The Kansas Supreme Court has dismissed a lawsuit by a subsidiary of prominent skill-game manufacturer Pace-O-Matic, seeking to confirm the legality of its skill game Dragon’s Ascent. The subsidiary, POM of Kansas, filed the suit in 2019, targeting multiple entities for their failure to affirm its products’ legality. The defendants included Derek Schmidt, who was the state’s Attorney General at the time, and the Kansas Racing and Gaming Commission (KRGC).
Now, the Supreme Court has ruled that the company lacked standing to bring its suit. That brings the case to a close without the court deciding on the game’s legal status one way or another. So, for now, skill games will continue to occupy a gray area in Kansas.
POM sought clarity over its game’s legality
Before launching Dragon’s Ascent in 2019, POM sought out the state’s regulator to confirm whether it was legal under Kansas law. According to the company, the game involves an element of skill, thus making it legal.
The KRGC agreed to test the game without formally deciding on its legality. Staff found that the game “involved some skill, but contained too many non-skill features, to allow mastery.” However, the regulator did not declare the game illegal.
Growing impatient, POM launched the game anyway and sought the opinion of law enforcement agencies. It also consulted with then-Attorney General Schmidt, who revealed Kansas lacked a formal process to distinguish skill games from games of chance.
An assistant attorney general suggested that POM file a declaratory judgment, which the company did in the Douglas County District Court. The request for a declaration then grew to include constitutional challenges and questions about whether the Kansas Expanded Lottery Act applied. In its lawsuit, POM raised three claims:
- The Kansas Expanded Lottery Act does not apply to its game.
- Dragon’s Ascent does not violate Kansas criminal gambling statutes.
- The term “chance” in the gambling statutes is unconstitutionally vague.
Complicating matters even more, three casino operators moved to intervene, arguing that Dragon’s Ascent is illegal and causes them financial harm. A district court allowed the casinos to intervene while ruling against a motion to dismiss by the Attorney General and KRGC, citing no real controversy.
The case was transferred to Shawnee County, where the court dismissed POM’s Expanded Lottery Act claim for lack of standing and rejected its constitutional claims. The company then appealed directly to the Kansas Supreme Court.
Ruling leaves skill game status unclear in KS
The Kansas Supreme Court ruled that POM lacked standing. That’s because it had not incurred any injuries, including no seizure of game machines, cease-and-desist letters, or initiated prosecutions. Furthermore, Justice Keynen “K.J.” Wall wrote that the court lacks the power to determine the status of the games:
The Kansas Constitution places limits on judicial power. One such limit requires courts to interpret and apply laws only in actual cases or controversies. To satisfy this case-or-controversy requirement, a party must have legal standing to sue. Because POM has not shown any credible threat of prosecution or injury traceable to the parties they sued, the company lacks standing. We understand POM’s desire to confirm that Dragon’s Ascent complies with Kansas law. But we cannot expand our judicial power simply because an answer would be helpful. Thus, we dismiss this appeal for lack of jurisdiction.
As the Supreme Court dismissed POM’s appeal and did not rule on the game’s legality, it leaves it in an unregulated gray area. That means POM machines and other similar skill game devices lack regulator oversight. Also, they do not pay taxes, unlike legal gambling options such as slots. To change that, Kansas lawmakers would need to intervene and pass a law to either regulate or ban them.
Pennsylvania faces similar skill game challenges
Pennsylvania, home to thousands of unregulated skill game machines, finds itself in a legal gray area similar to Kansas. In February 2023, a county judge ruled that Pace-O-Matic machines were not gambling devices. An appellate court upheld the decision in December 2023. However, the rulings have not clarified the machines’ status in the state.
The Pennsylvania Supreme Court could provide that clarity. Last year, the state’s highest court agreed to hear appeals by state authorities arguing the machines are illegal gambling devices.
Another potential resolution could come from lawmakers. However, that’s easier said than done, as opinions are divided on how to proceed with skill games. Some, including Gov. Josh Shapiro, want to regulate and tax them, an idea supported by manufacturers like Pace-O-Matic and small businesses. On the other hand, some lawmakers believe skill games should be labeled illegal.
However, until the Supreme Court or lawmakers decide on the matter, skill games in Pennsylvania remain in a gray area, similar to Kansas.
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