THIRD DIVISION

BARNES, P. J.,

BOGGS and BRANCH, JJ.

NOTICE: Motions for reconsideration must be

physically received in our clerk’s office within ten

days of the date of decision to be deemed timely filed.

http://www.gaappeals.us/rules/

March 26, 2015

In the Court of Appeals of Georgia

A14A2138. ALL STAR, INC., et al. v. GEORGIA ATLANTA

AMUSEMENTS, LLC.

BRANCH, Judge.

All Star, Inc., Elite Amusement, Inc., Ideal Amusements, Inc., Midtown

Vending, LLC, and Ultra Group of Companies, Inc. (collectively “appellants”),

appeal from an order of the Gwinnett County Superior Court granting summary

judgment against them and in favor of Georgia Atlanta Amusements, LLC (“GAA”),

on the appellants’ claims for tortious interference with contractual relations. At issue

in this case is OCGA § 50-27-70 et seq., which is the most recent statutory scheme
regulating the bona fide coin-operated amusement machine business in this State.1

The trial court found that this law, which became effective on April 10, 2013, voided

certain written contracts and/or oral agreements that four of the appellants had with

their customers for the placement of coin-operated amusement machines. The trial

court reached this conclusion even though the contracts at issue predate the law’s

enactment. Based on this holding, the trial court granted summary judgment against

the appellants on their claims for tortious interference with contractual relations. On

appealfromthe summary judgment order, the appellants contend that OCGA § 50-27-

70 et seq. should not be interpreted so as to void preexisting contracts. For reasons

explained more fully below, we agree. We therefore reverse the trial court’s order

granting partial summary judgment against the appellants.

The relevant facts are largely undisputed but where any doubt existed, we have

construed the record in favor of the appellants, as the non-movants. See Thompson

v. Lovett, 328 Ga. App. 573 (760 SE2d 246) (2014) (on a motion for summary

1 The statute defines “bona fide coin operated amusement machines” as “every

machine of any kind or character used by the public to provide amusement or

entertainment whose operation requiresthe payment of or the insertion of a coin, bill,

other money, token, ticket, card, or similar object and the result of whose operation

depends in whole or in part upon the skill of the player, whether or not it affords an

award to a successful player . . . , and which can be legally shipped interstate

according to federal law.” OCGA § 50-27-70 (b) (2) (A).

2
judgment, we “construe the evidence in the light most favorable to the nonmovant”)

(citation omitted). The record shows that each of the appellants is a company that

owns coin-operated amusement machines and is in the business of leasing those

machinesto third parties. At issue in this case are “ClassB” coin-operated amusement

machines (“Class B machines”).2 Prior to April 2013, all of the appellants other than

Ideal Amusements had written rental contracts and/or oral rental agreements with

specific business owners (“location owners”) for the placement of one or more Class

B machines within that business.

3 Each of the written contracts contained a clause

2 The law defines a Class B machine as “a bona fide coin operated amusement

machine that allows a successful player to accrue points on the machine and carry

over points won on one play to a subsequent play or plays . . . and [r]ewards a

successful player in compliance with the provisions of paragraphs (1) and (2) of

subsection (d) of Code Section 16-12-35.” OCGA § 50-27-70 (b) (4) (A). Thus, Class

B machines must reward a player “exclusively with: (A) Free replays; (B)

Merchandise limited to noncash merchandise, prizes, toys, gift certificates, or

novelties, each of which has a wholesale value of not more than $5.00 received for

a single play of the game or device; (C) Points, tokens, vouchers, tickets, or other

evidence of winnings which may be exchanged for [any of the foregoing] rewards.”

OCGA § 16-12-35 (d) (1). Additionally, players of Class B machines “may

accumulate winnings for the[ir]successful play . . . through tokens, vouchers, points,

or tickets [and] . . . redeem accumulated tokens, vouchers, or tickets for noncash

merchandise, prizes, toys, gift certificates, or novelties so long as the amount of

tokens, vouchers, or ticketsreceived does not exceed $5.00 for a single play.” OCGA

§ 16-12-35 (d) (2). 

