Technology/Services

Iowa Pays for TouchPlay Ban

Will pay $1.67 million to Royal Financial

DES MOINES, Iowa -- Iowa attorney general Tom Miller and the Iowa Lottery said that the state and Royal Financial LLC have amicably and fairly resolved litigation over the TouchPlay lottery machines. The AG negotiated the settlement with Royal Financial, and the State Appeal Board approved the settlement.

Royal Financial was the largest operator of TouchPlay machines in Iowa.

Under the settlement, the state of Iowa will pay $1.67 million to Royal Financial. The state has denied any wrongdoing and the settlement agreement acknowledges [image-nocss] the state's denial of liability. Royal Financial will dismiss its lawsuit and will continue to cooperate with the state in making available documents and information sought by the state relating to the other TouchPlay litigation.

Royal Financial operated about 1,650 TouchPlay machines, about a fourth of the total number of machines in Iowa.

We believe this is a good, fair and reasonable settlement of the litigation with Royal Financial, the AG's office said. We are pleased to resolve a major portion of the TouchPlay litigation with the Royal Financial settlement.

Other litigation by other plaintiffs remains pending. The state will continue discussions with any other interested TouchPlay litigants, and the state intends to treat those plaintiffs in a similar fashion, said the AG's statement.

Royal Financial is a West Des Moines, Iowa, company with ties to the Kum & Go convenience store chain. Kum & Go was among several businesses that sued the state for breach of contract in 2006 after the Iowa Legislature banned the machines, 6,700 of which were in gas stations, c-stores and taverns across the state, added a Des Moines Register report.

In its lawsuit, Royal Financial claimed Ed Stanek, the lottery's chief executive, personally asked the company's founder, Bill Krause, to get involved in the TouchPlay program.

Dr. Stanek stated he needed one private party to take the lead and purchase 1,000 [TouchPlay devices] in order to make the TouchPlay program viable. Without such a purchase, the entire TouchPlay program could fail. He requested that Krause be that party, the lawsuit said, according to the report. The Lottery Authority represented to Royal Financial that the TouchPlay program would last for a minimum five-year period, that Royal Financial would recoup its investment and expenses.

Iowa Lottery sales plunged by 31% in fiscal year 2007, the lottery's first year after dropping the immensely profitable TouchPlay games, the newspaper reported in late July.

Click here to view the settlement.

Click here to view the TouchPlay litigation chronology and summary.

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