of the Kentucky legislature.

The powerful horse racing industry paid for ads supporting the ban, while Pace-O-Matic largely financed ads opposing it. The two rival groups spent more than $800,000 on ads alone in the first three months of the 2023 session.

This story is reprinted with permission from WKMS. Read the original.

Joe Sonka is Kentucky Public Radio’s first Enterprise Statehouse reporter, joining the team in October 2023.