3 Appellant Ideal Amusements had two contracts for the placement of Class B

Machines. Each of these contracts, however, was executed on or after April 10, 2013,

and neither allegedly violated the statute at issue. Accordingly, these contracts were

not subject to the trial court’s summary judgment order and are not at issue on this

appeal.

3
that set forth how the revenue generated by the leased machines would be divided

between the company that owned the machines (the “machine owner”) and the

location owner. Similarly, under each of the oral agreements in place, the location

owner had agreed to pay the machine owner a certain percentage of the revenue

generated by the machine as rent for the machine. The specific agreements at issue

are as follows:

All Star

On November 1, 2000, All Star entered into a written rental agreement with

Fast Freddy’s, a gasstation and convenience store located in Lilburn. Under the terms

of the this agreement, Fast Freddy’s agreed to pay All Star 40 percent “of the total

gross revenue”4generated by the machines as rent for the machines, with Fast

Freddy’s retaining 60% of the revenue. The contract was for a term of seven years

and it contained an automatic renewal clause. That clause provided that the contract

would automatically renew for additional terms of seven years unless one party

notified the other, at least 90 days in advance of the renewal date, that it was electing

4 Each of All Star’s written contracts provides that gross revenue will be

calculated after deductions for any amounts expended by the location owner on

certain items, including sales tax, other fees required by law to be paid to the State,

and refunds. 

4
not to renew. There is no evidence in the record that either party exercised its right

of non-renewal; thus, the contract renewed on November 1, 2007, for an additional

seven-year term.

On March 28, 2011, All Star entered a written rental agreement with USA Food

Mart, a gas station and convenience store located in Carrollton. Under the terms of

this agreement, USA Food Mart agreed to pay All Star 70 percent of the total gross

revenue generated by the machines, with USA Food Mart retaining the remaining 30

percent. The contract was for a term of three years. 

As of April 2013, All Star had an oral agreement with Tienda Veracruz, a

Carrollton grocery, and the agreement had been in place for approximately one year.

There is no evidence in the record as to how the parties had agreed to split the

revenue from the machine or machines placed at this location.

Elite Amusement

As of April 2013, Elite had in place oral agreements for the placement of its

machines atfive different locations: Discount Foodmart in Atlanta; the BP gasstation

in Stockbridge; East Side Tobacco in Conyers; Old National Hookah in Riverdale;

and Tobacco More in Atlanta. Elite’s agreement with Discount Foodmart had been

in place seven years; its agreement with the Stockbridge BP had been in place six

5
years; its agreement with Old National Hookah had been in place six months; and its

agreements with East Side Tobacco and Tobacco More had each been in place for

three months. There is no evidence in the record as to how the parties had agreed to

split the revenue from the machine or machines placed at these locations.

Midtown Vending

On August 2, 2010, Midtown Vending entered into two separate written rental

agreements with Kahlid Amin for the placement of coin-operated amusement

machines at two businesses owned by Amin in Fayetteville: Paw Paw’s Shell and

Coleman Grocery. Both of the agreements provided that the business in question

would pay Midtown Vending 30 percent “of the total gross revenue”5

generated by

the machines as rent for the machines, with the businessesretaining 70 percent of the

revenue. Each contract was for a term of 36 months. 

On July 18, 2011, Midtown Vending entered a written rental agreement with

Badi U. Zaman for the placement of coin-operated amusement machines in the

Lakeview CountryStore, a business owned byZaman and located in Fayetteville. The

5Each ofMidtown Vending’s written contracts providesthat gross revenue will

be calculated after deductions for any amounts expended by the location owner on

certain items, including sales tax, other fees required by law to be paid to the State,

and refunds. 

6
agreement provided that Zaman would pay Midtown Vending 30 percent “of the total

gross revenue” generated by the machines as rent for the machines, with the Zaman

retaining 70 percent of the revenue. This contract was for a term of 24 months. 

