Time To Unplug? Illegal Gambling Machines Bypass Laws And Harm Individuals And Communities, AGA Report Says

Written By Kevin Shelly on April 19, 2021
AGA Report Warns Against Unregulated Gambling Devices

A report just released by the American Gaming Association (AGA) ties illegal gambling devices to criminal activity including money laundering, drug trafficking, and violent crime. PlayPennsylvania earlier this month reported on a murder of a convenience store clerk that had a connection to an illegal video poker machine.

The AGA report also showed illegal gambling machines are not subjected to testing, licensing, taxes, or regulatory standards.

In announcing the report, the AGA said:

“Maintaining the integrity of the gaming industry and continuing to benefit our communities is a top priority. Casino gaming is now a legal, regulated industry in 44 states, generating over $261 billion in economic impact and $41 billion in direct tax revenue, supporting more than 1.8 million jobs nationwide.

“Illegal gambling machines have been found in dozens of states and continue to bypass these laws and regulations, harming communities and consumers nationwide.” [emphasis added]

Illegal machines ‘skilled at deception’

The AGA report is titled, “Skilled at Deception: How Unregulated Gaming Machines Endanger Consumers and Dilute Investments in Local Economies.”

Some key findings of the report:

  • Illegal devices have no responsible gaming components
  • Unregulated machines are unmonitored to ensure fair play
  • Unregulated operators lack training in responsible gaming
  • Unlicensed operators can lure children to gambling
  • Unregulated operators foster problem gambling behaviors
  • Lack of protection of consumer data

To combat the continuing spread of illegal machines, the report recommended:

  • Law enforcement and policymakers must prioritize robust enforcement
  • States and communities must not authorize these machines or risk harming regulated gaming
  • Lack of enforcement erodes regulations
  • Protect consumers

Illegal machines ‘erode public trust’

The regulated gaming industry and law enforcement have shared concerns, said the report.

The report quotes Arizona Attorney General Mark Brnovich, who was the former Director of the Arizona Department of Gaming:

“History has taught us that unregulated gambling gives rise to an array of legal and social concerns, and ultimately erodes public confidence in the safety and integrity of the whole gaming industry.”

AGA Vice President of Government Relations and Gaming Policy Counsel Jessica Feil said:

“Legal gaming provides immense benefits to the communities it serves – and operating with a gaming license is a privilege that our industry takes seriously.

“Unfortunately, there’s been a rapid increase of unregulated gaming machines that exist in the shadows, taking advantage of loopholes and flouting the law, with little to no oversight. These machines ultimately endanger consumers and communities, fueling problem gambling and crime while drawing important tax revenue away from states.”

State police in another jurisdiction decried the spread of illegal machines

In the report, Major Chuck McNeal of the Louisiana State Police Gaming Enforcement Division said:

“Organized criminal operations profit from the use of these machines and take advantage of unsuspecting consumers. State and local law enforcement must be on the front lines and partner with prosecutors to root out these machines from our communities.”

But the PA state police spokesman declined to comment on the report.

The PA SP had initially taken the lead in enforcement efforts in the Keystone State, but lately, regulation has fallen more to local agencies, such as the district attorneys in Berks and Delaware counties.

Enforcement falling to county District Attorney Offices

Illegal machines in Delco alone outnumbered legal machines operating throughout PA during the pandemic, Delco DA Jack Stollsteimer estimates.

Using enforcement grant funding from the Pennsylvania Gaming Control Board, or PGCB, Delco recently seized 13 machines. And the county has more than 30 ongoing investigations of other illegal gaming device locations.

Stollsteimer and Berks DA John Adams both have complained of inaction on the state level. An illegal mini-casino operated in Adams’ jurisdiction until last year.

The PGCB does not have enforcement power over unlicensed machines. However, the agency does fund enforcement grants to local agencies, including Delco.

A spokesman said the PGCB would consider more than $1 million in additional enforcement grants during this month’s Board meeting.

PA Lottery claims to lose money to illegal machines

According to Ewa Swope of the PA Lottery, “There is no question that skill games continue to have an impact on Lottery sales and profit.”

She continued:

“Illegal machines are responsible for siphoning-off tens of millions of dollars otherwise destined to the Lottery Fund for senior programs. More senior funding is at risk every day if these machines continue to operate in Pennsylvania. That’s why the Lottery has advocated for lawmakers to support proposed legislation that addresses illegal skill games and protects funding for senior programs.”

PA AG has punted on unregulated devices

Last June, PA Attorney General Josh Shapiro had quietly dropped pursuing illegal device cases, PlayPennsylvania discovered.

At the time, his office said:

“The question of whether ‘skill games’ are legal is currently pending before the Commonwealth Court and OAG is representing State Police and the Department of Revenue in that litigation. While we continue to maintain that “skill games” are illegal, as an agency, we have elected not to actively seize machines until the Commonwealth Court provides guidance on the issue.”

Likewise, the PA Legislature has continued to kick the can. Lawmakers are not tackling either setting up a process for licensing, testing, taxing and regulating the devices. Nor are they clearly defining the machines as illegal and actively enforcing their regulation.

PA gaming industry group: “Time to unplug these machines”

Danielle Gross, a spokesperson for Pennsylvanians Against Illegal Gaming, said:

“This report should end any doubt whatsoever: it is time to unplug these machines and get them out of our state. Illegal so-called skills games entice children to gamble. They are draining hundreds of millions from our state lottery.

“It is the only lottery in the nation that dedicates all funding to seniors. These machines are magnets for crime. We are seeing more and more media reports about crimes driven by illegal slot machines.”

One maker says criticism does not apply to Pennsylvania Skills game

Mike Barley, a spokesman for Pace-O-Matic, the maker of Pennsylvania Skills games, agrees the games are spreading. But he argues the criticism does not apply to his company.

“This report highlights the dangers of illegal gambling devices, and we agree that they are proliferating and often appearing in mini-casinos. Unlike those games, Pace-O-Matic’s Pennsylvania Skill game has been adjudicated and ruled a legal game of predominant skill by a Court of Common Pleas. We have since brought a lawsuit against the Commonwealth to cement the legal status of our games.

“An independent study from a well-known Pennsylvania economist has proven there is no impact on casino or lottery revenues from the play of legal skill games. The revenues of both the lottery and casinos continue to rise to record levels. Unlike the out-of-state companies operating in the lottery or casino space, over 90% of the profits generated from legal skill games stay in the Commonwealth.

“Additionally, Pace-O-Matic has taken the lead in fighting for regulation and the application of additional taxes on skill devices. We have had success and are currently regulated and taxed in Wyoming, Georgia, Virginia, and the District of Columbia.

“We have built tremendous support for legal skill games in the Pennsylvania legislature and remain confident that we are on a path toward regulation in the Commonwealth.”

Image c/o PA State Police

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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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