Gaming machines allowed to prosper
LISA SINK
Gaming machines allowed to prosper
Authorities unhappy with enforcement by Department of Revenue
By LISA SINK lsink@journalsentinel.com, Journal Sentinel
Sunday, March 28, 2004
Since the state transferred enforcement of some of its video gaming machine laws from criminal investigators to tax collectors last summer, the number of the devices is on the rise in Wisconsin, state and local officials say.
“You’re seeing more and more of the machines everywhere — in taverns, restaurants, the place I bowl at,” said Kyra Schallhorn, special agent in gaming enforcement for the Justice Department’s Division of Criminal Investigation.
The reason: Now that Justice Department investigators aren’t involved when there are five or fewer machines in one establishment, just nine alcohol and tobacco enforcement agents in the Department of Revenue are responsible for watching the state’s more than 10,000 taverns.
Tavern owners, officials say, hope authorities look the other way.
“In their minds, and rightfully so, there’s nobody that’s going to enforce” the law, Schallhorn said.
But the owners are finding that in some communities, such as Brookfield — where police recently ordered the removal of all gambling machines — local authorities still are taking enforcement seriously.
The crackdown seems unfair to Brookfield tavern owners, who watch their competitors plug in machines without penalty in neighboring Wauwatosa, Menomonee Falls and Waukesha.
Tavern League lobbyist Scott Stenger disputes that the number of machines is on the rise, saying they have stayed steady at 20,000 to 30,000. And, he added, inequitable treatment by municipalities is exactly what last summer’s enforcement change was intended to prevent.
“If one community isn’t going to allow them, it doesn’t take a lot of economic study to say what is going to happen,” Stenger said. “They’re going to lose out because someone is going to go three blocks to another community to play them.”
The enforcement change — which was added to the state budget bill and not vetoed by Gov. Jim Doyle — stated that state Department of Justice agents and local police and sheriffs can no longer enforce state laws governing taverns that have five or fewer gaming machines. Possessing five or fewer machines is a non-criminal forfeiture offense with a penalty of up to $500 per machine.
Local police and Justice Department agents can still seize machines if a tavern has six or more. That is a felony offense punishable by possible prison time and fines.
But the attorney general and the League of Wisconsin Municipalities said that the transfer of authority for five or few- er machines does not prevent communities from enforcing their own existing anti-gaming device ordinances — or from adopting new ones.
Brookfield prohibits all gaming devices, regardless of the number, as do West Allis and Port Washington.
In Appleton, aldermen on March 3 voted 8-6 to defeat a proposal to create a local ordinance banning the machines.
But other communities considering adopting anti-gaming device ordinances are the cities of Fond du Lac, Janesville and Manitowoc, and Door and Rock counties, said Schallhorn, the special gaming enforcement agent for the Justice Department.
The state Revenue Department, since taking over enforcement of those with five or fewer machines, is concentrating its efforts on tax collection via audits of gaming machine distributors and taverns.
They must pay sales and income taxes on gross receipts from the devices, state tax administrator Diane Hardt said. In addition to her division’s nine alcohol enforcement agents, she can tap 150 field auditors for that purpose.
“We have not gone out yet and disabled any machines or seized any machines, but we are developing audit cases,” she said.
Only one audit has been done so far, and the assessment is under appeal, Hardt said.
In Brookfield, Police Chief Dan Tushaus sent a letter to all liquor licensees in May stating that the machines were illegal and must be removed.
But detectives found a total of 35 machines in nine businesses during routine compliance checks between November and January. None had more than five machines, Tushaus said.
He sent another letter last month to the offenders, asking them to remove the machines in a week or face seizure and daily forfeitures of $102 per machine per day of violation.
All removed their machines by the time officers returned.
“I’m very proud of the response,” Tushaus said. “It tells me that we have responsible people running our liquor establishments.
“I looked at this issue as an opportunity to educate them, because I think there is a lot of misinformation out there.”
Many believe the machines are legal, as long as no payouts are made. Not true, say state officials and Brookfield police.
Stenger said the Tavern League disagrees.
“If I bet on a game of pool, do I confiscate the pool table and say that’s an illegal gaming device?” Stenger said.
“I have heard that there are times people played darts and put a bet on it. Do we take all the dart machines?”
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