Senators voted 29-6 on March 14 to approve a Kentucky skill game ban, HB594. The bill takes on a gray area of legal gambling that’s spurred lawsuits nationwide and defied full regulation in many states.
The bill that passed the House on March 8 in a 64-32 vote and the Senate today moves on to Gov. Andy Beshear to sign into law.
If the Kentucky skill game ban is enacted, it will impact machines Kentuckians see at gas stations, convenience stores, and bars.
UPDATE: 3/16/2023
Gov. Andy Beshear signed HB594 into law today.
Business owners have until July to remove skill game machines from their properties in Kentucky.
Beshear said during his Team Kentucky Update today:
I am a pro-gaming governor. I think it’s time we have full-blown casino gaming in Kentucky.
But it’s an industry that absolutely has to be regulated, and it needs to be legal. And that’s the way that we use funding from the system to do good in different parts of Kentucky. But it’s also the way that we ensure that any ills that come along with it have a system and a network to help folks that may need that help.
So I will certainly sign sports betting, if it gets to me. I want to be very clear about that. It’s something that I have pushed for for years. And I believe it is very close to having the votes that it needs. And I believe that this is something that Kentuckians overwhelmingly want.
I did sign a bill this morning to ban what are called ‘gray machines.’ And the reason is they’re entirely unregulated.
I don’t believe that they were legal.
Yet they came into Kentucky and just set up and were taking dollars from Kentuckians and taking them out of state with zero regulation, zero taxation, zero system to help those that might develop any issues from using them for gaming or gambling.
I want to look at ways that we can have more, better regulated gaming.
But the law is the law.
They were unregulated. I think that they were unlawful.
Now, I understand that there are a lot of businesses out there that this provided another revenue stream for, and I want them to know that I’m sympathetic for them. I always fall back on the rule of law and what’s legal or not.
So Beshear said he hopes to help those businesses replace that income with legal options, like the Kentucky Lottery, that also do a better job of protecting state residents.
The Latest Words on the Ban
HB594 amends state law:
To define “coin-operated amusement machine,” “skill,” “skill-based contests,” and “skill game.”
The penalty for defying the ban can’t exceed $25,000 for each device.
Meanwhile, businesses need to remove the machines by July, reported Jessica Welman of SBC Americas. While those business owners objected before this vote, machine manufacturers were the most vociferous Kentucky skill game ban opponents. They included Pace-O-Matic, BJ Novelty Inc, and Prominent Technologies.
The bill’s sponsor, state Rep. Killian Timoney, R- Lexington, said the banned skill games don’t involve skill:
This moniker is a red herring and nothing more.
State Sen. David Yates, D-Louisville, said as he cast his “yes” vote to ban the machines, he hoped the state would revisit the measure next year. He’d hoped to carve out exceptions for charitable gaming and businesses that only serve customers who are 21 and older.
Skill Game Manufacturers May Not Leave Quietly
If the ban becomes law, it may mean Kentucky will face a lawsuit. That may be a given, considering Pace-O-Matic sued Pennsylvania and recently won.
Virginia lawmakers also approved a skill game ban. It was scheduled to begin in July 2021, but it remains in litigation.
Perhaps the most successful regulator attempting to oversee the machines is the Michigan Gaming Control Board (MGCB). That regulator recently opposed a Senate bill that would’ve expanded Michigan skill games.
However, the manufacturers hadn’t published a statement about the vote as of press time. The same was true of the Kentucky Merchants and Amusement Coalition (KY MAC), which has more than 350 members “comprised of local small businesses and fraternal organizations across the state.” They’d traveled to Frankfort on Valentine’s Day to rally “in the Capitol Rotunda in support of legal skill games,” according to Pace-O-Matic.
Kentucky Skill Game Ban Fits With Sports Betting Bill
Senators removed the proposed amendment from Yates. However, his name will still sound familiar to fans of HB551. That online sports and esports measure is scheduled for a Senate vote tomorrow.
Yates sponsored SB73. That measure calls for a 6.75% tax rate on Kentucky online poker, like HB106. While those bills haven’t advanced to the Senate, they shared a 14.25% proposed tax rate on online sportsbooks with HB551.
Also, perhaps because esports are included in the Kentucky online sports betting bill, an approved amendment to the Kentucky skill game ban removes esports competitions from HB594’s definition of “gambling device.”
Meanwhile, the Kentucky General Assembly‘s approval of the skill game ban does seem to fit with the legal gambling industry’s goals.
On July 28, 2022, the American Gaming Association (AGA) sent a letter to “state legislative leaders”:
Not only are states losing hundreds of millions of dollars in tax revenue that could be funding education programs, infrastructure projects and other important priorities, but the lack of transparency and regulatory oversight significantly increases the risks of supporting other forms of crime including money laundering, drug trafficking, and gang violence.
Today, Kentucky lawmakers primarily seemed to echo the AGA’s sentiment that the machines are “everywhere.”
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