Battle Over Slots-Like ‘Grey Machines Dominating Lobbying Spending in Kentucky

February 26, 2023 | Gaming Machines

FRANKFORT, Kentucky (February 20, 2023) — Two groups opposing each other on legislation involving the cash payout games proliferating in stores around Kentucky are on pace to shatter lobbying spending records in the 2023 session, according to reports filed with the Kentucky Legislative Ethics Commission.

Called “legal skill games” by supporters and “illegal grey machines” by opponents, the video games resembling slot machines were nearly banned in the 2022 session of the Kentucky General Assembly, an expensive fight pitting the horse racing industry against Pace-O-Matic, the largest maker of the games in Kentucky and other states.

Those two industries are once again the main players financing the fight over the games through the first month of this year’s session, with another bill to ban them expected to be filed by the deadline next week, as well as another bill supported by the skill game industry to formally regulate and tax the games.

While most of the roughly $2.4 million spent by more than 600 groups to lobby state legislators in January went toward compensating registered lobbyists, the two leading groups in the grey machines fight collectively spent more than $320,000 on advertisements urging Kentuckians to contact their legislators on the issue.

‘Grey machine’ battle hits the airwaves

Leading all groups in legislative lobbying spending through January was Kentuckians Against Illegal Gambling — a new coalition comprised of the horse racing and gaming industries — which reported spending $174,000 on TV and digital ads calling for legislators to ban the machines they claim are illegal.

The TV ad of KAIG says grey machine gambling is “a predator lurking” that “destroys families and puts kids at risk,” potentially bringing “violence, organized crime, money laundering (and) robberies” to your neighbourhood.

Ten horse racing industry groups — which effectively lobbied in 2021 to legalize historical horse racing machines, which also resemble casino slots — also collectively spent more than $80,000 on lobbying in January. Churchill Downs and Keeneland both placed in the top 30 in spending, lobbying to ban “grey games.”

Placing second in lobbying spending was the Kentucky Merchants and Amusement Coalition, made up of retailers, bars, restaurants and fraternal organizations who say they rely on the games to stay afloat and urge legislators to regulate and tax them.

Kentucky MAC, which is funded by Pace-O-Matic, reported spending $146,275 on radio and TV ads as well as direct mail to “operators/locations” around the state.

One ad of the coalition showed happy people playing the “totally legal video games where you win cash for your skills,” saying they “also create critical Kentucky jobs and allow restaurants, bars and fraternal organizations to survive during tough times.”

Also among the top lobbying spenders was Pace-O-Matic, which reported spending $20,500 on nine lobbyists, ranking it sixth among all companies and organizations.

Kentucky MAC and KAIG are both on pace to break legislative lobbying spending records, as each spent more in January than any organization spent lobbying in the first three months of the 2022 session. They also have spent more than what all but six groups spent in all of 2022.

Though House Bill 256 was filed this week to regulate and tax skill games, Kentucky MAC has indicated it will support a different bill that is expected to be filed in the House next week.

Rep. Killian Timoney, R-Lexington, is expected to once again carry a bill to ban the games.

In the larger context of the issue, this lobbying spending mirrors similar fights in recent years between Pace-O-Matic and competing gambling interests in other states, while the skill games maker recently joined the horse racing industry in becoming a prominent political donor to candidates and committees of the Republican supermajority in Kentucky.