When can law enforcement seize coin-operated amusement machines as illegal gambling devices in Arkansas?

Plain-English summary

Arkansas has two parallel statutory tracks for coin-operated devices. The first is the antigambling statute (A.C.A. § 5-66-101 et seq.), which makes it a crime to set up or keep "any gaming table or gambling device" used to play games of chance for money or property. The second is the "Chuck E. Cheese law" (A.C.A. § 26-57-401 et seq.), which carves out a regulated, taxed, and licensed category of "coin-operated amusement devices" and excludes them from the antigambling statutes.

State Representative Ashley Hudson asked three questions about how these tracks interact. The AG answered no to all three.

Question 1: Does the Chuck E. Cheese law exempt amusement devices from the gambling prohibitions as long as the device has no automatic payoff and prizes are nonmonetary and worth less than $5?

The AG said no. Those two conditions are necessary but not sufficient. Several other conditions must be met:

• The device must be a "coin-operated machine, device, or apparatus that provides amusement, diversion, or entertainment." Permissible examples include radio rifles, miniature sports, shooting galleries, pool tables, shuffleboard, pinball, cranes, video games, claw machines, and similar games requiring some skill.
• The device may NOT be a casino-gambling-style game (slots, roulette, craps, video poker, mechanical/electronic draw games, or any game where outcomes are substantially determined by chance).
• The device may NOT contain a jackpot or automatic money payoff.
• Rewards must be limited to free amusement features, toys, novelties, candy, or redeemable tickets/tokens for those items, with a wholesale value cap (the lesser of 10x the play cost or $5; with higher caps in specific accumulation and facility scenarios per § 26-57-402(2)(B), (C)).
• Prizes must be on the same premises in a single display area; the operator must keep records of wholesale value; prizes cannot be re-awarded; prizes cannot be cashed out or traded for money or property to anyone associated with the operator or to circumvent the antigambling statute.
• The owner must pay the privilege tax, privilege fee, and license fee.

Failure to comply with these can declare the device a public nuisance subject to seizure (§§ 26-57-406, 26-57-414).

Question 2: If a coin-operated machine requires some skill, has no automatic payoff, and is operated entirely within § 26-57-401's limits, can it nevertheless be an illegal gaming device under § 5-66-104?

The AG said no, with a careful caveat. A machine can be properly licensed under the amusement statute yet still be illegal in operation. But if a machine is in fact "operated entirely within the limitations" of the amusement-device statute, it cannot also be an illegal gaming device. A game whose outcome is substantially determined by chance does not qualify as a lawful amusement device. The limited toys, novelties, candy, and redeemable tokens permitted under the amusement statute are excluded from "money or property" for antigambling purposes.

Question 3: If the owner of a properly-licensed amusement device leases it to a merchant who then uses it illegally (for example, paying out cash), can law enforcement seize and destroy the machine under A.C.A. § 5-5-101 et seq. without a civil forfeiture action?

The AG said no. Arkansas case law (collected in State v. 26 Gaming Machines, 356 Ark. 47 (2004)) recognizes two kinds of illegal gaming devices:

• Per se gaming devices: machines whose only reasonable and profitable use is in a chance game (Steed v. State, 189 Ark. 389 (1934)). Mere possession is criminal under § 5-66-104.
• Gaming devices by actual use: machines that can be used lawfully but have been converted by use (Bostic v. City of Little Rock (pinball used for cash payouts), Albright v. Muncrief (teletype machines used for horse-race betting), Johnson v. State (dice and cloth)). Evidence of actual gambling use is required.

A lawful amusement device converted by a merchant lessee to gambling use falls into the second category, gaming-device-by-actual-use. In that situation, the AG said § 5-5-101 does not permit seizure and destruction without a civil forfeiture action. The statute and Rule 15 govern disposition of seized property. Rule 15.2 lets the rightful owner or possessor move for its return. The statute excepts contraband owned by a defendant from its return requirement.

