ARE THEY AMUSEMENT ARCADES OR . . .
THE NEXT GENERATION OF CASINO GAMBLERS?

5.1.06

The 2002 ruling by the Alabama Court of Civil Appeals said that the electronic games in the arcades were games of chance and violated the prohibition against lotteries in the state constitution. Operators of the arcades had argued that a 1996 law, known as the "Chuck E. Cheese law," allowed them to operate as long as they did not offer cash prizes. The law, named after a chain of pizza restaurants catering to children and families, allowed "bona fide coin-operated amusement machines" that give prizes or tokens worth up to $5 per play. The law was used to open an estimated 2,000 adult arcades, where video gaming machines provide gift certificates worth up to $5 a play.
Justices refuse to step down from gambling case/www.tuscaloosanews.com/5.21.4

Georgia: During the debates it became painfully apparent that the issues surrounding video gambling have purposefully been made confusing by the industry. It is also apparent that the industry has worked for more than eight years to disguise itself as a harmless "amusement machine" industry and to obtain passage of very favorable laws creating a unique environment in Georgia. The ruse was created by the industry's suggesting that we needed to relax our laws that arguably could prevent a business from giving children trinkets, food or prizes of nominal value for playing games like we see in Chuck E. Cheese, Putt-Putt, and similar places of family entertainment, e.g., skeeball, video racing, simulated baseball, etc. So the Legislature first passed a law that allowed awarding prizes, not to exceed $5 in value, for successful play of games that required "some degree of skill." Then the industry got a law passed that allowed the award of "gift certificates." The stage was then set for the introduction of video games that involved "strategy" and "tactics" traditional gambling games of poker, black jack, and matchup or lineup machines that mimic slot machines, i.e., Cherry Master and Georgia Redemption machines. By way of confession: Georgia's prosecutors never realized the potential for widespread, thinly veiled commercial gambling that this well-planned scheme was about to birth and that we now encounter.
gamblingmagazine.com/articles/14/14-1462.htm

The arcades' legality has come under attack across the state with some municipalities banning them, calling them illegal games of chance. Arcade owners argue the machines are protected under the state's "Chuck E. Cheese" law. The law allows people to play games with an "application of skill" to get credits redeemable for non-cash prizes. Deputies seized 70 arcade machines from the Tropicana Arcade after a national gaming expert deemed them games of chance. Tropicana Arcade owner Michael Mills is awaiting trial on charges of keeping a gambling house and possessing an illegal slot machine. Fontaine said she's ready to mobilize supporters and fight to stay in business.
Adult-arcade raid could prove key in courtroom fight/South Florida Sun-Sentine/1.4.06

Using the broad definition of problem gambling, adolescent problem and at-risk
gamblers in Nevada are most likely to wager regularly card, dice or board games
with friends and family, on private games of skill, and on arcade or video games.
One-fifth (21%) of these respondents reported that they started wagering
on private games of skill and another 10% reported that they started gambling on arcade or video games.
GAMBLING AND PROBLEM GAMBLING AMONG ADOLESCENTS IN NEVADA
Report to the Nevada Department of Human Resources
Rachel A. Volberg, Ph.D., Gemini Research, Ltd.


"It has been firmly established that all gaming machines, regardless of the size of the stake or the amount of prize money, are unsuitable for children and young people. The Royal College of Psychiatrists strongly recommends that they should cease to be made legally available to them." (Supplementary memorandum from the Royal College of Psychiatrists (DGB 128) to the Joint Scrutiny Committee on the Draft Gambling Bill) Gambling is an adult activity. As gambling researcher Dr. Sue Fisher wrote: "Controlling one's response to gambling requires certain life skills which are likely to be under-developed in children and young people."
CHILDREN & GAMBLING Briefing on children and the Gambling Bill from The Methodist Church, The Salvation Army and NCH

