As one Kentucky city targets ‘gambling devices’ in stores, Louisville’s hands are tied

Thousands of cash payout games resembling slot machines have proliferated in gas stations and stores around Kentucky over the last few years, pushing the state legislature to address the issue.

Lawmakers responded in 2023 by passing a bill to ban them and provide clarity on the so-called “gray machines,” dubbed so because of the legal gray area they occupy.

More than a year later, such clarity still eludes Kentucky.

Many similar cash payout games still exist in stores across the state, despite Attorney General Russell Coleman’s recent advisory that new games claiming to be “risk free” are also illegal.

Now, two local governments are now taking highly contrasting enforcement measures.

While a Jefferson County judge has blocked Louisville’s efforts to crack down on these new types of games, the Winchester Police Department seized 38 games from 11 stores on Sept. 4, charging the business owners with multiple Class A misdemeanor counts of possessing an illegal gambling device.

Abuthiab Taysir is the owner of one of the Winchester convenience stores that had its machines seized and is now facing serious criminal charges. He expressed frustration that he was given no warning from the police, nor any indication from the company distributing the games — and splitting the profits — that they may land him in such hot water.

“This is not worth it,” Taysir said. “I told the company before they (brought) the machine, I don’t want (any) problem at my store, nothing. If you’re not legal, I don’t need your machine.”

After the 2023 ban went into effect on the machines — called “skill games” by their manufacturers — at least two companies developed and distributed new games they claimed steered clear of the ban, as first reported by Kentucky Public Radio.

By revealing on the screen the outcome of the next spin, they claimed these games have no element of chance and are “risk-free” for the player, therefore not falling under Kentucky’s gambling prohibition.

Whether that is true depends on who you ask.

Following enforcement actions taken in 2023 by Louisville Metro Alcohol Beverage Control against stores housing games distributed by Skill State LLC — which also goes by the name Friendly Amusement — the company filed a lawsuit seeking an injunction to block the agency from such actions.

This June, Jefferson Circuit Judge Patricia Morris granted Skill State’s motion, temporarily blocking further enforcement by Louisville ABC against stores with the games. Morris’ order sided with the argument of Skill State that the games were licensed coin operated amusement devices and had no element of chance by revealing the outcome of the next spin or play.

That argument stands in stark contrast to the subsequent opinion of AG Coleman, whose Sept. 3 advisory said games claiming to be risk-free by pre-revealing the outcome of the next play are also prohibited gambling devices, as players still have an element of chance in the hope that the following play will reveal a win.

Saying that he issued the advisory in response to requests from “law enforcement and prosecutorial partners” about what to do with these new gray machines, Coleman wrote that “there is no safe harbor in Kentucky’s gambling laws for this kind of game.”

Prominent Technologies — a former skill games maker that switched to distributing “no-risk” games to Kentucky stores in 2024 — disagreed with the advisory, but still advised client stores to disconnect their games on Sept. 4, when Coleman’s advisory was publicly released.

Representatives of Skill State and Friendly Amusement — including C. Thomas Hectus, their attorney in the Jefferson County lawsuit — have not responded to repeated requests for comment on Coleman’s advisory and how its client stores would respond.

However, clients of both companies had their stores busted and games removed by city police in Winchester the same day that Coleman’s advisory was released publicly in a press release.

Bob Heleringer, an attorney for Prominent, says one of its gas station clients in Winchester had three devices removed by city police that day before they could even advise the business to disconnect their games.

He says he will defend that client from the charges, while the owner and manager of two other stores hit by Winchester police that day told Kentucky Public Radio they will be represented in court by Hectus, the attorney for Skill State and Friendly Amusement.

Heleringer added that he and Hectus will soon file a civil action in the Clark County Circuit Court on behalf of their clients, seeking to protect them from prosecution and have a judge declare their games to be legal.

Store owners, game distributors and law enforcement are battling over the issue of these games in Louisville, Winchester, Frankfort and beyond, a sign that there is a long road ahead to determine what is and is not a legal cash payout game — by any name.

Winchester police coordinated day full of search warrants

Winchester Police Sgt. Matthew Reed told Kentucky Public Radio the department executed search warrants on 11 gas stations and liquor stores seizing 38 illegal gambling devices in early September.

Reed said he put cash into each machine and played them, cashing out a ticket after he won more money. He would then take the ticket to register and redeem it for its cash amount.

The detective then submitted affidavits for search warrants, which were executed the day after being signed by Clark District Judge Charles Hardin. Each affidavit describes Reed playing a digital game that resembles a slot machine and redeeming a ticket for cash at the register, but does not mention the brand name of any game company.

While the search warrants were executed the same day that Coleman publicly released his advisory and a day after he wrote it, Reed said the timing was a random coincidence, as the entire investigation lasted about a week and a half.

“Some people may accuse it otherwise, but I hadn’t even been in contact with the attorney general’s office,” Reed said. “I just went by the statute and my bosses wanted me to look into it, so we did.”

Asked why Winchester police decided to take the action to seize the games, Reed answered that “we investigate all criminal acts and that just happened to be the one that we investigated that week.” He said the department has been in contact with attorneys from Prominent and Skill State over the seizures and citations.

As of Thursday morning, the Kentucky Court of Justice’s online system showed eight different business owners had been cited and charged with a total of 33 Class A misdemeanors — one for each “gambling device” seized from 10 stores. Under Kentucky law, the penalty for such a conviction could be up to 12 months imprisonment and up to a $500 fine.