What this means for you

Owners of amusement devices and arcade operators

Compliance with the Chuck E. Cheese law is granular. To stay outside the antigambling statute:

• Confirm your device is a skill-based amusement device, not a casino-style game.
• No jackpot or automatic money payoff. Period.
• Prize structure: free play, toys, candy, novelties, or tickets/tokens for those items, with the wholesale-value caps (the lesser of 10x play cost or $5 in the basic case; higher in accumulation or qualifying facilities).
• Display the prizes in a single on-premises area. Document the wholesale value of every prize.
• Do not allow re-awarding of prizes. Do not allow merchants or employees to redeem prizes for cash or other value.
• Pay the privilege tax, privilege fee, and license fee. The AG says failure to pay can lead to the device being declared a public nuisance subject to seizure.

If a merchant lessee converts your lawful device to gambling use and it is seized, Rule 15.2 lets the rightful owner or possessor move for its return. The AG did not decide whether a particular owner would recover a particular machine.

Convenience store owners and merchants leasing amusement devices

The opinion describes a merchant paying cash to customers using a leased amusement device as an example of conversion to gambling use. The device may then be treated as a gaming device by actual use.

The amusement-device law requires operators to keep records confirming the wholesale value of toys and novelties and restricts cash redemption.

Sheriffs, police, and county prosecutors

Two procedural points to keep straight:

1. A device that fully complies with § 26-57-401 et seq. is not an illegal gaming device under § 5-66-104.

2. For a lawful amusement device converted by a merchant lessee to gambling use, the AG says § 5-5-101 does not authorize seizure and destruction without a civil forfeiture action. Rule 15.2 lets the rightful owner or possessor file a motion for return.

Licensure alone does not resolve whether a device is lawful in operation. The AG's second answer assumes the device operates entirely within the amusement-device statute.

Civil forfeiture practitioners and defense attorneys

The AG distinguishes per se gaming devices from devices converted to gambling use. For the latter, evidence of actual gambling use is needed before a violation will be upheld. For a seized device, § 5-5-101 and Rule 15 govern disposition, and the rightful owner or possessor may seek its return under Rule 15.2.

Local government and city attorneys advising on nuisance abatement

The AG says failure to pay the required tax and fees can lead to the device being declared a public nuisance subject to seizure. That issue is separate from the third question about a merchant's gambling use.

Common questions

Why is it called the "Chuck E. Cheese law"?
The AG calls the amusement-device provisions the "Chuck E. Cheese" law. They exempt qualifying coin-operated amusement devices from the gambling statutes.

What is the prize value cap?
The basic cap is the lesser of 10 times the cost to play one time or $5 wholesale value (§ 26-57-402(2)(A)). Higher caps apply in two scenarios:

• Accumulated tickets or tokens redeemed for a single toy or novelty: $12.50 wholesale (§ 26-57-402(2)(B)(i)).
• Specific listed facility types (§ 26-57-402(2)(C)): up to $500 wholesale.

Can a winner exchange tickets for cash?
No. The statute explicitly bars exchanging awarded items for "money, property, or other valuable thing" to any person on the premises associated with the operator, and bars any exchange done to circumvent the antigambling statute (§ 26-57-402(2)(D)(i)).

Can a winner give the toy back so the next player can win it? No. The operator cannot re-award a previously awarded toy or novelty (§ 26-57-402(2)(D)(ii)).

What if the device fails one element of the licensure? Then it does NOT qualify as an amusement device, and it is potentially subject to the antigambling statute. The licensure framework is all-or-nothing on its compliance elements.

Can police destroy a leased amusement device converted to gambling use without a forfeiture action? The AG says no for that situation. The seized-property statute and Rule 15 govern disposition of the device, and the rightful owner or possessor can move for its return.

Are slot machines ever legal in Arkansas outside casinos? Not under the amusement-device law. The opinion says its definition excludes casino-gambling-style games, including slot machines. It does not address other possible authorizations.

