Are they skill-based games or ‘grey machines?’ Kansas regulators ask people to avoid the game terminals offering cash prizes at gas stations and bars.
* The legality of cash-payout machines in stores and bars is uncertain, hinging on whether they are games of skill or chance.
* These unregulated “grey machines” have proliferated, with their presence in lottery-selling locations growing from 3.7% in 2018 to 33.6% in 2024.
* One major operator, Pace-O-Matic, has sought legal clarity and expressed support for regulation, but state officials have declined to issue a definitive ruling.
Are machines found offering cash payouts in convenience stores, bars and restaurants across the state games of skill or chance?
That’s the unanswered question that has allowed the machines to proliferate across the state without regulations or transparency about how they operate.
One gaming company, Georgia-based Pace-O-Matic, asked the state to clearly state its position on one of their games’ legality but were denied an answer.
With an estimated 600,000 so-called skill-based gaming machines in the United States — about 40% of the total number of gaming machines in total — the games have exploded in popularity.
Scientific Games, a company that provides data analytics and online platform design for lotteries, published a market analysis that tracked the number of skill-based gaming machines found at locations that also sell lottery tickets.
In 2018, there were machines at 3.7% of locations; by 2024, it was at 33.6% of locations.
Skill-based games or grey machine?
Supporters of the machines call them “skill-based gaming machines,” while opponents favor the more sinister-sounding term “grey machines.”
Consumers who use the machines like that they’re accessible, and some have had success in winning prizes.
“These games are better than the old ones they have because people actually win more on these,” said Jaliyah Smith. “You may not win a lot, but you’ll win something.”
Smith had never been to a casino but likes playing the skill machines.
“You also take a chance of losing, so you’ve got to be careful, just like gambling in the casino,” Smith said. “It’ll eat your money.”
The agreement between the machine operators and individual store owners varies, with owners and operators negotiating a share of the profits after expenses. One convenience store owner told The Capital-Journal they got one after losing customers and are only getting foot traffic from the machine’s operators.
“I think they’re attractive because c-store owners want to have goods and services in their store that attract customers to come in,” said Brian Posler, executive director of Fuel True, the trade organization for convenience stores in Kansas.
The legal uncertainties of the machines can cause reluctance for some store owners, but Posler said the gaming companies emphasize they are games of skill.
“As I hear from these amusement companies, they are adament that in Kansas, no games have been successfully challenged that are games of skill,” Posler said.
Kansas organization doesn’t see machines as games of skill
Kansas Racing and Gaming Commission do not see the grey machines as skill games, and considers them to be gambling devices exploiting ambiguity in state laws.
“The current statute that defines a gaming device was written in 1994, and so advances in technology has led to inconsistent application of the law,” said Randy Evans, government relations manager with the Kansas Racing and Gaming Commission.
Evans noted that over the lifetime of slot machines at state-run casinos, they must pay back 87% of what’s put in, and tribal casinos must return 80% of what’s put in. The grey machines are unregulated, and how much money they return isn’t known, regulated or audited.
“These machines that we’re talking about now, since they’re unlicensed and unregulated, we don’t know what they’re set at. We’ve run into them before where they’re set in the low teens,” he said. “Casinos aren’t built on winners, and so even at 87% up to 99% payback, in the long run, you’re going to lose.”
Scientific Games’ overview of the skill-based game machine market said that payouts range between 75% to 93%, but acknowledged that there are some limitations to what is known about the machines.
“Skill-based or ‘grey’ machines aren’t regulated the way casino or lottery products are, so there isn’t a single audited source that reports their payouts. The range we cited reflects a synthesis of publicly available information rather than a single study,” Beth Bresnahan, chief communications and brand officer of Scientific Games, said in a statement to The Capital-Journal.
The lower-end of the range, 75%, is based on the American Gaming Associations’ figures, while the higher end is supported by industry reporting.
“Public statements from manufacturers and operators further highlight the frequent-win design of these games, though those statements speak to player experience rather than audited payout levels,” Bresnahan said. “Taken together, those sources support a reasonable estimated range rather than a precise measured average, which simply doesn’t exist for these machines today.”
