Prosecutor orders arcades to pull some game devices

Are kids and adults gambling when they play arcade games at Chuck E. Cheese’s, Dave & Buster’s and Fun Factory?

A cease-and-desist notice signed by city Prosecutor Keith Kane­shiro that went out to an undisclosed number of Oahu arcades Monday has some game room operators scratching their heads.

The "notice to cease and desist all gambling activity and remove illegal devices" specifies, among others, "coin pusher game devices" and "Fish Hunter type devices," commonly found in many arcades open to children.

Although management of Chuck E. Cheese’s Hono­lulu store would not comment, a source says it received a cease-and-desist notice, but it has not removed any of its game machines, including the coin pusher-type games.

Dave & Buster’s has a casino-style game room with several coin-pusher game devices using different names, as well as what appears to be a Fish Hunter-type game. All continue to operate.

"Dave and Busters is a successful family-oriented business that operates in many states," Newton Chu, an attorney for the company, said in a written statement. "We received a copy of a document sent to many local businesses that have entertainment machines. We are in the proc­ess of determining whether the document applies to us. We are committed to following the law, as we do in all states in which we operate."

A spokesman for the Prosecutor’s Office declined to comment on the legality of specific machines or whether certain establishments are free of gambling devices, saying the notice with a list of machines was never intended for the public and that it is not the role of prosecutors to give out legal advice.

Attorneys whose clients were indicted May 1 on gambling charges — the first charges since arrests and seizures of sweepstakes machines began in 2012 — say Kane­shiro has erred on several fronts in efforts to stamp out alleged gambling devices.

There’s a fine line between what’s legal and what’s not, said attorney Keith Kiu­chi, who represents PJY Enterprises and other companies who sued Kane­shiro and Hono­lulu Police Chief Louis Kea­loha, seeking the return of gaming machines seized by police beginning in 2012.

Kiuchi questions whether the prosecutor is targeting only establishments that give cash prizes.

The cease-and-desist notice says "if players risk money on games of chance with the opportunity to win cash rewards," it constitutes gambling.

But Kiuchi argues, "you can’t make that distinction," citing the law, which does not specify a cash reward, only "something of value."

Hawaii Revised Statutes 712-1220 says, "A person engages in gambling if he stakes or risks something of value upon the outcome of a contest of chance … upon an agreement or understanding that he or someone else will receive something of value in the event of a certain outcome."

Kiuchi also cites the law where it defines a contest of chance as any game, scheme or device "in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor."

As for the coin-pusher games, "some are more illegal than others," since some are purely games of chance, with no element of skill involved, he said.

Kaneshiro has declined to respond to severe criticism and allegations of politicking, retaliation and abuse of authority in the way he has handled an indictment of nine people on gambling charges.

"We will not argue the merits of the case outside of court," said Dave Koga, spokes­man for the prosecutor’s office.

Attorney Myles Brei­ner said he is seeking a dismissal of the May 1 indictment brought by the prosecutor’s office against nine people on 414 counts of gambling promotion, possession of gambling devices, racketeering and money laundering.

Breiner said the grand jury indictment should be dismissed because the defendants were unable to defend themselves and pre­sent evidence that the Hono­lulu Liquor Commission had approved the machines.

"We consider it ethically and legally suspect that Keith Kane­shiro, a named defendant in a civil case, would bring charges against people who are presently suing him for the original seizure of the property," he said.

Breiner represents Tracy Yoshi­mura, who was indicted on 257 counts of gambling, money laundering and racketeering.

He said his client did everything right and got approval for the Products Direct Sweepstakes machines from the Hono­lulu Liquor Commission before installing them in bars.

There was "no criminal allegation, no seizure going on, no criminal matter pending. (Kane­shiro) just took it upon himself to say these machines are gambling devices," Brei­ner said.

Police began seizing the sweepstakes machines and making arrests Sept. 27, 2012.

"This has effectively put him (Yoshi­mura) out of business," Brei­ner said.

"Kaneshiro made a calculated decision to undermine a civil lawsuit he was facing, to force the plaintiffs to defend themselves in a criminal case."

The attorneys said those who were indicted were retaliated against because they are part of the lawsuit. They also said Kane­shiro was waiting for a ruling from a federal judge in that case before seeking an indictment.

At a May 5 news conference, Kane­shiro said prosecutors were already conferring with the grand jury the day the ruling in the lawsuit was made by a federal judge, that three years of investigation by police, prosecutors and the Department of the Attorney General had gone into the 414-count indictment and that the timing was coincidental.

The sweepstakes machines worked by selling a discount coupon to customers who could use it for products online. After buying a coupon, a customer could receive free entries into a sweepstakes with a chance to win cash prizes.

U.S. District Judge Leslie Koba­ya­shi dismissed the lawsuit, issuing an order April 30 that at the time of the seizures, the way the machines were used was gambling. She said the contention the machines were part of the legitimate sale of discount coupons for merchandise is self-serving and unsupported by the nonuse of the coupons, which were usually discarded, and the redemption rate was low.

Breiner said Kane­shiro should have referred the matter to the attorney general or U.S. attorney for Hawaii before seizing the sweepstakes machines two years ago.

"Now he is issuing a cease-and-desist on all the other machines? How is that fair?" Brei­ner said.