Illinois Sweepstakes Machines May Remain Unregulated Amid National Quagmire of Gray Machines

Illinois sweepstakes machines seem to be gray gaming devices by another name. The machines are often found in gas stations like slot-style skill game machines are in other states. Similarly, members of the Illinois General Assembly are attempting to outlaw the currently gray gaming machines, as other states have done. However, SB1504 may not meet the May 12 deadline in the House that it must satisfy to survive.

By Friday, the bill needs to be on a third reading in the House to continue toward passage. As of today, the bill sponsored by state Sen. Bill Cunningham, D-Chicago, had one reading in the House and passed the Senate in a 58-0 vote on March 23.

Legislators adjourn on May 19.

Putting this bill in context, it’s an example of the eternal struggle of attempting to regulate or outlaw gray gaming machines. The former draws the ire of the legal retail casino industry and its advocates. The latter spurs lawsuits from the machine manufacturers and their customers, which are usually small business owners.

Illinois is going the route of rendering the machines illegal.

Illinois Sweepstakes Machines Defined

If approved, SB1504 outlaws “any vending or other electronic machine or device” that accepts money or an item of monetary value that then allows the user to enter into “any contest, competition, sweepstakes, scheme, plan, or other selection process that involves or is dependent upon an element of chance for which the person may receive a gift, award, or other item or service of value.”

Zach Savella Stallard, an organizer and volunteer with the nonprofit organization Stop Predatory Gambling Illinois, tells Bonus:

These machines do not include any element of skill, but are chance-based and provide a voucher which is exchanged for cash.

Trying them for himself, a Chicago Sun-Times columnist walked into a gas station in the city and played on a couple of the sweepstakes kiosks back in 2020. That’s when a House bill proposed banning the machines. Now a former columnist, Mark Brown inserted $20 into the kiosks – one of which resembled Keno and the other slots – and came away a half hour later with a $46 coupon that the attendant silently cashed for him.

Brown wrote in his January 2020 opinion piece:

Now that’s what I call gambling.

Illinois does, too.

The bill that outlines amending the Video Gaming Act says:

It is the intent of Section 28-2(a)(iii) to prohibit any mechanism that seeks to avoid being considered a gambling device through the use of any subterfuge or pretense whatsoever.

However, SB1504 has been sitting in the Illinois House Rules Committee since April 28.

Illinois Sweepstakes Machines vs. Skill Games

If the concept of gas station gaming machines sounds familiar, that’s because many states are concerned about “skill games.”

Chav Vasilev of Bonus differentiates skill games this way:

While Pace-O-Matic games resemble slots and VGTs, the gameplay differs because of the addition of a skill element. The company claims that players need ‘memory retention skills, pattern recognition skills, and eye-hand dexterity’ to succeed.

Most of its games involve slots-like reels with paylines based on Tic Tac Toe. Players must determine where to place a Wild to form a winning combination within the time limit. In addition, there is a ‘follow me’ section where players must follow color patterns, similar to the game Simon.

Vasilev’s story containing the skill games description is about Pace-O-Matic winning a court case. A judge declared the machines legal, despite Pennsylvania officials saying they’re illegal.

States have tried to ban skill game machines, with Kentucky being the most recent one to do so in March 2023. However, the Bluegrass State and Virginia – which had a ban slated to take effect in July 2021 – were immediately sued by the game manufacturers and their small business owner customers.

Why the Unregulated Machines Irk Retail Casino Owners

Children and problem gamblers who’ve put themselves on exclusion lists at legal retail casinos can walk up to the often unmonitored skill game machines and gamble, says Chris Cylke.

Cylke is the senior vice president of government relations for the American Gaming Association (AGA). The trade organization represents the legal online and retail gambling industry.

Speaking to Bonus on April 24, Cylke said of skill and sweepstakes gaming machines:

I think they’re all the same.

He cited AGA research showing Americans bet $109 billion a year on unregulated machines. Cylke said that handle costs the legal gaming industry $27 billion in annual gaming revenue – equivalent to 79% of the $34.2 billion in commercial slot revenue in 2022.