Teens say they consider Foxwoods Resort Casino and Mohegan Sun like big malls. They offer arcades and recreation areas for children and many concerts appeal to teens. "Our society is exposing kids to gambling. Early exposure to gambling gets them excited about it," said Marvin Steinberg, executive director of the Connecticut Council on Problem Gambling. Durand Jacobs, a clinical professor of psychiatry and behavioral sciences at Loma Linda University and Medical Center in California, said exposure will make a difference. Jacobs said he believes the casinos know the effect they have on children and use it to their advantage."What they're doing is developing the next group of consumers.
Foxwoods say teens not their targets/Mohegan Sun, Norwich Bulletin/3.05.06

They're in trouble. They are still living with me. They've stolen everything I've got," Harris said. "It gets out of control." "We've seen them in restaurants, we've seen them in little mom-and-pop businesses," First Assistant District Attorney Cliff Herberg said. "And so, they're there for anybody to access, including children. Arcades, we've seen them in video arcades." The government plans to crack down on fast spreading gambling arcades and tighten regulations regarding their operations. "Gambling arcades have rapidly increasing in number, causing many serious problems. The number of gambling arcades has surged by 1,000 annually in recent years and there are a total of 14,991 game rooms - 1,832 for juveniles and 13,159 for adults, the government said.
Government to curb gambling arcades/9.14.05
http://www.koreaherald.co.kr/SITE/data/html_dir/2005/09/14/200509140014.asp/

The number of adult arcades has exploded in South Florida during the past few years, with as many as 100 in Broward, Palm Beach and Miami-Dade counties. The state's pari-mutuel industry argues that the arcade machines are unregulated, unlicensed slot machines taxed the same as children's video arcade games. Robert Jarvis, a Nova Southeastern University law professor who co-authored a book on gambling law, said that eventually the Florida Supreme Court will have to rule on whether the adult arcades should fall under the "Chuck E. Cheese law." The law allows people to play games with an "application of skill" to get credits redeemable for non-cash prizes. Adult arcades typically offer gift certificates to grocery stores, drug stores, gas stations and restaurants.
Little-noticed amendment gives Florida's adult arcades a legal boost/www.sun-sentinel.com/news/local/florida/sfl-carcade20may20,0,1953715.story?coll=sfla-news-florida/9.2.05

Even teenagers who don't play cards can get hooked on gambling by trying to win games of chance at arcades, playing hand-held game machines or betting on sporting events. About 5 percent of kids who gamble risk developing an addiction, said Keith Whyte, executive director of the National Council on Problem Gambling in Washington, D.C. The earlier someone starts gambling, the more likely he or she is to develop a problem, Whyte said.
A losing hand: Gambling's addictive nature can be a risky wager for teens http://www.pittsburghlive.com/x/tribune-review/trib/regional/s_324379.html /4.15.05

The ponytailed third-grader had racked up her 114,000th point on the Pac Man video game when her baby-sitter suggested they try calling her mom's cell phone. It was 2 a.m., closing time at the arcade. "When those kids start growing up, what do you think they are going to remember most? Being with Aunt Tilly in their hometown park? Or the wonderful time they had at that fairyland casino?" said Dr. Durand Jacobs, a professor of psychiatry at Loma Linda University Medical School in California and a national expert on gambling addiction and youth. "They will return when they are adults with their children in tow. It becomes an intergenerational marketing ploy of tremendous success." On average, Kids Quest will drive more than $2 million in additional gaming revenue to its host property every year.
Casinos cash in with child care for players/http://www.nydailynews.com/news/story/61733p-57671c.html/7.05

Playing quarter games at the fair and getting lost for hours in the adventure of the arcade are vivid memories for Dave Hemken of Ames. Hemken said childhood games and the competitive nature of his family might have contributed to what became a lifetime addiction to gambling.  "I kept going for the adrenaline rush," he said. "I would do anything to play and anything to win."
A holiday hazard/Ames Daily Tribune/12.17.05

Even teenagers who don't play cards can get hooked on gambling by trying to win games of chance at arcades, playing hand-held game machines or betting on sporting events.
A losing hand: Gambling's addictive nature can be a risky wager for teens http://www.pittsburghlive.com/x/tribune-review/trib/regional/s_324379.html /4.15.05

