Banilla Games, a North Carolina company, manufactures and sells electronic games that resemble touch-screen slot machines. Players purchase credits, with one cent equaling one credit, and are challenged to match or complete sets of images on the screen. Winners receive a ticket or voucher worth up to $50 that can be redeemed for merchandise within the commercial establishment where the game is played.
At issue is whether Banilla’s Superior Skill game machines must be registered with the State under the gambling regulations in Iowa Code Chapter 99B. Gaming devices that require registration are limited by the statute to businesses holding liquor licenses, whereas non-registered devices can be placed in other locations, such as convenience stores.
The Iowa Department of Inspections and Appeals ruled that Banilla’s Superior Skill machines are subject to the registration requirement, and the agency’s ruling was upheld in a July 2017 decision by Polk County District Judge Mary Pat Gunderson.
Banilla argues in its appeal of the District Court decision that its machines are games of skill, not chance, and thus do not have to be registered.
Iowa Code Section 99B.53 provides that “an electrical or mechanical amusement device in operation or distributed in this state that awards a prize where the outcome is not primarily determined by skill or knowledge of the operator shall be registered by the department as provided in this section.”
Banilla said in a brief submitted to the Court that the heart of the issue is the statute’s phrase “where the outcome is not primarily determined by skill or knowledge of the operator,” and the company argued that “the player’s use of knowledge and skill completely controls the outcome of game play. Chance plays no role in the outcome of game play.”
The Department of Inspections and Appeals disagrees. The most significant word in that part of the statute, the department argues in its brief, is “primarily,” because the outcome of the game is determined more by chance than the player’s skill or knowledge.
“The fate of all Superior Skill players, no matter their experience and skill level, is dependent on the unpredictable (and highly infrequent) appearance of high value play screens,” the department argued. “A skillful player is not guaranteed a prize, but a novice player can blindly strike it rich.”