Goodwin Gaming
August 10, 2016

In Florida, a Fine Line Between Arcade Games and Illegal Gambling

After being featured prominently at last year’s Global Gaming Expo in Las Vegas, skill-based slot machines—think Angry Birds, Candy Crush, or Guitar Hero, but played for cash—have been heralded as the heir apparent to the original slot machine.  The stale original is boring for younger generations of casino-goers that have grown up playing interactive games on their smartphones.  Casinos recognize that, to capture the attention of this market, they have to evolve the slot machine from the insert-a-token, pull-a-lever, and hope-for-fortune model.

One industry observer has suggested that the enthusiasm behind skill-based slots is “a sign of the casino industry’s destiny—sort of Bellagio meets Dave and Buster’s.”  This may be true, and the future proliferation of skill-based slots might not be limited to places like Las Vegas and Atlantic City.  Because the outcome of skill-based slots are, as the name implies, based on players’ skill, they may not be prohibited by the gambling laws of certain states.

Florida is not one of those states. Florida explicitly prohibits skill-based slots that pay out cash or other things of value.  Florida Statute § 849.16 defines slot machine as “any machine or device . . . [that] may be operated and if the user, whether by application of skill or by reason of any element of chance or any other outcome unpredictable by the user, may: (a) Receive or become entitled to receive any piece of money, credit, allowance, or thing of value.”  In addition, the State’s gambling laws and broad statutory definition of “slot machine” have created a very fine line between arcade games, like those offered at Chuck E. Cheese’s, and illegal slot machines.

The Palms II internet café of Ocala, Florida recently found itself on the wrong side of that line.  Last December, a state court ordered the Palms II to cease operating video game machines that the State Attorney had deemed to be illegal slot machines.  Order Granting Final Summary Judgment, Let’s of Ocala II, LLC v. Brad King et al., No. 15:2648-CA-G (Fla. Cir. Ct. July 13, 2016). The game in question involves two stages.  In the first, a randomized “loot wheel” spins on the screen; where it lands dictates the potential points the player can win.  In the second stage, the player attempts to click on ducks flying across the screen—much like Nintendo’s classic Duck Hunt.  Successful players win points that are redeemable for cheap merchandise on-site.  No cash equivalent is offered for the points.

The Palms II challenged the State Attorney’s determination in court, arguing that the games were skill-based and more akin to arcade games than illegal slot machines.  The Circuit Court of Marion County disagreed, granting summary judgment against the Palms II.  According to the court, the game constituted illegal gambling under Florida Statutes § 849.08 and § 849.16.  Section 849.08 makes it a crime to play or engage “in any game . . . of chance, at any place, by any device whatever, for money or other thing of value.”  As noted above, Section 849.16 defines illegal slot machines as machine-based games that contain “any element of chance or any other outcome unpredictable by the user.”  The court found that the “loot wheel” at the outset of the game qualifies as an element of chance prohibited by the statutes.   For the same reason, the court found that the games are not protected by under Florida’s Family Amusement Games Act—the statute enacted to protect arcade games like those at Chuck E. Cheese’s and Dave and Buster’s.

Because Florida expressly prohibits skill-based slots, the court’s decision doesn’t have significant implications on the burgeoning industry.  The decision does, however, highlight the potential complications that will arise as the industry grows amidst ill-fitting gaming laws.  The skill-based slot machine industry is coming; states will need to be prepared with correspondingly modernized gaming laws and regulations.