Ultra Group of Companies

On August 14, 2008, Ultra entered a written rental agreement with Merchant

Investment Group for the placement of coin-operated amusement machinesin a Citgo

Food Mart/ Sunoco in Tucker. Under the terms of this agreement, Ultra wasto receive

30 percent “of the total gross revenue”6

generated by the machines as rent for the

machines, with Citgo/Sunoco retaining 70 percent of the revenue. The contract was

for a term of ten years and therefore was in effect until August 14, 2018. 

On May 4, 2011, Ultra entered into a written lease agreement with FNR/ENT,

Inc. for the placement of coin-operated amusement machines in a Texaco station in

East Point; On November 1, 2011, Ultra entered into a written lease agreement with

East/West Convenience, Inc. for the placement of coin-operated amusement machines

in a Chevron gas station and convenience store located in Conyers. That same day,

Ultra also contracted with King Petro, Inc. for the placement of amusement machines

6 The contract provides that gross revenue will be calculated after deductions

for any amounts expended by the location owner on certain items, including salestax,

other fees required by law to be paid to the State, and refunds. 

7
in a Shell station in Stone Mountain. These agreements had identical revenue terms,

and each provided that Ultra would receive 30 percent of the “netrevenue”7generated

by the machines and that the location would retain the remaining 70 percent. The term

of the rental agreement for the East Point Texaco was two years, while the contracts

for both the Conyers Chevron and the Stone Mountain Shell had ten-year terms. 

As of April 2013, Ultra had in place oral agreements for the placement of its

machines at five different locations: Our Convenience Store in Atlanta; Stop’n’Save

in Atlanta; the Shell gas station in Norcross; the Texaco gas station in Decatur; and

Atlanta Food Mart in East Point. Ultra’s agreement with Our Convenience Store had

been in place nine years; its agreement with Stop’n’Save had been in place eight years

and five months; its agreement with the Norcross Shell had been in place seven years

and three months; and its agreement with the Decatur Texaco had been in place for

six years and 11 months; and its agreement with the Atlanta Food Mart had been in

place for six years. There is no evidence in the record asto how the parties had agreed

to split the revenue from the machine or machines placed at these locations.

7 Each of these agreements defined net revenue as the “gross revenue”

generated by the machines “minus the dollar amount of the noncash redemptions

awarded.” 

8
The Statutory Scheme Enacted by HB 487

At the time each of the foregoing contracts was made, nothing in the law

governing coin-operated amusement machines addressed how the revenue from the

machines had to be divided. Rather, the parties were free to divide the revenue any

way they chose. In 2013, however, the legislature passed House Bill 487 (“HB 487”),

now codified as OCGA § 50-27-70 et seq. One of the legislature’s stated purposes of

this bill was to “support the need to educate Georgia’s children through the HOPE

scholarship program and pre-kindergarten funding authorized by Article I, Section

II, Paragraph VIII of the [Georgia] Constitution.” OCGA § 50-27-70 (a). To

accomplish this goal, the legislature required the Georgia Lottery Corporation to

acquire, no later than July 1, 2014, a Class B accounting terminal to which all Class

B machines could be linked by a communications network. OCGA § 50-27-101 (a).

Additionally, the law requires all location owners hosting Class B machines to

establish a bank account where all proceeds from these machines must be deposited,

separate from any other funds belonging to the location owner. OCGA § 50-27-102

(c). Beginning six months after the Lottery Corporation acquired the Class B

accounting terminal and after “successful testing” thereof, location owners are

required to transmit all funds deposited in their respective Class B bank accounts to

9
the Lottery Corporation. Id. For the first fiscal year following the “successful

implementation and certification of the Class B accounting terminal” the Lottery

corporation isto retain 5 percent of the net receiptsreceived from the location owners

of Class B machines and is required to provide 47.5 percent of those net receipts to

the location owner and 47.5 percent to the machine owner. OCGA § 50-27-102 (a).

