Lawmaker bets on legal video poker

Last updated: April 06. 2013 10:39PM - 5873 Views
By - jlynott@timesleader.com - (570) 991-6120

Video poker machines that pay out are legal in the state's casinos, but not in local bars and clubs. An area lawmaker has legislation that aims to change that.
Video poker machines that pay out are legal in the state's casinos, but not in local bars and clubs. An area lawmaker has legislation that aims to change that.
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WILKES-BARRE — The odds could be worse for Eddie Day Pashinski’s effort to legalize video poker gambling in bars and private clubs across the state.

Times are tough, creating the right environment for legislation he’s circulating in Harrisburg that would bring in millions of dollars in revenue, put an end to the regular roundup of illegal machines and keep neighborhood and local bars in business.

“If things were good, it probably wouldn’t have a chance,” said Pashinski, D-Wilkes-Barre.

The third-term lawmaker in the state House of Representatives has been seeking co-sponsors for his bill and has reached out to the casinos for their support of the legislation that essentially gives them money just because they already have state-issued gambling licenses.

The impetus behind it was the Small Games of Chance Act of 2012 that increased payouts for the contests held by community organizations and private social clubs and required them to maintain more detailed records.

The law “didn’t do a thing for taverns,” Pashinski said.

His proposed legislation would, by permitting taverns and clubs to have a maximum of three machines at a cost of $500 each paid annually to the municipality in which they are located. The machines would be connected to the central hub of computers to which the casinos’ machines are linked and the payouts would come from the state.

“It gives the state a clean account and it prevents guys from going to jail,” Pashinski said.

He provided the following breakdown of the money brought in by machines: 45 percent for property tax relief, 5 percent each to the casinos and municipalities, 22 percent to the vendor and 23 percent for the tavern or club.

Additional money would pay for gambling addiction programs and administrative costs.

Cut not enough for some

It’s a good effort on Pashinski’s part, but some tavern owners want a larger cut.

Jo Ann Kelly — who owns Kelly’s Bar, located on Slope Street in Plains Township since 1967 — was one of those raided last October in a massive investigation into illegal gambling. She had video poker machines in the past but a pinball machine was seized in the raid.

“I don’t mind them being legalized, but the thing is 23 percent for us is not enough,” Kelly said.

“That’s kind of low and the $500 a machine is kind of high,” she said

The video poker money paid the light and gas bills and helped out with expenses for people such as Kelly with children still in school.

“I don‘t mind paying the tax on it,” Kelly said. “I don’t want to go into the hole paying the tax.”

Dorothy Rygiel, who owns Rygiel’s Pub on South Main Street in Dupont, supported legalizing the machines and offered some constructive criticism for Pashinski.

In the bar business for 30 years, Rygiel was cited in the October raids for a machine she had gotten rid of months earlier.

“He better go back to the drawing board and make it a little more profitable for me,” she said.

Pashinski responded that he’s trying to help out owners like Rygiel and Kelly.

“At this point, it’s not everything they want,” he said.

The percentages and language of the proposed legislation can be changed. “It’s fluid,” Pashinski said. “I’m willing to negotiate.”

A similar bill proposed under former Gov. Ed Rendell allowed for five machines and the amount of money to be brought in was between $500 million and $750 million a year, Pashinski said.

With a limit of three machines, he estimated revenues between $250 million and $450 million a year.

Association shifts focus

Pennsylvania Tavern Association Executive Director Amy Christie says the association has tried diligently in the past to make the illegal gambling machines legal.

But, after several failed attempts, the association has shifted its focus to benefiting association members through small games of chance, which are already legal.

“We do not think the support is there (to get a bill passed) to legalize the machines,” Christie said. “We are focusing on small games of chance.”

The games, Christie said, are entertainment factor for the association’s member establishments and several types can be utilized.

Pull tabs, drawings and raffles are profitable, Christie said, and allow for an entertainment factor.

With casinos moving in and providing patrons with free drinks, bars and taverns were the only part of licensed establishments that didn’t have any sort of entertainment to offer patrons.

“It’s devastating to be the only ones left out. That is a big priority for us to offer entertainment to our customers,” Christie said.

Ripple effect

Kutztown University professor Timothy O’Boyle has been studying illegal gambling machines for a number of years and continues to keep a watchful eye on law enforcement raids and bars and clubs in his area.

“The machines are legal if the person loses,” O’Boyle, an associate professor in the anthropology/sociology department, said. “They are illegal if the person wins and the club pays them money. Should they be illegal? No. It’s kind of ridiculous.”

O’Boyle said the state could be making money by taxing the machines, and law enforcement officials could be using their time to prosecute other more serious crimes rather than busting a mom-and-pop bar for having one video gambling machine.

He said establishments that have machines could have the potential to make millions of dollars, but it depends on where the bar is and how many machines are located on the premises.

“There are other clubs in Allentown that make millions each year off this,” O’Boyle said. “They aren’t making as much anymore because (law enforcement) has been cracking down because of the casinos. They want the money diverted to casinos.”

The confiscating of video machines can lead to other problems, O’Boyle said. A bar might not be able to make ends meet and has to shut down or the sponsorship of a Little League team goes by the wayside.

“There’s a ripple effect that people don’t think about, but it happens,” O’Boyle said.

Gamblers’ families complain

State police Bureau of Liquor Control Enforcement Sgt. James Jones said he believes the majority of establishments that have video gambling machines have no intention of violating the law.

They see the gaming machines as a source of income to help repair a heating system or purchase a new cooler, and get the machines from a vendor who has a legitimate business.

“That’s how an otherwise law-abiding citizen gets involved in unlawful activity,” Jones said. “And then there are some people who know (the machines) are illegal and are looking to supplement their income.”

Jones, who participated in what law enforcement calls the biggest raid on illegal gambling machines in the state in October in several northeastern counties, said what was noticed in that investigation by the Compliance and Auditing Gambling Enforcement unit is that all the gambling machines were from one particular vendor.

“That investigation was tremendously involved,” Jones said. “The goal for the officers is to actually observe the device being used as a gambling device. That’s the best evidence.”

The majority of illegal gambling investigations begin with a complaint, he said.

Jones, who is in charge of the BLCE Punxsutawney office and who presents dozens of seminars on illegal gambling throughout the year, said complaints usually come from family members of the gamblers– they’ve spent too much money and the loved ones want it to stop – so officers are alerted to an illegal device in a local bar and it’s eventually seized.

Other times, investigations into illegal gambling come when an officers are in a bar for another reason, such as a liquor license violation, and they observe an illegal gambling machine.

Once machines are confiscated, Jones said, they used to be demolished by a garbage truck.

Now, they are stored in a large warehouse – where, Jones said, it is possible to walk across the top of them because there are so many – where they await dismantling and recycling.

Jones said another way to determine if a machine is being used illegally is to obtain a search warrant and determine if it has the characteristics of a gambling device.

One example, Jones said, is if the machine has an accounting device.

“If there is a way to account for how much money came in and how much money was paid out, they are an illegal gambling device,” Jones said.

Those payouts, Jones said, are different for each establishment. It is not uncommon for some bars to collect between $3,000 and $4,000 a week, and some even more.

It is impossible to make the video gambling machines legal, Jones said, because of they way they are designed to pay out.

“They are not the same as slot machines in the casinos. A casino has to have a license to operate slots,” Jones said. “These machines are different. They are designed to deceive and cheat the player.”

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