Companies that distribute video and other gaming devices say a new set of regulations proposed by the Maryland Lottery and Gaming Control Agency could put them all out of business.
The proposed regulations, which were approved by the agency earlier this year, are meant to prevent an influx of illegal electronic gambling devices, which could potentially take revenue out of a tightly controlled legal gaming system that currently includes four operational casinos.
“When I have a machine making $20 per week — $1,000 a year — I don’t think David Cordish is waking up in the morning saying, ‘Those god-damn arcade operators are hurting my business,’” said Larry Bershtein, owner of Laurel-based Capitol Amusements and president of the Maryland Amusement and Music Operators Association, in a reference to the operator of the Maryland Live Casino.
Members of the association plan to attend in force a public hearing on the new regulations scheduled for 10 a.m. Friday.
Stephen L. Martino, director of the state gaming agency, issued a brief statement in reply to a request for an interview. “This is an opportunity for interested parties to be heard and for the Commission to consider all public comments — both written and oral — when finalizing the regulations,” the statement.
Kevin O’Keeffe, a lobbyist who represents the industry, said the proposed regulations contain conflicting language that regulates everything from video games to skeeball and claw machines. The new rules also impose additional fees of as much as $200 per machine and require businesses to register each machine and report when those machines have been moved.
“This is already a heavily regulated and taxed industry,” said O’Keeffe, who noted that most jurisdictions in Maryland already charge fees to license the devices and as much as a 10 percent amusement tax on money collected by the games.
The proposed regulations, published in The Maryland Register on June 13, represent roughly 27 months of work.
In 2012, the General Assembly passed legislation authorizing a sixth casino in the state. In that bill, the legislature also authorized the gaming agency to regulate other gaming machines. The intent at the time was not meant to impose regulations on arcade or other games that offered prizes with minimal cash values.
At stake are potentially millions of dollars in revenue to the state and casino operators.
A 2006 study produced by the Abell Foundation estimated that as many as 3,500 video gambling devices were in bars, bowling alleys, convenience stores, gas stations, laundromats and liquor stores. Those devices are distributed by many of the same companies that also distribute arcade-style games.
That same study, completed two years before the state legalized video slot machines, estimated the gross revenue on the devices at $91 million to $181 million — most of which goes unreported. The report estimated that the loss of tax revenue to local jurisdictions was as much as $15 million.
Bershtein said his industry is struggling to compete with smartphones, portable gaming devices and other market changes. The regulations would not only hurt amusement companies but the industries they serve.
Several current and former gaming distributors, such as Carroll Bond III, Gilbert Sapperstein, Joseph Stonik, John Vontran, and John Zorzit, provide the machines that law enforcement officials say are linked to underground gambling. Machines placed in bars and taverns around the area are easily modified, and payouts to players are based on credits accumulated.
Tony Paszkiewicz, owner of Columbia Games and Music, attended Thursday’s gaming commission meeting in opposition to the regulations. The company was listed as having more than 250 electronic gambling machines in Baltimore and Baltimore County, according to a 2006 report by the Abell Foundation.
Paskiewicz was charged with two illegal gambling offenses in 2000. Those charges were later dropped.
In 2008, Bond, owner of Carbond, was charged with 110 counts of illegal of possessing and distributing illegal slot machines — charges he had faced 14 other times. While most of those earlier charges were ultimately dropped, a Baltimore County District Court judge in 2008 found that his machines were illegal, ordering him to forfeit 114 machines and more than $20,000 in cash.
In 2011, Baltimore County police raided the bar owned by Del. Joseph “Sonny” Minnick and his brother Daniel and seized a number of machines. A county official said at the time they were acting on a tip that the bar was paying out on its poker machines for years. Prosecutors charged Daniel Minnick but ultimately dropped the charges.
O’Keeffe said the proposed regulations overshoot any attempt to control illegal gaming.
“There are a variety of machines out there,” O’Keeffe said. “If that’s the intent, these regulations are much broader.”