Kentucky attorney general advises ‘risk-free’ games are illegal gambling

Kentucky Attorney General Russell Coleman released an advisory to local prosecutors this week warning new games resembling slot machines and claiming to be “risk-free” are actually illegal gambling devices.

“There is no safe harbor in Kentucky’s gambling laws for this kind of game,” Coleman stated.

Kentucky Public Radio was the first to report on the new “no-risk” games in March, which began proliferating in gas stations around the state earlier this year. Officials say there are currently more than 600 of the games operating in Kentucky.

The Kentucky General Assembly passed a bill to ban so-called “gray machines” last year. The gaming machines numbered in the thousands and offered cash payouts in gas stations, bars and other stores throughout the state. The companies that made and leased the games contended they were “skill games,” saying the success of players depended on their actions and that they were not games of pure chance.

Pace-O-Matic and Prominent Technologies — the two largest manufacturers of the skill games in Kentucky — disconnected their devices after the new law went into effect, while both sued to strike down the legislation as unconstitutional.

However, Prominent also went back to the drawing board and created a new game they claimed was not outlawed under the new law, and started putting them back into gas stations at the beginning of 2024.

Calling them “no-risk” or “risk-free” games, the company’s attorneys and representatives pointed out the new devices informed people before each play whether or not they would win on the next spin. The company even informed the attorney general’s office of the new games in January and offered to demonstrate them.

Coleman’s advisory this week disputes the company’s interpretation, stating the risk-free games are just as illegal as the gray machines that were in Kentucky stores in 2023.

“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.”

Coleman’s advisory goes on to provide guidance to local prosecutors, stating that “you and your office are free to investigate and prosecute any violations of the Commonwealth’s gambling laws, including the laws 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 are disappointed with Coleman’s advisory, but they will comply. The company has informed all of the stores using the games throughout Kentucky to disconnect them by 5:30 p.m. Wednesday.

Heleringer added that Prominent will spend the coming days “exploring legal options” in the wake of the advisory. Prominent sued to block the gray machines ban in 2023, but dropped its lawsuit this summer.

“It’s just a shame that people can’t come in here and invest in Kentucky and hire employees and grow a company without these legal impediments being thrown up in our faces that we don’t think are justified,” Heleringer said.

In an accompanying press release released Wednesday, the attorney general’s office stated that “more than 500” of the risk-free gambling devices have now appeared in Kentucky.

Prominent previously said in March it had games in more than 100 locations across Kentucky. Heleringer said Wednesday there are currently 600-700 games in roughly 70 counties in the state.

Heleringer says Prominent representatives met with the attorney general’s office three weeks ago to make their case for why the risk-free games should be deemed legal, providing the aforementioned figures on how many of their games were in stores.

Coleman’s advisory cited a Kentucky Supreme Court ruling from 106 years ago to make its case for why the risk-free games are illegal, as the high court found nickel games that provided a piece of gum with each play to be illegal. Heleringer countered that it’s not a proper comparison of the two games.

Prominent is not the only company offering risk-free games to stores around the state this year, as many gas stations now feature similar games without the clear branding of a company.

One company called Friendly Amusement has games in Louisville gas stations. Its website tells prospective store owners that the games are legal because there is no risk involved for the player.

As of this summer, the Kentucky Department of Alcoholic Beverage Control has taken very few enforcement actions against stores for operating risk-free games.

The state agency responded to a Kentucky Public Radio open records request this week with all of its citations of stores for having illegal gambling devices. The agency has given only nine warning notices to gas stations and convenience stores so far this year. Just three notices mentioned the “Wildcat” branding of Prominent, which were all in February.

Though Prominent dropped its lawsuit to block the 2023 gray machines 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 bill to ban skill games 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 funded ads opposing the ban. The two rival groups spent more than $800,000 on advertisements alone during the first three months of the 2023 session.’

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