777 Casino Raid Underscores Lack of PA Skill Games Oversight and Regulation

Posted on September 2, 2020 - Last Updated on September 3, 2020

From early last December until late August 2020, 13 casinos operated in Pennsylvania.

Twelve casinos operated legally: Licensed, inspected, regulated, and heavily taxed, as required under the state’s laws. But the 13th casino was none of those things.

Windfall operated in plain sight, with local approval

And yet Windfall Amusement’s 777 Casino in tiny Kenhorst Borough in Berks County operated in plain sight between a dollar store and a pawn shop. And it operated with its host community’s approval.

Windfall’s skills games casino operation even advertised as a casino on the internet and YouTube, and with prominent signs.

Initially, they did so with impunity, welcomed by a town of fewer than 3,000. A town so small, in fact, that nearby Reading provides its policing.

Local’s ignored cautions and red flags with Windfall

From the beginning, Kenhorst officials repeatedly approved the operation despite cautions and red flags. Among those red flags:

  • The city manager, Brian Cole, was a former leader of the neighboring city of Reading’s Police Department’s vice unit, presumably aware of state gambling laws. Cole has not responded to repeated requests for comment.
  • A lawyer for nearby Penn National Gaming sent a detailed eight-page letter to the borough’s legal counsel in advance of a meeting where the expansion of Windfall was approved. The letter, obtained by PlayPennsylvania, detailed the many ways Windfall’s operation was operating outside of state gaming laws. Kenhorst council’s legal advisor Jill E. Nagy, addressee of the letter, and Mayor Nickolas J. Hatzas have not responded to requests for comment.
  • Another Reading police officer, also presumably aware of PA gambling laws, was present at the meeting which granted the variance for expansion.

All of which leaves Berks County District Attorney John Adams, the man who finally raided the casino – with the assistance of the State Police – and shut it down, incredulous.

DA left stunned by local indifference to Windfall’s operation

Adams admitted he was even more stunned that the borough approved an expansion of the business despite a detailed warning that the operation was “likely illegal.

Of the operation itself, Adams said this week during an exclusive interview with PlayPennsylvania:

“It was incredibly blatant.”

Nearly half a million in unregulated skills machines value seized

During the raid, law enforcement seized $67,768 in cash and 57 unlicensed skills machines.

Many of machines – similar to slots but with more player participation – appear to be from Banilla, a manufacturer and distributor in North Carolina which primarily services the regulated skills game market in Georgia. Assuming an average cost per machine of $8,500 for Banilla products, that means nearly $485,000 in equipment was confiscated.

While two people with roots in Georgia were taken into custody at a condo residence in the nearby PA town of Exeter during the Aug. 20 raid – Nahyun Hutchinson and Sean Lee, both of whom have past or current residences in GA – no one has been charged, said Adams this week, as the investigation still continues.

What’s the GA to PA connection for Windfall?

Sean Sang Lee

Adams also said that so far it isn’t clear what brought the two from the South to Berks County, a region perhaps best known as the birthplace of the late author John Updike who set his fictional stories there, tales of what he said were about “the American small town, Protestant middle class.”

However, there are about 25,000 licensed skills games operating in Georgia under that state’s lottery commission, so the availability of devices may explain the connection. About a third of the machines in Georgia are from Banilla.

Nahyun Hutchinson

Lee, who appears to also be known as Sang Ik Lee, has declined comment. Records indicate he has had liens of more than $200,000 against him Mississippi, where he lived prior to residing in Georgia. The largest lien is from the IRS. He has more than 1,000 friends on Facebook, including an assistant DA in Berks County. A large number of his connections appear to be in real estate.

A contact for Hutchinson, who appears to also go by Nayhun Kwon, could not be found. Sean Lee is one of her only three Facebook friends. A contact for her husband, David Hutchinson, also could not be found. Records indicate he has liens of more than $1 million against him from the IRS.

State Police know machines came from an out-of-state vendor

State Police Captain James Jones spoke exclusively to PlayPennsylvsania this week about the ongoing investigation by troopers, plus members of his Bureau of Liquor Control Enforcement, and detectives with the Berks DA.

He said the illegal machines came to PA from an out-of-state vendor, though he declined to name the vendor or to say which state the vendor operates from. As of now authorities do not know how the connection to the Kenhorst location was made.

With the operation out of business and the machines moved to a State Police facility in Allentown, Jones said “time is on our side” for running down details. Jones said it should take “several weeks more to figure out who all was involved.”

He declined to discuss Lee or the Hutchinsons in any detail since no one has been charged. But he confirmed authorities are aware of “incidents” elsewhere involving them.