In each fiscal year following the first year, the Lottery Corporation’s share of the net

receipts “shall increase 1 percent, taken evenly from the location owner . . . and the

[machine owner], to a maximum of 10 percent.” OCGA § 50-27-102 (b). Thus, by

approximately January 1, 2020, ten percent of the net proceeds from all Class B

machines will go to the LotteryCorporation, with the location owner and the machine

owner each receiving 45 percent of the remaining proceeds.

The statute also declared that from the time of HB 487’s enactment until the

implementation of the Class B accounting terminal, it would constitute an unfair

business practice for either the machine owner or the location owner “to retain more

than 50 percent of the proceeds generated by any Class B machine. . . .” OCGA § 50-

27-87.1 (1). The law also makes it an unfair business practice for a location owner to

“ask[ ], demand[ ], or accept[ ],” or for a machine owner to provide, “anything of

value, including but not limited to a loan or financing arrangement, gift, procurement

10
fee, lease payments, revenue sharing, or payment of license fees or permit fees from

a [machine owner], as an incentive, inducement, or any other consideration to locate

bona fide coin operated amusement machinesin that establishment.” OCGA § 50-27-

87.1 (3), (4). Engaging in any of these unfair business practice subjects a location

owner or a machine owner to the revocation “of his or her state business license. . .

for a period of one to five years per incident” and to a fine of “up to $50,000.00 per

incident.” OCGA § 50-27-87.1 (3), (4).

Finally, the new law also requiresthat all agreements between machine owners

and location owners be in writing, OCGA § 50-27-87 (b) (1), and that these

agreements be on file in both the machine owner’s and the location owner’s place of

business. OCGA § 50-27-87 (b) (2). Additionally, each such agreement “entered into

after April 10, 2013, shall be exclusive as between one bona fide coin operated

amusement machine [owner] and one location owner or location operator per

location.” OCGA § 50-27-87 (b) (3).

Appellants’ Attempts to Comply With HB 487

Following the enactment of HB 487, All Star, Midtown Vending, and Ultra

each approached the location owners with whom they had written agreements and

explained to the location ownersthat the law now governed the revenue split and that

11
any violation of the law could result in a substantial penalty. Each of these

companies, therefore, asked their clients with whom they had written agreements to

execute a new agreement (or an amendment to the existing agreement), which would

reflect the statutorily-mandated revenue split. Additionally, All Star, Elite, and Ultra

each approached the location owners with whom they had oral agreements and asked

those owners to enter a written lease agreement which provided for a 50/50 revenue

split. Each of these location owners refused to execute a new or amended agreement,

allegedly because they had been offered more lucrative terms by GAA.8 All Star,

Elite, Midtown, and Ultra each refused to match these terms because they believed

them to be illegal. Despite the existence of the agreements then in place, the clients

of these appellants removed appellants’ machines from their respective businesses

and replaced those machines with ones owned by GAA. 

8 Representatives of All Star, Elite, and Midtown each averred that their

respective clients informed them that GAA was offering the client 70 percent of the

machine revenue and additional incentives to sign lease agreements with GAA. A

representative of Ultra averred that Ultra’s clients had informed him that GAA was

offering each of the clients more than 50 percent of the machine revenue if the clients

would lease their machines from GAA. 

12
The Current Lawsuit

All Star, Elite, Ideal,Midtown, and Ultra filed the current lawsuit against GAA.

Based on the foregoing facts, the appellants asserted claims for tortious interference

with contractual relations and tortious interference with business relations.

Additionally, Midtown Vending asserted a claimfor destruction of personal property,

based on the damage done to one or more of its machines.

9 The appellants sought to

recover actual and punitive damages as well as attorney fees and expenses. 

GAA filed a motion for partialsummary judgment on the appellants’ claimsfor

tortious interference with contractual relations, arguing that because each of the

written and oral agreements at issue provided for a revenue split other than 50/50,

those contracts became illegal on April 10, 2013, the day that HB 487 became

effective.10 Thus, GAA contended that the contracts were void and unenforceable as

9 The complaint also originally named GAA’s owner, Nasimadin H. Virani, as

a defendant, and it contained a count seeking to pierce the corporate veil and hold

Virani personally liable. The appellants also asserted a claim for breach of public

duty. The count seeking to pierce the corporate veil was dismissed voluntarily and

without prejudice The count asserting a claimfor breach of public dutywas dismissed

without prejudice via a consent order. In that same consent order, Virani was

dismissed a a defendant. 