Regardless of what investigators find, some anti-gambling advocates say arcade games are the gambling industry's version of Joe Camel. "These games are training wheels for kids," said Tom Grey, executive director of the National Coalition Against Legalized Gambling. "What you're doing is hooking kids on games of chance."
For gambling -- or kid's play?/State Justice Department investigating whether kiddie arcades should be adults-only/Chronicle/ 4.21.02

Children's arcades in casinos are particularly problematic, said Chuck Gardner, a Las Vegas lawyer who is active in the issue. He argues that they teach children how to gamble. They offer payouts in the form of paper coupons, which are redeemed for toy prizes. Casinos, he notes, reward winners in chips. "Some of the devices are carbon copies of the games in the casinos," he said. Children's arcades in casinos? They're no different from those you'll find at your neighborhood fun center, said Judy Patterson, senior vice president and executive director of the American Gaming Association.
BETTING ON THEIR FUTURE/Gambling's allure increasingly being peddled to children/Union-Tribune Publishing Co/2.2.02

Meanwhile, faced with a growing number of requests to open video arcades, county commissioners are concerned their efforts to at least keep adult arcades away from schools, churches and homes may be for naught. County law limits any video arcade to adult-entertainment commercial districts, which must be at least 1,000 feet from schools, churches and residences. But arcades have sought variances to open in other commercial districts, said Commissioner Mary Buckelew. (FL passed a Chuck E. Cheese law in 1996)
Video gambling ban clouds ruling on games of skill/
www.al.com/news/birminghamnews/6.4.04

It's the dinner hour at Chuck E. Cheese's restaurant in San Bruno, and Victoria Zambrano's son is begging her for another token to plug into an arcade game. "What you're doing is hooking kids on games of chance." Durand Jacobs, a Loma Linda University professor of medicine who has studied adolescent gambling since 1989. "These games are insidious because by playing them, kids can learn to get better and better until they beat the game," Jacobs said. Children get in trouble when they try to beat more chance-based games later in adolescence and early adulthood -- and fail, he said.
“State Justice Department investigating whether kiddie arcades should be adults-only”/Joe Garofoli/ Chronicle/4.21.02

MO - At the Riverport Casino Center, where the state requires that every slot machine be videotaped and every blackjack dealer's background be investigated, one section of the glittering complex is off the government's radar screen....a place where children can stay as late as 2 a.m. on weekends, long after their quarters have run out for arcade games such as Smokin Token. The Maryland Heights facility is known as Planet 4 Kidz. ...people watching the children get no... scrutiny. No cameras are focused on the baby-sitting area or toddler playroom. Even parents are barred from seeing the rooms behind a giant TV screen. They're not allowed past a check-in counter. On a Saturday night..., at 1:55 a.m., five minutes before the child care center closed, five parents had to be paged over the casinos' intercom to retrieve their children. At 2:15 a.m., the last straggler showed up. If the parent is a no-show when the center closes (at 2 a.m. on weekends, for example), the workers call police to take custody of the child."
"Riverport casino child care center is not licensed or inspected by state"/By Virginia Young And Kim Bell/St. Louis Post-Dispatch/11.21.99

To most people, taking the kids to Scandia, Chuck E. Cheese or other game centers with machines that spit out tickets for good play is just good family fun. A new wave of critics, however, contends these unregulated games are essentially gambling machines -- or, at best, gambling training devices. (Duran Jacobs, a retired professor of psychology said) "We have an industry always looking for the next generation of consumers." Jacobs and others also argue that, with gambling legal in some form or location in nearly every state and state-sponsored lotteries for "good causes" prevalent, gambling carries little or no stigma for today's youth.
"Arcades' games face legal review Skill or chance? State officials will decide if the child-oriented machines should be regulated"/Bee Capitol Bureau/4.15.02