Background and statutory framework

The antigambling statute:

• A.C.A. § 5-66-101 et seq. prohibits gambling and gaming.
• § 5-66-104(a) makes it unlawful to set up or keep a gaming table or gambling device.
• The Arkansas Supreme Court treats "gambling" and "gaming" interchangeably and defines it as "the risking of money between two or more persons, on a contest or chance of any kind, where one must be loser and the other gainer" (Sharp v. State, citing Portis v. State, 27 Ark. 360 (1872)).

The amusement-device statute (Chuck E. Cheese law):

• A.C.A. § 26-57-401 et seq. licenses and taxes coin-operated amusement devices.
• § 26-57-402 defines "amusement device" and excludes casino-style games.
• § 26-57-403 prohibits jackpots and automatic money payoffs.
• § 26-57-404 imposes a privilege tax.
• § 26-57-408 imposes a privilege fee.
• § 26-57-409 sets the annual license fee.
• §§ 26-57-406, 26-57-414 declare unlicensed devices public nuisances and authorize seizure.

Disposition of seized property:

• A.C.A. § 5-5-101: returns seized property to its rightful owner or possessor except contraband owned by a defendant.
• Ark. R. Crim. P. 15.2: sets the procedure for return motions.

Per se vs. by-actual-use distinction:

• State v. 26 Gaming Machines, 356 Ark. 47, 145 S.W.3d 368 (2004): collects the doctrine.
• Steed v. State, 189 Ark. 389, 72 S.W.2d 542 (1934): per se device defined.
• Bostic v. City of Little Rock, 241 Ark. 671, 409 S.W.2d 825 (1966): pinball used for cash payouts.
• Albright v. Muncrief, 206 Ark. 319, 176 S.W.2d 426 (1943): teletype machines used for horse-race betting.
• Johnson v. State, 101 Ark. 159, 141 S.W. 493 (1911): dice and cloth as gaming devices.
• Blankenship v. State, 258 Ark. 535, 527 S.W.2d 636 (1975): evidence requirement for by-actual-use cases.

Citations

• A.C.A. § 5-66-101 et seq. (antigambling statute)
• A.C.A. § 5-66-104(a) (gaming table or gambling device)
• A.C.A. § 5-5-101(a) (return of seized property)
• A.C.A. § 26-57-401 et seq. (Chuck E. Cheese amusement-device statute)
• A.C.A. § 26-57-402(1)(A), (B) (definition of amusement device; casino-style exclusions)
• A.C.A. § 26-57-402(2)(A)-(D) (prize and redemption rules)
• A.C.A. § 26-57-403(a) (no jackpot or automatic payoff)
• A.C.A. § 26-57-404 (privilege tax)
• A.C.A. § 26-57-406, § 26-57-414 (public nuisance, seizure)
• A.C.A. § 26-57-408 (privilege fee)
• A.C.A. § 26-57-409 (license fee)
• Sharp v. State, 350 Ark. 529, 88 S.W.3d 848 (2002)
• Pre-Paid Solutions, Inc. v. City of Little Rock, 343 Ark. 317, 34 S.W.3d 360 (2001)
• State v. 26 Gaming Machines, 356 Ark. 47, 145 S.W.3d 368 (2004)
• Steed v. State, 189 Ark. 389, 72 S.W.2d 542 (1934)
• Bostic v. City of Little Rock, 241 Ark. 671, 409 S.W.2d 825 (1966)
• Albright v. Muncrief, 206 Ark. 319, 176 S.W.2d 426 (1943)
• Johnson v. State, 101 Ark. 159, 141 S.W. 493 (1911)
• Blankenship v. State, 258 Ark. 535, 527 S.W.2d 636 (1975)
• Portis v. State, 27 Ark. 360 (1872)

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2023-008
February 28, 2023
The Honorable Ashley Hudson
State Representative
Post Office Box 241205
Little Rock, Arkansas 72223-0004
Dear Representative Hudson:
This is in response to your request for an opinion on the proper interpretation and application of Arkansas laws regarding amusement devices. Your request contends that: This is an issue that I believe requires clarity for my constituents and business owners around the State, who are often unjustly subjected to searches and seizures of machines that qualify as lawful amusement devices under Arkansas Code Annotated § 26-57-401. Your opinion is also necessary to relieve law enforcement and local officials from the burden of interpreting the law themselves, which results in unnecessary time and expense investigating activity that, often times, is lawful. In this regard, you have asked the following questions:

