Legal Struggles in 9 States regarding Video Gaming Machines

Here is the Latest update in 9 different states that have legal battles over Video Gaming machines

Illinois
The town of Gurnee, near Chicago, became the latest jurisdiction to opt out of the state's forthcoming operator-run video lottery market. The five-person board of trustees voted unanimously on Feb. 20 to ban VLTs from bars and other locations. Local press outlets said 77 communities and four counties statewide had already opted out, taking advantage of a clause in the 2009 Video Gaming Act, which established regulations for the VLT sector. Chicago, the state's largest potential VLT market, has still not decided the issue.

Ohio
The Ohio House voted 69-24 to pass HB 386, a bill that would permit casino gambling and video lottery terminals -- but not for amusement operators. VLTs would be confined to a few racetracks. The Ohio Coin Machine Association has been lobbying hard since late 2011 to convince legislators to include amusement operators in any gambling expansion bill, but so far without success.

South Carolina
A Senate Judiciary subcommittee on Feb. 22 passed a measure that would explicitly outlaw sweepstakes videogames, which are popping up statewide. The full Judiciary Committee now has an opportunity to consider the bill. Gov. Nikki Haley opposes sweepstakes videogames and other forms of legalized gambling in the Palmetto State. As reported by Vending Times, South Carolina has recently seen legal warfare erupt statewide over the status of sweeps games.

North Carolina. The state Court of Appeals on Feb. 22 upheld, by a vote of two to one, the right of local jurisdictions to impose special taxes on sweepstakes videogames. Local operators in Lumberton had sued the city after it imposed a $5,000 operating fee per location and a $2,500 per-terminal licensing cost.

Georgia
The Legislature is facing a proposal for limited VLT legalization, but only the state lottery would be allowed to operate them. State Rep. Ron Stephens (R-Savannah) has offered a measure to allow the state lottery to operate VLTs in areas with high tourist traffic. Stephens cited a state lottery study that estimated the move could raise $1 billion to support Georgia's underfunded HOPE scholarship program.

Tennessee
Waynesville city leaders said they plan to join jurisdictions such as Maggie Valley, Canton and Franklin that charge up to $32,000 per location annually for Internet sweepstakes café licenses. Video gambling was banned statewide in 2007 and sweepstakes games were banned in 2010, but operators have challenged the latter with multiple lawsuits.

Pennsylvania
Rep. Curt Schroder (R-Chester County) has introduced HB 1893 to ban sweepstakes videogames in the House Committee on Gambling, which he chairs. Schroder told local press outlets that only 13 sweeps cafés are currently operating in the Keystone State but could proliferate if lawmakers fail to act. As earlier reported by VT, in 2009 Schroder asked the FBI, U.S. Attorney General Eric Holder and assorted Pennsylvania law enforcement and tax agencies to investigate the amusement industry. Two years later, the result was a massive bust of organized crime figures who were charged for operating a number of the state's estimated 17,000 illegal video pokers.

Alabama
State prosecutors rested their case in the second trial against electronic bingo operators and associates in late February. Meanwhile in the city of Oxford, a sweepstakes videogame parlor was preparing to open in early March, even while city officials said they planned to shut it down.

South Dakota
Senate Bill 167, which would raise the state's VLT bet limit from $2 to $5, lost a vote in the state Senate on Feb. 6. On Feb. 22, the $5 limit proposal lost a second vote in the House. Unfortunately for VLT supporters, when the House version of the $5 bet limit went down, it took with it a bill -- already passed by the Senate -- that would allow operators to expand the number of VLTs from 10 machines per location to 14.

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South Carolina Still Unclear about legality of Internet Sweepstakes Games

COLUMBIA, SC -- Sweepstakes videogames in bars, restaurants, Internet cafés and even operators' trucks are being targeted for seizure by local sheriffs in South Carolina. Some local judges, who view electronic sweepstakes games to be illegal, are ordering them to be destroyed. But other judges assert they are legal under a state law that permits promotional sweepstakes games.

Surveying the confusion, one prominent state lawmaker predicts that the state Legislature will eventually fight a battle over the legal status of the profitable and highly controversial games. Other observers said the issue could wind up in the hands of the South Carolina Supreme Court.

No wonder the chief of the State Law Enforcement Division, based here, said he is holding off on a previously announced plan to raid video sweepstakes cafés statewide. Two months after taking the job last July, SLED Chief Mark Keel originally vowed that his department would forcefully crack down on sweeps games. Now Keel admits that further investigation, including a legal seminar that touched on the subject, has made him back off.

Simply stated, Keel is uncertain if sweeps videogames are legal after all, as maintained by industry members, according to a story in the State newspaper.

Ironically, Keel's SLED predecessor Reggie Lloyd is now a lobbyist for sweepstakes game companies. Lloyd argues that the devices are legal under state laws that permit promotional games.

In Kershaw County, Sheriff Jim Matthews calls the sweepstakes defense a "scam." County cops seized 10 games at c-stores and even from operators' trucks between Jan. 26 and Feb. 9, said a South Carolina TV news organization.

Police in other jurisdictions have been seizing up to 24 sweeps games at a time from a single Internet café. Raids in Bluffton and Hardeeville confiscated machines made by Texas-based Hest Technologies.

District judges continue to issue conflicting rulings on the legality of the machines. Three magistrates -- from Kershaw County, Georgetown and Greenville County --ruled sweeps games are legal. A judge in Horry County more recently ruled they are illegal. According to local press outlets, the question may eventually land on the docket of the state Supreme Court.

The cities of Greenville, Sumter, Beaufort, Bluffton, Port Royal, Hardeeville and Charleston have also seen actions by police, courts and local governments that either seized, approved or banned the devices over the past several months. In late January, the Charleston City Council imposed a six-month moratorium on new licenses for sweeps cafés.

The growing controversy over sweeps games is increasingly on the radar of state lawmakers. In January, state Rep. Phyllis Henderson (R-Greenville) sponsored a bill to outlaw "casino-type" games, a measure that she said should include sweepstakes videogames. In February, state Rep. Leon Stavrinakis (D-Charleston) predicted the state Legislature would erupt into a battle over the legality of the devices.

One locally produced sweeps game, which is part of a phone-minutes vending machine called Magic Minutes, is manufactured and operated by a former investigator for a South Carolina district attorney and his wife, a former police officer. These previous law enforcement officials said they agreed with sweeps operators and with any number of district judges across the state that sweeps games are legal promotions.

Hest Technologies has advanced another legal argument in favor of its devices, asserting that the machines are collection points for charitable contributions to benefit autistic children, not gambling devices. Some judges have apparently found in favor of Hest under this doctrine.

South Carolina banned video pokers in 2000, eliminating an industry that was variously estimated to generate between $2 billion and $3 billion in annual revenues. Legal poker machines had become a major cause of political controversy in a gubernatorial election campaign.

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