City considering gaming ordiance
By Sharon Brooks
The Beaumont City Council held a workshop to discuss an ordinance meant to combat illegal gambling in the city during their regular meeting on Tuesday, May 13. The ordinance, which has been on the city attorney’s desk for months, faces some opposition but should go up for a vote very soon, according to Sharae Reed of the city attorney’s office.
In 2012, The Examiner exposed illegal gambling in Southeast Texas and explored the obstacles faced by law enforcement and city officials in their war against illegal game rooms and their operators.
Several months of investigation by The Examiner staff revealed a saturation of illegal casino-style gaming outlets in Southeast Texas, with game rooms potentially grossing millions of dollars in unreported earnings. Dozens of game rooms have been identified all over the Golden Triangle, raking in thousands of dollars a day in proceeds for the business owners, and paying out cash under the table to patrons. Local law enforcement agencies say they are aware illegal gambling is prevalent in the area, but they are limited in what they can do to stop it.
The 8-liners, known officially as amusement redemption machines, used in illegal gambling rooms are only to be used for amusement, not gambling. Legally, players can be offered prizes in value up to $5. Any amount over that or anything paid out in cash is not legal.
Enforcing the law of the land isn’t easy, according to Sgt. Mike Custer of the Beaumont Police Department’s special assignments unit.
“The law is specific on these game rooms and what we can do,” said Custer. “There is a potential legal use for these machines, but in my experience I’ve never seen one being used legally.”
Custer said the investigations into illegal gambling are difficult and expensive. The investigation necessitates the use of confidential informants.
“It’s hard to bring people in, and you pretty much have to let these people (at the game rooms) get to know you,” he said. “You have to go in repeatedly, gambling, spending money. It’s a very expensive investigation.”
R.J. DeSilva, spokesperson for the State Comptroller’s office, said his office works to ensure the proper licensing of amusement machines throughout Texas. He said they enforce the licensing and penalize those operators who do not comply with Texas law.
The coin-operated machines tax is in Chapter 2153 of the Texas Occupation Code and applies to various types of machines including pool tables, video games, jukeboxes and arcade games. The annual occupation tax is $60 per machine. If a business has machines at its own location, it gets a registration certificate for $150 per year. If a business has machines it puts in another person’s locations, then it gets a general business license, which can cost between $200-$500 per year. The businesses can place the different types of machines at locations around the state, so the statewide number of machines is what is tracked by the comptroller’s office. The machines must have decals issued by the state indicating they are licensed for operation.
The coin-operated machines tax does not authorize gambling, which is illegal under Chapter 47 of the Texas Penal Code. Agency criminal investigators have authority under Chapter 14 of the Texas Code of Criminal Procedures to make an arrest if an offense occurs within their presence or within their view, including gambling violations, while conducting an inspection. Generally, local law enforcement agencies investigate gambling under the Texas Penal Code. Those law enforcement agencies contact the state comptroller if they need to check ownership information or require other assistance as part of their investigations.
According to Custer, sealing or seizing the machines costs the operators a lot more than the Class A misdemeanor charge levied against them by police. With the machines out of commission, the operators potentially lose thousands of dollars each day the machine is not properly licensed rather than a mere $4,000, the maximum amount for the misdemeanor charge. Custer said as the law stands now, the police are not able to enforce the licensing and cannot seize the property. Only the comptroller has that power due to restrictions in state legislation.
Many law enforcement officials believe the legislature has failed to deter illegal gambling with such minor penalties. Some cities have taken matters into their own hands, or the hands of their city councils including the cities of Vidor and Bridge City that have both instituted ordinances taxing the machines and making the locations where amusement machines are utilized more accessible to local law and city code enforcers. Now, the city of Beaumont is attempting such a measure.
Sgt. Custer has been fighting against illegal gambling for years, from time spent in the Dallas metro area to his current position in Beaumont. Custer said profits from illegal gambling enterprises often are sent overseas and the money is no longer in circulation locally. In fact, Custer claims the game rooms and operators are basically robbing area citizens and increasing crime rates.
“The proposed ordinance has been a long time coming,” Custer said. “The burr under my saddle is the exploitation of the citizens of Beaumont.”
