Georgia business suffers setback after rolling dice on legitimacy of arcade game
TOPEKA — The Kansas Supreme Court deflected a legal squabble initiated five years ago by an electronic “skill-game” company that sought an official declaration that its Dragon’s Ascent game available to players at truck stops or convenience stores was legal under state law.
The state Supreme Court upheld a district court’s dismissal of claims by POM of Kansas, a subsidiary of game manufacturer Pace-O-Matic of Duluth, Georgia, in a lawsuit seeking declaratory judgment that the state’s casino law didn’t apply to the company’s arcade game.
In the original 2019 suit, POM of Kansas sought a court order that their unregulated Dragon’s Ascent game complied with the state statutes because it was a contest of “skill.” It was different, they argued, from slot machines in casinos because those were regulated games of “chance.”
The justices also vacated a district court ruling that rejected claims the state’s criminal gambling statutes were unconstitutionally vague because there was no provision giving companies fair notice on whether a device was considered a game of chance or skill.
The foundation of the Supreme Court’s decision was that the courts lacked subject matter jurisdiction, or legal authority, to decide this specific case. In court documents and oral argument, POM of Kansas struggled to establish standing to bring the lawsuit because there was no credible threat the devices would be seized by the state or the company would be prosecuted in Kansas for offering Dragon’s Ascent to players.
“Dragon’s Ascent has operated throughout Kansas for several years without incident,” said Justice Keynen “K.J.” Wall, who wrote the opinion. “No devices have been seized. No prosecutions have been initiated. No cease-and-desist orders have been issued. And neither the Racing and Gaming Commission nor the attorney general has opined that the game is illegal.”
The company lacked standing because there was no injury traceable to the state parties targeted by POM of Kansas’ suit, said Wall, who was appointed in 2020 by Democratic Gov. Laura Kelly.
“Though uncertainty about the legal status of Dragon’s Ascent may create practical difficulties for POM, those difficulties do not establish jurisdiction when our state constitution requires an actual case or controversy,” Wall said. “We cannot expand our judicial power simply because an answer would be helpful.”
In games such as Dragon’s Ascent, which haven’t been regulated by the Kansas Racing and Gaming Commission in the manner of casino slot machines, players shoot at dragons or engage in other play in the quest for prizes redeemable for cash.
Concerned that Dragon’s Ascent might be labeled an illegal gambling device, POM of Kansas asked KRGC and then-Attorney General Derek Schmidt to affirm legality of the game. KRGC and Schmidt declined to provide formal opinions, which the district court and the Supreme Court said left POM of Kansas without an adversary who allegedly harmed or threatened to inflict damage on the company. POM of Kansas launched the game anyway.
“If the AG doesn’t want to pursue this, then you still don’t have an ability to be here,” Justice Dan Biles told POM of Kansas’ attorney during oral argument of the case.
Overland Park attorney Thomas Hamilton, who represented POM of Kansas, said KRGC director Don Brownlee sent a letter to district attorneys and sheriff’s departments that artfully suggested Dragon’s Ascent wasn’t legal.
In the letter, Hamilton said, Brownlee asserted Dragon’s Ascent had too many non-skill features to enable mastery of the game. KRGC employees played the game at POM of Kansas’ request. One KRGC employee placed a weight on the control stick, in a test of the random nature of the game, and was apparently able to outperform colleagues who relied on their personal skills to play Dragon’s Ascent.
Hamilton said the poison-pill letter served as an indirect warning that businesses shouldn’t allow installation of the electronic game until KGRC or the attorney general blessed it as legal.
“There are locations where we lost revenue, lost business because we didn’t place the games there because of that threat,” Hamilton said.
Under existing Kansas law, no formal process exists for certifying arcade games as skill-based rather than chance-based.
The Supreme Court decision last week didn’t end litigation about so-called gray games in Kansas. A separate lawsuit is pending in Shawnee County District Court. Casino companies operating in Kansas joined the legal fray by claiming Dragon’s Ascent was not only illegal but also caused them financial harm.
Kansas Reflector is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on Facebook and Twitter.
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