Gray skies may soon be hanging over Colorado’s illegal gambling market, thanks to an investigation by news station Denver7.
In its aftermath, Governor Jared Polis recently signed a new law that gives the Colorado Division of Gaming the authority to look into gray casinos in areas that haven’t legalized gambling.
The Division’s director, Dan Hartman, vowed to put an end to illegal gaming activity in the state. He believes most of these gray casinos operate outside the law.
Gambling became legal in 1990 in three mountain towns when citizens voted to allow it in:
- Black Hawk
- Central City
- Cripple Creek
There are numerous Colorado casinos in each town. Tribal sovereignty allows Native Americans to offer casino gaming, too.
On the other hand, adult gaming arcades, another name for the gray casinos, have proliferated illegally elsewhere across the state.
They attempt to circumvent state laws with their payout practices. They attract crime.
Hartman told Denver7 that his department will collaborate with local police and prosecutors during investigations. Hartman said:
“We can bring our experts in to talk about what is and what isn’t legal and maybe make it easier for them to tackle this problem.”
Creeping crypto, sneaky slots
In its investigation that used undercover cameras, Denver7 showed illegal gaming arcades ”hidden away in strip malls”. They are offering cryptocurrency as a prize in an attempt to work around Colorado law.
Winning players receive crypto as their payout. Then they can exchange the crypto for US dollars at a crypto machine. One customer said:
“They make it legal by the crypto machine. What they give you then is crypto money, then you go to that machine and it turns it into American money.”
This topic has recently gotten the attention of the American Gaming Association (AGA) which has requested the White House include them in any ongoing discussions regarding digital currency.
Some gray casinos even more brazenly flout state rules by giving players cash, a practice banned by law in 2018. One adult gaming arcade worker told Denver7 that they pay out at the cash register.
“You pay here, you play here, and you get paid here,” another gray casino employee told the news channel. They were also informed that these venues may pay out more generously than regular legal casinos.
One woman took home about $13,000 from a gray casino play. Players bet anywhere from a penny to $3 per play. One customer admitted to the news channel that it can be addicting and added, “but it’s fun.”
The slot machines found in gray casinos look like and operate similarly to regular casino slot machines. And Colorado’s not the only state to have a problem with them.
The states where gray machines exist don’t receive part of the proceeds from them. The machines are untaxed and unregulated, with no consumer protections.
As for Colorado, Hartman told Denver7 that his biggest concern is that “they (gray casinos) are starting to expand.”
Colorado gray casinos linked to serious crimes
Crime in the vicinity of Colorado gray casinos has been increasing, as well. According to Montrose Police Chief, Blaine Hall this makes them a public safety issue.
He told Kovaleski that these adult gaming arcades “have been linked to serious crimes” including:
- Drug offenses
Chief Hall lamented that gray casinos present a problem because “there is no clearly codified definition”. And because his department has “limited resources.”
In fairness, some employees seem to believe these games are legit, telling Denver7 things like “it’s all predetermined winning…” and “they’re skill tables.” Skill tables would be plain arcade games.
And one employee stated, “That (crypto) machine doesn’t have anything to do with us… We’re just the third party.”
Denver7’s investigation also discovered that more gray casinos operate in Lakewood than anywhere else in the state.
Aurora is handling the gray casino problem
The state’s third largest city plans to tackle the problem itself. City Councilor Curtis Gardiner was instrumental in getting new laws in place that ban these arcades.
The Council unanimously approved the measures.
In addition to banning gray casinos, Aurora’s new laws ban the use of cryptocurrency for payouts. “I think it’s important businesses operate on a level playing field,” Gardiner told Denver7.