A legal effort to win approval for gambling-style machines in Arkansas has lost
Circuit Judge Chalk Mitchell ruled that Arkansas Amusements, which operates machines across Arkansas, had failed in its challenge to privilege taxes on the machines. Arkansas Amusements argued that dexterity or other skills were necessary to play the machines, thus they were not gambling devices and a privilege tax should not be assessed if they were illegal machines. It has paid the taxes to avoid other penalties.
The lawsuit, with Sen. Jeremy Hutchinson as one of the attorneys, was filed against the state Finance and Administration Department, whose agencies include the Alcoholic Beverage Control Division. The ABC has been enforcing rules against gambling devices in businesses with alcohol permits. This has been a political hot potato in areas of the state where prosecutors have turned a blind eye to the gambling machines and where the operators have enjoyed support from state legislators.
The pressure for the machines has increased because of their profitability. Putative games of skill are allowed by law at Southland and Oaklawn casinos in West Memphis and Hot Springs, though they look for all the world like standard Vegas-style slot machines. Using the “game of skill” excuse, operators have tried to add electronic games at various businesses around the state, with more success some places than others. The legislature has also expanded the prize limits on gambling-style machines operated at the big Dave and Buster’s restaurant/arcades and the Chuck E. Cheese law allows prizes worth up to $12 on gambling style machines such as those leased by Arkansas Amusements.
The judge in St. Francis County would have none of the game-of-skill sophistry. Wrote Mitchell: “Illegal gaming devices do not become legal by paying taxes on them. Plaintiffs allegation that skill or dexterity is involved does not make the illegal gaming devices legal.” He said the plaintiffs had failed to prove the privilege tax was an illegal exaction, having cited no law to support the argument.
He suggested that plaintiffs should directly challenge an ABC determination on the machines in a criminal case or administrative hearing before the ABC board. A couple of such challenges are pending, but they’ve been awaiting a decision in this case.
Legislation regularly surfaces to find a way to legalize gambling machines.
I asked Hutchinson if an appeal is planned. His response by e-mail:
We are evaluating our options. We will be pursuing it further in some manner. We believe that the issue of what is and what is not a “game of skill” needs to be answered by a court of competent jurisdiction so that all parties will have clarification.
I also asked for a comment from Boyce Hamlet, ABC director of enforcement:
“We are pleased with the judge’s decision. We’ve never felt this was a gray area. It’s clear in the law that video poker and slot machines are illegal and in most cases rise to the felony level. Circuit judges across the state, the Attorney General, and the Arkansas Supreme Court have always been consistent on this issue. Every time we’ve had this issue in a court of law our stance has been affirmed. We hope this sends a clear message that illegal gaming machines are against the law and have a negative and harmful impact on our communities.”