Federal court rules sweepstakes machines are gambling devices

Published On: May 01 2014 05:46:44 PM HST   Updated On: May 01 2014 07:52:54 PM HST

A ruling by federal Judge Leslie Kobayashi is providing clarification about whether sweepstakes machines confiscated by police from game rooms across Oahu are gambling devices. In the ruling filed Wednesday Kobayashi said the machines constitute gambling under Hawaii law since the user of a terminal "clearly 'stakes or risks' something."

Click here to watch Andrew Pereira's report.

More than 150 of the sweepstakes machines were seized when Honolulu police raided Winner'z Zone locations and other arcades twice in 2012 and once in 2013. That prompted five companies behind the machines to file a lawsuit in federal court against City Prosecutor Keith Kaneshiro and Honolulu Police Chief Louis Kealoha, claiming the raids were tantamount to illegal search and seizure. The companies also alleged Kaneshiro misspoke when he said the machines were a form of gambling during a news conference in September 2012.

In court PJY Enterprises LLC, Lucky G. Enterprises Inc., SL&G Investments LLC, WZ Waikiki Partners LLC and WZ Wahiawa Partners LLC argued the machines aren't a form of gambling since players can win coupons to purchase products online or at arcades.

However Kobayashi refuted the argument, saying coupons were hardly ever used and even when they were, products never arrived in the mail.

"Rather," Kobayashi wrote, "the only reasonable inference is that customers continue to purchase discount coupons because they went to increase their odds of winning a larger cash prize."

Kaneshiro declined an interview Thursday, but spokesman Dave Koga said Kobayashi's ruling confirms the sweepstakes machines are in fact gambling devices.

During a news conference in September 2012 Kaneshiro put arcades and other establishments on notice, saying more machines would be seized if they continued to operate.

According to the Honolulu Liquor Commission, 32 establishments had permits to operate sweepstakes machines on Oahu in 2012. On Thursday the commission could not provide updated numbers to KITV4.

Attorneys representing businesses that had sweepstakes machines confiscated did not return phone calls by KITV4 seeking comment.


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