Video-poker ban presents obstacles

State officials attempt to regulate number, location of gaming machines as they are set to become illegal

Web posted June 11, 2000

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By Margaret N. O'Shea
South Carolina Bureau

AIKEN - The waning days of video poker in South Carolina are underscoring that it is as hard an animal to stalk on its last legs as it was at its prime.

Three weeks from the day the games become illegal, state regulators can't say for certain how many machines are licensed in Aiken and Edgefield counties or where they are. They also don't know for sure whether any machines in the two counties are operating illegally after the May 31 expiration of 21,000 licenses statewide - even after a June blitz by state law enforcement agents looking for violations of gambling laws.

The South Carolina Department of Revenue estimates the state has about 22,000 video gambling machines operating now, about 10,000 fewer than last year. They include: 11,000 machines with two-year licenses that expire in 2001 10,938 machines with two-year licenses bought this year between May 1 and June 5 442 machines with six-month licenses bought between May 1 and June 5 The revenue department is processing applications for renewals after 21,000 licenses expired May 31. Video gambling - and income for the industry - ends July 1. Source: Associated Press

Sixty-three sites in the two-county area were included in the raids, which covered 1,589 locations with 6,654 machines statewide. An additional 18 were in McCormick and Barnwell counties. None were in Allendale. The agents made 33 cases, 28 of them for license violations, shut down 171 poker sites, confiscated 927 machines and turned off 414.

The State Law Enforcement Division churned out the statistics late last week with no problem. But even though a current license is supposed to be posted on a machine that's plugged in, SLED's findings in the raids are not cut and dried, said the law enforcement agency's representative, Kathryn Richardson.

SLED turns its paperwork on such raids over to the Department of Revenue, which regulates poker, because the penalties are civil rather than criminal, Ms. Richardson said. But the revenue department won't decide how to handle the information from SLED until it plows through applications for renewals.

And the revenue agency hasn't finished processing applications for license renewals. Nearly 10,000 of the licenses that expired May 31 were not renewed - unless they're in the stack that hasn't been processed yet, revenue spokesman Danny Brazell said.

To add to the confusion, few poker machines are owned by the establishments where they're played. Most are leased from a handful of poker barons who pay $4,000 to license one machine but actually submit single applications for dozens or hundreds, Mr. Brazell said. The licenses can be moved from one machine to another. And that's what's happening in the last month of legal poker, when owners are deciding whether to replace licenses.

Although the unused portion of the licensing fee is refundable, some owners are not willing to put the money up front. Some are yanking machines with unexpired licenses and moving the licenses to machines in more lucrative locations that need new ones, Mr. Brazell said.

In the shuffle, machines have been moved out of several Aiken and Edgefield poker businesses, from parlors to convenience stores, in the past two weeks. Last week, drivers on U.S. Highway 1 reported a truckload of them making its way toward the state line.

After July 1, poker machines and the parts to fix them will be contraband - unless something happens to keep the industry alive. Last year, the Legislature banned video poker on that date unless voters decided to keep it legal in a referendum.

But the South Carolina Supreme Court ruled the referendum would be illegal. The reason was the Legislature is elected to make laws for the people and can't abdicate that responsibility with a binding referendum. The U.S. Supreme Court refused to hear an appeal of that decision.

Now the state Supreme Court has taken first jurisdiction on an industry lawsuit that says the Legislature's ban on video gambling amounts to an illegal and unfair taking of private property by the state. Because the most popular machines, Pot o' Gold, cost about $8,000 when the ban was passed, two small poker companies in Greenville say that making them illegal without due process was wrong.

That lawsuit is one hope for an industry that made $3 billion a year until its demise was set.

Another thing to watch is the developing state budget. Poker was legalized in 1986 when Sen. Jack Lindsay, D-Marlboro, slipped a proviso into the budget bill.

Lawmakers return to the Statehouse June 20 to work on the budget bill and some other pending bills, any of which could be amended.

Avid video-poker opponents, including Langley Republican Rep. Roland Smith, say the Legislature has to be careful now or poker could be revived.

If poker is banned at midnight June 30, owners have a week to get their machines and parts out of the state, SLED Chief Robert Stewart said.

SLED agents will seize machines during the first week of July if they are not unplugged. The criminal penalty for having an operating machine will be up to a year in prison and a $500 fine. Beginning July 8, the same penalty could apply for simply having a machine or parts for one, Chief Stewart said.

SLED agents and other law enforcement officers, some in uniform and some undercover, will monitor compliance and enforce the law, he said.

Reach Margaret N. O'Shea at (803) 279-6895 or scbureau@augustachronicle.com.