SLED plans crackdown on gambling machines in South Carolina

jmonk@thestate.comJanuary 31, 2012 

SLED officials in September said they would launch a massive crackdown to seize possibly hundreds of suspected new gambling machines popping up in stores and nightspots across the state.

Now, SLED is scaling back. Some say the new gaming machines are legal; some say they're not. SLED wants to make sure it puts together cases that will hold up in court.

"It probably won't be any grand, going out and scooping up lots of machines at one time," SLED Chief Mark Keel said this week.

"We have to do our homework," he said. "We don't want to come out of the box and lose a case."

In preparing for the raids, Keel learned that today's gaming machines involve sophisticated new technology - making a gambling case against them harder to prove than with the old video poker machines. Moreover, he learned that manufacturers of the new gaming machines have top legal talent and will launch vigorous courtroom counterattacks against any seizures.

"I anticipate it will be a battle, like it was in the past," Keel said. "We have to do our homework."

Jim Griffin, a Columbia lawyer representing gaming machine interests, said: "Mark Keel is wise to be cautious. The new generation of gaming machines might have the look of the old games of chance, but they are a new breed - a different animal."

Since S.C. outlawed video poker machines in 2000, various configurations of gaming machines have been tested in the market and in the courts. Games of skill are legal. Games of chance are not.

But the law allows sweepstakes, Griffin said.

He said the concept of the new games is akin to the Monopoly sweepstakes of McDonalds, or cash sweepstakes offered by other brand-name companies like Publishers Clearing House, Starbucks, Pepsi-Cola or Piggly Wiggly.

All are legal sweepstakes involving chance, Griffin said. "You go to McDonald's, and you get these Monopoly pieces, and if you get the correct pieces, you get a lot of money. There is a whole industry of sweepstakes."

The state banned video poker machines after years of political and legal fights. At the time, the largely unregulated gambling devices - located in hundreds of stores and restaurants across the state - comprised one of the state's biggest industries. Each operator paid a modest per-machine fee to the state, but the industry's $3 billion cash operations were largely untaxed.

After 2000, SLED seized thousands of the old machines that were operating in violation of the law. It still has more than 800 confiscated machines in a warehouse in the Columbia area.

These days, complaints from sheriffs and police chiefs about the new gaming machines are growing, Keel said.

"People would tell me they'd go in a store one day, and there'd be some video poker machines, and they'd come back, they'd have stools in front of them, and then later ... there'd be a sign up saying 'Somebody won $500,' " Keel said. "That sounds like the old days, when video poker was really out there."

To get ready for his coming crackdown, Keel sent he sent two SLED agents and an assistant attorney general to a law enforcement seminar. SLED also will have an expert witness on hand.

Keel declined to reveal when the raids might take place or if they would involve prior work by undercover agents. He did say, "We'll be getting the IRS involved and the S.C. Department of Revenue involved."

Some sheriffs across the state can't wait for SLED's crackdown.

"We're flooded with them," said Richland County Sheriff Leon Lott. "We've got them in just about every bar, nightclub and restaurant."

Lott said the devices are clearly illegal gambling. "People put money in, and they either lose that money, or they get money back."

Lott said the current law banning gambling machines has loopholes that are exploited by defense lawyers in court. They have convinced some magistrates to declare the machines legal in several seizures his deputies made, Lott said.

"The Legislature needs to do something," he said. "If these machines are going to be legal, they need to be taxed, and we can get the revenue from them. If they are illegal, then that means they should be totally illegal."

Jeff Moore, executive director of the S.C. Sheriffs' Association, said machine operators are putting the new machines everywhere they can across South Carolina.

Moore said the operators have gotten rulings by magistrates in several counties that the machines are legal, and they are taking those rulings and showing them to sheriffs in other counties.

"The machines are just about everywhere," Moore said. "And we're seeing Internet cafes spring up - 30 or 40 computers at tables where you go in and get connected to gambling machines. It's gambling."

Moore said the machines might not always pay off in cash. "They might pay off in phone cards, and then you trade the phone card in for cash."

In Kershaw County, Sheriff Jim Matthews' deputies have seized suspected gambling machines in the past week. A magistrate will rule on two of the machines after a Monday hearing in Camden, Matthews said.

An assistant attorney general is expected to be on hand, Matthews said.

A spokesman for S.C. Attorney General Wilson said Wilson is a "staunch ally" in Keel's effort.

"I'm going to enforce the law," Keel said. "If the games are legal, they're legal. But the courts will have to make that determination."

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