Dowinn Group claims defamation and denies permanent closure

Judge Shepherd has upheld the Kentucky ban on popular "grey machines", skill games that offer cash payouts and were operating in a "grey" legal area. Some argue that these machines are games based on skill, but others declare that the element of chance present in these games ultimately makes them gambling machines or disguised slot machines.

The controversy around these machines peaked when Governor Andy Beshear signed House Bill 594 into law in 2023. This legislation ended the blurred distinction between games and gambling, making the operation of these devices illegal and imposing substantial fines on businesses and manufacturers that did not comply.

The legal battle began when Pace-O-Matic, a major operator with 2,500 machines in the state, challenged the law, arguing against its constitutionality and seeking to overturn the ban. While the company's machines across the state remain in small businesses, they are disabled, pending a final decision to remove them.

Pace-O-Matic argues that the ban is unconstitutional for several reasons, including violations of free speech, due process, equal protection, and separation of powers. It also claims the ban constitutes taking property without fair compensation.

The complaint states that skill games are a form of expression that communicates ideas through unique literary features and should be protected speech under the Kentucky Constitution.

Additionally, it contends that the ban unfairly targets certain electronic video-style skill games while allowing similar devices used in e-sports or .

Judge Shepherd's decision sided with Attorney General Russell Coleman, who vigorously defended the law as necessary to protect Kentucky's families and children from potential social harms associated with unregulated gambling. Coleman praised the bipartisan effort of the legislature in passing the bill.

The ruling addressed several key arguments from opponents of the ban, including claims that the law violated free speech rights and unfairly targeted specific industries. Judge Shepherd's comprehensive 52-page ruling dismissed these claims, affirming that the legislature had the authority to regulate gambling activities to protect public welfare.

Supporters of the ban, including House Speaker David Osborne, celebrated the decision as validation of the legislature's intent to fight illegal gambling practices. They argued that allowing these machines to operate without oversight could have led to expanded gambling across the state, potentially undermining existing regulatory frameworks.

In contrast, opponents of the ban, such as Pace-O-Matic and its legal representatives, expressed disappointment with the court's decision and indicated they were considering an appeal. They argued that the law unfairly targeted their industry and advocated for recognising these machines as legal "skill games" rather than gambling devices.

Earlier this year, in March, Virginia legislatures voted to unban skill games machines and regulate the market, stating that the tax revenue was much needed (grey machines are taxed at 25%) and that many small businesses depended on these machines to survive.

On July 1, 2024, Sweden implemented an increase in its gambling tax, raising it to 22% of gross gaming revenue. In 2019, the country had introduced an 18% tax on gambling profits as part of a broader regulatory reform on iGaming.

The decision to increase the tax rate has received within the industry. Stakeholders such as the Swedish Trade Association for Online Gambling (BOS) and major gaming companies have voiced concerns. They argue that higher taxes could lead players to seek out unlicensed operators, potentially undoing progress made in reducing the influence of the illegal gambling market.

Gustaf Hoffstedt, Secretary General of , has predicted that the unlicensed market would thrive under the new tax regime as licensed operators face increased financial pressures.

Within the gambling industry, more traditional operators like ATG, specialising in racetracks and horse-racing, are opposing the fact that the tax affects all gambling operators uniformly. They argue that online gaming, which has seen substantial revenue growth, should bear the brunt of the new government policy instead.

However, not only industry stakeholders have opposed the new tax regime. The Swedish Professional Football Leagues Association declared that clubs across the country depend on partnerships with sports betting operators. They expressed worries about potential income loss from sponsorships and the financial strain it could place on clubs. “Football cannot live solely on the commitment and voluntary efforts of players, managers and supporters – money is also needed,” the association stated.

In defence of the tax hike, the Swedish government anticipates an increase in tax revenues, estimating an annual boost of SEK 540 million (approximately 47 million euros).

Additionally, the government has worked tirelessly to fight the black market. The goal is to achieve a channelisation rate of 90% or higher, ensuring that the majority of gambling in Sweden occurs through licensed operators.

The government conducted research before the 2019 market regulation, which suggested that a tax rate slightly above 20% would be most suitable for gross gaming revenue. However, at that time, the government opted to set the tax rate at 18% as a measure to prioritise market stabilisation and channelisation efforts. Five years later, the government deemed it appropriate to implement the originally recommended tax rate.

