1798 Kentucky law recovers lost money
“Gray machines,” meaning gambling machines that operate in a legal gray area, are increasingly common throughout Kentucky. But if recent lawsuits have any effect, that may be about to change. Action Network reports that the lawsuits depend on a 1798 law that permits third parties to “recover money lost in illegal gambling.”
Kentucky Governor Steve Beshear utilized the 1798 law to sue gambling operator PokerStars
Over a decade ago, former Kentucky Governor Steve Beshear utilized the 1798 law to sue gambling operator PokerStars and recover more than $300m in a 2021 settlement. The Kentucky Supreme Court ruled in favor of the state in a 4-3 ruling.
The latest civil lawsuit against the Kentucky gray machine industry was filed by Vanessa Cantley in support of the charity nonprofit “Empathy in Action.” Cantley established the nonprofit organization in 2017 to fight injustices.
Latest lawsuit resembles 2021 PokerStars settlement
Cantley claims that her latest lawsuit resembles the PokerStars case that resulted in a $300m settlement. Unfortunately, it is difficult to ascertain just how much money people in Kentucky have spent—or lost—on the illegal gray machines due to most of them being unregulated and operating with cash.
Cantley said: “Our hope is that in the discovery process in the lawsuit, they’ll (gray machine companies) be compelled to turn over the information that’ll give you the answer to that question. 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.”
House Bill 594 defines illegal gambling
In 2023, lawmakers passed House Bill 594 as a response to the continued growth of gray machines. The Bill changed the definition of a “gambling device” and provided much-needed clarity on the legality of gray machines, defining them and those that claimed to be “risk-free play” devices as illegal under the new law. Indeed, as reported by VegasSlotsOnline News in September 2024, if a machine is ruled to be based on chance rather than skill, it is therefore defined as illegal.
CThere is no safe harbor in Kentucky’s gambling laws for this kind of game.”
Kentucky Attorney General Russell Coleman pushed law enforcement officials to act as though the ban is “now fully in effect” and to “take enforcement actions.” Coleman stated: “There is no safe harbor in Kentucky’s gambling laws for this kind of game.” Coleman’s advice told state and county prosecutors: “You and your office are free to investigate and prosecute any violations of the Commonwealth’s gambling laws, including the laws related to gray machines.”
In line with Coleman’s push, other states may utilize Kentucky’s legal approach to take control of predatory gambling practices. If it’s in a gray area, it’s in jeopardy of facing law enforcement or a potential lawsuit. Kentucky’s 226-year-old Loss Recovery Act permits an individual to file a lawsuit first within six months of losing money from illegal gambling, after which any other person from Kentucky “can also file a lawsuit to recover up to three times the amount lost from illegal gambling within the last five years.”
