Signs along Highway 25 in Edgefield County entice customers to play video poker. South Carolina is readying to enact a ban on such machines July 1, and Augusta officials are preparing for an influx into the Garden City that they expect will result. CHRIS THELEN/STAFF

Final hand plays Friday

Web posted June 25, 2000

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By Margaret N. O'Shea
South Carolina Bureau

NORTH AUGUSTA - ``For sale'' signs dot the stretch of Martintown Road where video poker parlors are dealing their last cards this week.

Unless there's one up a sleeve to salvage the lucrative industry, it is scheduled to fold at midnight Friday. Machines that are not unplugged then will be illegal. Owners have a week to get them out of the state - along with any spare parts. After that, they'll be contraband. It will be a crime to have them sitting around - even if the screens are dark - a crime that carries a penalty of a year in jail and a $500 fine.

That is the expected end of an industry that grossed up to $3 billion a year, paid winners up to $2 billion a year and gave the state millions of dollars in taxes and thousands in license fees. Critics say it also ruined the gateways to neighborhoods and took food from children's mouths. David Beasley, the Republican governor who likened video poker to crack cocaine, lost his bid for a second term to a Democrat in a state that hadn't elected one to that office since 1978.

But is it really the end of an era that put South Carolina on the map as the nation's video poker capital?

``I'll believe it when I see it,'' said Richard Gergel, the Columbia lawyer who is representing addicted gamblers in federal court, although it appears the industry ``seems to have run out of cards to play.''

Larry Huff of the Legacy Alliance, formed to oppose the poker industry, also was skeptical.

``I won't rest until July 1 comes and goes without some new challenge,'' he said.

Video poker became legal in a state that had never tolerated open gambling before when Sen. Jack Lindsay, D-Marlboro, slipped a provision into the hefty budget bill in 1985 and misled the few colleagues who asked what it meant. By the 1990s, there were poker machines in restaurants, mom-and-pop stores, convenience stores, service stations, bowling alleys and beauty parlors. Increasingly, strips like Martintown Road became rows of poker parlors. Around them were pawnshops, car-title loan offices, and businesses willing to cash checks or advance money until payday - the kinds of places that offered players money to keep trying to win.

In 1999, despite that claim and with the potential ban looming in 2000, something happened to prove there must still be big money in the industry. The state's top three poker barons shifted positions on the chart and one of them - McDonald's Amusement of Little River - added more machines.

In the last three months of 1999, the latest figures available, video poker machines in South Carolina grossed $556,429,576.

The state Department of Revenue has not released figures for the first quarter of 2000. In mid-June, the department was still processing license renewals for thousands of machines. About 21,000 had licenses that expired May 31, and about half of them were being renewed with only another month of legal gambling to go.

That's why Mr. Gergel said there's no guarantee that video poker will end Saturday. If it does, he said, ``Other than Prohibition, it will be the largest industry ever shut down by government.''

Risky business

Last week, with just a few days of legal gambling left, the gambling industry was ``in a pretty good shambles,'' said Mike Fletcher, president of Drews Distributing in Spartanburg, the company that sold thousands of the popular Pot of Gold machines at $8,000 each during poker's prime.

Of 32,000 machines in 7,000 locations, an estimated 10,000 went out of commission early. Mr. Fletcher said that some owners were apprehensive because the state attorney general and top law enforcement officer don't agree on how the poker ban should be enforced.

Attorney General Charlie Condon wanted to start filing criminal charges at 12:01 a.m. Saturday, although the law banning video poker makes it legal until midnight Friday. That system would have given owners 1 minute to get their machines disabled and out of South Carolina - or forced them to stop a legitimate business long before the law required to avoid criminal charges.

State Law Enforcement Division Chief Robert Stewart will have agents out in force Saturday to make sure machines are unplugged. On July 8, SLED agents will file criminal charges where they find any machines at all.

Even so, Mr. Fletcher said last week, ``People are trying to figure out what to do.''

``The state is taking their business, telling them they can't operate after midnight Friday,'' he said. ``They're a crime as of 12:01, and they can't even take the machines they paid for and store them on their own property without breaking the law. Something's wrong with that. And down the road, I think there is a court out there somewhere that will agree.

``The question that John Q. Public should be asking is whether the government can simply decide a business cannot exist any longer without compensating anyone in any form or fashion.''

Though some people have made enough money in video poker to retire, others do stand to lose when it disappears. Ronnie White, who runs the Westside Quik Shop in Greenville, was a plaintiff in the lawsuit that the state Supreme Court decided last week - the one that unsuccessfully tried to prevent the state's ban on video poker.

He contends he will lose his home and business if he loses his poker machines.

Smaller operatorssay gambling revenues keep them afloat.

The Pot of Gold distributor could be right, although the lawyers for Westside Quik Shop and Winner's Pot of Gold in Darlington haven't yet said whether they will ask the U.S. Supreme Court to hear the case.

Their argument was based on a South Carolina case in which the nation's highest court said the state had to compensate the owner of some beach property after preventing him from developing it.

And it's not true that video poker machines no longer legal in South Carolina could simply be plugged in somewhere else, Mr. Fletcher said. Their innards were specifically designed for South Carolina's unique regulations.

Vote vetoed

Specific measures of the effectof video poker on South Carolina are hard to come by, although some are likely to emerge this summer in campaigns for and against a state lottery. Voters face a November referendum on whether to change the state constitution to allow a lottery to help fund education reforms.

That raises a frequently asked question: Why can't voters decide whether to keep video poker?

Last year, when the Legislature couldn't agree on whether to regulate or ban video gambling, lawmakers went home without doing anything. Gov. Jim Hodges, whose campaign had been largely financed by gambling interests, called them back into session to face poker head-on. He favored letting voters turn thumbs up or down.

In Aiken, former Republican Party Chairwoman June Cannon gave up her kitchen to anti-poker fliers, buttons and records of grass-roots efforts to register voters and get out the vote. The referendum was highly anticipated in Aiken County, home of resident Republican Sen. Greg Ryberg, one of the industry's most adamant foes.

The court squelched last year's planned referendum, too. It dealt a dead man's hand to the video gambling industry with a ruling that said the Legislature can't abdicate its law-making function to voters. It could not agree to be bound by the results of a referendum. That knocked out the notion of letting voters decide whether to keep poker and left the rest of the 1999 law intact, including the July 1 end date.

The difference between a lottery referendum and a poker referendum is this: The state constitution prohibits lotteries, and the constitution can be changed only by voters in a referendum. The courts have ruled that video gambling, which requires some skill, is not a lottery, so it's not in the constitution. It is in state law. The Legislature can change state law, but voters can't.

Mr. Hodges has two more years in office, but he's already been labeled a one-term governor in some quarters because he managed to make the same enemies Mr. Beasley credits with his defeat - those who wanted the Confederate flag to keep flying and those who wanted video gambling to stay.

He angered flag proponents by calling for an end to the flag debate and poker proponents by insisting that lawmakers regulate poker or get rid of it.

``They sneaked in through the back door, and they're being thrown out the front door,'' said the Legacy Alliance's Mr. Huff. ``But it's hard to envision that a $3 billion-a-year industry is going to say, `Oh, well. That's it. We lost.' It's probably not going to happen.''

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