The Colorado Springs Police Department has sent notices to owners of businesses in the city that house illegal gambling machines. The message is simple: Unplug the machines or expect a visit from the police in the near future.
Although many of the businesses in question have been housing these unregulated, slots-like machines for the last five years, this is the first time police have cracked down.
Some businesses will likely abandon the machines, but at least one business has vowed to fight.
Police responding to amendment and new law on gambling machines
Casino gambling can legally take place in three Colorado cities. They are Central City and Black Hawk, west of Denver, and Cripple Creek, southwest of Colorado Springs. Voters approved gambling in the cities in 1990. Online casinos in Colorado, and retail casinos outside the three cities, are illegal.
Two prior actions, in particular, are driving the crackdown by the Colorado Springs Police Department (CSPD).
Lawmakers closed loophole in 2018
First, in 2018, a Colorado law was amended to close loopholes in the legality of gambling machines. That amendment spelled out that gambling in the state is illegal outside the three voter-approved gambling towns.
While that amendment has been in effect for five years, authorities believe there’s still a lack of understanding in the public. That is why CSPD Lt. Mark Chacon told KRDO.com that his department is focusing on education before levying charges or conducting raids.
“A lot of these businesses are not aware that these are not legal in the state of Colorado. That is why it is really important for us to do the educational phase before we even look at any potential enforcement action.”
New law in 2022 targets ‘gray casinos’
The second action followed an investigation by Denver7 news station last year. A law was enacted to give the Colorado Division of Gaming the authority to specifically target “gray casinos,” or adult arcades housing illegal gambling machines.
The division’s director, Dan Hartman, told Denver7 that he vowed to end illegal gambling in the state. He said his agency would work with local police to shutter these businesses.
“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.”
Denver7’s investigation showed illegal gaming arcades offering cryptocurrency as prizes. A machine on the premises converts crypto to US dollars. Other arcades simply gave out cash prizes, like slot machines in casinos. Denver7 reported that one woman won $13,000 playing on illegal machines.
CSPD sent out notices to 32 businesses
The CSPD issued warnings to at least 32 different businesses. The gambling machines are similar to games one would find at arcades, such as Dave and Busters. But instead of providing tickets that can be redeemed for prizes, they pay out actual monetary gains. Those are the machines the CSPD is targeting, Chacon said.
“You are putting money into these video arcade games and you are getting something in return of a monetary value. It could be a coupon or financial gain.”
The fact that no taxes are paid on the machines is the main reason for the crackdown, Peggi O’Keefe, executive director of the Colorado Gaming Association, told KRDM.com.
“They are unregulated. There is no tax that’s collected. There is oftentimes other illegal activities that are associated with these arcades, so it really is a public safety concern for both residents of the community as well as from a law enforcement perspective.”
It’s the illegal activities associated with the adult arcades that are driving the crackdown by authorities. Montrose Police Chief Blaine Hall told Denver7 that arcades “have been linked to serious crimes.”
Those crimes include shootings, stabbings, and drug activity. Hall said his department, located on the Western Slope of Colorado, has limited resources to combat the problem.
One business vows to fight order in Colorado Springs
An owner of Charlie Chedda’s, one of the businesses that got a notice from the CSPD, told KRDO.com that they believe the business is operating legally.
“Charlie Chedda’s is extremely grateful to the Colorado Springs Police Department for addressing the issue of so-called “skilled” game rooms, and we welcome their actions. Charlie Chedda’s has been the trailblazer for creating legitimate, Colorado law compliant, contest video game venues since 2015. To our knowledge, the software utilized by Charlie Chedda’s is the only software that has been reviewed and approved by the state Attorney General’s office, and nationally recognized independent laboratories for compliance specifically with Colorado contest laws. Bona-fide contests have always been exempt from Colorado gaming regulations, which was made even clearer by the Colorado Legislature with the adoption of CRS 18-10.5-103 effectively regulating prize requirements for simulated gambling.”
It will be interesting to see how far the owners of Charlie Chedda’s take the issue or whether CSPD will specifically target the business for non-compliance.