Kentucky Lawsuit Seeks to Reimburse Gray Machine Gambling Losses

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 machines but 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 Cantley now 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 into any clear legal category. The ambiguity encouraged Kentucky lawmakers to approve House Bill 594 in 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 appear in 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 General Russell Coleman praised 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 expansion of gambling in Kentucky’s history. Pace-O-Matic and Prominent 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 the same strict restrictions as gambling offerings. 

Cantley’s lawsuit aims to shed 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 have far-reaching implications beyond Kentucky. The case, if successful, could set a precedent in holding gaming companies accountable for losses on unregulated devices, potentially leading to significant industry changes across the country as other states take inspiration from Kentucky’s legal approach.