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EDITORIAL: The High Cost Of Gray-Area Games

Posted On: 6/8/2007

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The amusements industry has a long and painful memory of being classed with illegal gambling. Twenty years ago, trade members began a lengthy, difficult and expensive process to persuade state and local authorities that cranes and redemption machines can be innocent games of skill. Today, the industry continues battling, for the most part successfully, to ensure that online skill-based tournaments are not lumped in with Internet casinos.

Yet some of that hard-won legislative edifice is at risk, as much or more from ignorance on the part of lawmakers as from operator misconduct. The case of Indiana is instructive. Lawmakers there recently considered a bill intended to eliminate video poker games, which were already illegal but flourishing nonetheless. In the frenzy of the legislative process, amendments added to the bill contained language so broad that, if passed, it could have outlawed cranes and standard amusement-style redemption rewards.

"Suddenly the Chuck E. Cheese's games were at stake," said Indiana AMOA executive director Wendell Walls. IAMOA managed to get the bill's language changed before the law passed, which it did on April 30. But Walls admits it was a close-run thing. For a while, an entire state's redemption market was staring into the abyss. Fortunately, Indiana operators had in place a solid association with active, hardworking members.

Even if an operator is legally in the right, and even if an association wins all its battles with state officials, the cost of operating adult redemption games can be high. It can also be extremely personal. Gale Fontaine of Tropicana Rec Room (Pompano Beach, FL) is president of the Florida Arcade Association. Last August, she won her criminal trial on illegal gambling charges in connection with her longtime licensed bingo parlors, which also feature adult redemption games.

"Going to court was not hard in the sense that I knew I had not done anything wrong," said Fontaine. "I consulted many attorneys and followed the letter of the law, all the rules and regulations. But it's a very emotional experience and not something I would wish on anybody. I am a great grandmother and was looking at spending 11 years in prison for providing a business with camaraderie and affordable entertainment for those who can't afford to play in an Indian casino or pari-mutuel facility."

Fontaine received an award as Community Advocate of Year on January 19, 2006, basically because of her arcades (which cater to seniors) and other activities on behalf of the senior community. The very next day, she was arraigned for the same activities.

The lessons that Fontaine drew from her painful experiences are well worth heeding. "If you operate according to state statues, you're not in the clear," she declared. "You will be closely scrutinized. The government thinks you are making millions of dollars. You must follow the rules and you must have an organization that will speak for the operators."

Darrell Westfaul of Dixie Novelty (Tuscaloosa, AL) said that Alabama's legal market in sweepstakes games and eight-liners disappeared virtually overnight following a state Supreme Court ruling last December. As acting president of the Alabama AMOA, he provided his own stark assessment of the risk.

"Legalized gambling is a dangerous proposition," said Westfaul. "The loss of our legal eight-liner and sweepstakes games represents a big cost to the industry here. Many operators were relying on eight-liner money to support their amusement routes. We all were. Now we are returning to basic, old-fashioned operating with pool tables, jukeboxes and cranes to make up the lost income. You are back to 1980s-style operations and equipment. But that's not good, because nowadays we've got 20th century pricing with 21st century costs and competition."

Whether it's called adult redemption, video poker or gray-area gaming, operators nationwide have judged the cost of entering this market to be worthwhile. But they should be aware that both the price and the risk of staying in appears to be climbing.