1. Does Arkansas Code Annotated § 26-57-401 exempt “amusement devices”
   from the State’s prohibitions on “gambling devices” so long as such devices do not include an automatic payoff and the prizes for winning are nonmonetary and have a value of less than $5.00?
2. If a coin-operated machine requires some level of skill, does not include an
   automatic payoff, and is operated entirely within the limitations contained in Arkansas Code Annotated § 26-57-401, can it nevertheless be considered an unlawful “gaming device” under Arkansas Code Annotated § 5-66-104?
3. If the owner of an “amusement device” authorized under Arkansas Code
   Annotated § 26-57-401 leases the device to a merchant who uses the machine illegally (e.g., the merchant or her employees gives cash to a customer for using the machine) can the machine be seized by law TIM GRIFFIN ATTORNEY GENERAL OF ARKANSAS The Honorable Ashley Hudson State Representative Opinion No. 2023-008 Page 2 enforcement and destroyed pursuant to Arkansas Code Annotated § 5-5-101 et seq. without a civil forfeiture action? RESPONSE The answer to each of your questions is “no.” DISCUSSION A general overview of the applicable law may be helpful before turning to your specific questions. The Arkansas Code prohibits gambling and gaming.1 While “gambling” and “gaming” are not defined by statute, the Arkansas Supreme Court has used these terms interchangeably and has defined “gambling” as “the risking of money between two or more persons, on a contest or chance of any kind, where one must be loser and the other gainer.”2 The Arkansas Code also makes it “unlawful for a person to set up, keep, or exhibit any gaming table or gambling device…, either: (1) [a]dapted, devised, or designed for the purpose of playing any game of chance; or (2) [a]t which money or property may be won or lost.”3 However, the so-called “Chuck E. Cheese” law exempts certain “coin-operated amusement devices” from the gambling statutes.4 Specifically, § 26-57-402 limits the definition of the money, property, and other valuables mentioned in the antigambling statutes to exclude free amusement features and toys, novelties, candy, or “representations of redeemable value” (e.g., tokens or tickets) for these items if their wholesale value is not more than ten times the cost charged to play the amusement device one time or $5.00, whichever is less.5 If a device qualifies as an “amusement device” under § 26-57-402 and certain criteria are met, the owner pays a privilege tax and licensing fee, and the device is excluded from the antigambling statutes.6 With this general overview of the law in mind, I turn to your specific questions. 1 A.C.A. § 5-66-101 et seq. (Repl. 2016). 2 Sharp v. State, 350 Ark. 529, 534, 88 S.W.3d 848, 851–52 (2002) (quoting Portis v. State, 27 Ark. 360, 362 (1872)). 3 A.C.A. § 5-66-104(a). 4 A.C.A. § 26-57-401 et seq. (Repl. 2020 and Supp. 2021). 5 A.C.A. § 26-57-402(2)(A) (Repl. 2020). 6 See, e.g., A.C.A. §§ 26-57-404 (Repl. 2020) (imposing a privilege tax on amusement devices), 26-57-408 (Repl. 2020) (imposing a privilege fee on amusement devices), 26-57-409 (Repl. 2020) (providing for an annual license fee for amusement devices). The Honorable Ashley Hudson State Representative Opinion No. 2023-008 Page 3 Question 1: Does Arkansas Code Annotated § 26-57-401 exempt “amusement devices” from the State's prohibitions on “gambling devices” so long as such devices do not include an automatic payoff and the prizes for winning are nonmonetary and have a value of less than $5.00? No, the conditions you have listed are necessary but not sufficient for a device to be exempt from the antigambling statutes. Several other conditions must also be met. First, the nature of the device is important. Arkansas law defines an “amusement device” as “a coin-operated machine, device, or apparatus that provides amusement, diversion, or entertainment….”7 Examples of permissible games include radio rifles, miniature sports, shooting galleries, pool tables, shuffleboard, pinball tables, cranes, video games, claw