Prosecutor’s letter prompts game room chain to close

A chain of game rooms has shut down operations at all nine of its Oahu locations following a cease-and-desist letter that went out Monday to several Oahu game room owners from the city prosecutor’s office.

"Winner’z Zone is stunned by the delivery of a cease-and-desist order pertaining to our games," according to a statement issued by the company’s spokeswoman, Ruth Limtiaco of TLC PR. "Winner’z Zone business model is to operate within the law, and we are currently seeking advisement from our legal counsel regarding the games listed in the cease-and-desist order."

The letter was issued to all arcade owners operating machines on a list of alleged gambling devices, warning they face prosecution if they fail to get rid of the devices.

The prosecutor’s letter says the machines allow players to risk money on games of chance with the opportunity to win cash rewards, which constitutes gambling. Anyone promoting or facilitating this activity may be subject to felony gambling, money laundering and organized-crime charges.

"We do not operate any games of chance in our establishments," Winner’z Zone said.

"All games are based on some level of skill or activity that must be performed by the player. These are similar to the games provided in many well-known arcade establishments."

After a three-year investigation, and seizures beginning in September 2012 of alleged gambling devices and arrests, city Prosecutor Keith Kaneshiro’s office obtained its first grand jury indictment May 1, charging nine people with a total of 414 counts of promoting gambling, money laundering, racketeering and possession of gambling devices.

The indictment followed a federal judge’s April 30 ruling in a civil case that the use of the Products Direct Sweepstakes machines constitutes gambling.

Proponents of the machines contend that the devices do not meet the criteria set by state law pertaining to gambling.

Attorney Victor Bakke, who represented several game room employees arrested beginning in 2012 and got them released and back to work, said the prosecutor should have issued a cease-and-desist order two years ago instead of arresting people and seizing machines.

"The prosecutor did not have a basis to say this was illegal," said Bakke, who is also closely familiar with the indictment case. "They were waiting for the judge’s decision.

"But to go back two years ago and say it’s illegal? Why did they let them keep operating? … The prosecutor didn’t think they could prove it was gambling."

Bakke said the prosecutor should have sought the opinion of the attorney general on whether the devices are illegal.

Kaneshiro said at a news conference last week the timing was coincidental and that conferral with the grand jury occurred on the day of the judge’s decision.

The cease-and-desist letter, signed by Kaneshiro, says the prosecutor’s office and police "are aware of allegations your business has been operating in violation of Hawaii’s anti-gambling statutes."

It continues, "You are to immediately cease and desist all gambling activity, including but not limited to the operation of the following games and devices." The letter lists six categories of machines and the games to be removed from establishments.

» Pull tab dispenser devices: Phone cards, horoscope cards, Internet time cards

» Coin "pusher" game devices: Monopoly, Cyclone Fever, Bonus Hole, Car Wash

» Multicasino-style game type devices: Pot o’ Gold, Platinum Touch, Southern Gold, Internet & Server Based Sweepstakes

» Multislot-type devices: Island Fruit, Crazy Fruit, Crazy Bugs

» Fish Hunter-type devices: Fish Hunter, Fish Hunter II, Fish Hunter Plus, Ocean King, Ocean King II, Ocean Star, King of Treasures, Shark King

» Discount coupon kiosk-type devices: Product Direct Sweepstakes, Panikka Promotion Coupon Kiosk

On May 1, Tracy Yoshimura, owner of PJY Enterprises LLC, which distributes the Products Direct Sweepstakes machines, shut them down in bars.

Police have seized about 175 of the machines since September 2012.

PJY received prior approval to use the machines in bars from the Honolulu Liquor Commission.