The payouts could vary if, as the machine owners contend, the outcome is determined by skill. Evans isn’t convinced.
“I think them saying that there’s some sort of skill base to it is a very fine line,” Evans said. “We have machines in our office that we’ve seized in our evidence room, that when you play them, you can tell that they’re not skill.”
Without clear illegality, the KRGC has seized machines under civil asset forfeiture laws. Resources are limited, there are only three agents assigned to the KRGC’s illegal gaming unit, and it’s not clear if the seizures are making a dent.
“In my opinion, the manufacturers know their machines are on the edge, and they’re not really fighting it. What they do is, our agents will seize six machines in a gas station, and within three or four days their machines are replaced. So they just keep cycling machines through,” Evans said.
Evans favors a ban on the machines, and encouraged Kansans to avoid them.
Largest operator in Kansas tried to clear up legal status of products
Pace-O-Matic, the largest operator in the state, has sought to clear up uncertainty about the legal status of its products. In January, they took a Kansas Supreme Court decision declining to opine on the legality of their game Dragon’s Ascent as a win.
“The Attorney General and KRGC were clear to the Supreme Court: They do not take the position our games are illegal,” Pace-O-Matic chief public affairs officer Michael Barley told The Capital-Journal after the decision was published in January.
Pace-O-Matic approached the Kansas Racing and Gaming Commission in 2019 to determine whether their game was legal, but the commission declined to offer a formal opinion. Pace-O-Matic then sought clarification from then-Kansas Attorney General Derek Schmidt, who also declined to determine the game’s legality.
Though the KRGC didn’t give a definitive opinion, a report it produced said Dragon’s Ascent “contained too many non-skill features” to allow mastery, and observed a player beating another by placing a heavy can over the joystick to allow continuous firing.
Pace-O-Matic sued to force a determination from the state, which was later broadened to challenge the state’s criminal gambling statute as too vague. Simultaneously, the state’s casinos sued Pace-O-Matic claiming they interfered with their business interests.
The Kansas Supreme Court dismissed the case on standing.
“Dragon’s Ascent has operated throughout Kansas for several years without incident. No devices have been seized. No prosecutions have been initiated. No cease-and-desist orders have been issued. And neither the Racing and Gaming Commission nor the Attorney General has opined that the game is illegal,” Kansas Supreme Court Justice K.J. Wall wrote, in the opinion.
Pace-O-Matic’s communications director Rachel Albritton told Casino Reports in October 2024 that the company “absolutely supports the regulation and taxation of skill games” and has advocated passing skill game legislation in states for years. She said the main barrier has been opposition from retail casinos.
Pace-O-Matic highlighted increased earnings in casinos to support that their company isn’t in competition with traditional casinos.
Albritton didn’t respond to questions in an email exchange with The Capital-Journal, which inquired about the number of machines in the state, agreements with store owners, win percentages, their ideal regulatory framework and the distinction between skill-based and chance-based games.
Pace-O-Matic is the largest operator of the machines in the state, but there are other operators. Midwest Amusement is one other company the KRGC identified in the state.
The proliferation of gambling across Kansas
The options for people to gamble have exploded in recent years. Kansans can access sports betting and lottery tickets on their phone.
The number of Kansans who report gambling occasionally, often and very often has shot up.
In 2017 13.1% of Kansans occasionally gambled, and in 2025 it was 24.6% according to the 2025 Kansas Gambling Survey.
The number of people who gamble often went from 2.7% to 8.6%, and very often from 0.8% to 3% during the same period.
There are now substantially more Kansans who are considered at risk of problem gambling. About 40% of respondents were at high or moderate risk, the survey said.
Skill games are also on the rise. Fortune Business Insights placed the global market size of skill gaming, including online games where players use real currency to compete, at $40.69 billion in 2024, and predicts it will increase to $101.97 billion by 2032.
The growth of in-person gaming machines could be changed with state-level regulation. Colorado, Kentucky and Virginia have banned the devices.
Evert Nelson contributed to this report.
