Kentucky's Department of Alcoholic Beverage Control says illegal gambling machines are on the rise in their state. Unregulated slot machines and video poker machines are common in the state, where they become an open secret in a local community. One illegal brick-and-mortar gaming site was shut down recently in Williamson. In that case, the illegal money laundering activities only came to an end when the IRS raided the operation. The defendant in the case pleaded guilty to money laundering.
In many cases, gaming operators want the games to appear legal to law enforcement personnel, so they appear to be games for young adults. To make sure field agents know what to spot, officials with the Kentucky Alcoholic Beverage Control (which also handles illegal gambling) is now training law enforcement personnel across the state. Once they attend training seminars, the operations are easier to spot.
Training to Spot Illegal Machines
Mike Razor is the division director for the training seminars. He says the illegal gaming machines are a disservice to the gamblers they serve, because the payout percentage can be pitifully small in comparison to legal slot machines and video poker machines.
Razor says, "Besides violating state and federal laws, these illegal gambling machine operators are cheating their customers. The machines are able to be programmed by the operator to alter the winning or 'pay-out' percentage, meaning there is zero skill involved at winning."
All gaming machines maintain the payout percentage which is programmed into it, but the random number generators which produce the wins and losses can be set to a number of different settings. While state laws require a minimum payout percentage is used for machines in the legal casinos, the illegal operators can set their machines to criminally low percentages. Therefore, in land-based casinos which are licensed under the law, the gaming machines often have a much higher win percentage.
Punishment for Gaming Crimes in Kentucky
If caught possessing an illegal gaming machine in Kentucky, a person is guilty of possession of a gambling machines, a class A misdemeanor which brings with it a sentence of up to 12 months in jail. If the person owner machine is convicted of "promoting gambling", the operator would be sentenced to 1 to 5 years in prison as perpetrator of a Class D felony.
Finding small time operators is not as easy as one might think, though. Local citizens might know about a local 8-liner operation, but unless you are an everyday patron of one of these gaming parlors, it's hard to know if the operation pays out real money or simply pays in household items. Outlawed gaming parlors might operate for months or years before the state-level officials notice, because they must police large stretches of territory.
The state officials are not alone, though. While Kentucky gaming regulators hope to shut down the illegal operations, the feds sometimes get involved. One such case happened recently in South Williamson, Kentucky, where the Internal Revenue Service raided an illegal poker machine parlor.
West Virginia Man Guilty of Money Laundering
Gregory A. Dotson of Chapmanville, West Virginia pled guilty to money laundering charges in a case involving illegal gaming machines, say U.S. Attorney Booth Goodwin. Gregory Dotson owns Giovani's of Logan in West Logan, and was tried in Charleston, West Virginia.
According to court records, Dotson ran an illegal poker machine parlor in a cigar shop he owned in South Williamson, Kentucky. He paid winnings on the poker machines, while mixing money between his cigar shop and the restaurant. He also used $12,000 from the rake on the poker machines to buy a car in Bristol, Tennessee.
IRS Raids Poker Machine Operation
Paying money for winnings on dozens of gaming machines allows for a significant amount of money laundering to take place. Since he mixed money from businesses in two states (Kentucky, West Virginia) and used that money to make a purchase in a third state (Tennessee), the illegal operation was of interest to federal authorities. Eventually, the IRS raided his illegal gambling operation and seized 80 different poker machines.
Sentencing for Mr. Dotson will take place on June 10. He faces up to 10 years in prison for money laundering.
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