Breaking News
More () »

Lawmakers believe 'gray machine' manufacturers took advantage of legal loophole

The machine developers say they are skill-based games and aren't technically slot machines. They feel that means they're legal.

LOUISVILLE, Ky. — Gaming machines are popping up around Kentucky bars, pool halls and convenience stores. Some have dubbed them "gray machines" - and say they're only still operating because of a loophole in Kentucky law. 

The machine developers say they are skill-based games and aren't technically slot machines. They feel that means they're legal.

However, some Kentucky lawmakers believe skill game developers took advantage of a legal loophole when they opened up shop in the commonwealth and have filed House Bill 608 to outlaw the machines altogether. 

"The problem isn't necessarily whether or not they are or are not legal at this point or whether or not having them in every corner is a problem," Rep. Adam Koenig, R-Erlanger, said. "The problem is that they just showed up, started operating and are asking forgiveness rather than permission."

RELATED: Kentucky makes another play to legalize sports betting

Koenig said since the industry isn't regulated, consumers are at risk. 

"They're not paying taxes. There are no regulations. They say they don't let anybody under 21 use it, but I've been in restaurants where they exist and I don't see anybody carding anyone," Koenig said.

Credit: WHAS11

The Kentucky Public Protection Cabinet, which is the state agency that regulates charitable gaming and horse racing in the commonwealth, said while they aren't officially weighing in on if these games are legal or not, they say they can't promise businesses the games comply with current Kentucky law.

Chip Polston, a spokesperson for the Kentucky Lottery, said there are nearly 1,400 machines operating in KY Lottery retailers across 71 counties but he couldn't account for machines in bars and restaurants since they don't track those machines.

Polston said he knows of at least two developers with machines in Kentucky but there could be more. One of those companies is Pace-O-Matic.

Mike Barley, Chief Public Affairs Officer at Pace-O-Matic, said they started operating in Kentucky in February of 2021. As of this week, they have 900 machines in 42 counties across the commonwealth. 

Barley said their game is legal because it's not based on chance, so it isn't considered "gambling."  

"You can win every time on our game," Barley said. "There's not an amount that needs to be played before it decides to pay someone out. And that's the way a traditional HHR or gambling machine would work."

Credit: WHAS11

Barley said they're still trying to work with Kentucky lawmakers to regulate the industry.

"We do understand and believe that the industry would benefit from further regulation," Barley said. "Obviously, I don't think many industries come to the commonwealth and say we'd like to pay additional taxes, and we're one of those."

Polston said there are no regulations on skill games in Kentucky.

"There are zero regulations, no reporting on sales or taxable income, no information on odds or payouts, nothing," Polston said in an emailed statement. "Charitable gaming operations have reams of regulatory paperwork and hoops they have to jump through - these devices have none."

Barley said if his company is allowed to operate, it would bring in a lot of revenue for the state and would help small businesses since they keep a cut of the profits. 

Barley also said he feels it'll help eliminate illegal gambling in Kentucky.

"We believe that our games and the way that we operate our games is a great chance to clean that up, while also allowing Kentucky small businesses to play a major role in that revenue stream," Barley said. 

HB 608 was proposed earlier this week. It could be heard in committee as early as next week.

► Videos on Demand | Watch WHAS11 on Roku and Amazon Fire TV

Contact reporter Rachel Droze at rdroze@whas11.com. Follow her on TwitterFacebook and Instagram.

Make it easy to keep up-to-date with more stories like this. Download the WHAS11 News app now. For Apple or Android users.

Have a news tip? Email assign@whas11.com, visit our Facebook page or Twitter feed.