AGA encourages Justice Dept. to go after makers of illegal gaming machines

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The American Gaming Association is urging the federal government to target manufacturers of illegal gaming machines to help stymie unregulated gambling.  

“Support and resources from the Department of Justice and federal law enforcement agencies are critical to eliminating illegal gambling devices from our communities,” AGA President and CEO Bill Miller wrote in a letter submitted this week to the Justice Department.

The association wants the government to use a long-established law requiring any company that makes, sells, or ships a gambling device that is sent across state lines to register with the Justice Department, as those in the regulated gaming industry do. Violators of the law, known as the Johnson Act, can be fined up to $5,000 and face up to two years in prison, in addition to forfeiting the machines. 

“Unfortunately, illegal and unregulated machines continue to skirt the law and put consumers at risk,” said Jessica Feil, AGA’s vice president of government relations and gaming policy counsel. “The AGA and its members are urging the Department to utilize the Johnson Act to investigate and prosecute illegal gaming machine manufacturers. This important step will protect players and, ultimately, root out these pervasive, bad actors.” 

Commercial and tribal casinos, which must adhere to state and federal laws covering a wide range of procedural and reporting requirements, operate in 41 states. The AGA says machines that take advantage of legal loopholes or openly flout the law are common at bars, convenience stores, and gas stations in many states. Known by various names – including “nudge,” “sweepstakes,” “skill,” or “no-chance” games – the machines function much like casino slots, but do not undergo the testing or regulation required of licensed operators.

In addition, according to the AGA, such machines do not meet federal laws regarding anti-money laundering, are not tested or monitored to ensure fairness for consumers, and prey on the most vulnerable consumers, including minors and problem gamblers on self-exclusion lists from regulated casinos.

“Gambling outside the purview of regulators is rife with opportunity for money laundering and other activities that nefarious actors hope will go undetected,” says an AGA report released in April. 

Recent news reports highlight illegal gambling operations across the United States: 

  • In October, a Canadian company agreed to pay $3.5 million and permanently stop its California operations, as it settled a lawsuit by the state that accused the company’s “sweepstakes cafes” of unfair competition and false advertising. 
  • Also in October, officials in Platte County, Mo., publicly destroyed five machines after the vendor was convicted of a felony promotion of gambling. 
  • This week, a representative of a skill-gaming manufacturer took reporters on a tour of what he called illegal casinos in Virginia and said the number of illegal machines has grown substantially since the state legislature banned skill games this summer. The company he represents is pushing to overturn the ban. The Association of Gaming Equipment Manufacturers, which opposes unregulated gaming, notes that such “skill” machines are unlike the highly regulated “skill-based” or “skill-influenced” games available in licensed casinos. 

Feil said some analysts estimate that tens of thousands of illegal machines operate in some states. 

“It can be hard to determine how many machines are truly operating in the shadows,” she said. “Even when these machines are rooted out in one place, they simply pop up in another location. The operations range from a couple of machines in a convenience store to dozens of machines in illegal mini-casinos. Unfortunately, these manufacturers and operators are always trying new tactics to evade law enforcement and regulation.” 

She said all legal gaming operators register their machines as required by the Johnson Act and consider it part of the industry’s commitment to operate safely and legally. 

“The regulated casino industry works with lawmakers and law enforcement at all levels to understand and eliminate gray areas and legal loopholes that illegal gambling machines take advantage of,” she said. “In places where the laws are already sufficient, enforcement against illegal operators must be prioritized.” 

She said all legal gaming operators register their machines as required by the Johnson Act and consider it part of the industry’s commitment to operate safely and legally. 

“The regulated casino industry works with lawmakers and law enforcement at all levels to understand and eliminate gray areas and legal loopholes that illegal gambling machines take advantage of,” she said. “In places where the laws are already sufficient, enforcement against illegal operators must be prioritized.” 

https://www.cdcgamingreports.com/aga-encourages-justice-dept-to-go-after-makers-of-illegal-gaming-machines/