Children's arcades in casinos are particularly problematic, said Chuck Gardner, a Las Vegas lawyer who is active in the issue. He argues that they teach children how to gamble. Derevensky, who notes that studies show adolescents are up to five times more likely to develop gambling problems than adults. And... most problem gamblers report gambling as early as 9. "It erodes our children's education and work ethic," said Durand Jacobs, a clinical psychologist and professor at Loma Linda University Medical School in Riverside who has long studied the issue. He says he did a study in the 1980s that showed as many as 40 percent of underage teens had played the lottery. Teens aren't the only ones vulnerable to gambling's reach.... Research shows that the majority of children -- before they reach 12 -- have gambled for money, (Jacob's) said.
"Gambling's allure increasingly being peddled to children"/By Michael Stetz/Union-Tribune Publishing Co./2.2.02

The arcades perform three functions. The most obvious is to free up the parents to gamble. The second is to free the kids of their money. The third is to train the next generation of gamblers.
"Kiddie Kasinos Training the next generation of gamblers"/
By Chuck Gardner/Review-Journal/5.31.98


Ms. Rodgers, the prosecutor, said the Albanian crime ring had controlled a network of 50 video gambling machines. The machines themselves, a type of arcade game, are not illegal, but it is illegal to pay money to winners. The ring collected protection payments and illegal gambling proceeds weekly from various restaurants and social clubs in the Bronx and Astoria. From the early 1990's until 2004, according to the indictment, the defendants gained control of businesses through the threat of violence and forced various social clubs that also ran gambling operations to give them money in exchange for protection.
Albanian Gang Portrayed as Aspiring Mafiosi/NEW YORK TIMES/12.20.05

A potent argument pushed by gaming opponents is that Las Vegas casinos are consciously, cynically molding the half-formed minds of children with arcade games and kiddie attractions, predisposing them to indulge in serious wagering when they come of age. As Chuck Gardner, former Nevada deputy attorney general, pointed out on these pages in May, many of the casino-based arcade "games of skill" -- in which children win tickets to exchange for prizes --are really games of chance, indistinguishable in their essence from adult casino gambling.
Casinos, kids, slots/www.lvrj.com/lvrj_home/1998/Jul-26-Sun-1998/opini/7.26.98

Hour after hour, its graying customers, most of them women, feed quarters and dollar bills into the television-like machines, essentially electronic slot machines with buttons instead of pull-arms. State Rep. Ronald Greenstein, D-Coconut Creek, says the video machine vendors have been banned in North Carolina, South Carolina and Georgia, so they are pushing to expand in Florida. He contends that people with $50 worth of coupons are going to supermarkets, redeeming them for 50 cents in merchandise and taking the change in cash. That exposes the arcades for what they are, he says: gambling casinos.
Senior gamblers fight bad odds, experts say/PALMBEACHPOST.COM/4.12.04

DELTONA, Fla. -- Hundreds of video slot machines were seized after authorities raided seven adult arcades in Volusia County and one in St. Johns County for alleged illegal gambling operations. Investigators seized the machines looking for proof that the computer chips inside were rigged to allow players to win a set number of times, making the slots "games of chance," which are illegal in Florida, But a two-month investigation conducted by law enforcement agencies in the area identified gambling experts who say the machines actually contain chips that are programmed to win or lose, Davidson said. Meanwhile, investigators in Jacksonville raided two similar arcades Thursday and seized about 25 slot machines.
Video Slot Parlors In Volusia, St. John's Raided, Shut Down/www.local6.com/11.8.03

FL The city of Melbourne has been on a crusade to shut down Starlight Palace, but a state legal loophole -- nicknamed the "Chuck E. Cheese exemption" -- and conflicting court decisions allow it and other such arcades to stay in business. Slot machines are largely illegal in Florida, and authorities have shut down arcades in Pinellas, Hillsborough and Volusia counties, along with Panama City and Sarasota. Elsewhere, however, the quasi-casinos are operating and thriving -- including Merritt Island and Sebastian in this area. April 2004: Police raid the arcade, seizing 98 slot machines, $17,355 cash and $13,800 in Visa gift cards.
City, arcade battle is no game/http://www.floridatoday.com/8.15.05

