Federal judge rules gas station games are illegal gambling machines

The flashing machines with all the bells and whistles that greet Missouri customers walking into a gas station, pizza parlor or bar are illegal gambling devices, according to a federal judge.

In the latest installment of back-and-forth litigation between TNT Amusements and Torch Electronics, Judge John A. Ross of the U.S. District Court for the Eastern District of Missouri determined the machines violate state law.

In the Feb. 13 opinion, Ross wrote that outside of licensed casinos, the “no-chance” games violate state statute after expert analysis revealed the machines do contain multiple elements of chance.

TNT Amusements leases traditional arcade games to businesses in the state (such as pinball, PAC-MAN etc.), while Torch leases its “no-chance” games in “the same territory,” according to the court.

Litigation between the two companies precedes and extends beyond this particular case, Ross wrote. In this federal action filed in March 2023 with TNT as the plaintiff and Torch as the defendant, TNT asked for declaratory judgment that: “(1) Torch Devices are illegal gambling devices and slot machines under Mo. Rev. Stat. § 572.010 and (2) Torch operates an ‘illegal gambling business’ under 18 U.S.C. § 1955.”

Torch’s machines cycle through a combination of prize multipliers and themed images that when aligned in the correct order, correspond with a cash prize. TNT argued this fits Missouri’s definition of an illegal slot machine.

“There are no discernible patterns within the sequential pools of prize multipliers,” according to the opinion. “There is nothing a player can do to alter the payout amount of a turn before or after the player inserts money. There is no element of skill in any of the game themes on the Torch Devices.”

In his analysis, Ross defines gambling devices as something that a player can stake or risk something of value in a contest of chance. He writes that the jury found Torch’s claims that chance played no role in its game false.

Torch claimed the prize viewer function on its devices show that the games don’t involve chance.

“Defendants counter that the Torch Devices don’t involve any element of chance because the prize viewer allows a player to see the prize amount for the very next play for each game theme and play level, and thus the devices allow a player to know the prize amount of the next game without committing her funds,” Ross wrote. “Defendants’ argument is unavailing.”

Ross wrote that the evidence at trial shows a player is unable to redeem a balance of less than $1 from the game, and the prize viewer only allows a player to see the very next prize amount, not prize outcomes for two or three turns in the future.

“Thus, as Mr. Friedman demonstrated at trial, a player who wagers $1.00 at the $0.25 play level and uses the prize may be able to determine what (or whether) she will win on the next turn, but she can’t know the prize amount for the second, third, or fourth plays,” Ross said. “Once she plays the first turn; she has committed the entire $1.00. In such an instance, she has gambled the remaining $0.75 without any ability to determine what the prize amounts will be for the subsequent turns.”

Even if some players use the view function before placing their wager, the machines are still illegal gambling devices because Missouri statute defines these as any device useable for gambling, Ross wrote.

The decision is a win for the Missouri Attorney General Catherine Hanaway who recently announced lawsuits against the unlicensed machines.

“When retail shops turn a blind eye or facilitate a space for illegal gambling, they are not only ignoring the law, they are putting our communities at risk,” Hanaway said in a news release announcing suits against other establishments with the machines. “Lawlessness has always been a magnet for organized crime. My Office will hold any business accountable for profiting off of unlawful activity, and we will do everything in our power to shut illegal gaming and gambling machines down.”

Torch raised several arguments in opposition to the court’s ruling, including asking the court to abstain, citing Younger v. Harris and Burford v. Sun Oil Co., and claiming declaratory judgment would “violate Missouri’s Tenth Amendment right to regulate gambling as a state law issue.”

The court rejected these arguments with Ross writing; “outside of a licensed casino, the devices are prohibited in the state of Missouri – i.e., they are illegal. This conclusion is far from advisory; rather, it is central to the controversy, as reflected in TNT’s complaint and throughout the parties’ briefing in this case. The court has declared no more than necessary to resolve the parties’ dispute.”

The case is TNT Amusements, Inc., d/b/a Play-Mor Coin-Op v. Torch Electronics et al., Case no. 4:23-CV-330-JAR.