Hawaii Latest State to Crack Down on Sweepstakes Parlors

Posted on: May 12, 2014, 05:30h. 

Last updated on: May 8, 2014, 07:44h.

Casino.org Staff Writer Read More

Expertise: Commercial Gaming.

For most Americans, Hawaii seems like an exotic destination, a place where one can go on a grand vacation to get away from their troubles. Unfortunately for the operators of sweepstakes cafes, the state has decided that it’s not a place where they’re going to be able to hide.

Hundreds of charges have been filed against the owners and operators of sweepstakes machines in a major bust in Hawaii. A grand jury has returned an indictment that included 414 counts against three establishment owners and six additional employees, including criminal charges of money laundering and promoting gambling.

So far, seven of the nine individuals charged have been arrested. The two remaining people, Mike Miller and Mike Madali, are currently in the mainland United States. Officials say they will be arrested on their return to Hawaii.

While the arrests and charges were sweeping, the Honolulu Police Department (HPD) has made it clear that their investigation is far from over.

“Those who have it in their establishments, it would be wise to remove them because if they don’t, the HPD will be coming after them,” said HPD Major Jerry Inouye.

Federal Judge Declares Machines Illegal

The move comes after federal judge Leslie Kobayashi granted the city of Honolulu’s motion for summary judgment in another sweepstakes-related case. In that ruling, Judge Kobayashi declared that this use of the machines – in this case, known as products direct sweepstakes terminals or PDS devices – constituted gambling even at the time of prior seizures.

While manufacturer PJY Enterprises says they will appeal the ruling in the 9th Circuit Court, officials say the ruling certainly made it easier for them to bust other sweepstakes venues.

“It helps us,” said Honolulu Prosecutor Keith Kaneshiro. “It wasn’t the basis of why we did it. It just further confirms what we believe to be true that these machines are gambling machines.”

In total, law enforcement officials have confiscated 200 machines from 14 different locations around the city in recent weeks. In addition, authorities say that they have video from inside the establishments that can help them find additional people involved in the enterprises.

Customers Also Warned

In a warning that might surprise many, the city also said that customers could potentially be charged with crimes as a part of the crackdown if they do not stop playing.

“If you want to gamble, gamble in a jurisdiction where it’s legal,” Kaneshiro said.

According to the HPD, residents have been making regular complaints about the establishments hosting such games. They also say that the sweepstakes cafes have led to an increase in crime near the venues.

“There’s no amount of resources that can measure the value in living in a community that’s safe for everyone,” HPD Chief Louis Kealoha said.

Tracy Yoshimura, owner of PJY Enterprises, has called the crackdown a form of harassment, and is suing HPD and the city in response.

Sweepstakes machines are used as an attempt to circumvent local gambling regulations by offering games of chance only alongside a purchase – usually telephone cards or Internet time. However, the chance to win a prize is the real incentive. Many states have worked to outlaw such games or have found them illegal under current gaming law.

Hawaii is one of only two states, along with Utah, that currently has no forms of legalized gambling.