10 GAA also sought summary judgment as to the oral agreements on an

additional ground. Specifically, GAA argued that because HB 487 required all rental

agreements for Class B machines to be in writing, the oral agreements became void

on the day HB 487 went into effect. 

13
a matter of law and could not serve as the basis of a tortious interference with

contracts claim. The trial court granted that motion, finding that “[a]ny agreements

[that] do not provide for a 50/50 [revenue] split are . . . illegal, void, and

unenforceable” and that “[t]he Court cannot reform the contractsto comport with the

law.” Thus, the trial court concluded that “any claim for tortious interference with

contracts” asto these agreementsfailed as a matter of law. The appellants now appeal

from this order. 

As appellants concede in their reply brief, they have not appealed the trial

court’s ruling as to the oral agreements at issue in this case. Thus, the controlling

question in this appeal is whether HB 487 rendered the written contracts at issue void.

In analyzing this question, we begin with the fact that the contract clauses of both the

Georgia and the United States Constitutionsforbid the legislature fromenacting “any

law impairing the obligation of contracts.” U.S. Const. Art. I, Sec. 10, cl. 1. See also

Ga. Const. Art. I, Sec. I, Par. X (1983). Although the United States Supreme Court

has held that this prohibition applies only to laws which substantially impair

contracts, Gen. Motors Corp. v. Romein, 503 U. S. 181, 186-187 (II) (112 SCt 1105,

117 LE2d 328) (1992); Energy Reserves Group v. Kansas Power & Light Co., 459

U. S. 400, 411 (II) (A) (103 SCt 697, 74 LEd2d 569) (1983), the total destruction of

14
a contract meetsthisrequirement. Accordingly, if, asthe trial court found, the law did

destroy these agreements, we would be obligated to remand this case to the trial court

for consideration of whether the law, as applied to pre-existing contracts with a

revenue split of other than 50/50, violates the contracts clauses of the Constitutions

of both Georgia and the United States.

11 Alternatively, if HB 487 did not void the

contracts, then the summary judgment order must be reversed.

We start our analysis with the well-established legal principle that the State

may exercise its police powers “to protect the lives, health, morals, comfort, and

general welfare of the public.” Moore v. Ga. Pub. Svc. Comm., 242 Ga. 182, 183 (1)

(249 SE2d 549) (1978) (punctuation omitted). And it is “accepted as a commonplace

that the Contract Clause does not operate to obliterate the police power of the States.”

Allied Structural Steel Co. v. Spannaus, 438 U. S. 234, 241 (II) (A) (98 SCt 2716, 57

LE2d 727) (1978). Thus the State may, in the exercise of its police powers, enact

11 GAA argues that appellants have waived any claim that HB 487 is

unconstitutional because they failed to raise that claim in the court below in response

to GAA’s motion for partial summary judgment. The appellants, however, are not

challenging the constitutionality of HB 487. Rather, they are asserting that the trial

court erred in applying the statute to the contracts at issue so as to destroy them,

because such an interpretation would render HB 487 unconstitutional as to

preexisting contracts providing for a Class B machine revenue split of other than

50/50. In other words, appellants are arguing that the trial court’s order created a

question as to the constitutionality of HB 487.

15
regulations that place reasonable restraints on individuals’ freedom to contract. See

Energy Reserves Group, 459 U. S. at 410 (II) (A) (“[a]lthough the language of the

Contract Clause is facially absolute, its prohibition must be accommodated to the

inherent police power of the State to safeguard the vital interests of its people”)

(citation and punctuation omitted); Moore, 242 Ga. at 183 (1) (the State may exercise

its police powers even “though contracts previously entered into between individuals

may thereby be affected”) (punctuation omitted).

