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Md. amusement gaming industry pleased with latest proposed regulations

A new set of proposed rules meant to regulate some arcade games in the state is meeting with the approval of distributors of the machines even though some say a 49-month battle has caused a loss of jobs and businesses.

The approval of the industry potentially clears the way for the Maryland Lottery and Gaming Control Commission to begin the lengthy process of finalizing the regulations that have been under consideration since 2012.

Gov. Hogan plays a claw machine in ocean city last August while on the campaign trail. (File)

Gov. Hogan plays a claw machine in Ocean City in August 2014 while on the campaign trail. (File)

“Given all the ups and downs we’ve had, these (regulations) have been quite a breath of fresh air,” said Larry Bernstein, member of the commission who represents the industry.

Charles LaBoy, managing director of gaming for the state and chair of the commission, said he tried to incorporate changes that addressed the concerns of the industry.

“This has been a very challenging item to tackle,” LaBoy said during a Wednesday afternoon meeting of the commission, adding “I’m pleased that you guys aren’t tearing it up.”

Coming up with a set of regulations has been the focus of more than four years of back and forth between companies that distribute or operate the games and the commission since a 2012 law moved oversight of the industry to the same agency charged with governing casino gaming and lottery tickets.

Operators of amusement gaming devices were initially upset over proposals requiring the registration  — at as much as $200 per machine — of all games ranging from standard arcade games such as Pac-Man to skee ball, claw machines that dispense stuffed animals and other trinkets and higher-end machines that offer expensive prizes such as gaming systems and tablet computers.

But the new regulations eliminate much of what distributors and arcade owners saw as onerous.

Gone are the fees. Only games that offer prizes or tickets that can be redeemed for prizes are required to be registered. Arcade games would be exempt.

“You’ve basically eliminated all the amusement games,” said Larry Bernstein, a member of the commission who represents the industry. “These regs can’t apply to those. That’s a pretty huge carve-out. That’s good.”

Also changed are more stringent requirements for registration. Previous proposals required all games to be registered and for updated reporting when games were moved from one location to another. Both owners and operators of games would have needed to seek a license.

Under the new proposal, only owners of the games need register themselves and the games — just the ones that offer prizes or tickets that can be traded for merchandise. The new rules substitute requirements that included serial numbers of each machine for a simpler list that includes the machine and the location and the number of machines at each site. Swapping out games is much easier and would only need to be reported during the next annual registration period.

LaBoy said the gaming agency hopes to create an online registration system similar to what is used by casino licensees to further streamline the process.

“That will be the heaviest lift for us,” LaBoy said.

There will also be no new staff for the program. Enforcement through the agency would be limited, with most of it falling to local police and state’s attorneys or the Maryland State Police.

“It will be a challenge for us to come up with compliance without resources and we’ll have to develop a plan,” LaBoy said.

Nick Sarioglou, a member of the commission and branch manager for Baltimore office of amustement game distributor Betson, said the struggle over the regulations created an uncertainty that forced 13 operators and one distributor out of the business in the state.

“This long process is affecting people’s lives,” Sarioglou said.

Sarioglou was quick to praise Gov. Larry Hogan, who appointed the commission after touring the Boardwalk in Ocean City and criticizing the regulatory effort as being too heavy-handed.

“We wouldn’t be at this point if not for the governor,” Sarioglou said.

The new regulations could be ready to go before the full lottery commission as early as next month — the beginning of a process that could take a minimum of 120 days.