AGA estimates there are 580,000 unregulated machines in the US vs. the 870,000 legal slot machines that undergo regular testing, only allow gamblers of legal age to play on them, and prevent problem gamblers from using them. AGA compares the unregulated machines with slot machines because many games on them resemble slots.

However, Cylke said there might be more unregulated machines than the 580,000 estimate.

Because the skill game machines are unregulated, he tells Bonus:

It’s of course an inexact science.

Cylke Says Enforcement Can Go Beyond State Regulators

Cylke thinks the unregulated machines are threats to consumers and communities. Regarding literal cost, it’s $8 billion a year in foregone tax revenue.

He added that he lives in Virginia, where he saw skill game machines in gas stations even before the state’s legal gambling industry launched.

He spoke to Bonus about skill game machine manufacturers:

They don’t want to be held to the same standards.

Cylke said he believes states with solid laws should enforce them, and those that still allow the machines to live in a legal gray area should clarify that.

However, Cylke told Bonus:

Victory can mean different things in different places.

South Carolina officials even successfully sought federal help enforcing state law in December 2022 against Bubba Technology Group.

In Missouri, skill game machine players are seeking justice, he said.

Cylke cited a class action lawsuit brought by Missouri residents against Torch Electronics.

On its site, Torch describes its machines as:

Torch’s No Chance Games are the first of an entirely new entertainment concept; a game in which there is no element of chance.

Importantly, the player may view each and every outcome which may entitle them a prize before playing the game. They may simply touch the “Prize Viewer” button on the game console and view the result of the game before playing. As such, the player can decide if they want to play the game or not based on the pre-determined outcome.

On March 3, the plaintiffs filed suit in US District Court for the Western District of Missouri against Torch and the retailers who housed the allegedly “illegal slot machines” for the manufacturer. The case is ongoing.

Why Pennsylvania Seems to Be Ground Zero

Pennsylvania generates a lot of money for the legal gambling industry.

In the online realm alone, the commonwealth is regularly the No. 1 revenue producer among the legal iGaming states. In March, online casino and poker sites brought in $181.5 million in gross gaming revenue (GGR).

So the claim by state Sen. Gene Yaw, R-Williamsport, that regulating skill game machines could bring in sizable tax revenue might have merit.

In a 2021 press conference, Yaw claimed regulating the machines would generate $250 million in annual tax revenue for Pennsylvania. In today’s press release about a bill he sponsored, he upped the figure to $300 million.

Today, Yaw introduced SB706. This is just months after a judge ruled the Pace-O-Matic games legal in Pennsylvania.

The bill to establish the Skill Video Gaming Act isn’t Yaw’s first attempt to regulate skill game machines. He and other lawmakers held a press conference in 2021 about his proposal to create the act and regulate the devices.

I reported on the 2021 press conference for the retired Catena Media site, Online Poker Report. This site, Bonus, is also a Catena publication.

In 2021, Yaw said the skill games didn’t cannibalize retail casino revenue. Additionally, skill game machine players increased lottery ticket sales at retail stores and saved Pennsylvanians from illegal, “preprogrammed” games of chance that were cheating them.

Full disclosure: I live in Philadelphia. My radius includes gas stations blocks away from me that contain these skill game machines.

Even Regulated Machines Are Known By Many Names

Trying to classify skill game machines is difficult, even for state lawmakers.

In Michigan, the regulated machines are called “redemption games.”

To Nebraskans, they’re “mechanical amusement devices.”

In Wyoming, the classification is “skill-based amusement games.”

Perhaps that’s part of the reason it’s difficult for states to get on the same page about skill game machines.

However, Illinois sweepstakes machines may be added to the page in the Video Gaming Act describing a “gambling device.” However, that depends on whether the Illinois House takes action on SB1504 by Friday.

Until then, the word on sweepstakes machines may remain “gray.”

About the Author

Heather Fletcher

Heather Fletcher

Heather Fletcher is Lead Writer at Bonus, concentrating on online casino coverage. She specializes in breaking news, legislative coverage, and gambling marketing strategy overviews. To reach Heather with a news tip, email [email protected].
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