As the United States Supreme Court has recognized, however, “private

contracts are not subject to unlimited modification under the police power.” United

States Trust Co. of New York v. New Jersey, 431 U. S. 1, 22 (IV) (97 SCt 1505, 52

LE2d 92) (1977). Accordingly, any laws that affect contractual rights must be in

furtherance of a legitimate public purpose, as this “guarantees that the State is

exercising its police power, rather than providing a benefit to special interests.”

Energy Reserves Group, 459 U.S. at 412 (II) (A) (footnote omitted). Provided that the

government has acted in furtherance of a legitimate public interest, parties to private

contracts will be required to adjust their contractual “rights and responsibilities” to

accommodate the law, so long as the required adjustment is a reasonable means of

furthering the public purpose at issue. Id. (citation and punctuation omitted).

16
Moreover, parties who contract with respect to a regulated industry or enterprise enter

those contracts subject to further, reasonable regulation; when the subject of the

contract is regulated, this fact controls, to some extent, the parties’ reasonable

expectations underthe contract. See Keystone BituminousCoalAssn. v. DeBenedictis,

480 U. S. 470, 503-504 (IV) (107 SCt 1232, 94 LE2d 472) (1987); Energy Reserves

Group, 459 U. S. at 408-409 (I) (D); Union Dry Goods Co. v. Ga. Pub. Svc. Corp.,

142 Ga. 841 (83 SE 946) (1914), aff’d, Union Dry Goods Co. v. Ga. Pub. Svc. Corp.,

248 U. S. 372 (39 SCt 117, 63 LE 309) (1919). In essence, such parties are presumed

to contract with the knowledge that, regardless of the termsthey agree to, subsequent

reasonable regulation might require them to amend one or more of those terms. Id.

In Union Dry Goods, the Georgia Public Service Corporation (“GPSC”) had

contracted to provide Union Dry Goods, a mercantile company, with electricity at a

specific rate for a five-year period. 142. Ga. at 842. At the time of the contract, the

Railroad Commission of Georgia

12

had the authority to regulate power rates, but

“there was neither statute nor rule of the Railroad [C]ommission regulating rates for

the service contracted for.” Id. After the contract had been in effect for a year, the

12 The Railroad Commission is now known as the Public Service Commission.

See Georgia Public Service Commission v. Atlanta Gas Light Co., 205 Ga. 863,

870-871 (1) (55 SE2d 618) (1949).

17
GPSC applied to the Railroad Commission for permission to impose a rate increase.

The Commission granted that application and “published an order declaring that the

schedules of rates therein contained, until further order of the Commission, shall be

the maximum schedules of rates to be charged by the Georgia Public Service

Corporation for the classes of service indicated.” Id. The maximum rates allowed

under these schedules were in excess of the ratesspecified in the contract between the

parties. Id.

After the Railroad Commission issued its order, GPSC began to bill the

mercantile company at the maximumrate allowed under the rate schedule. Union Dry

Goods then filed suit, seeking specific performance of the contract. When the trial

court denied Union Dry Good’s request for an injunction prohibiting GPSC from

discontinuing its service unless Union Dry Goods paid the higher rate, the company

appealed. Id. The Georgia Supreme Court noted that the “pivotal question” on appeal

was “the effect of the [C]ommission’s order on the contract between the dry goods

company and the public service company. Did it empower the Georgia Public Service

Corporation to disregard the contracted rate, and charge for the service at the

maximum rate allowed by the [C]ommission?” Id. at 843. The court answered this

question in the affirmative, noting that the State could exercise its police power to

18
regulate certain industries “and that the power is not destroyed because such

regulations may to some extent affect the power to contract, or existing contracts.”

