Torch Electronics Ordered to Pay $500K in Missouri ‘Illegal’ Gray-Market Gambling Machines Case

Key Takeaways: Understanding the dynamics of gambling machines is essential for making informed decisions.

• Jury finds Torch’s “no-chance” games violate Missouri law.
• TNT Amusements wins $500,000 in gray-market games case.
• Verdict may spur crackdown on unregulated video gaming machines.

A recent ruling by a federal jury in Missouri has ordered Torch Electronics, a grey market games operator, to pay $500,000 to the arcade game distributor TNT Amusements. The verdict concluded that Torch’s games are illegal under state law.

The lawsuit kicked off in 2019, where TNT Amusements accused Torch of unfair competition and tortious interference. They claimed Torch had lured businesses to swap out legitimate arcade machines for what are effectively illegal gambling devices. The case, however, wasn’t settled until 2023 when it moved to federal court for a final decision.

Torch Electronics defended its machines as legal because they employ a “no-chance” or “pre-reveal” design. Players can see the result of the next spin before placing bets, a feature Torch asserts eliminates gambling’s typical element of chance as per Missouri law. Additionally, the machines operate on a fixed sequence of outcomes rather than employing random number generation.

Legal? No Chance

Contrarily, the jury sided with TNT Amusements, arguing that the lengthy sequences and randomized starting points rendered the results unknowable. As users typically engage with multiple spins, they essentially pay to uncover outcomes that remain uncertain until they proceed to the next spin.

This landmark ruling represents the first judicial examination of the legality surrounding Missouri’s so-called gray machines. Although the jury’s decision is civil, it has significant implications for future enforcement initiatives against similarly unregulated machines across the state.

A Significant Impact

Evidence revealed in court showcased that between 2017 and 2023, players invested approximately $32 million into around 100 of Torch’s machines situated across just 20 venues, with a reported payout rate of 65%. The Missouri Gaming Commission estimates over 15,000 Torch machines are currently operating throughout the state.

Unlike sanctioned casinos, Torch’s operations lack stringent state oversight, reporting, or taxation protocols, raising concerns regarding public safety and regulation.

‘Disgorgement of Millions’

Mark Finneran, the attorney representing TNT, expressed gratitude to the jury for recognizing Torch’s misleading advertising. The determination enables TNT to pursue further legal action aimed at recovering millions in profits that Torch allegedly garnered through the deceptive marketing of its devices as “no-chance” games.

Currently, Torch plans to appeal this decision, which establishes a precedent within the growing landscape of gaming regulations.