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Georgia Law To Create Video Lottery, Making Music and Amusement Operations 'A Privilege - Not A Right'

Posted On: 3/8/2013

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TAGS: video poker machines, Georgia video poker, Georgia Lottery, video lottery bill, House Bill 487, Rep. Matt Ramsey, amusement-only video poker, Georgia Lottery Corp., Georgia gambling prohibitions, cash payoffs, pinball, video game, poker game, coin-op devices, redemption games, Class A amusement machines, Class B machines

ATLANTA -- Video poker machines, a thriving sector in Georgia, would be transformed into an operator-run, computer-networked video lottery program regulated by the Georgia Lottery, if a new bill becomes law.

House Bill 487, sponsored by state Rep. Matt Ramsey (R-Peachtree City), passed the House March 7 by a 166-4 vote; Gov. Nathan Deal supports the measure, which in its 30-pages never uses the term "video lottery."

Amusement-only video poker is illegal in Georgia, but observers have long contended that both poker machines and illegal payoffs are not uncommon. HB 487 appears to give Georgia Lottery Corp. the power to tacitly permit payoff poker by the simple expedient of not acting to enforce the state's gambling prohibitions.

The bill does not explicitly overturn Georgia's prohibition of gambling, which has long existed in other state statutes. But HB 487's final sentence states: "All laws and parts of laws in conflict with this Act are repealed."

The measure authorizes local city and county governments to require amusement locations to post a notice warning players that cash prizes are illegal. This provision could be construed as either a fig leaf of pretense to uphold state gambling prohibitions, or merely as a local opt-out provision. A local option was critical in getting video lottery passed in Illinois three years ago.

According to the Atlanta Journal-Constitution, HB 487 would permit video lottery locations "to award vouchers for merchandise in the store, not cash or tobacco or alcohol."

However, another section of the bill requires the state to prove that operators knew "misuse" of their machines was occurring in locations in order for their machines to be forfeited, creating a huge legal loophole that gives a wink and a nod to cash payoffs. Line 146 of the measure also specifies "winnings from amusement machines" as a feature of certain machines that would be licensed and regulated.

Many sections of the bill are consistent with regulation of legalized gambling devices in other jurisdictions, including licensing, taxing and technology provisions, and fees for pokers and other redemption games.

The bill would establish two classes of amusement devices. Class A amusement machines are defined as games that accept coins, currency, credit cards and that fit certain other criteria. A list of specific examples of Class A amusement machines that would be regulated by the act is provided in the bill. They include jukeboxes, pinball machines, bowling machines, crane (claw) machines, pushers, videogames, arcade novelties and soccer tables, along with a dozen other classifications that cover the gamut of the amusement industry.

Pokers, redemption games and other machines that allow the accumulation of points, or award merchandise or certificates, would be categorized as Class B amusement devices.

The division of machines into an amusement class versus a gambling class is a common feature of gambling-enabling legislation.

Lines 889-895 of the bill require all Class B machines to be linked to a central computer for monitoring and accounting purposes, which is another standard feature of video lottery systems.

The bill also calls for the lottery to share some of the proceeds from Class B devices with the state's HOPE college scholarship program. Provisions that earmark a certain percentage of tax proceeds for public education have been a common feature of gambling or lottery legalization measures in other states for decades.

Under the measure, no licensed operator of poker, risk-reward or redemption games will be permitted to own part of an amusement manufacturer or distributor. This again is a common feature of legislation authorizing video lottery.

However, HB 487 impacts far more than just poker. If passed, the bill would also regulate, license and tax all amusement devices, as well as jukeboxes. Georgia's operators would be required to buy a master license from the state. The cost of the license will range from $500 to $5,000, depending on the number of games owned and operated by an individual or business. In addition, operators would be required to pay an annual "location license fee" of $25 for each Class A machine and $125 for each Class B machine. All operators would be required to have written contracts with their locations.

From a constitutional point of view, the bill's major significance comes not from poker regulation, but from its assertion that citizens have no inherent freedom to engage in a certain legitimate business, specifically amusement machine operations.

If passed, the state government will claim sole authority to grant or withhold permission for citizens to engage in such a business.

The first sentence of the bill states: "The General Assembly finds that the ability to operate a bona fide coin-operated amusement machine business in this state constitutes a privilege and not a right."

Page 13 of the bill authorizes city and county governments to prohibit the operation of more than nine redemption machines in a single establishment, specifically referring to machines that reward players with merchandise, prizes and toys.