ARC GAMING AND TECHNOLOGIES LLC v. HALCYON AMUSEMENT INC (2026)

This case involves a contractual dispute between parties involved in the coin-operated-amusement-machine business. Arc Gaming and Technologies, LLC appeals the superior court's order denying its petition for review and confirming an arbitration award in favor of Halcyon Amusement, Inc. and its president, Shreya Patel.

Arc argues that under the parties’ asset purchase agreement, it is entitled to damages because one of the locations it purchased in the agreement closed. It also argues that it is entitled to attorney fees and costs under OCGA § 13-6-11 and under a provision of the parties’ agreement.

But that location was closed at least in part because of a violation of the statutory prohibition of cash payouts, and the parties’ agreement forecloses a remedy where a location is closed for that reason. So Arc has not shown that the arbitration award was against the weight of the evidence or that it included an error of law. So under OCGA § 50-27-102 (c) (5), the superior court did not err by denying Arc's petition for review and confirming the award, and we affirm.

1. Background

We analyze this contract dispute in light of the strict regulations governing the coin-operated-amusement-machine business and providing for arbitration of disputes like this one.

The ownership and operation of [coin-operated amusement machines, which are often referred to as “COAMs,”] is a highly regulated industry, governed by an extensive statutory scheme. Importantly, the [Georgia Lottery Corporation] has jurisdiction of all disputes between and among any licensees or former licensees relating in any way to any agreement involving COAMs. Such disputes are initially referred to a hearing officer, who conducts a hearing in accordance with [Georgia Lottery Corporation] rules, which must be consistent with the Georgia Arbitration Code. Once the hearing officer issues a decision, that decision may be appealed to the chief executive officer of the [Georgia Lottery Corporation]. In turn, appeals from actions of the chief executive officer shall be to the Superior Court of Fulton County.

Singh v. Ultra Group of Cos., 374 Ga. App. 22, 24-25, 910 S.E.2d 834 (2024) (citations, punctuation, and footnotes omitted).

In its review of such arbitration awards, a superior court “shall not reverse the chief executive officer's findings of fact unless it is against the weight of the evidence as set forth in Code Section 5-5-21[, which grants judges discretion to grant a new trial when a verdict is ‘strongly against the weight of the evidence’], and the chief executive officer's legal conclusions shall not be set aside unless there is an error of law.” OCGA § 50-27-102 (c) (5).

The record shows that Arc and Halcyon are both in the business of owning and operating COAMs. Arc entered into an asset purchase agreement with Halcyon and its president, Shreya Patel, to purchase Halcyon's contracts that gave Halcyon the right to operate COAMs at two particular locations, as well as the tangible assets, including COAMs, at those locations. The purchase price was $3,484,350, but in a section entitled “Holdback,” the agreement provided that Arc would withhold more than $435,000 of the payment until certain conditions were met. In a section entitled “Earn-out,” the agreement included formulas for the sharing of revenue from the COAMs for a one-year period, depending on whether the COAMs brought in more or less revenue than expected.

Most important to this appeal, the agreement included an article entitled “Article XII Additional Remedy,” which provided remedies should either of the two locations close. The particular remedy and the availability of any remedy depended on the reason for the closure. Section 12.1 in that article provided remedies for a location closure due to a notice of disconnection from the Georgia Lottery Corporation; section 12.3 provided remedies for a closure for reasons other than a disconnection or a lease expiration; and section 12.4 provided remedies for a closure due to a lease expiration.

In September 2022, the Georgia Lottery Corporation revoked the COAM license of one of the two locations purchased by Arc, because the licensee had entered a no-contest plea to charges that “it failed to provide or make available records and provide explanations requested by [the Georgia Lottery Corporation], specifically records of Coin Operated Amusement Machine (COAM) prize redemption.” That location closed.