The Malta Gaming Authority (MGA) has recently released a comprehensive guidance manual for reporting Alternative Dispute Resolution (ADR) proceedings. This equips licensees with detailed instructions on the requirements and procedures for submitting monthly ADR reports via the on the MGA website.

Alternative Dispute Resolution (ADR) is a process that allows disputes to be settled outside of court with the help of an impartial entity. This process includes methods such as mediation, arbitration, and conciliation. ADR is particularly valuable as it offers a less formal, often more expedient, and cost-effective resolution mechanism compared to traditional court proceedings.

In 2018, the Malta Gaming Authority issued the Alternative Dispute Resolution Directive: iGaming companies operating in Malta are required to inform players about the procedures for filing a complaint and how to escalate it to an ADR entity that will assist them free of charge.

Operators are also mandated to report each dispute referred to an ADR entity, along with the outcomes, to the MGA. The MGA's newly released manual on reporting states: "The Authority shall be notified that a dispute has been referred to an ADR entity by the 20th of the following month together with the monthly report on player funds and details the information that shall be submitted to the Authority, including the details of the parties involved as well as the subject matter of the dispute. B2C licensees are also obliged to notify the Authority of the outcome of the dispute with the submission of the following monthly report on player funds."

SiGMA has launched its own platform to assist players with gambling disputes involving licensed operators. The service is offered free of charge to players, while operators pay a fixed monthly fee. Using its extensive experience in the iGaming industry, SiGMA was able to develop an user-friendly and trustworthy platform to help players with their disputes.

Mex Emini, CTO of SiGMA Group and MD of SiGMA Play, explains: "During our efforts to assist players with their gambling disputes, our main goal is to connect them with operators and contribute to the creation of stronger relationships. This is also what we do during our events — connecting people. This is our biggest mission."

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The Philippine Amusement and Gaming Corporation (PAGCOR) revealed that a former high-ranking government official attempted to secure gaming licences for several illegal Philippine Offshore Gaming Operators (POGOs) that were recently raided. PAGCOR Chairman and CEO Alejandro Tengco stated that these activities and the involvement of the former official would be disclosed in a proper forum.  

Tengco the need to investigate the issuance of licences to POGO applicants with questionable backgrounds, facilitated by former officials and their intermediaries. He criticised the past administration for the excessive number of POGO licences granted, which has since been reduced from 298 to 43 under the current administration. 

“As a regulator, it is our mandate to ensure that only those with valid licences are allowed to operate all forms of gambling and gaming activities, whether these are land-based casinos or online platforms,” Tengco said in a statement. 

“It is in the interest of the government to crack the whip against illegal operators, including the so-called offshore gaming operators or POGOs and their backers, because the criminal activities associated with their illegal operations pose serious threats to our people,” he said. 

Two prominent POGOs, Zun Yuan Technology Inc. and Lucky South 99 Corp., were raided and shut down this year. Both companies are facing human trafficking charges. The operations against these companies were led by the Presidential Anti-Organized Crime Commission (PAOCC) with support from the Philippine National Police (PNP). 

Senator Sherwin Gatchalian, advocating for a total ban on POGOs, expressed surprise that PAGCOR officials had not previously mentioned the former Cabinet official's lobbying efforts in Senate hearings. He called for a thorough investigation and indicated plans to invite the mentioned former official to testify in upcoming hearings.  

hinted at possible connections involving former Presidential Spokesperson Harry Roque, whose name appeared in documents found at a raided POGO facility. Roque has denied any wrongdoing, stating his involvement was limited to legal representation for a related company. 

Senator Risa Hontiveros, leading the Senate committee on women, children, family relations, and gender equality, called on PAGCOR to address the criminal activities associated with POGOs, regardless of their licencing status. Both Gatchalian and Hontiveros stressed the need for stricter regulatory oversight to prevent further crimes linked to the industry. 

Despite the crackdown, PAGCOR due to their significant contribution to government revenues. In 2023, POGO companies generated PHP5.2 billion (€82.7 million) for the government, accounting for about 5-6 percent of PAGCOR’s total revenues. The Department of Finance reported a 127 percent increase in tax revenues from POGOs in 2022. 

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