Comptroller Peter Franchot announced yesterday a broad crackdown on video poker machines at Maryland bars, saying the tax collector's office would use its authority to enforce alcohol laws to pressure liquor-license holders to get rid of the "for-amusement-only" devices that he says are mostly operated as illegal slot machines.
Last week, Franchot, a Montgomery County Democrat and ardent gambling opponent, sent a letter to the state's 7,200 liquor licensees informing them that his interpretation of Maryland case law means that even putatively amusement-only consoles, such as video poker games, may be considered "slot machines" and therefore subject to criminal prosecution or revocation of liquor licenses.
"We're coming after you," Franchot said yesterday at a Baltimore news conference. "No more turning a blind eye. No more wink and a nod. ... I intend to shut them down."
Beside him stood an arcade-style "Cherry Master" game he said was typical of the 3,500 devices he alleges are largely used for illegal gambling in Baltimore-area corner bars and convenience stores.
The announcement was met with both scorn and concern by mom-and-pop bar operators.
"The comptroller is drinking too much of some kind of Kool-Aid," said Del. Joseph J. "Sonny" Minnick, a Baltimore County Democrat who owns a bar with his brother in Dundalk that has four of the devices Franchot is targeting. "It certainly sounds like he's overstepping his bounds."
Minnick said he pays hundreds of dollars a year in licensing fees for each game machine and taxes on the income they produce. "If they weren't legal, why would Baltimore County require a license to have them in your establishment?" Minnick said.
Despite professing that he doesn't make "payouts" on the machines, Minnick said his brother would likely remove the devices from their bar and "wait and see. ... I think somebody will take Franchot to court on this issue."
A few blocks from the comptroller's midtown Baltimore offices, the manager of Leon's in Mount Vernon said Franchot's letter has sown fear among bar operators and the vending machine company employees that typically lease the machines to businesses.
"They need to stop picking on the poor small businesses," said Carol Mullins, who has been working at Leon's for three decades. She predicted that Franchot's crackdown would hurt her bar. "Some customers come in because of the machines," she said. "They love to play."
Jeffrey A. Kelly, deputy director of the tax-collector's field enforcement division, said he would begin training inspectors - who typically inspect between 2,000 and 3,000 liquor-licensed businesses every year - to look for video poker machines, as well as other indications of illegal gambling, such as ledgers used to record payouts to customers.
If inspectors find the machines, they will refer the licensees to local law enforcement and prosecutors, asking for their help in prosecuting the bar owners, Franchot said. He said he did not need evidence of gambling activity to conclude that the machines were illegal.
That's not the understanding that Samuel T. Daniels, head of the Baltimore City Board of Liquor License Commissioners, has been operating on for two decades. "As long as they didn't pay off, then the machine apparently was legal," Daniels said, though he agreed with Franchot that in the overwhelming majority of cases, he assumes they are used as gambling devices.
It is not clear whether prosecutors will be eager to tackle the cases Franchot refers.
Kathryn M. Rowe, an assistant attorney general assigned to the General Assembly, said Maryland courts have not issued broad guidance about what constitutes an illegal gambling machine. "It's certainly not clear that every machine out there that has video poker on it is a slot machine," Rowe said.
Baltimore County State's Attorney Scott D. Shellenberger said he welcomed any prosecutable evidence of illegal gambling, but he cautioned: "Just like a deck of cards is not illegal, a video machine in and of itself is not necessarily illegal."
Franchot said his crackdown was sparked by a recent law passed by the state legislature that banned many gambling devices but exempted the "for-amusement-only" machines that have proliferated in the city and Baltimore County. In February, the comptroller announced stepped-up tax-compliance enforcement of video gambling establishments and has audited more than a dozen businesses, assessing $1 million in unpaid taxes against them, said Franchot's chief of staff, David Weaver.