The state of Kentucky has seen two opposing bills introduced to the house in the last week, both with vastly different approaches to tackling the identified and growing ‘gray gambling machine’ issue. One simply seeks to clearly define gambling legislation to outlaw these machines, the second looks to create a regulatory body and to begin the regulation of these machines.

What is Kentucky bill HB 551?

Rep. Killian Timoney has filed HB 551, a bill that aims to clarify Kentucky’s state gambling law to completely outlaw these machines. It would make having three machines in the back of your convenience store akin to having an illegal casino on your premises, and thus aims to discourage action accordingly. It’s likely to face opposition from owners of small bars and the like, who have previously claimed as much as 20 percent of their revenue can come from these ‘safe’ and ‘fun’ machines. Senate Majority Floor Leader Daymon Thayer has suggested the banning of the aforementioned machines is ‘top priority’.

HB 551 is also the premier bill pushing for the legalization of sports betting (without legalization of gaming machines and online poker).

What’s Rep. Doan’s competing bill?

Rep. Steve Doan, on the other hand, has argued for the creation of the Kentucky Gaming Commission with HB 525. In addition, the bill would call for the regulation of these electronic gaming machines, bringing them under state gambling law and therefore allowing tax receipts from the machines too. Rep. Doan’s bill would seek to inspect the games and ensure the skill element is being met, and set a tax rate of 6 percent – in line with Kentucky’s state sales tax. In addition, it would limit the number of machines to two per 500 square feet of common space, up to a maximum of five per establishment. The exception would be truck stops, which would allow a maximum of ten.

What are these machines?

‘Gray machines’ for supporters, or ‘skill for idiots’ by opponents, the machines found across Kentucky take advantage of a regulatory gray area to argue that their games do not fall foul of outlawed gambling devices. In Kentucky, historical horse racing based machines have been legalized, which allow players to bet on old horse races invisible to them. Providers of gray machines such as Pace-O-Matic and Prominent Technologies argue that their machines are games of skill.

Rep. Timoney, in an interview with local press commented: “It’s a gambling device and you put your money in and you hope to win more money than you put in. So by definition, it is a gambling device. But they’re called gray machines because they do operate within a gray area of the law. We would have to build a whole new branch of government almost, or an agency in government, and then staff it, and then develop the rules that go along with it. So it was a really really daunting task.”

Kentucky sports betting does not yet exist, despite pressure to do so – even though the state is famous for one of the world’s biggest horse racing spectacles. There is no commercial gambling properties across the state, nor is there a tribal gaming presence. It seems unlikely that Kentucky retail casino will be forthcoming, never mind Kentucky online gaming.