TO: Any Interested Parties
RE: Petition for Declaratory Order to determine whether " Phoenix" is lawful and not subject to registration
Pursuant to Iowa Code Section 17A.9( 3), this letter is to advise you that on June 17, 2020, the Iowa Department of Inspections and Appeals, Social and Charitable Gambling Unit, (Department) received a Petition for a Declaratory Order. Petitioner requests the Department to determine if" Phoenix" is lawful and is not subject to the registration requirement.
The Department invites you to comment about the issues presented in this Amended Petition for a Declaratory Order, if you so choose. To do so, please send all comments in writing to the undersigned at the Iowa Department of Inspections and Appeals, Lucas Building, 321 E. 12th St., Des Moines, Iowa 50319, by the close of business on Monday, July 13, 2020. A copy of the petition is available at https:// dia.iowa.gov/ and clicking on the Quick Link on the left side of the page. If you choose to intervene in this matter and are qualified to intervene, please refer to Iowa Code Section 17A.9( 4) and Iowa Administrative Code 481- Chapter 3.
Chief, Social & Charitable Gambling Unit
STATE OF IOWA
DEPARTMENT OF INSPECTIONS AND APPEALS
PETITION FOR DECLARATORY ORDER
Pursuant to Iowa Code § 17A.9 and 481 Iowa Administrative Code Chapter 3, Petitioner BluCat, LLC ("BluCat"), files this petition to the Department of Inspections and Appeals (the "Department") requesting a declaratory order regarding the applicability of Iowa Code Sections 99B. 52 - 53 et seq. and Iowa Code Section 725. 9 to BluCat in connection with the operation of Phoenix Skill System version 2. 21. 0. 7369 ("Phoenix") described more fully below.
BluCat respectfully request that the Department declare as follows:
1. That Phoenix and its skill games are an electrical and mechanical amusement device that is lawful to own, possess, and offer to use by any person at any location because it complies with the provisions set forth in Iowa Code Section 99B.52.
2. That Phoenix and its skill games are an electrical and mechanical amusement device that awards a prize, but the outcome is primarily determined by the skill or knowledge of the operator; therefore, the electrical and mechanical device is not subject to the registration provisions set forth in Iowa Code Sections 99B.53-56 as a result of its ownership, distribution and/ or manufacturing of Phoenix.
3. That Phoenix and its skill games are an electrical and mechanical amusement device that awards a prize, but the outcome is primarily determined by the skill or knowledge of the operator; therefore, the electrical and mechanical device is not subject to the penalty provisions set forth in Iowa Code Sections 99B.53-57.
4. That Phoenix and its skill games are an electrical and mechanical amusement device that awards a prize but is not an illegal gambling device under Iowa Code Section 725.9.
IDENTITY OF THE PETITIONER
5. BluCat is a Delaware limited liability company that has its principal place of business at 3970 Johns Creek Ct., Suite 100, Suwanee, Georgia 30024. For the purposes of this petition and request, BluCat's telephone and facsimile numbers are those of its undersigned attorneys. As established by the facts described below, BluCat will be substantially and directly affected by the Department' s determination in this proceeding.
6. The device is both electronic and mechanical and uses a color monitor through which images are displayed to a player.
7. The device is operated via player control which includes a touch screen and may include buttons.
8. The player does not have the ability to increase his/her chance of winning games, portions of games, by paying more than the ordinary amount required to play.
9. The device permits the player to insert money into a bill acceptor located on the front of the game terminal. The bill acceptor accepts U.S. notes of varying denominations. Bills inserted are displayed on the video screen as "Credits" available for game play purchase, where one "Credit" equals one cent.
10. The device may award tickets or print vouchers, which are printed and dispensed from the device and redeemable for merchandise.
11. The device does not and cannot award cash or coins.
12. No merchandise prize with a value greater than fifty dollars ($50.00) shall be offered in connection with the play of Phoenix's skill games.
13. The device does not award or promote a potential award of cash for use of the device. Rather, only tickets are awarded with such tickets to be redeemed for merchandise only.
14. Tickets dispensed will display a numerical merchandise value. Each ticket shall contain a merchandise amount of fifty dollars ($50.00) or less.
15. The device will not operate without a ticket printer having a supply of tickets.
16. In conjunction with the use of this device, any awards won for the use of this amusement device shall only be redeemed on the premises where the device is located and only for merchandise sold in the normal course of business for the premises.
17. All prizes won are displayed as "Win" and added to the "Balance" available for additional game play purchases. The player may redeem their "Balance" after each game play. Redemption of the player's "Balance" is accomplished by simply pressing the "Collect" icon or button displayed on the main menu screen.
18. The device does not possess any capability or "knock-off' switch that would allow a player to cause the release of free games.
19. The device is not a gambling device as defined in Iowa Code Section 725.9 or a device that plays poker, blackjack, or keno.
20. The device displays to the player a skill game that has up to two phases.
21. Each game theme includes a "Rules" feature. Activating the "Rules" feature within a game theme produces a screen which furnishes explanations for the active game theme.
22. There are multiple different game themes within the first Phase. In fact, Phoenix's slide-to-win games offer twelve (26) different game themes.
23. Game play begins with the player selecting an available game theme and one of the play levels from which to participate. A player my change the desired play level at any time prior to engaging in game play.
24. The first phase of the game play displays a potential outcome to the player, as well as a slider mechanism will appear. The slider mechanism will display two values, one value will be a potential prize equal to or greater than one credit and the other value will be zero. The customer must slide the indicator over to the potential prize within the allotted time limit to earn the displayed prize.
25. The skill process must be completed within the allotted time limit, approximately 20 seconds. The player cannot win a prize without the correct skill interaction within the limited time.