Custer recounted a story involving a raid on an illegal gaming enterprise from a few years ago. He said he found five post-dated checks written by an elderly woman from Beaumont. He called her to let her know he had possession of the checks and requested information from her about potential illegal gambling at the game room from where the checks were confiscated. The woman would not cooperate and eventually hung up on the officer. Undeterred but discouraged, Custer said he reached out to a relative of the elderly woman, her son. When he explained the situation to the man, he was shocked and told Custer he had wondered where his mother’s money was going since she was on a fixed income and could afford no such expense.
“That stuck with me, and that was what fueled this,” Custer said regarding the proposed gaming ordinance, which he originally drafted but has since been revised with the help of staff from the Beaumont city attorney’s office.
Custer said, in his opinion, other crimes stem from illegal gambling than exploitation. In fact, he and others feel that an attempted aggravated robbery resulting in the death of a 25-year-old suspect, Duayne Deandre-Devon Smith of Port Arthur, on Sept. 17, 2013 was the direct result of illegal gambling. According to a report from BPD, patrol officers responded to the reported aggravated robbery of D’s Gift Shop, a game room in the 3600 block of East Lucas, at about 9:30 p.m. A clerk working in the game room told officers that three men attempted to rob him at gunpoint. Sometime during the robbery attempt, the owner retrieved his handgun and exchanged gunfire with the robbery suspects. After the exchange of gunfire, all three suspects fled on foot. Officers found Smith dead from an apparent gunshot wound near the scene of the crime.
City leaders of Beaumont held a meeting on Sept. 27, 2013 and further discussed the issue. At the meeting, BPD Chief Jimmy Singletary said he and his team of officers had raided “over 14 gaming facilities” and “seized almost $80,000” from illegal gambling dens since the beginning of 2013.
When asked how the gaming ordinance that requires licensing could help combat illegal gambling, Custer said that at least with the ordinance officers would be allowed access
“What this is going to allow us to do is effectively police gaming locations, which up to now we have been very limited in what we could do,” Custer asserted. At this time, he said, only the state comptroller has the right to check for required licenses. Many game room owners have been able to keep police at bay up to now by allowing entry only to “members,” but the proposed ordinance would change that. “This will give us a tool to police the game rooms. Officers or any city official will have the right to inspection and penalties will be assessed for refusal.”
Beaumont Senior Assistant City Attorney Sharae Reed addressed the council at the May 13 meeting. She explained the facets of the new ordinance, which may be viewed from the city’s website at www.beaumonttexas.gov/city-council. It includes a requirement that gaming machines display a new city decal that may be purchased for $15 per machine and prohibits certain locations for gaming sites. In addition, sites with gaming machines must display a sign, similar to the “No Smoking” signs seen in the windows or on the doors of businesses, designating the location as a gaming site. She said in some cases businesses that are actually operating as gaming sites show no indication of that. Instead, the business would be designated or licensed as some other business, like a gift shop such as D’s Gift Shop where Deondre Smith was killed in the Sept. 17, 2013 incident. Gaming sites must also be permitted. The application fee for the initial permit would be $200 and the annual renewal application fee would be $100 as proposed.
According to Reed, the state comptroller gave cities the right to take the proposed measures. She said the ordinance is meant to shut down illegal gambling but should have little effect on those operating legitimately.
“The gaming ordinance was brought to the legal department’s attention by Sgt. Custer, who noticed there a need for it in our city,” Reed told the council May 13. “It’s not meant to be an enforcement ordinance. What it’s meant to do is give the law enforcement division as well as city division and agencies the ability to go inside these businesses and make sure they are operating effectively. What I mean by that is, some of the gaming sites within our city aren’t properly signed. They have no signage. Some are signed as gift shops and others have absolutely no signage. What the ordinance seeks to do is basically legitimize current gaming sites and then flush out illegitimate businesses.”
A question from Councilman Alan Coleman prompted Reed to answer that the measure would not affect certain businesses with amusement machines meant for children.
“We are talking about slot machines, 8-liners. This is not the Chuck-E-Cheese ordinance,” Reed quipped. “This won’t affect in them in terms of having to pay the (occupation) tax and all that. This is specifically for the 8-liners and slot machine-type machines.”
Coleman said laughingly that he does not have any of the machines in his neighborhood, but City Attorney Tyrone Cooper said that is likely not accurate.
“They are out there,” Cooper warned. “You may not be cognizant of them or they may be hiding from you, but the law enforcement, they have an eye out and this will help them.”
During the meeting, Reed reiterated Custer’s statement that the ordinance would provide officers with probable cause to enter a facility.