Id. at 844. Rather than finding that the contract was voided by the rate increase,

however, the court found that the parties were expected to conform their contract to

the law. Id. at 844. The court reasoned that the rate increase did not interfere with the

reasonable expectations of the parties, as they were aware that they were contracting

with respect to a regulated industry. Id. at 844-847. Thus, the parties were presumed

to know that the State could enact regulations – including rate increases – that would

impact the contract. “‘One whose rights, such as they are, are subject to [s]tate

restriction, cannot remove them from the power of the [s]tate by making a contract

about them. The contract will carry with it the infirmity of the subject-matter.’” Id.

at 844, citing Hudson County Water Co. v. McCarter, 209 U. S. 349, 357 (28 SCt

529, 52 LE 828) (1905). In affirming the Georgia Supreme Court, the United States

Supreme Court relied on this same rationale. See Union Dry Goods Co., 248 U. S. at

375-376.

Almost 70 years later, the United States Supreme Court applied similar

reasoning in Energy Reserves Group, 459 U. S. 400. That case involved two contracts

for the intrastate purchase of gas from a specific gas field. Each contract contained

19
two “price escalator” clauses, one of which provided that if any governmental

authority fixed a price for any natural gas that was higher than the price specified in

the contract, the contract price would be increased to that level. 459 U. S. at 403.

After the contracts were executed, the federal government enacted a law that changed

the way it regulated the price of natural gas, replacing the federal price controls that

had been established under the 1938 Natural Gas Act “with price ceilings that rise

monthly based on ‘an inflation adjustment factor’ and other considerations.” Id. at

405-406 (I) (B). In response, the Kansas state legislature passed a law that controlled

intrastate natural gas prices and the contracts at issue became subject to the Kansas

law. Id. at 407-408 (I) (C).

When the supplier sought to terminate the contracts based on the buyer’s

refusal to pay the higher gas rate allowed under federal law, the buyer responded that

the Kansas act served to amend the parties price escalator clause, as it limited the

supplier to the highest price allowed under Kansas law and prohibited the supplier

from charging the higher rate allowed under federal law. Id. at 408 (I) (D). The trial

court entered summary judgment in favor of the buyer, finding that the Kansas Act

did not void the contracts, even though it amended the price that the supplier could

20
charge. Id. at 409 (I) (D) The Kansas Supreme Court affirmed the trial court, and the

supplier then appealed to the United States Supreme Court.

In affirming the decision of the Kansas courts, the Supreme Court agreed that

the Kansas law was enacted in furtherance of legitimate public purposes: the

protection of “consumers from the escalation of natural gas prices caused by

deregulation” and to correct “the imbalance between the interstate and intrastate

[natural gas] markets.” Id. at 417 (II) (C) (footnote omitted). The court then found

that the law required the parties to conform their contract to the new regulation. In

doing so, the Court noted that “[s]ignificant here is the fact that the parties are

operating in a heavily regulated industry.” Id. at 413 (II) (B) (footnote omitted). Thus,

the parties should have reasonably anticipated that future governmental regulation

might occur and thatsuch regulation could impact the parties’ contract. Id. at 416 (II)

(B) (as the contract itself reflected, the supplier “knew its contractual rights were

subject to alteration by state price regulation. Price regulation existed and was

foreseeable as the type of law that would alter contract obligations.”). 

Turning to the current case, we note that coin-operated amusement machines

“have been permitted to operate in this state only by the grace of the legislature. In

fact, amusement machines have been the subject of frequent and intensive regulation

21
in this state.” State of Ga. v. Old South Amusements, 275 Ga. 274, 279 (3) (564 SE2d

710) (2002) (footnote omitted). Thus, when interpreting legislation which affects a

change in the regulatory scheme governing these machines, we look to “cases

involving regulated industries,” as they “are more on point” than cases involving

industries that are not subject to such regulation. Id. We therefore find the rationale

of casessuch as Union Dry Goods and Energy Reserves Group to be applicable to the

instant case. Under that reasoning, where further regulation of an already regulated

industry impacts private contracts, the parties to those contracts will be required to

adjust their contracts to the new regulation, provided two conditions are met. First,

the regulation must be in furtherance of a legitimate public purpose. Second, the

regulation must constitute a reasonable method of furthering that public purpose.

