Raid on arcades of dubious value

A chain of amusement arcades became aware in February that the Honolulu Liquor Commission was awaiting legal opinions about whether certain "sweepstakes" machines were tools of illegal gambling. To the arcade owners’ surprise, word came in the form of seizure of the machines ordered last month by city Prosecutor Keith Kaneshiro. The swashbuckling raid was unseemly, considering the legal ambiguity involved.

Flanked by police vice officers at a Sept. 28 news conference, Kaneshiro maintained that the machines’ illegality was "elementary. If you put in money with the intent of winning money, and you either win or lose money, then that’s gambling."

It’s not that simple. The machines are described by its distributor, PJY Enterprises, as a venue for obtaining discounts for purchasing products being sold exclusively on the Internet by Products Direct, a start-up e-commerce company.

Three weeks before the Honolulu raid, South Carolina Magistrate Charles Garrett ordered that a sweepstakes machine seized by a county sheriff be returned to its owner, because it is not a video gambling machine. He pointed out that the machine "clearly discloses" that no purchase or payment is necessary to play, although a customer inserting money is given a discount coupon worth twice the inserted amount, according to the Greenville News. The customer could win a larger discount or cash.

That appears to be the legal parallel here. But Kaneshiro says the raid was supported by legal research showing that courts in Mississippi and Missouri have ruled that the machines are illegal gambling devices. While no charges have been filed since the Honolulu raid, misdemeanor cases have been opened against the six arcades.

Police and prosecutors expressed conviction that the machines are illegal gambling devices, although Honolulu Police Assistant Chief Susan Dowsett said after the raid, "This is the start of the investigation, just the start."

Five of the six companies being investigated took the offensive late last week, suing police and the prosecutor’s office for return of the 77 machines, estimated by police at a value of more than $250,000, and seeking an injunction preventing future seizures.

That lawsuit should not have surprised Kaneshiro. Before its filing, a spokesman for Kaneshiro told the Star-Advertiser his office was "waiting to see what the owners of the machines will do." Meanwhile, he added, "There has to be a determination if the machines are gambling devices or not."

It seems such legal determination should first be clear before legal enforcers swoop in.

Eight months ago, city Liquor Administrator Greg Nishioka told KITV regarding Products Direct Sweepstakes machines, "We have run it by the police, and my understanding is they have run it before the prosecutor’s office and we are still waiting on some decision on this."

He now says that 21 of 32 businesses that the Liquor Commission has allowed to use the machines have had them installed, with the stipulation that the machines be removed if they are found by any law enforcement agency to be illegal. Talk about mixed messages for the arcade business owners: One city agency gives tacit approval for legal installation of the machines, then another comes in later with zealous law-and-order seizure of the devices.