Jones said State Police have numerous open investigations in progress in PA, some of about the same scale.

The state first sent investigators to the Kenhorst site in February and it was immediately apparent the machines were illegal gambling devices, he said. COVID-19 then slowed down follow-through. The 777 Casino closed for months beginning in March.

Jones said it is “not at all unusual” for municipalities to approve the use of illegal machines. He blames “misinformation” for confusing both politicians and even local police departments.

A basic timeline for Casino 777

PlayPennsylvania has assembled a timeline for Windfall via documents and sourcing.

Chronology:

  • March 4, 2019: Nahyun Hutchinson registers Windfall Amusements as a business with the state using a rented residence in nearby Exeter as the company’s office. The cost of registration is $125. The attorney for Windfall from the outset is Keith Mooney, a former solicitor for Reading. Mooney has not responded to a request for comment.
  • June 27, 2019: Nahyun Hutchinson attacks her husband, David, stabbing him in an arm, and cutting his face, according to legal papers. The attack happened in a suburb of Atlanta, Georgia. A police report said David had returned home drunk at 2 a.m. He awoke with Nahyun atop him with the weapon, according to the report.
  • July 2, 2019: David Hutchinson, serving as secretary and treasurer for Windfall, appears before Kenhorst Borough Council and gets a conditional use approval granted for the casino.
  • July 5, 2019: Fulton County, Georgia charges Nahyun with assault, battery, and possession of a knife.
  • October, 2019: Sean Lee posts on Facebook that Windfall is looking for employees for the casino operation in Kenhorst. Katz Properties leased the 3,780-foot property. No one from KPR has responded to a request for comment made to the realty company’s PA office.
  • November, 2019: There is a soft opening of Windfall Amusements’ 777 Casino.
  • December 6, 2019: The official opening of the casino.
  • February 6, 2020: David Hutchinson appears before Kenhorst council and asks to install more machines and extend hours. They defer the decision to March. A police lieutenant from Reading, which polices Kenhorst, is present.
  • A story appears immediately afterward in the Reading Eagle pointing out the questionable legality of the operation.
  • Law enforcement begins the investigation of Windfall in February, following the newspaper story and a citizen complaint.
  • March 3, 2020: Nahyun, who has posted a $50,000 bond subsequent to stabbing David, enters into a pretrial intervention program in Georgia known as SOS. PTI allows first-offenders to avoid a court record and trail if they stay out of subsequent trouble and complete the program.
  • March 5, 2020: The Kenhorst board allows as many as 90 machines and permits Casino 777 to operate until midnight (thus extending their hours).
  • Mid-March: Windfall takes a hiatus during the virus restrictions.
  • August 20: Law enforcement raids Casino 777, confiscates machines, and seizes money.

Unlicensed competition

Adrian R. King, Jr., an attorney for Penn National Gaming, which operates Hollywood online casino as well as a physical racino not far from Reading in Grantsville, PA, said Penn was “surprised and disturbed” when they “low and behold” realized they had an unlicensed competitor in their backyard.

Penn also has plans for building a mini-casino in Morgantown, which is not far from Kenhorst. The company paid $7.5 million simply to acquire a license for that location.

Of 777 Casino he said:

“The size and audacity of the operation was somewhat surprising. I think there are others out there of this magnitude and size.”

DA and Penn believe the issue is a failure of the PA state legislature

“Here we are, with governments struggling for revenue, and this was operating without any benefit” to state and local governments, said Adams, the Berks DA.

Licensed slot machines in legal PA casinos pay about 53% of their revenue in tax, with about $120 million a year from that split between host counties and host communities for each casino, according to Doug Harbach of the Pennsylvania Gaming Control Board (PGCB). Earlier this year the PGCB definitively labeled unlicensed skill games as illegal.

The lingering issue of unlicensed gambling is a failing of the PA Legislature, added Adams.

“The problem is the complete, the complete… what’s the word? Negligence, that’s it. The negligence to reign it in or make it clear it isn’t legal.”

King agreed that a slow-moving court case on the legality of just one specific skills game – Pennsylvania Skills – has clouded the water. And so far the PA Legislature has hemmed and hawed about resolving the matter, with no definitive new legislation being passed.

“I would love to tell you we have a clear path to resolve this,” but that’s not the case so far in PA, said King.

All images courtesy of PA State Police and Berks County Detectives District Attorney press conference presentation.

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Kevin Shelly

Kevin C. Shelly is an award-winning career journalist who has spent most of his career in South Jersey. He's the former assistant city editor of The Press of Atlantic City, where he covered the casino industry and Atlantic City government as a reporter. He was also an investigative, narrative enterprise, and features reporter for Gannett’s Courier-Post.

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