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Georgia business faces challenges after gambling on the legitimacy of an arcade game
TOPEKA — The Kansas Supreme Court dismissed a legal dispute initiated five years prior by an electronic “skill-game” enterprise that sought a formal ruling declaring that its Dragon’s Ascent game, accessible to players at truck stops or convenience stores, adhered to state regulations.
The state Supreme Court upheld a district court’s dismissal of claims from POM of Kansas, a division of game developer Pace-O-Matic from Duluth, Georgia, in a lawsuit pursuing a declaratory judgment that the state’s casino regulations did not pertain to the company’s arcade game.
In the original lawsuit filed in 2019, POM of Kansas sought a court directive affirming that their unregulated Dragon’s Ascent game was compliant with state laws, claiming it was a contest of “skill.” They contended it was distinct from casino slot machines, which they argued were regulated games of “chance.”
The justices also annulled a district court decision that dismissed assertions that the state’s criminal gambling laws were unconstitutionally ambiguous since there was no indication providing companies clear notice on whether a device was classified as a game of chance or skill.
The basis of the Supreme Court’s ruling was that the courts lacked subject matter jurisdiction, or legal power, to resolve this particular issue. In court filings and oral discussions, POM of Kansas struggled to prove standing to initiate the lawsuit, as there was no valid threat that the devices would be confiscated by the state or that the company would face prosecution in Kansas for offering Dragon’s Ascent to players.
“Dragon’s Ascent has functioned throughout Kansas for several years without incident,” stated Justice Keynen “K.J.” Wall, who authored the opinion. “No devices have been confiscated. No prosecutions have taken place. No cease-and-desist orders have been issued. And neither the Racing and Gaming Commission nor the attorney general has stated that the game is illegal.”
The company lacked standing since there was no injury linked to the state entities targeted by POM of Kansas’ lawsuit, remarked Wall, who was appointed in 2020 by Democratic Governor Laura Kelly.
“Although ambiguity surrounding the legal standing of Dragon’s Ascent might lead to practical challenges for POM, such issues do not establish jurisdiction when our state constitution demands a real case or controversy,” Wall stated. “We cannot broaden our judicial authority merely because an answer would be advantageous.”
In games like Dragon’s Ascent, which have not been regulated by the Kansas Racing and Gaming Commission in the same way as casino slot machines, players engage in shooting dragons or participating in other activities in pursuit of prizes that can be exchanged for cash.
Worried that Dragon’s Ascent might be deemed an illegal gambling apparatus, POM of Kansas requested the KRGC and then-Attorney General Derek Schmidt to confirm the game’s legality. KRGC and Schmidt declined to issue formal statements, which the district court and the Supreme Court indicated left POM of Kansas without an opponent who allegedly caused harm or threatened to cause damage to the company. Nevertheless, POM of Kansas proceeded to launch the game.
“If the AG chooses not to act on this, then you still lack the capacity to be here,” Justice Dan Biles remarked to POM of Kansas’ attorney during oral discussions of the case.
Overland Park attorney Thomas Hamilton, representing POM of Kansas, mentioned that KRGC director Don Brownlee sent a communication to district attorneys and sheriff’s offices that subtly indicated Dragon’s Ascent was likely not legal.
In the communication, Hamilton noted, Brownlee claimed that Dragon’s Ascent had too many non-skill elements that hindered mastery of the game. Employees from KRGC played the game at the request of POM of Kansas. One KRGC staff member placed a weight on the control stick, testing the game’s random nature and reportedly outperforming colleagues who relied on their personal skills to play Dragon’s Ascent.
Hamilton contended that the cautionary letter served as an informal warning that businesses should refrain from installing the electronic game until KGRC or the attorney general deemed it legal.
“There are locations where we experienced lost revenue and missed business because we refrained from placing the games there due to that threat,” Hamilton expressed.
According to current Kansas statutes, no official process exists for certifying arcade games as skill-based rather than chance-based.
The Supreme Court’s ruling last week did not conclude litigation regarding so-called gray games in Kansas. An additional lawsuit is pending in Shawnee County District Court. Casino operators in Kansas have entered the legal discourse by asserting that Dragon’s Ascent is not only illegal but has also caused them financial damage.
Kansas Reflector is part of States Newsroom, a collective of news bureaus supported by donations and grants as a 501c(3) public charity. Kansas Reflector upholds editorial independence. Contact Editor Sherman Smith for inquiries: [email protected]. Follow Kansas Reflector on Facebook and Twitter.
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