Gray Games Ban Weighed in Kentucky, Pace-O-Matic Gives $125K to Police Charity

Posted on: March 17, 2022, 08:35h. 

Last updated on: March 18, 2022, 09:42h.

Steve Bittenbender Read More
Expertise: Legislation, Sports Betting, Horse Racing.

Pace-O-Matic, a developer of skill-based games, made a $125,000 donation to the Kentucky Fraternal Order of Police (FOP) on Tuesday, one day before a bill that would ban such machines from operating in the state passed in a legislative committee.

Killian Timoney
Kentucky state Rep. Killian Timoney speaks on the House floor during a General Assembly session in January 2022. The Lexington Republican has sponsored a bill that would ban gray machines, also known as skill games, that have popped up across the state in recent years. (Image: Kentucky House GOP)

Supporting law enforcement officers was “the best investment any company can make,” company President and COO Paul Goldean said in a statement. The funds will go toward the law enforcement labor union’s disaster area response team (DART).

The skill games, also referred to as “gray machines” because they’re considered unregulated, are controversial. Pace-o-Matic donation comes not only as lawmakers debate, but also as companies like Pace-O-Matic have installed a multiple of games in various places throughout the state. Machines are found in convenience stores and FOP lodges across the state.

“As law enforcement officers, the commitment to our communities and neighbors does not end when we take off the uniform at the end of our shift,” Kentucky FOP Ways & Means Chair Mike Sweeney said in a statement. “The generosity of our partners at Pace-O-Matic will enable us to quickly support our fellow Kentuckians the next time a disaster occurs.”

Through DART, the Kentucky FOP sends teams to communities where natural disasters hit. Those individuals provide meals for first responders tending to the emergency and ensure access to food, water, and other needs.

Vote on Ban May Come Friday

On Wednesday, the House Licensing, Occupations, and Administrative Regulations Committee passed four gaming-related bills. Three of them, including a measure to legalize sports betting, were passed unanimously. The fourth, House Bill 608 which would ban the machines, featured a lengthy debate.

The bill sponsored by state Rep. Killian Timoney, R-Lexington, made it through the committee with an 11-3 vote. However, four committee members passed, and even some of those who voted for the bill have indicated they may not vote for it on the House floor.

HB 608 may get a vote on the House floor as early as Friday morning.

Lottery Cites Sales Losses Due to Games

Supporters of the bill say that the skill games have come into Kentucky without approval, and taken away sales and revenue. There’s also uncertainty because some retailers that allow the games in their businesses permit 18-year-olds to play the games – the same age limit as the lottery – and others set the minimum age at 21.

We’ve had retailers say we don’t want the gray machines, but we have to have them in order to compete with the store down the street,” Kentucky Lottery President Mary Harville told the committee Wednesday. “And we’ve had our retailers tell us, ‘Please do not make us choose between these machines and the lottery, because we will have to choose these machines.’ Why is that? Because the machines make more money and there are no rules to follow.”

Harville said lottery officials have looked at sales statewide. Since the gray machines or skill games have set up shop, sales in retailers that also offer those games have declined about 5.5 percent.

There are more than 1,500 such machines in nearly 400 lottery retailers located in 72 of Kentucky’s 120 counties, Harville added. That’s not counting bars and other venues – like FOP lodges – that also host games.

Game Developer Says There’s Nothing Gray About Them

In testimony before the committee, Goldean told lawmakers that Pace-O-Matic seeks to be “disruptive” in that it generates revenues for the retailers. He added that the company regulates itself and hires retired police officers to enforce contractual agreements and requirements.

Supporters of the machines say a ban may be unconstitutional. Those who testified on behalf of the industry Wednesday morning included two former state representatives, including John Tilley, who also served as the secretary for the state’s justice cabinet.

Tilley told the committee that when Pace-O-Matic got ready to enter Kentucky, company officials conducted a census and determined there were already up to 20,000 illegal gray games in the state.  With few exceptions, there was little enforcement against them.

He added that when the company entered Kentucky, it did so after communicating with officials from the Office of Charitable Gaming and the Public Protection Cabinet. Before it entered the state roughly a year ago – it now has machines in 42 counties – Tilley and others met with local elected officials and prosecutors.

“The idea that somehow this company entered the marketplace under the cover of night is simply not true,” Tilley said.

Kentucky is not the only state to grapple with what to do with such games. Several states have weighed legislation. Virginia, before banning them, allowed retailers to operate them for one final year and taxed the machines to fund COVID-19 relief measures.

Even if a House vote comes Friday or later, the bill still would need to be approved by the Senate. Lawmakers have until March 30 before a 10-day veto period begins for Gov. Andy Beshear. After that period ends, lawmakers would return for one final two-day period starting on April 13.