machines, novelty arcade machines, and other similar games that require some level of skill.8 By contrast, the definition of “amusement device” explicitly excludes “a machine, device, or apparatus that constitutes a casino-gambling-style game,” including mechanical or electronic draw games, slot machines, roulette wheels, craps, video poker, and casino- gambling style games where the outcome is determined substantially by chance.9 Furthermore, an amusement device cannot contain any sort of jackpot or automatic money payoff mechanism.”10 Second, any reward given for playing the amusement device must exclusively consist of a free amusement feature or merchandise limited to toys, novelties, candy, or some type of ticket or token than can be redeemed for those items.11 The items must have a wholesale value of not more than ten times the cost charged to play the amusement device one time or $5.00, whichever is less.12 Rewards that meet these requirements do not constitute money or property for purposes of the antigambling statutes.13 Other restrictions set forth in the “Chuck E. Cheese” law include the requirement that toys and novelties be located solely on the premises where the amusement device is played14 7 A.C.A. § 26-57-402(1)(A). 8 See id. 9 A.C.A. § 26-57-402(1)(B). 10 A.C.A. § 26-57-403(a) (Repl. 2020). 11 See A.C.A. § 26-57-402(2)(A). 12 Id. 13 Id. 14 A.C.A. § 26-57-402(2)(B)(iv). The Honorable Ashley Hudson State Representative Opinion No. 2023-008 Page 4 and that they be displayed in a single area.15 Furthermore, each operator must maintain records confirming the wholesale value of the toys and novelties.16 A toy, novelty, or candy given or awarded to a player as a reward cannot be re-awarded to another player by the amusement device operator,17 and it cannot be traded, redeemed, sold, leased, or otherwise exchanged for money, property, or other valuable thing to any person on the premises who is associated with the amusement device operator or for the purpose of circumventing the antigambling statutes.18 If a player accumulates redeemable tickets or tokens, any toy or novelty awarded by an amusement device operator or redeemed by a player cannot have a wholesale value of more than $12.50.19 If the toy or novelty is offered in a facility that meets certain listed requirements,20 its wholesale value may not exceed $500.21 Finally, the owner of an amusement device must pay a privilege tax, a privilege fee, and a license fee.22 Failure to do so can result in the amusement device being declared a public nuisance that is subject to seizure.23 Question 2: If a coin-operated machine requires some level of skill, does not include an automatic payoff, and is operated entirely within the limitations contained in Arkansas Code Annotated § 26-57-401, can it nevertheless be considered an unlawful “gaming device” under Arkansas Code Annotated § 5-66-104? No, a machine that operates entirely within the limitations of § 26-57-401 et seq. would not be unlawful under § 5-66-104. As the Arkansas Supreme Court has observed, it is quite possible for a machine to be properly licensed under § 26-57-401 et seq. but still be illegal under § 5-66-104.24 However, if a machine fully complies with all the requirements set forth in § 26-57-401 et seq., it cannot, by definition, also constitute an illegal gaming device. That is because an illegal gaming device is one “adapted or designed for the purposes of playing any game of chance or at which any money or property may be won 15 A.C.A. § 26-57-402(2)(B)(ii). 16 A.C.A. § 26-57-402(2)(B)(iii). 17 A.C.A. § 26-57-402(2)(D)(ii). 18 A.C.A. § 26-57-402(2)(D)(i). 19 A.C.A. § 26-57-402(2)(B)(i). 20 See A.C.A. § 26-57-402(2)(C). 21 A.C.A. § 26-57-402(2)(B)(i) and (2)(C). 22 See, e.g., A.C.A. §§ 26-57-404, 26-57-408, 26-57-409. 23 See A.C.A. §§ 26-57-406 (Repl. 2020), 26-57-414 (Repl. 2020). 24 Sharp, 350 Ark. at 530, 88 S.W.3d at 849 (noting that whether video arcade machines were properly licensed was not relevant in determining whether they constituted illegal gaming devices). The Honorable Ashley Hudson State Representative Opinion No. 2023-008 Page 5 or lost.”25 But a game in which the outcome is substantially determined by chance cannot be considered a lawful amusement device.26 And the limited toys, novelties, candy, tickets, or tokens that may be won by the player of an amusement device do not fall within the definition of “money or property” for purposes of the antigambling statutes.27 Therefore, a machine that meets all the statutory requirements of a lawful amusement device under
