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Maryland Bans Video Slots; Operators Move To Form Association

Posted On: 4/21/2008

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BALTIMORE -- Maryland operators, distributors and manufacturers are working to form a state association, in response to a new wave of legislation banning slots-style amusement devices.

On April 13, state lawmakers passed a bill requiring operators to shut down these games by July 1, 2009. An estimated 15,000 units currently operate statewide.

On April 19, the Maryland State Senate voted 45 to 2 to pass "emergency" legislation banning instant bingo machines and similar machines immediately. Gov. Martin O'Malley said he would sign the legislation if it came to his desk. The new law allows sentences of up to one year in prison and a $1,000 fine for violations.

In response to the first bill's passage, some 30 amusements industry members met on April 18 in the offices of Betson Distributing here to consider forming a state association. Its first mission, they said, would be to defend the legal status of slot-style videogames.

The Senate's emergency ban passed the next day.

Slot-style electronic bingo devices have "exploded across the state, many apparently in violation of gambling laws," according to the Washington Post. Yet Maryland's legal landscape with regard to such equipment provides a textbook illustration of why this machine category is often said to fall into a "gray area" of the law.

Maryland state law permits operation of certain slot-style games in 15 counties -- but only if 100% of proceeds to go charities or nonprofit organizations. In addition, state attorney Richard Fitz (R-St. Mary's Co.) issued a written opinion in July of 2007 that permitted at least one operator to install such machines in his jurisdiction.

Certain operators have claimed that slot-type games are legal as long as owners contribute at least "a portion" of the proceeds to charity. That practice is flatly illegal, assistant state attorney general Kathryn Rowe (D) recently said.

This spring, Rowe issued a 10-page opinion on the issue, stating that many of the electronic gaming devices now operated across Maryland are illegal slot machines.

Leading supporters of the April 13 ban include Senate president Tom Miller (D-Calvert) and House Speaker Michael Busch (D-Annapolis). Both leaders said electronic bingo devices are interfering with profits of the state lottery.

Ban supporters also said continued operation of slot-type bingo games would unfairly impact a voter referendum on statewide slot machine legalization, slated for this November.

Miller called the bingo devices "a disease," telling the Baltimore Sun: "These are counterfeit slot machines, but the money goes to private entrepreneurs. It doesn't benefit the state."

Opponents of the ban include members of the legislature, local county officials who receive tax funds from the machines, owners of affected bingo halls and operators of the devices who place bingos in taverns and private clubs. This group said the new ban is unfair legislative favoritism, amounting to state protection for planned Indian casinos in the state.

The April 19 bill contained an exemption for machines in bars and restaurants in Baltimore and Baltimore County. The bill also apparently continues to permit slot-style games that are labeled "for amusement only," since language banning games with this signage was removed before passage of the legislation. It is widely believed that illegal cash payoffs occur under the table for most of the games labeled this way.

The attitude of law enforcement toward bingos in Maryland has been inconsistent, observers said, some claiming that police have known of illegal slot-type operations statewide for years and done nothing about it.

But following passage of the emergency legislation, St. Mary's Co. sheriff Tim Cameron announced that his department would deliver "cease and desist" letters and make warning phone calls to 23 bars, bingo halls and other locations to advise them that machines not in compliance with all relevant regulations will be seized.

Court rulings on the Maryland slots question have also failed to clear up the confusion, in part because both the laws and the technology involved are complex. In.2001 the Maryland Supreme Court said electronic bingos are legal because game outcomes are not random; instead, each machine contains a predetermined volume of winning combinations on printed cards or tickets (even though these paper items are distributed to players on a random basis).

But assistant attorney general Rowe's 2008 opinion added a new layer of complexity to the interpretation of that Supreme Court ruling. Rowe said machines that are loaded with preprinted tickets are illegal if they utilize an internal printer and computer chip programmed with winning combinations to advise players if they have won. To be legal, she said, the devices must dispense paper tickets, even if results are also displayed on a monitor.

AMOA treasurer Gary Brewer of Brewer's Amusement (McMinnville, TN) participated in the two-hour meeting of Maryland industry members on April 18 and said he found the attendance and interest level encouraging. Brewer played a key role in the successful creation of the Tennessee Coin Machine Association several years ago.

The Sun reported that over the years, operators "have spent hundreds of thousands of dollars on lobbying and campaign contributions" to keep bingo machines legal.

Local officials in counties where bingos are legal protested that the ban would deprive them of millions in local taxes used to support schools, group homes and other social services.

"It's terrible. It's going to decimate my county," county delegate Kevin Kelly (D) told the Sun." Every penny [earned by bingo machines in Allegheny Co.] is accounted for and taxed, so our problem is: [if the machines are banned] how can we make up that funding?"

VENDING TIMES will provide continuing coverage of this story as it unfolds.