Kentucky Lawsuit Seeks to Reimburse Gray Machine Gambling Losses

This legal action follows another recent trial that upheld Kentucky’s ban on “gray machines,” slots-like devices that pay out moneyImage Source: Shutterstock.com

A new lawsuit filed in Kentucky seeks to recover millions of lost dollars by players engaging with “gray machines,” a type of cash payout game that proliferated in many convenience stores and gas stations across the state. The lawsuit, brought by the nonprofit organization Empathy in Action, aims to reimburse people who have lost money gambling on these contentious devices, which resemble slot machinesbut operate in a gray legal area.

Dealing with the Devices Remains a Pressing Issue for Kentucky

The legal action invokes Kentucky’s 226-year-old Loss Recovery Act, which allows third parties to recover money lost from illegal gambling. This same law was successfully used in 2011 when the state won a $300 million judgment against PokerStars, an illegal online poker operator. Lead attorney Vanessa Cantleynow hopes to apply that same law to go after the companies responsible for gray machines.

Gray machines have a long history of controversy in Kentucky. Known to many as “skill games,” these devices resemble gambling devices but don’t fall intoany clear legal category. The ambiguity encouraged Kentucky lawmakers to approve House Bill 594in 2023, banning the machines and redefining what constitutes a gambling device. 

Despite the state’s efforts, enforcing this measure has proven difficult, with new machines continuing to appearin various establishments. In July 2024, the legal battle against gray machines marked another success when Franklin County Circuit Judge Phillip Shepherd reaffirmed the state’s ban. Attorney GeneralRussell Colemanpraised the decision, saying it was a step toward preventing the unchecked spread of gambling.

This New Lawsuit Could Set a Precedent for Other States

Critics say the machines have contributed to the most significant expansionof gambling in Kentucky’s history. Pace-O-Matic andProminent Technologies, the two most prominent companies that produce and distribute these devices, argue that they are legitimate skill-based games and should not fall under thesame strict restrictionsas gambling offerings. 

Cantley’s lawsuit aims toshed light on this contentious industry by forcing the gray machine companies to disclose financial information, such as how much Kentuckians have spent on these games over the past five years. She estimates the amount lost to gray machines could be in the millions, given the ubiquity of the machines across the state.

Our hope is that in the discovery process of the lawsuit, they’ll be compelled to turn over the information.

Vanessa Cantley, Empathy in Action lead attorney

The outcome of this lawsuit could havefar-reaching implicationsbeyond Kentucky. The case, if successful, could set a precedent in holding gaming companies accountable for losseson unregulated devices, potentially leading to significant industry changes across the country as other states ngake inspiration from Kentucky’s legal approach.