Due to the closure, Arc calculated that, under the terms of the agreement governing its purchase of that location — taking into account the amounts Arc had withheld under the Holdback provision as well as the revenue guarantee in the Earn-out provision — Halcyon owed it more than $1.65 million. Arc made a demand for that amount. Halcyon countered that, instead, it was owed the total amount withheld under the Holdback provision.

Arc demanded arbitration for breach of contract, and the Georgia Lottery Corporation referred the matter to arbitration. After a hearing at which both sides presented evidence, the hearing officer entered a final award. He concluded that Arc was not entitled to damages under any of the remedies set out in Article XII for the closure of one of the locations; that Arc was entitled to $195,090 under the Earn-out provision; and that Halcyon was entitled to the entire amount Arc had withheld under the Holdback provision. When the amounts were set off against each other, the hearing officer concluded, Arc owed Halcyon $66,228.

Arc petitioned the chief executive officer of the Georgia Lottery Corporation for reconsideration and review. The chief executive officer did not enter an order on the petition within 30 days, so the petition for review was deemed denied. See OCGA § 50-27-102 (c) (5); GLC Rules 13.2.5 (1) (b) (1) (B), (1) (b) (4).¹

Arc then filed a petition for review in superior court. See OCGA § 50-27-102 (c) (5). Halcyon and Patel moved to confirm the arbitration award. The superior court denied the petition for review and confirmed the arbitration award. Arc filed this appeal.

2. Damages for location closure

Arc argues that the superior court erred by denying its petition for review because it is entitled to damages under the plain language of section 12.3 of the parties’ agreement, “Closure of a COAM Location other than due to Disconnection or Lease Expiration.” The superior court found no grounds to reverse the hearing officer's decision that the applicable provision is section 12.1, “Notice of Disconnection.”

In cases like this one, the superior courts are to “reverse or remand the case for further proceedings if substantial rights of the appellant have been prejudiced because the ․ chief executive officer's findings, inferences, conclusions, or decisions are ․ [a]ffected by other error of law.” OCGA § 50-27-76 (b) (4) (punctuation omitted).

The hearing officer held that it was undisputed that the location was closed because the Georgia Lottery Corporation issued a notice of disconnection, so section 12.1, not section 12.3, applies. And section 12.1 specifies that the remedy it sets out is not available where “a Notice of Disconnection [is] issued in connection with the closure of a COAM Location as a result, whether in whole or in part, of a violation of the prohibition under applicable Gaming Laws against payment of cash on the redemption of a winning voucher from a COAM.” (That specification does not distinguish between violations of the cash payment prohibition that took place before or after the location was sold.)

Arc does not dispute that the Georgia Lottery Corporation issued a notice of disconnection. It nonetheless argues that section 12.3 applies. But it ignores language in the agreement that shows otherwise. The heading of section 12.3 provides: “Closure of a COAM Location other than due to Disconnection or Lease Expiration.” (Emphasis supplied.)

More fundamentally section 12.3 incorporates the specification in section 12.1. Section 12.3 provides that the remedy it sets out is not available where the reason for the closure is one of the “the reasons set forth in Section 12.1.”

Our rules of contract construction provide that “[t]he construction which will uphold a contract in whole and in every part is to be preferred․” OCGA § 13-2-2 (4). We “should avoid any construction that renders portions of the contract language meaningless.” Sutherlin v. Sutherlin, 301 Ga. 581, 585 (II) (A), 802 S.E.2d 204 (2017) (citation and punctuation omitted). Arc's construction would render the above language meaningless.

Under the plain language of the agreement, section 12.1, not section 12.3, applies. Reed v. Auto-Owners Ins. Co., 284 Ga. 286, 287 (2), 667 S.E.2d 90 (2008) (“Where the contractual language unambiguously governs the factual scenario before the court, the court's job is simply to apply the terms of the contract as written․”). And the exclusion Arc seeks to avoid would obtain even if section 12.3 did apply.

After hearing evidence, the hearing officer found that the location was closed, in whole or in part, for giving cash payouts. So he concluded that Arc was not entitled to a remedy under section Article XII. Arc argues that the hearing officer erred in making this finding. But evidence presented at the hearing supported the hearing officer's finding.