FL With more than 50 slot machines lining the walls, Triple Sevens Arcade on U.S. 1 in Fort Pierce looks like a small gambling casino. The payoff here is in store and restaurant coupons, not cash. Patrons help themselves to a veggie tray, free sodas and coffee. Last weekend, eight arcades in Volusia and St. Johns counties were raided and dozens of slot machines were seized. Retirees love the arcades. Sheriff's Office consulted Sertell, who used to run Harrah's in Atlantic City and is an expert on gaming machines. Sertell has testified in court that slot machines in adult arcades are rigged. Sertell said an arcade slot typically is regulated by a computer that ticks along at such a fast cycle it can read the outcome of a spin before it stops. If the computer doesn't like the pending result, it changes it. "Skill plays no role in determining the outcome," he said. Some machines have settings where you can turn the grand jackpot off.... The customer is not able to either predict or control the outcome of the game."
'Adult arcades' legality questioned/PALM BEACH POST/ 11.16.03

County officials say the ordinance is necessary to stop the casinolike arcades popping up across Central Florida. Adult-arcade operators claim refuge under the arcade exception -- the so-called "Chuck E. Cheese" loophole. Central Florida adult-arcade owners say they should be free from prosecution because they award gift cards, restaurant coupons and other low-stakes prizes to players of digital slot machines.
Decision may sweep video slots out of Seminole County/ORLANDO SENTINEL
3.22.04


The law targeted rogue game hall operators who had illegally turned arcade games consoles into gambling machines.
Greece still faces gaming ban/WWW.THEAGE.COM.AU/ 3.2.04

IA "The (gambling) investigation resulted from a major embezzlement investigation that we were conducting," Steve Bogle, assistant DCI director, said.
Arcade owners receive probation for operating slots/LAS VEGAS SUN/1.19.04

"They are feeders into other forms of gambling," said Duran Jacobs, a
retired professor of psychology and a gambling opponent. "We have an
industry always looking for the next generation of consumers."
Arcades' games face legal review/SACRAMENTO BEE/ 4.15.02

Even teenagers who don't play cards can get hooked on gambling by trying to win games of chance at arcades, ... said Denis Rudd, professor of tourism, hospitality and gaming at Robert Morris University in Moon.
A losing hand: Gambling's addictive nature can be a risky wager for teens PITTSBURGHLIVE.COM/4.15.05

Atari and Las Vegas gambling-machine manufacturer Alliance Gaming today announced a licensing agreement that will see Alliance develop a series of slot machines based on Atari's classic games. The games will be released by Alliance's Bally Gaming division and will feature bonus modes in which the player will use traditional controllers to play brief rounds of the arcade games for bigger rewards.
Coming to a casino near you: Atari slot machines/WWW.GAMESPOT.COM /9.14.04

More than 53 percent of at-risk and 46 percent of problem gamblers reported
wagering on arcade games.
Study renews problem gambling debate/LAS VEGAS SUN/ 3.25.02

OH Police seized 35 machines and roughly $10,000 at Tigertown Arcade, 2840 Lincoln Way E., which is in a retail center known as Patrick Square.
Police also seized 18 machines and roughly $4,000 from GameQuest,
Perry gambling rings busted/WWW.INDENONLINE.COM/ 12.9.05

TX Approximately 129 lot and video machines were seized from Vickie's Place and Jackpot Arcade in San Jacinto County, after a raid on these establishments for illegal gambling last year.
SJC to sell machines due to illegal gambling/WWW.ZWIRE.COM/1.17.06

TX Two arcade owners faced a judge Monday on illegal gambling and weapons charges. An undercover operation showed the Penas were running an illegal gambling business at the Gold Mine Arcade.
Raid shuts down gambling business/WWW.NEWSCHANNEL5.TV/1.10.06

