City trying to close 'sweepstakes' game rooms

Baltimore police are taking steps to close game rooms in the city offering computer terminals that mimic slot machines and pay cash prizes, but one operator went to court Monday to challenge the crackdown.

The police sent written notices about two weeks ago to several operators, giving them until Monday to shut down the machines, but further action will be put off at least until a Circuit Court hearing scheduled Thursday, said Anthony Guglielmi, a police spokesman. He declined to name the businesses that received the letters or say how many were notified.

He said police acted after the city's Law Department ruled last month that the machines operating in "sweepstakes" game rooms are illegal under a state law adopted this year. The measure says a slot machine pays off in cash and includes equipment that "delivers a game through the Internet or offers Internet or other services."

That language targets the "sweepstakes" games, as their operators claim they are actually selling Internet time and giving away points to play the computer game that runs like a slot machine, much as McDonald's might give away sweepstakes tickets with a Big Mac.

The city's lawyers rejected that claim. In a four-page memo, the lawyers wrote: "The consideration paid is for the opportunity to play the sweepstakes game not to access the internet; the offer of internet time is merely a subterfuge to evade the law."

The city action is being challenged by BBB Management Inc., the operator of Patapsco Bingo on Annapolis Road, which alongside its conventional bingo game also runs an Internet "sweepstakes" room with 111 terminals, one of the largest such operations in the city. According to an online court record, the company asked the court Monday for a temporary restraining order against further city action.

The lawyer for BBB Management shown in the record, Matthew M. Bryant, did not return a message seeking comment. Joseph Brzuchalski, who is listed in state records as a principal of the company, referred questions to his lawyer.

Terry Land, who operates Hot Spot Sweepstakes in Towson, said Monday he closed the game room he was running in the city recently after a police officer showed up and warned that the operation was illegal.

He said he had not received a written notice but might challenge the city in court; he has filed suit in federal court against authorities in South Carolina who tried to close his business.

The city's lawyers drafted the memo in response to a request from City Councilman Robert W. Curran, who asked for the opinion after a sweepstakes operator applied for a permit to open a location in his district. Curran wanted to know if the machines are legal and if operators are paying the tax on "simulated slots" established under a bill he sponsored in 2010.

"My concern is about the revenue lost if these are slots," Curran said, adding that the charge under that tax could run about $2,250 per machine each year. The operators at Patapsco Bingo, for example, now pay $180 a year in amusement taxes per machine, as the machines were considered "amusement devices."

The opinion of the city's lawyers says the "sweepstakes" terminals are neither "simulated slot machines" nor "amusement devices," but are illegal slot machines because the operators pay cash prizes. The memo notes that the new law gives the Maryland Lottery Commission the authority to make the final decision on whether a game machine is legal, but does not bar "local jurisdictions from making enforcement decisions."

On Monday, Del. Pat McDonough of Baltimore County called on Gov. Martin O'Malley and the commission to enforce the new law and close "sweepstakes" game rooms.

"These places are reproducing like rabbits," said McDonough, a Middle River Republican. In his part of Baltimore County, he said, one room opened a few months ago and two more have appeared in the last two weeks.

Larry Bershtein, president of the Maryland Amusement and Music Operators Association, said his members have been calling him for months complaining about "sweepstakes" games. He said those operations are not subject to the same taxes as his members, and were paying cash prizes, which is illegal for the games his members make, distribute and operate.

Bershstein, whose organization helped draft the revised law, said he considered the city legal ruling "a fair outcome. … My fundamental interest was to see a level playing field."