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    Iowa Settles TouchPlay Issue with Kum & Go Division

    State will pay $1.67 million to Royal Financial.

    DES MOINES, Iowa -- The state of Iowa agreed earlier this week to pay $1.67 million to Royal Financial, a division of convenience store chain operator Kum & Go, to settle a lawsuit that concerns the state's decision to end TouchPlay gambling, The Associated Press reported.

    Royal Financial, created by William Krause, the co-founder of the Kum & Go chain, was the largest individual owner of TouchPlay machines -- at 1,599 machines -- when lawmakers voted in March 2006 to outlaw the game. The ban went into effect in May of that year, when TouchPlay machines were turned off and removed from businesses. Royal Financial operated about one-fourth of the total number of machines in Iowa, the AP reported.

    Royal Financial saw about $23.6 million in net revenue from the TouchPlay machines, according to the report. The company filed a lawsuit against the state and the Iowa Lottery claiming breach of contract and unjust enrichment.

    Krause claimed that the lottery's CEO Ed Stanek personally urged him to buy the machines and promised that the program would last for at least five years, giving the company an opportunity to recover its investment and expenses, the AP reported.

    About 60 other companies that had invested in the TouchPlay machines also sued the state and that case is pending in Polk County District Court.

    A statement from Iowa Attorney General Tom Miller and the Iowa Lottery said the state denies any wrongdoing. The settlement acknowledges the state's denial of liability, according to the report. Miller negotiated the settlement with Royal Financial, and the State Appeal Board approved the settlement Monday afternoon.

    As a result, the company 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."

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

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