After the 1993 amendments to North Carolina's slot-machine statute, are video poker machines still illegal under G.S. § 14-306, or are they exempt as amusement devices?

Plain-English summary

Representative Billy Creech asked whether Collins Coin Music Co. v. N.C. Alcoholic Beverage Control Comm. made the video-poker machines described in his letter illegal. The AG said those machines were not illegal under the then-current § 14-306 because they involved some skill and met the other statutory criteria. The opinion was issued in November 1997. Source

The opinion says a 1993 amendment changed the amusement-device exception. The earlier wording required operation to "depend upon" player skill or dexterity; the amended wording required the device to "involve the use of skill or dexterity." The AG said Collins had interpreted the earlier version and no longer controlled the exemption question under the amended language. Source

The AG listed four criteria: use for amusement; skill or dexterity in making varying scores and receiving coupons; an actual operating limit of eight on accumulated credits or replays that may be played at one time and award replays or coupons; and no cash conversion or exchange for merchandise worth over $10. The machines described in the request awarded up to eight free replays or credits, played "one at a time," with merchandise worth no more than $10. Source

Currency note

This letter applies the version of § 14-306 discussed in 1997. Check current gaming law and later decisions before drawing conclusions about a machine today.

Background and statutory framework

The AG quoted the second paragraph of § 14-306 before and after the 1993 amendment. The amendment changed the skill wording and added the eight-credit or replay operating limit. The opinion treats the exception as conditional on how the machine actually operates. Source

Common questions

Did the 1997 opinion say all video-poker machines were exempt?

No. It says a machine must satisfy each listed statutory criterion to be outside § 14-306's illegal-slot-machine definition. Its answer for Creech concerned the machines he described. Source

Did the AG interpret the eight-credit limit as allowing bets of eight credits per play?

No. The described machines played accumulated credits "one at a time." The opinion repeats the statutory limit on credits or replays that may be played at one time, but does not analyze how many credits may be staked or bet in a single play. Source

Why did the AG say Collins no longer controlled?

The court had applied the former wording, under which operation had to "depend upon" skill or dexterity. The AG said the amended exception required only that the machine "involve the use of skill or dexterity." Source

Source

• Landing page: https://ncdoj.gov/opinions/video-poker-machines-2/

Citations

• N.C.G.S. § 14-306
• N.C.G.S. § 14-296
• N.C.G.S. § 14-301
• N.C.G.S. § 14-302
• N.C.G.S. § 14-305
• Chapter 406, Section 1, 1993 Session Laws
• Collins Coin Music Co. v. N.C. Alcoholic Beverage Control Comm., 117 N.C. App. 405, cert. denied, 340 N.C. 110 (1995)

Original opinion text

November 5, 1997

The Honorable Billy J. Creech
N.C. House of Representatives
Room 635, Legislative Office Building
Raleigh, NC 27601-1096

RE: Advisory Opinion; Video Poker Machines; N.C.G.S. § 14-306

Dear Representative Creech:

You request our opinion whether the North Carolina Court of Appeals decision in Collins Coin Music Co. v. N.C. Alcoholic Beverage Control Comm., 117 N.C. App. 405, cert. denied, 340 N.C. 110 (1995), makes illegal the video poker machines described in your letter of November 1, 1997 addressed to Attorney General Easley.

You describe the video poker machines as follows:

The video poker machines in question electronically simulate the play of poker. Upon inserting money and pressing a play button, five cards appear upon the screen, any one of which may be discarded by pressing corresponding discard buttons. New cards replace the discarded ones in an effort to obtain a better hand. Incorporated on the machine is a free-play feature that rewards a successful player with a maximum of eight free replays or accumulated credits that may be played one at a time which are registered on a digit meter on the screen of the machine. These credits on the machine may be used for replays or may be exchanged for merchandise with a value not exceeding $10.00. The machines are used for amusement and involve the use of some skill.

