In 2023, Kentucky clearly prohibited skill games, often referred to as "gray machines." Currently, a lawsuit is attempting to recover three times the funds lost by Kentucky players under an outdated clawback statute. 

The legal action, initiated last week in the Franklin Circuit Court by the nonprofit charity Empathy in Action, references the state’s 226-year-old Loss Recovery Act (LRA), established to safeguard the families of impoverished gamblers. 

According to that law, a gambler has a period of six months to file a lawsuit to reclaim money lost from unlawful betting. If the gambler fails to do this within six months, any other resident of Kentucky may submit a claim to retrieve up to three times the amount the gambler lost, for the past five years. 

It was successful with PokerStars 

It’s not as wild a risk as it seems. Simply inquire with PokerStars. In 2011, Kentucky filed a lawsuit against the online poker giant, which had earlier provided unlicensed online poker in the U.S. due to the absence of available licensing. 

The state aimed for $870 million through the LRA, three times the $290 million it alleged Kentuckians lost at the location. 

This sparked controversy since Kentuckians didn't lose this amount to PokerStars, but to fellow players, with the online poker platform collecting a minor fee. Nonetheless, in September 2021, PokerStars' new parent company, Flutter Entertainment, reached a settlement with Kentucky for $300 million. 

If they succeed, Empathy in Action will contribute any gains from its lawsuit to state initiatives that combat gambling addiction and support small businesses and rural areas. The lawsuit identifies nine companies as defendants, featuring prominent manufacturers Pace-O-Matic, Prominent Technologies, and Skill State. 

Tints of Gray 

Gray machines, named for their former gray legal status, resemble slot machines in appearance and experience but often require a skill component, like remembering complex patterns. The producers claim this legitimizes their actions since Kentucky's gambling regulations provide an exception for “games of skill.” 

In 2023, the legislature broadened the state’s definition of a slot machine to encompass games that are “primarily or mostly based on skill.” 

Determining the extent of losses for Kentuckians from playing gray machines over the last five years is challenging due to the lack of industry regulation. Vanessa Cantley, founder of Empathy in Action and the primary attorney in the lawsuit, informed Kentucky Public Radio of her hope that the defendants will be required to provide their financial details during the recovery process. 

“We certainly expect it to be many millions of dollars. Otherwise, they wouldn’t be so prevalent, they wouldn’t be all over the state,” she said.