The attorney who handled all COAM matters for the Georgia Lottery Corporation testified at the hearing. She testified that the location at issue was investigated for making cash payouts for the redemption of winning COAM vouchers. She testified about the factors that led to the investigation: complaints of cash payouts were received; the location had unexplained, extremely high revenue, an indicator of cash payouts; and the location had signage that said “slot machines” — which are unlawful gambling devices that pay cash.

The attorney testified that the Georgia Lottery Corporation requested the location's records regarding prize redemptions, but the location did not provide them. She testified that the location was cited for failing to provide records, not for cash payouts. But she explained that the penalty for failure to provide prize redemption records is the same level of severity as the penalty for making cash payouts, because a licensee should not receive a lighter penalty for failing to provide records that could incriminate it in making cash payouts. The attorney explicitly testified that the cash redemption issue did play a part in the discipline issued to the location. That discipline led to the location's closure.

This evidence supports the hearing officer's finding that the location was closed, in whole or in part, for illegally giving cash payouts. Arc has not shown that the superior court erred in denying its petition for review on this ground. See OCGA § 50-27-76 (b) (5).

3. Attorney fees and costs

Arc argues that the superior court erred by denying its petition for review because it is entitled to attorney fees and costs under OCGA § 13-6-11 and under the agreement. We disagree.

(a) OCGA § 13-6-11

OCGA § 13-6-11 authorizes the recovery of expenses of litigation “where the plaintiff has specially pleaded and has made prayer therefor and where the defendant has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense․” The statute “authorizes a fee award only to a prevailing party, which means a party that has obtained an award of damages or other affirmative relief on its underlying claims.” Scarborough v. Hunter, 293 Ga. 431, 439 (3), 746 S.E.2d 119 (2013) (punctuation omitted).

Arc prevailed only on its claim under the Earn-out provision — a claim that Halcyon and Patel did not dispute, according to the hearing officer. Arc has not shown that the hearing officer erred by failing to award attorney fees under OCGA § 13-6-11.

(b) Claim under the agreement

Arc argues that the hearing officer erred by finding that it was not entitled to attorney fees under section 11.2 (b) of the agreement. Section 11.2 (b) provides:

Indemnification by Seller and Control Party.

Subject to the terms and conditions of this Article XI, Seller and the Control Party agree to, jointly and severally, indemnify, defend and hold harmless Purchaser ․ from, against, for and in respect of any and all Losses imposed upon or incurred or sustained by Purchaser ․ by reason of, resulting from, based upon or arising out of any of the following: any breach of or failure of Seller or the Control Party to perform any covenant or obligation applicable thereto as set forth in this Agreement or in any Transaction Document[.]

The agreement defines “Losses” to include reasonable attorney fees. But the agreement also contains a section entitled “Certain Limitations” that provides, among other limitations, that “an Indemnifying Party shall not be liable to indemnify the Indemnified Party pursuant to Section 11.2 ․ unless and until the Indemnified Party has suffered Losses arising thereunder in excess of 0.5% of the Purchase Price․” Arc makes no argument about these limitations. It has not shown that the hearing officer erred by finding that it is not entitled to attorney fees under the parties’ agreement. So Arc has not shown that the superior court erred in denying its petition for review on this ground. See OCGA § 50-27-76 (b) (5).

4. Confirmation

Arc argues that the superior court erred by confirming the award in favor of Halcyon and Patel because Arc was entitled to damages under section 12.3 of the agreement. As described in Division 2, Arc is not entitled to damages under section 12.3. So Arc's argument fails.

Judgment affirmed.

FOOTNOTES

1.   The Georgia Lottery Corporation's COAM rules may be found at https://www.gacoam.com/API/Documents/Document?documentID=822 (retrieved Jan. 22, 2026).

McFadden, Presiding Judge.

Hodges and Pipkin, JJ., concur.