For reasons which follow, the video poker machines you describe are not illegal, since they involve the use of some skill and otherwise comply with the law. Collins is not controlling because the General Assembly substantially amended the law upon which the Collins decision was decided.

Collins involved a civil action against the State seeking a declaratory judgment that the video poker machines owned by plaintiff Collins Coin Music Co. (Collins) were not illegal slot machines as defined by N.C.G.S. § 14-306. Both Collins and the State agreed that the video poker machines fit within the § 14-306 definition of an illegal slot machine. Collins contended, however, that the machines were expressly excepted from the statutory definition of an illegal slot machine by the second paragraph of § 14-306 which provided:

The definition [of an illegal slot machine] contained in the first paragraph of this section and G.S. 14-296, 14-301, 14-302 and 14-305 does not include coin-operated machines, video games, and devices designed and manufactured for amusement only, the operation of which depends upon the skill or dexterity of the player. Included within this exception are pinball machines, video games, and other mechanical amusement devices that enable the player, based on his skill or dexterity, to make varying scores or tallies and to receive free replays or paper coupons that may be exchanged for prizes with a value not exceeding Ten Dollars ($10.00), but may not be exchanged or converted to money. N.C.G.S. § 14-306 (Emphasis supplied).

The Court held against Collins. Although the Court acknowledged that some skill was involved, it concluded that Collins did not prove "that the operation of the video machines at issue here depends upon the skill or dexterity of the player," rather than chance. 117 N.C. App. at 408.

While the Collins case was pending in the North Carolina Court of Appeals, the General Assembly in 1993 amended N.C.G.S. § 14-306. See, Chapter 406, Section 1, 1993 Sess. Laws. The amendment took effect December 1, 1993 and applied to offenses occurring after that date. The General Assembly left intact the first paragraph of § 14-306 which defines an illegal slot machine. The amendment changed the second paragraph of § 14-306, the paragraph which contains the exceptions to what is an illegal slot machine, as follows:

The definition [of an illegal slot machine] contained in the first paragraph of this section and G.S. 14-296, 14-301, 14-302, and 14-305 does not include coin-operated machines, video games, and devices used for amusement. Included within this exception are pinball machines, video games, and other mechanical devices that involve the use of skill or dexterity to make varying scores or tallies and which, in actual operation, limit to eight the number of accumulated credits or replays that may be played at one time and which may award free replays or paper coupons that may be exchanged for prizes or merchandise with a value not exceeding ten dollars ($10.00), but may not be exchanged or converted to money. N.C.G.S. § 14-306 (Emphasis supplied).

As noted, the 1993 amendment makes clear that the lawful operation of the machines no longer depends upon the skill or dexterity of the player, or must be based upon the skill or dexterity of the player. The lawful operation of the machines must only involve the use of skill or dexterity. What the General Assembly clearly intended to do, and in fact did was to lower the skill or dexterity standard involved in the lawful operation of these machines from skill or dexterity being, as the Collins Court put it, the "dominating elements that determine the results of the game," to simply involving the use of skill or dexterity.

Collins is no longer controlling when determining whether a video poker machine is a legal machine as defined in the second paragraph of N.C.G.S. § 14-306. In order to be exempt under our present law from the definition of an illegal slot machine, the video poker machine must satisfy each of the following statutory criteria:

• The machine must be "used for amusement;"
• The players ability to make varying scores and receive coupons must "involve the use of skill or dexterity;"
• In actual operation, the number of accumulated credits or replays that may be played at one time and which may award free replays or paper coupons that may be exchanged for prizes or merchandise is limited to eight; and
• The coupons or credits that a player can accumulate in a single hand (game) may not be exchanged for cash and may not be exchanged for merchandise having a value greater than $10.00.

Video poker machines or other slot machines that satisfy all four of the above-stated criteria are exempt from § 14-306's definition of "illegal slot machines," and are therefore legal.

Should you have any other questions, please feel free to contact us.

Andrew A. Vanore, Jr.
Chief Deputy Attorney General