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The legal status of some “grey machines” in Kansas will remain nebulous for the foreseeable future after the state’s Supreme Court dismissed an attempt to have the court system declare that they do not fit within Kansas’ definition of gambling terminals. Without such a declaratory judgment, the businesses involved in the machines’ operation continue to risk prosecution and seizure of the terminals, although the risk seems minimal.
The legal proceedings exemplify a national struggle to adapt existing gambling standards to innovation in the gaming industry. The Kansas Supreme Court may be asked to weigh in on such standards again.
Kansas Supreme Court tells game provider to come back when you have a case
According to Tim Carpenter of the Kansas Reflector, game provider Pace-O-Matic (POM) of Kansas didn’t get the day in court that it wanted. The Kansas Supreme Court upheld the district court ruling that POM had no standing to bring its lawsuit because POM failed to show how a lack of the declaratory judgment it sought would harm its business.
POM argued that a letter from Kansas Racing and Gaming Commission (KRGC) Director Don Brownlee to law enforcement agents in the state constituted a threat to POM’s offering of the “Dragon’s Ascent” game in Kansas businesses with which POM has partnered. The letter shared that KRGC agents had played the game and found that the skill element was not sufficient to eliminate the impact that chance has on the game.
However, because neither the KRGC nor any law enforcement bodies have taken any enforcement action to this point, the courts found fault in POM’s argument. For that reason, these “grey machines” remain firmly in the grey area.
Kansas isn’t the only place where courts are confronted with defining whether electronic games are gambling or not.
“Skill games” issue playing out all over the US
POM and other companies operate similar games in many other US states, creating potential conflicts as gaming licensees proliferate their businesses in the same jurisdictions. For example, the North Carolina Court of Appeals weighed in on this issue on the final day of 2024.
Additionally, a case on this subject is currently before the Pennsylvania Supreme Court. In July 2024, a Kentucky court upheld a statewide ban aimed at such machines.
In some instances, courts have struggled to interpret statutes to novel concepts in the games. States like Virginia have attempted to clarify laws surrounding these terminals.
One factor that could prompt more action on this issue in Kansas is the state’s casino contingent.
Casinos could tip balance toward action against “skill games”
In other states, casino licensees have put their support behind efforts to limit the presence of “skill games.” Multiple casinos in Pennsylvania filed an amicus brief asking the state Supreme Court to review a case challenging the operation of the machines, for example.
Kansas is home to four commercial casinos, all of which are owned by the Kansas Lottery but operated by partners like Boyd Gaming and PENN Entertainment. To date, these companies have not taken significant public-facing action on the subject of games like “Dragon’s Ascent.”
That might be due to the fact that such games do not have enough of a presence in Kansas to pose a cannibalization threat. Should that change, the operational partners or the Kansas Lottery may press the legislature to clarify and tighten gaming standards.
Another course of action is to have the courts declare the games illegal under existing statutes.
If the legislature does move on the issue of what exactly constitutes gambling in a way that affects POM’s business in Kansas, that could give POM the standing the court determined that it currently lacks.
An escalation of this debate could span several years and warrant the Supreme Court’s attention again.