26. The second phase of the game play is called "2nd Shot Skill" and is a pattern recognition game that provides the player an opportunity to win back the credits lost by not successfully completing the first phase of the game play.
27. The "2nd Shot Skill" game features four colored shapes on the screen. The system displays a pattern, which the player must match by touching the corresponding indicators in the same pattern that was displayed. If the player successfully completes the presented sequence, the system will award will credit the player with the amount he/ she lost by unsuccessfully completing the phase one game play. If the player misses incorrectly repeats the sequence, the "2nd Shot Skill" game will terminate, and the player will not be awarded credits.
RELEVANT STATUTES AND RULES
28. Iowa Code Section 17A.9( 1)( a) provides that" rainy person may petition an agency for a declaratory order as to the applicability to specified circumstances of a statute, rule or order within the primary jurisdiction of the agency."
29. An agency's power to interpret a statute is limited to matters particularly left to the discretion of the agency. See Iowa Code § 99B.52; see also City of Marion v. Iowa Dep't of Revenue and Fin., 643 N.W.2d 205 ( Iowa 2002).
30. Iowa Code Section 99B.52 authorizes the possession, use, and distribution of certain types of electrical and mechanical amusement devices without registration or licensing subject to certain requirements enumerated.
31. An" amusement device "is defined as" an electrical or mechanical device possessed and used in accordance with [Section 99B.1 et seq.] When possessed and used in accordance with [Section 99B.1 et seq.], an amusement device is not a game of skill or game of chance and is not a gambling device." Iowa Code § 99B.1(2).
32. Prizes of merchandise exceeding fifty dollars in value and prizes of cash are expressly prohibited. § 99B.52( 2), ( 3).
33. No free games may be released, and the device shall not be designed or adapted to enable a person to increase the chances of winning free games or portions of games by paying more than ordinarily required to play the game. Id. § 99B.52(4),(5).
34. Awards given for the use of an amusement device must be redeemed on the premises where the device is located, and only for " merchandise sold in the normal course of business for the premises." Id. § 99B.52(6).
35. Devices "where the outcome is not primarily determined by the skill or knowledge of the operator" must be registered with the Department and must be used in conformance with other express restrictions. Iowa Code § 99B.53(1). "[T]he legislature's use of the word 'primarily' is 'the litmus test for determining whether the device must be registered.' D2 Enterprises v. State Dep't of Inspections and Appeals, 2008 WL 373637 (Iowa Ct. App. Feb. 13, 2008) (unpublished decision). Accordingly, if chance plays an equal or greater role than the players' skill or knowledge in determining the outcome of the game, registration is required. See id.
36. Electrical or mechanical amusement devices required to be registered as provided in Section 99B.52 are not gambling devices as defined in 725. 9, or devices that play poker, blackjack, or keno. Iowa Code § 99B.53( 15).
37. In light of Phoenix's design and function, BluCat contends that Phoenix is an electrical and mechanical amusement device that is lawful to own, possess, and offer to use by any person at any location because it complies with the provisions set forth in Iowa Code Section 99B.52.
38. Likewise, BluCat contends that Phoenix is an electrical and mechanical amusement device that awards a prize, but the outcome is primarily determined by the skill or knowledge of the operator; therefore, the electrical and mechanical device is not subject to the registration provisions set forth in Iowa Code Sections 99B.53.
39. BluCat also contends that Phoenix is an electrical and mechanical amusement device that awards a prize, but the outcome is primarily determined by the skill or knowledge of the operator; therefore, the electrical and mechanical device is not subject to the penalty provisions set forth in Iowa Code Sections 99B.53-56.
40. Specifically, BluCat contends that the outcome of playing Phoenix's Slide-to-Win games is determined primarily by the skill or knowledge of the operator because:
a. On every single play, a player has the opportunity to achieve a minimum of 100% of the cost to play the game;
c. The skill of the player determines the return rate in both dollars and as a ration of cash played;
d. With perfect skill, it is possible to play continuously and always get a return greater than the costs of play over time.
e. The first phase of the game requires cognitive and tactile skill to successfully complete a winning task. Any error can result in a failure to play the game correctly.
f. The system will never allow a winning arrangement to appear that does not require skill from the player to award a win.
g. The player has a limited time to play the first phase of a game or will forfeit any possible award. The allotted time is reasonable for a person of normal skill to succeed.
h. The standard round of play can consume one or two phases, both part of the same round, with no additional consideration required between phases.
i. While the first phase of a game may award less than the cost to play, the second phase—" 2nd Shot Skill"— provides the player with the opportunity to recover the entire cost of play.
j. The second phase — "2nd Shot Skill" — requires significant cognitive and tactile skill to remember, repeat, and touch the color sequence pattern that was presented to the player.
k. Skillful players may earn more credits than non-skillful players.
l. At no time may a player redeem more than fifty dollars per game played.
41. Finally, BluCat contends that Phoenix is an electrical and mechanical amusement device that awards a prize but is not an illegal gambling device under Iowa Code Section 725.9.
BASED ON THE FOREGOING, BluCat requests that the Department issue a declaratory order stating that BluCat' s device known as Phoenix Skill System version 18.104.22.16869, is an electrical and mechanical amusement devise, but is not subject to the registration provisions set forth in Iowa Code Section 99B.53, and the devise is subject to the requirements not related to registration set forth in Iowa Code Section 99B.52.
The Law Offices of Guy A. Lewis, PLLC.
/s Guy A. Lewis
Guy A. Lewis
Jeffrey M. Forman
Counsel for BluCat, LLC
12575 SW 67th Ave
Pinecrest, Florida 33156
Tel. (954) 688-6340