It seems like only yesterday when illegal gambling machines were popping up in our convenience stores and restaurants across Kentucky, leaving many of us scratching our heads as to how this new and widely accessible form of gambling was ever considered legal.
We knew that gambling in these family-friendly establishments was outside the norm, but we couldn’t figure out why or even if it was suddenly allowed. At one time there were 3,000 slot machines operating in 850 businesses across Kentucky. It was an explosion of “mini casinos” across the Commonwealth.
That’s why we formed Kentuckians Against Illegal Gambling (KAIG) and took on the fight to protect our communities from the risks associated with illegal, unregulated, and untaxed gambling. And thanks to strong leadership in the Kentucky General Assembly, specifically Speaker David Osborne and Rep. Killian Timoney, we passed House Bill 594 in 2023 to shut down illegal gray machines.
You may remember seeing the lights go out on these machines but not them being removed from our communities. That’s because gray machine operators thought they could win in court and one day turn them back on. Thankfully, and due in large part to the strong support of Kentucky Attorney General Russell Coleman, the Kentucky Court of Appeals upheld HB 594, finally and officially banning gray machines. This decision smartly reinforced the General Assembly’s important and necessary role in regulating gambling.
While issues like these may not be front page news every day, Kentucky families should be thankful for the smart and principled elected officials like Attorney General Coleman who are watching out for our best interests and upholding the smart policies passed by state legislators in Frankfort.
Now as we close the book on gray machines and give our local law enforcement officials the authority to wheel them out of our local restaurants and convenience stores once and for all, we must remain forever vigilant to ensure that new forms of unregulated gambling do not quickly swoop in to take their place.
Such is the case with a new and pervasive form of gambling—“prediction markets”—that are skirting the law. And maybe to a certain extent, this kind of gambling is worse because it is not even perceived as gambling and can be easily done on your smartphone at any time in any place.
Prediction markets are betting by another name, claiming to be regulated by the Commodity Futures Trading Commission (CFTC). Given the accessibility of betting on sporting events, current events, political outcomes and even the Kentucky Derby on your phone with no taxation, regulation or public safety measures, like age restrictions, this form of gambling vastly overshadows the few thousand gray machines we contended with in 2023.
Prediction markets operate outside the licensing requirements, consumer protections, and tax revenue structures that Kentucky applies to every other form of wagering permitted within its borders. This is the latest threat that contradicts the well-established principle that the General Assembly owns the right to regulate gambling. When it comes to illegal gambling operators, there’s always the will to find the way.
But for now, let us celebrate the removal of gray machines from Kentucky and commend leaders like Attorney General Coleman for their vigilance on our behalf. KAIG – and families across the Commonwealth – are relieved that these illegal gambling operators will finally be shown a path to the border.
Mark Guilfoyle is an attorney with DBL Law in Covington and executive director of Kentuckians Against Illegal Gambling.