Arizona settles with gaming company

Games were set to work only after a player lost

You could see them in shopping malls, gas stations and convenience stores: Drop a dollar, the Key Master machine promised, and you had a chance at winning expensive prizes like Apple iPads, gaming systems like the Nintendo 3DS, or remote-control helicopters.

What the machine didn’t tell you is that you might try 700 times before you had a fair chance of winning.

From about 2011 to 2013, the Betson Coin-Op Distributing Company sold, marketed, leased and financed about 25 Key Master machines throughout Arizona, according to court documents. The machines were manufactured by Sega, and Betson leased approximately 18 of the Key Master machines to IQ Vending, an Arizona limited liability company.

It took six years, but Attorney General Mark Brnovich’s office announced Wednesday a $1 million settlement had been made as part of a consent judgment with the Betson Coin-Op Distributing Company for violating the Arizona Consumer Protection act with its Key Master machines.

In a press release, the state said Betson was aware Sega manufacturers equipped the machines with an autopercentaging system, meaning the games could be set to work fairly only after a player lost a certain number of times.

Sega had an owner’s manual that stated the factory’s default payout setting was 700 losses.

The Arizona Attorney General’s Office first became aware of the problem during a criminal investigation into Jonathan Sanborn and his company, IQ Vending, according to Katie Conner, an agency spokeswoman.

A whistleblower who worked for Sanborn told authorities about the auto-percentaging system, Conner said.

The investigation into IQ Vending found the machines had no instructions and didn’t alert players that these were not games of skill, she said.

The Key Master machines operated by IQ Vending were purchased or leased from Betson. They operated in Arizona for nearly two years.

In May 2013, Arizona seized about 16 Key Master machines either purchased or leased from Betson. An industry re

port by Robert J. Snyder used forensic analysis to find that one of these machines allowed a prize to be won only after 2,200 losses, Conner said.

The Arizona Attorney General’s Office says this auto-percentaging system switched the Key Master from a game of skill to a game of chance, similar to slot machines in state-regulated casinos. Because games of chance are only allowed in licensed casino facilities, the state filed a complaint against Betson for violating the Arizona Consumer Fraud Act.

“Around this time, Sanborn stopped making payments on the machines he leased from Betson. Betson then sued Sanborn for missing payments and then Sanborn countersued,” Connor said.

“During discovery of this case, our office became aware of Betson’s knowledge regarding the capabilities of the machine that they were distributing into this state,” she said.

The Key Master machines are currently being held by Brnovich’s office.

Betson President Robert Geschine did not respond to a request for comment.