During citizen comments, Pam French of the Bernsen Law Firm addressed the council on behalf of her client, Jake Plaia, who owns numerous machines but no gaming sites. She said Plaia is concerned that the ordinance would negatively impact his business.
After the meeting, Plaia said he has machines in a variety of businesses, and the machines are meant to be utilized as adult amusement machines that pay out with merchandise not to exceed $5 as per state comptroller rules. He said if the ordinance passes as is, he fears businesses will have his machines removed so they do not have to face the stigma that he believes goes along with designating a location as a gaming site as defined by the ordinance. The ordinance defines a gaming site as, “A location that displays, exhibits, or maintains for public patronage any gaming machine.” The definition encompasses all facilities with any number of gaming machines, even if it is just a single machine. Even convenience stores, restaurants and bars that have few amusement redemption machines are included in that designation.
She pointed out Plaia’s company “was instrumental” in planning a similar ordinance in Harris County that they believe includes more appropriate language.
“They (Plaia Inc.) have helped prepare that ordinance so that you are not throwing the baby out with the bathwater, so to speak. That’s the concern we have about the proposed ordinance as written is that it is very overreaching.” French told council members.
Plaia said he thinks the proposed ordinance needs to be fine-tuned.
“I know that law enforcement is struggling to get into these game rooms,” Plaia said. “A game room is a large place that may have 15, 20, 30, 50 of these adult redemption games. These games are defined as redemption games. The coupons that come out of them are no different than with the Chuck-E-Cheese games, but instead of a kid’s prize you get an adult prize. The games are designed for adults… You are playing a game. Coupons come out. You take the coupons and go redeem them for merchandise, for a prize. In a convenience store that merchandise could be a Twinkee, could be a soft drink, could be milk. In a bar, it could be a cap, could be a t-shirt, could be maybe a pizza. When you start redeeming for cash, that’s where you run into problems, and that becomes illegal. They’re calling them gaming machines and gaming sites (in the ordinance). These machines are not designed to be gaming machines (for gambling). A gaming machine, as I understand, doesn’t work the same way. I didn’t say I don’t agree with the ordinance. I am all for an ordinance, but it needs to written in a manner that doesn’t just cast a large net and bring in every single machine. If you’ve got one of these machines at a convenience store, is that a game room? No. It’s punishing my customers for having one or two machines.”
When asked if any of his machines were in use for illegal gambling, Plaia said he is not sure.
“I wouldn’t know that, and I don’t own every machine in every location. All I can tell you is, I have a pool table in that location. If two people gamble on that pool table, is that gambling? Is the pool table illegal?”
He said, to his knowledge, none of his machines have been sealed for use for illegal gambling, and he has never been legally reprimanded in relation to the amusement redemption machines.
Reed said Beaumont’s proposed ordinance follows state comptroller guidelines and was modeled after gaming ordinances in two similarly sized Texas cities, Mesquite and Balch Springs rather than after Harris County, which she said is not comparable to Beaumont.
“They have similar zoning regulations and are similar in size,” Reed said of the cities. “They are similar in operation, which is very important. Houston has no zoning. It’s huge compared to our city. It’s not really a good example for the city of Beaumont.”
She said facilities with gaming machines will not have to “close their doors” but would need to get a permit so the city can more effectively track the machines and so that people will know the games are available on a business’ premises.
“I am not adverse to gaming sites,” Reed said. “But I do want to know if I walk into a convenience store that may have a back room that’s designated for gaming. And I probably wouldn’t send my daughter in alone to buy a soda. That’s a mother’s concern.”
She said she understands Plaia’s concerns but feels the ordinance is fair and is taking no chances with the city’s safety.
Custer said he is relieved the measure is finally on the city agenda.
“I’m very happy that it’s moving forward,” Custer said after the May 13 city council meeting. “It’s very necessary for the city. It’s a much-needed tool that will be used by many city departments to address the problem.”
Regarding whether or not the ordinance would unfairly punish game machine owners who lease the machines at varying types of locations due to stigmatizing those locations through re-designation of the facility as a gaming site per the ordinance, Custer said he believes the measure is reasonable and will be effective as it stands.
“I think the ordinance the way it is proposed is completely fair across the board. It addresses the needs of the city,” Custer said.
Reed said a vote on the measure is pending and will likely take place at the May 27 city council meeting in Beaumont.
Sharon Brooks can be reached at (409) 832-1400, ext. 241, or by e-mail at sharon [at] theexaminer [dot] com.