UPDATES & ANALYSIS

Slot-machine-like gaming machines are subject to gambling law, Iowa Supreme Court rules

by Rox Laird | October 17, 2018

Video games resembling slot machines that award prizes will not be showing up in laundromats or convenience stores anytime soon, as a result of an Oct. 12 ruling by the Iowa Supreme Court in Banilla Games v. Iowa Department of Inspections and Appeals.

The Court, in a unanimous decision written by Justice David Wiggins, upheld a decision by the Polk County District Court affirming the State’s interpretation of the gambling statute that Banilla’s video gaming machines must be registered with the department as gambling devices.

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.

Gaming devices that require registration under gambling regulations in Iowa Code chapter 99B are limited to businesses holding liquor licenses, whereas non-registered devices can be placed in other locations, such as convenience stores or laundromats.

The Court agreed with the State’s interpretation of the statute, which states 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.”

Focusing on the words “primarily,” “outcome,” and “knowledge,” the Court agreed with the department’s conclusion that chance, not the player’s knowledge, primarily determines the outcome, which is winning, or not winning, a prize.

Because the highest payout is 98 percent, even with “perfect skill and knowledge, a player cannot win every time,” Wiggins wrote. “Therefore, even if the payer had the skill to make the correct move every spin, he or she would lose 2 percent of the time.”

Tags: Iowa Code Chapter 99B, Iowa Supreme Court 2018-19