State officials: Proposed gaming rules misunderstood by industry

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Maryland Lottery and Gaming Control Agency officials say amusement and arcade owners misunderstand an effort to regulate some electronic gaming devices in the state.

Charles LaBoy, deputy director of gaming for the agency, said the proposed regulations are less about Ms. Pac-Man and more about so-called “merchandisers” — games that offer prizes.

“We worked to make sure there wasn’t undue burden placed on the machines,” said LaBoy.

Arcade owners and the companies that sell the games say the new regulations that were proposed earlier this month are vague and confusing, and impose up to $200 in new fees annually for games like skeeball, pinball and video games.

Those owners say they plan on fighting the proposed rules, perhaps even in court. Meanwhile, one state legislator said he plans on opposing the regulations in a General Assembly committee that will have a chance to review the rules before they are enacted.

The merchandiser games, which often feature an element of chance that can be adjusted by the owner of the machine, include claws or electronic challenges where players can win expensive prizes such as tablet computers and MP3 players.

“Over $30 clearly crosses into the electronic gaming universe,” said LaBoy.

Games such as skeeball, where players can collect tickets over time and redeem them for more expensive prizes are not affected by the proposed regulations, he said.

“You just can’t win that iPod on one game play,” LaBoy said.

Other more traditional family games, which are skill-based and offer free plays or prizes under $30 in value, would need to be registered with the commission. The annual fees charged to manufacturers and owners would not apply, and registration stickers would be free, LaBoy said.

“The reality is that it’s still not clear,” responded Kevin O’Keeffe, a lobbyist who represents the Maryland Amusement and Music Operators Association.

The proposed regulations could take effect any time between the end of September and June 13, 2015. If the regulations are not enacted by June, the agency would have to begin the process anew.

Del. Eric M. Bromwell, D-Baltimore County, said he does not believe the legislature intended arcade games to fall under the purview of the agency when it passed a law in 2012 authorizing it to regulate some electronic gaming devices.

Bromwell called the regulations “another tax on small business.”

“These businesses can’t handle it,” said Bromwell.

Bromwell, who sits on the Joint Committee for Administrative, Executive and Legislative Review, which reviews proposed state regulations, said he would fight the regulations when they come before lawmakers.

“It’s not something I’m going to support, I’ll tell you that,” Bromwell said.

Most counties already regulate amusement devices and charge operators fees for permits on top of amusement taxes of up to 10 percent.

Nick Sarioglou, vice president of Betson, a Baltimore-based amusement company, said he believes the regulations as written will apply to hundreds, if not thousands, of games his company distributes.

“It’s very difficult to come up with a number,” Sarioglou said.

Sarioglou estimated that his company alone has as many as 7,000 machines that carry merchandise under $30 and as many as 15,000 more that are other types of redemption devices.

“They (legislators) have to go back and rewrite this,” Sarioglou said.

Jerry Greenspan, the operator of two Ocean City arcades including Fun City Arcade, said that regulating the merchandiser machines could hurt his business to the point where he’d have to close his doors.

“The main issue is the prize value,” said Greenspan, who said he did a test in his arcade to see what would happen if he removed all of the high-value products from those games and replaced them with items under $30 in value.

“I had games that were doing $300 to $300 per week,” Greenspan said. “When I put the less expensive items in the machines, they took in less than $100. It proves that people aren’t going to play these games for those types of prizes.”

Greenspan said the merchandiser machines make up about 30 percent of the games he offers.

“You have to offer a mix,” Greenspan said. “It’s not gambling. People come for the family entertainment. They could buy these things in stores but it’s not as fun when they go to Wal-Mart or Target or a toy store to get the same stuff.”

The boardwalk arcade was opened in 1957 by Greenspan’s father. He said he’s angry about the possibility that the proposed new regulations could endanger his business.

“I am not going to get closed down by regulations,” he vowed.