   § 26-57-401 et seq. cannot also be an unlawful gaming device under § 5-66-104. Question 3: If the owner of an “amusement device” authorized under Arkansas Code Annotated § 26-57-401 leases the device to a merchant who uses the machine illegally (e.g., the merchant or her employees gives cash to a customer for using the machine) can the machine be seized by law enforcement and destroyed pursuant to Arkansas Code Annotated § 5-5-101 et seq. without a civil forfeiture action? No, § 5-5-101 et seq. would not permit law enforcement to seize and destroy the machine without a civil forfeiture action. A device may constitute a prohibited gaming device in one of two ways: it may be a per se gaming device, or it may be a gaming device by actual use.28 A per se gaming device is one that is adapted or designed to determine the winner and loser in a game of chance and whose “only reasonable and profitable use … is use in a game of chance.”29 The “mere possession” of a per se gaming device is punishable under § 5-66-104.30 By contrast, a gaming device by actual use is a device that may be used for lawful purposes but has been converted or used for gambling.31 Unlike a per se gaming device, there must be evidence presented that the device has actually been used for gambling before a violation will be upheld.32 25 Pre-Paid Solutions, Inc. v. City of Little Rock, 343 Ark. 317, 321–322, 34 S.W.3d 360, 362–63 (2001) (internal citation omitted); see also A.C.A. § 5-66-104(a). 26 See A.C.A. § 26-57-402(1). 27 A.C.A. § 26-57-402(2)(A). 28 See State v. 26 Gaming Machines, 356 Ark. 47, 145 S.W.3d 368 (2004). 29 Steed v. State, 189 Ark. 389, 390, 72 S.W.2d 542, 543 (1934). 30 26 Gaming Machines, 356 Ark. at 52, 145 S.W.3d at 371. 31 See, e.g., Bostic v. City of Little Rock, 241 Ark. 671, 409 S.W.2d 825 (1966) (holding that a pinball machine was a gaming device, as operated, because the owner paid winners for every free game won); Albright v. Muncrief, 206 Ark. 319, 176 S.W.2d 426 (1943) (holding that teletype machines were gaming devices, as operated, because they were used for betting on horse races); Johnson v. State, 101 Ark. 159, 141 S.W. 493 (1911) (holding that dice and a cloth pinned to the ground were used as gaming devices). 32 26 Gaming Machines, 356 Ark. at 56, 145 S.W.3d at 374 (citing Blankenship v. State, 258 Ark. 535, 527 S.W.2d 636 (1975)). The Honorable Ashley Hudson State Representative Opinion No. 2023-008 Page 6 I understand that you are asking about a situation in which a merchant lessee has converted a lawful amusement device into a gaming device by actual use, and law enforcement has seized the device. This situation is governed by A.C.A. § 5-5-101 and Rule 15 of the Arkansas Rules of Criminal Procedure, which address the disposition of contraband and seized property.33 Under § 5-5-101, “[a]ny seized property shall be returned to the rightful owner or possessor of the seized property except contraband owned by a defendant.”34 Rule 15.2 sets forth the procedures for implementing § 5-5-101,35 and it allows the rightful owner or possessor of the seized property to file a motion for return or restoration of the things seized things. Assistant Attorney General Kelly Summerside prepared this opinion, which I hereby approve. Sincerely, TIM GRIFFIN Attorney General 33 A.C.A. § 5-66-108 previously provided for the disposition of seized gaming devices, but that section was repealed in 2013. See Act 1348 of 2013, § 15. 34 A.C.A. § 5-5-101(a) (Repl. 2013). 35 See Wilburn v. Topeka Corp., 265 Ark. 141, 577 S.W.2d 406 (1979).