Winchester store owners said they received no warnings about games

Taysir is the owner of H&M Market in Winchester, who is now charged with three counts of possession of a gambling device, for each game seized by the police.

He said his store obtained the games through Friendly Amusement and that Hectus said he would represent him in his criminal case.

Taysir expressed frustration that his convenience store was given no warnings by police for having allegedly illegal games and that he would not have them if he had received any indication of that.

He said Friendly Amusement had assured him the games were legal before he put them in H&M market.

“I told the man at the company… if your machine (is) not legal, I don’t need it,” Taysir said. “If I make a million (dollars), I don’t need this. I want no headache.”

An unnamed friend of Taysir added that the games are no different than the legal games at businesses like Chuck E. Cheese, where players win tickets that can be redeemed for prizes.

Singh, a manager of the JNB Food Mart and gas station in Winchester, said the police seized six games at his store.

He also complained that while police did not give the store a warning — and seized all of the money from its cash register — he heard several other businesses, including a restaurant, did receive a warning that day and faced no seizures or charges.

Singh added that the store’s owner is also being represented by Hectus.

A store manager for the Shell Mart in Winchester who declined to give his name agreed with other store owners and staff who said there was a heavy police presence when the games were seized.

“They came in deep as could be,” he said. “You would have thought it was a murder scene, there was so many cops in our parking lot.”

He added that the four seized games were the type that revealed whether a player would win or lose before a spin, “that was supposedly what made them legal.”

Heleringer says he will defend his one client in Winchester that was charged, the owner of the Gasoline Alley gas station.

“I just feel sorry for my client that’s trying to make a living, I think, in an honest and upright way,” Heleringer said, describing the police action of seizing nearly 40 machines in one day a “jihad.”

Heleringer said he’s not yet sure whether Winchester police coordinated the timing of its search warrants with the attorney general’s office and its advisory, adding that “despite what they say, the timing looks rather beyond coincidental.”

He added that he will join Hectus in filing a civil lawsuit in Clark Circuit Court, possibly by the end of the week, in which he hopes to demonstrate the games to a judge “and try to get a court order that our games are compliant with current Kentucky law.”

Prominent filed a lawsuit in Jefferson County in 2023 challenging the newly passed ban on its skill games, but agreed to drop it over this summer. Pace-O-Matic, another major distributor of skill games, also filed a 2023 lawsuit challenging the constitutionality of the ban, but a Franklin Circuit judge dismissed it this June.

Pace-O-Matic is still appealing that ruling, but has shuttered its skill games since the ban went into effect and has not attempted to put “risk-free” games in stores this year, unlike Prominent.

A spokesman for Coleman did not answer whether they are aware of any other counties or local governments that have taken actions similar to the Winchester police since his advisory on risk-free games.

Court injunction puts enforcement on hold in Louisville

Though Jefferson Circuit Judge Morris granted the motion of Skill State to block Louisville’s ABC agency from enforcement action against stores with its games, the underlying lawsuit continues, seeking a permanent injunction and declaration that the defendants’ rights were violated.

Metro ABC director Brad Silveria told Kentucky Public Radio that despite the attorney general’s advisory that enforcement can be taken against “risk-free” games, they have to wait to take any further action “until we get the injunction set aside.” There have been no additional filings in the case since Morris’ June 28 order.

Josh Abner, the spokesman for Jefferson County Attorney Mike O’Connell, said the city plans to file additional pleading “as we work to clarify the matter and ultimately succeed on the merits.”

Silveria said he is not aware of any other local governments being hamstrung from enforcement actions against such gambling devices due to a court order.

Meanwhile, several different types of cash payout games continue to operate in Louisville, with confusion surrounding their company ownership and legal status.

A week after Coleman’s advisory, a Kentucky Public Radio reporter played a slots-like game at a convenience store on 18th Street in west Louisville that was mentioned in the Skill State lawsuit against the city.

The game had no identifiable company branding on its cabinet, but closely resembled the skill games that were banned in 2023, as a player had to touch the screen to have a chance at winning. Despite its cabinet stating “PRE-REVEAL NO CHANCE,” it did not reveal the outcome of a spin beforehand.

The game cabinet also displayed a city amusement device registration number, with a store employee showing the city licensed it to a company called Arnold Technology. The Kentucky secretary of state’s website shows Muhammad Sultan Shahbuddin as the registered agent and member of Arnold Technology, but when reached by KPR he said he was no longer associated with it and would pass on a message to the current owner.

At a deli on 4th Street in downtown Louisville, two games are present that closely resemble casino slots machines, as they do not “pre-reveal” a spin’s outcome and do not require the “skill” of a player touching the screen. A reporter won several dollars on the game and redeemed a ticket for cash at the register. A store employee said he believed the company distributing the machines is called Galaxy Games, though no company by that name is registered with the state.

At a bar in Louisville’s Schnitzelburg neighborhood, another game with no external company branding is in operation, which has a “preview” of the outcome of the next spin.

A review of Metro ABC notices of violations issued to stores over the past year for operating illegal gambling devices shows the city has issued none since April.

Outside the scope of any kind of criminal enforcement throughout the state are slots-like devices that remain legal under Kentucky statute, such as those operated by charitable gaming organizations, the Kentucky Lottery and horse racing companies.

Churchill Downs and Kentucky’s horse racing industry lobbied the Kentucky General Assembly heavily and successfully for the 2023 ban on gray machines, as well as the 2021 bill that legalized their “historical horse racing machines” — video games that closely resemble casino slots and have financially propped up the industry for more than a decade.

State government and politics reporting is supported in part by the Corporation for Public Broadcasting.