TX He is referring to the so-called "eight liners," slot-type machines that are widely operated in many parts of the state -- in bars, convenience stores and amusement arcades -- despite state laws against casino-style gambling activity. According to some estimates, there are as many as 143,000 eight liners now operating in Texas.
Perry an instant loser in school finance/HOUSTON CHRONICLE/1.10.06

TX Police seized 57 gambling machines and cash Friday in a raid conducted near Police Department headquarters. Game room parlors began to spring up after 1995, when the Texas Legislature legalized arcade games that dispense trinkets or tickets to be exchanged for inexpensive gifts.
Police raid gambling hall in Missouri City/HOUSTON CHRONICLE/11.1.03

TX Video gambling is legal in Texas within certain limits, said Brownsville Police Lt. Juan Hernandez. But the two arcades that police shut down weren't operating within those limits. Undercover policemen frequenting the arcades within the last few weeks were paid cash for hitting jackpots -- a no-no under state law.
Police close down casinos for alleged illegal payouts/THE BROWNSVILLE HERALD/ 4.30.04

He says when children play arcade games they get "instant satisfaction which is so absorbing, the player is not aware of the price they pay for the game. "They lose awareness of the value of money... Everything takes a back seat to instant gratification."(Philip Armstrong, father of two and Clinical Counsellor of the Australian Counselling Association. ) Mr Armstrong questions where children are getting their money. "I've seen kids walking around with $50.00 to play at arcades. "Just because the game is turned off, it doesn't mean a child's mind will turn off. A child's mind continues thinking about the game--you can see it in their eyes."
"GAMBLING-EASY AS CHILD'S PLAY?"/by Reneé Smith/Public Affairs Journalism/8.25.02

With the memory of Sherrice Iverson's death still fresh, the Legislature is considering a bill that would restrict children's access to video-game arcades at night. Seven-year-old Iverson was killed in 1997 in a restroom of the Primm Valley hotel-casino, 45 miles south of Las Vegas, after she had been playing in the hotel's game room late into the night while her father gambled in the casino. Jeremy Strohmeyer is serving a life sentence for the murder.
Bill limiting kids' access to arcades comes under fire/Las Vegas SUN/4.7.99

Unfortunately, a large percentage of the games in casino arcades are gambling devices. While the casinos are arcades for adults, the arcades are nursery casinos. The arcades perform three functions. The most obvious is to free up the parents to gamble. The second is to free the kids of their money. The third is to train the next generation of gamblers. This describes many of the games in the arcades. Some are miniature versions of casino games. At least one is indistinguishable from a casino device. While the representative of value in the arcades is a rectangular paper token (much like a theater ticket) which is turned in for toys, the representative of value in the casino is a stiff circular "chip," which is turned in for cash. The biggest difference is that the kids are ripped off even more than the adults. The arcade games are more deceptive, because they are frequently designed to suggest a level of control that doesn't exist. One arcade game, for example, resembles a roulette wheel in every respect except for the so-called "skill lever" which the child pulls to stop the wheel. But the ball keeps on bouncing through the numbers, and the result is random. Another machine found in most casino arcades is an exact rendition of one found in most casinos. Quarters are piled on a ledge behind glass. A broom-like device pushes them off when they reach a certain density. The player tries to bring the quarters to that density by depositing his own into the machine. The gobs of quarters on display hanging over the ledge likely tantalize the kids more than the adults, but the kids, unlike the adults, can win only paper tokens. One watches the children in the arcades with dismay. Many exhibit the same agitated and frustrated demeanor of gambling-addicted adults as they pump their coins into the machines. A representative of LazerTron stated over the phone that these machines are distributed "all over" and that LazerTron has "made them legal" by making them "skill-based.

www.nevadaindex.com/7ngisc.htm
The Regulation of Organized Gambling in Nevada

A report to the National Gambling Impact Study Commission

Chuck Gardner is a licensed attorney in Nevada and California and has practiced law in Las Vegas since 1985. He served as a deputy attorney general for Nevada between 1987 and 1994.