Applying the foregoing principles, we find that HB 487 did not void any

contracts for the placement of Class B machines that existed prior to the law’s

enactment, even if those contracts called for an uneven revenue split. The

legislature’s stated purpose for HB 487 (ensuring adequate funding for the State’s

HOPE Scholarship and pre-kindergarten programs) is a legitimate one, designed to

benefit the general welfare of all Georgia’s citizens. See Pitts v. State, 293 Ga. 511,

516-517 (2) (748 SE2d 426) (2013) (“ensuring that the children residing in Georgia

22
are afforded the opportunity of an education” is a “legitimate governmental interest”).

Additionally, the regulatory requirements of HB 487 with respect to Class B

machines represent a reasonable method of achieving this purpose, as they “will aid

in the enforcement of the tax obligations that arise from the operation of bona fide

coin operated amusement machine businesses as well as prevent unauthorized cash

payouts.” OCGA § 50-27-70. See Keystone Bituminous Coal Assn., 480 U. S. at 505

(“we have repeatedly held that unless the State is itself a contracting party, courts

should properly defer to legislative judgment as to the necessity and reasonableness

of a particular measure” that impacts contract rights) (citations and punctuation

omitted).

23
Furthermore, the parties to these contracts entered them with the knowledge

that Class B machines were subject to changing state regulation.

13

 And interpreting

HB 487 as requiring the parties to adjust their contractual rights and responsibilities

to the new law does not substantially impair any party’s contract rights. Indeed, the

law impacts only one term of the contract — the clause pertaining to the revenue

split. All other rights and obligations under the contract remain unchanged.

Moreover, the change affected by the law does not favor one party over the other —

13

“In 1978, the legislature exempted coin-operated

amusement machines which awarded a player with up to 15

free replays from the definition of a gambling device. Ga.

L.1978, p. 1779. Thirteen years later, the machines were

permitted to reward a player with noncash prizes, toys and

novelties, having a wholesale value of less than $5. Ga.

L.1991, p. 1398. In 1996, the cap on free replays was

removed and players were permitted to win noncash

‘merchandise’ and ‘gift certificates’ not exceeding a

wholesale value of $5. Ga. L.1996, p. 309. In 1999, the

reward system was expanded to authorize combinations of

free replays, merchandise, toys, gift certificates, novelties,

points, vouchers and tickets. Ga. L.1999, p. 1224.”

Old South Amusements, 275 Ga. at 279 (3), n. 8. Additionally, in 2001 the legislature

adopted the Video Poker Act, which outlawed as “gambling devices” a wide variety

of video games which had been used previously in the coin-operated amusement

machine business. See OCGA § 16-12-20; OCGA § 16-12-35; OCGA § 48-17-1

(2001). Thus, there were at least five significant legislative changes in the regulation

of coin-operated amusement machines over an approximately 15-year period. 

24
rather, it requires that both parties to the contract receive equal compensation from

the revenue generated by Class B machines. Additionally, although the law might

operate to take away a contractual advantage that one of the parties previously had

(i.e., more than 50 percent of the revenue generated by the machine or machines being

leased), the party suffering that loss could not recoup that loss on the open market if

the party were freed from its current contract. Any legitimate, new contract such a

party entered could not provide it with more than 50 percent of the machine revenue.

In light of the foregoing, we find that OCGA §50-27-70 et seq. requires the

parties to any written lease agreements for Class B machines that existed prior to the

enactment of HB 487, and which provide for a revenue split of other than 50/50, to

conform their contracts to the new law. In other words, the preexisting written

contracts remain intact, but between April 10, 2013 (the day HB 487 went into

effect), and the date on which the Lottery Corporation’s Class B accounting terminal

became active, the parties to the contract were required to split the revenue realized

form any Class B machine on an equal basis. After that time, the parties were to split

the revenue as provided in OCGA § 50-27-102 for the duration of the contract term.

Because HB 487 did not void the written contracts at issue in this case, the

order of the trial court granting summary judgment in favor of GAA and against

25
appellants on the appellants’ claims fortortiousinterference with contractualrelations

isreversed. The case isremanded for further proceedings consistent with this opinion.

Judgment reversed. Barnes, P. J., and Boggs, J., concur.

26