Is it a skills game, or gambling?


February 3rd, 2012

Lincoln, NE – A Nebraska Supreme Court ruling may have opened up a huge new market for coin amusement devices in the state. The makers of the Bankshot barroom video game won a two-year long legal battle after the state attorney general attempted to have it classified a gambling device. The court’s rejection of that argument cleared the way for a new style of skill game that pays out millions of dollars in prizes.

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Depending on whom you talk to, a popular barroom video game named “Bankshot” is either a harmless way to spend a couple of bucks or an alarming expansion of gambling in Nebraska.

American Amusements vs. Department of Revenue, argued before the Nebraska Supreme Court on September 7, 2011. (Photo credit NET News)

In 2010, state troopers seized a couple of the video game consoles at Fonner Park racetrack in Grand Island, claiming they were illegal gambling devices.

Late last year, the Nebraska Supreme Court ruled the game is legal. The court’s decision opened up a huge new market for coin amusement devices for a Nebraska company, American Amusements of Omaha.

It also raised an alarm for Nebraska Attorney General Jon Bruning.

“I have grave concerns how this will be carried out long-term,” Bruning told NET News.

In any of the nearly 500 bars and arcades where Bankshotis available, it looks like any of the other video games waiting for a bored patron to pump in a couple of quarters. The difference is that Bankshot can pay out tens of thousands of dollars in prizes to a single player.

Jim Fox, the president of American Amusements, “set out to make a skill-based amusement device that would be something that could be utilized within the laws of the State of Nebraska,” his attorney, Tom Culhane told the Nebraska Supreme Court.

Games of skill, like computerized golf or trivia games, are legal. However, you won’t get big cash prizes because some players can master them, meaning a big cash prize would eliminate the profits for the distributor. The elusive goal for game designers would be creating a game that was still based on skill – rather than chance – while making it difficult enough to assure there were more losers than winners. American Amusement apparently hit that sweet spot.

Travis Saxton installed Bankshot at Sidelines, his bar located in a working-class South Omaha neighborhood. His customers like it, and he said plays it regularly, as well.

“It’s kind of a Tic Tac Toe deal,” he explained while putting the game through its paces.

On the screen, a grid of nine images of pool balls appeared, three across and three down. The goal was to spot where a player could complete three in a row pattern by tapping the screen where a “wild card” ball would be added. Complete three in a row of sevens and you get a single point. Match three eight balls and you win the jackpot. The more money you use to play the higher the payout. The faster you solve the puzzle and the prize is even higher.

“If you don’t pick the winner by the time the timer goes out, you lose it,” Saxton demonstrated, his eyes never leaving the screen. “It’s strictly a skill game. If you go too fast, you can screw up. If you go too slow, you ain’t going to get nothing.”

In January, one of his regular customers let out a yell while seated in front one of the two Bankshot games at the Sideline. How much did he win?

“$15,000,” Saxton said with a smile. “He hit the jackpot. The eights!”

Those big prizes made Bankshot the centerpiece of a legal debate over what defines a gambling device in Nebraska, and the technology behind the game created a new generation of barroom coin amusements, according to Attorney General Bruning.

“I don’t think that’s good for Nebraska,” he said, arguing that the game’s software blurs the line between an illegal game of chance and a legal game of skill.

“Now what you have is mathematicians (creating) algorithms that they believe are more skill than chance,” he said, which he believes makes them more difficult to monitor for law enforcement and inspectors fromthe State Department of Revenue , which regulates the business.

“I think it will cause some of these machines to proliferate,” he added.

Even though these particular machines are legal, state regulators fear the complex software will be difficult to inspect to insure the games are being run honestly.

“Each iteration of each game needs to be reviewed by independent experts,” Bruning said, “and that is a very difficult thing to do when there is a mathematician in the backroom trying to create an algorithm that dances on the head of a pin.”

After the machines were seized from Fonner Park by the State Patrol, the case went to Lancaster District Court. In return, The American Amusement Company staged a full legal assault.

Nebraska’s gambling laws had not been challenged since the 1970s, when the law blocked cash prizes for pinball. The state’s constitution bans any “game of chance,” except for the lottery and keno, to the benefit of the state. Non-profit organizations are allowed to host bingo and sell the pull-tab tickets known as “pickles.”

In the original trial, Lancaster County District Judge Steven Burns ruled parts of the Bankshot game were illegal, but some of the games were strictly based on the skill of the player. The verdict was considered a victory for American Amusement, which made changes in the machine to eliminate the parts that the judge ruled crossed the legal line.

The case came before the Nebraska Supreme Court when the State of Nebraska appealed, claiming the entire game should be banned. Bruning asked, in effect, that the court change the state’s historic approach to regulating gambling. For decades, Nebraska law enforcement told coin amusement operators that a game could not “predominantly” be based on chance. The attorney general wanted to block any element of chance in coin amusements.

When the justices heard arguments in the case, Jay Bartel of the Attorney General’s office argued that “the statute is clear on its face that an element of chance, where betting is involved in the outcome, is in fact gambling.”

That prompted a skeptical response from Justice John Gerrard: “If it’s so clear on its face, why is the Department (of Revenue) and the State Patrol and everyone else interpreting it another way? I understand your argument, I’m not quite as certain as you are that the statute is that clear on its face.” (Gerrard recently stepped down from the Nebraska Supreme Court after being appointed as a U.S. District Court Judge.)

Tom Culhane, the attorney for American Amusement, argued the game’s creators already met the definition of a legal game after working with state officials and having it analyzed by three separate independent testing agencies, which agreed it was a game of skill.

“It was at that point,” continued Culhane, “that the State of Nebraska apparently decided they needed to change the standard if they were to outlaw this game.”

Evidence presented in the case made it clear that this was not an easy game to master, even if it wasn’t based on chance. Winning the top money required a player to make a choice in no more than 500 milliseconds. That is only slightly longer than the blink of an eye.

With at least a possibility any of the puzzles could be solved by a skilled player, the Supreme Court ruled the game was legal. However, the Supreme Court judges noted in their opinion that “the odds of coming away with more money than a player risks on a puzzle are remote.”

During oral arguments, the amount of practice needed to win the game brought a wry observation from Justice Gerrard.

“It seems like kind of an inverse relationship here,” he said. “The less of a life you have, the better player you are.”

Culhane said the ruling cleared away the legal fog over the game.

“Those that may have had any concerns based on some of the actions that had been taken in the past by either the Department of Revenue or the State Patrol are allayed by this decision of the Supreme Court,” Culhane said, adding that the ruling might attract new business.

Bankshot had already become hugely popular by any measurement in the gaming world. Bars and arcades all over the state installed 450 Bankshot consoles in the first two years it was available.

That popularity has Bruning concerned. Since it’s a legal game without any restrictions on where it can be played or by who, he sees the potential that the computer game could be “available at every Kwik Shop, and you’ll see 16-year-olds playing. That, to me, is a very troubling point.”

If they can’t outright ban the game or future variations, the Attorney General is working on legislation with some state senators that would put a cap on the size of the prizes, limiting them to a couple of bucks rather than a couple of thousand.

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