Local Government

Coin Operated Machine Businesses

Proposal

The City of Laredo Police Department is proposing that the  State  of  Texas  Legislature amend the  current  law  concerning  8-liner  coin  operated  machines.  The  current  law allows 8-liners to legally operate, but only allows the cash payout amounts to be no more   than $5 dollars in actual value. This issue  creates  a  problem  by  tasking  the  local law enforcement community with constant monitoring and enforcing of applicable gambling laws. The costs associated with building time and labor intensive prosecutable criminal cases against 8-liner businesses financially burdens local law enforcement. In the end, and due to the lucrative nature of the 8-liner business, the  temptation  upon  8-liner  business owners/operators to payout more than the allowed amount apparently outweighs the risk of facing arrest (Class A or B Misdemeanor) or paying fines.

 

The Laredo Police Department recommends either of the two most obvious options. The first option of which would be to lift the limit on cash payouts, thus making it legal for businesses to payout cash amounts to match winnings. At this junction, with careful regulation and state monitoring, such as in Nevada or Louisiana, the State of Texas could potentially keep Texans from traveling outside the State for gambling endeavors and further, the State of Texas could stand to create a new and sizeable cash crop to enhance any element  that  best  benefits the State such as: education, law  enforcement,  etc.  The second option would be to totally ban cash payouts for any form of coin operated amusement machines in  Texas.  The  City of Laredo does not specifically favor one option over the other.

Background

The establishment of amusement businesses, commonly referred to as “8-liners,” is booming in Laredo. The businesses are zoned and permitted through the City of Laredo as legitimate businesses. The 8-liner businesses are highly lucrative amusement establishments featuring coin operated apparatuses. The businesses are established by legitimate business owners and operators. These businesses attract a  large  following  of retirees, senior citizens and  those who opt not to travel long distances for entertainment.

 

The City of Laredo has a population of approximately 255,473 and has 64 permitted 8- liner businesses (approx. 5,400 machines). These businesses are currently governed by local planning, zoning and permitting laws, State of Texas tax/registration through the Texas Comptroller of Public Accounts Office and State of Texas gambling Penal laws. The local and state permitting laws seem appropriate and are generally complied with. A problem arises now that the 8-liner businesses have become too numerous and proved lucrative. The State law that limits 8-liner businesses’ cash payout of prizes to less than $5 is the one factor that business owners/operators are not abiding by. It is apparent that  there  is  public  demand  for cash payout to amounts greater than $5. Cash payouts are what attract customers. Business owners/operators then succumb to the demand for greater than $5 payouts and break the law.

 

There is public sentiment to allow a greater than allowed payout. Likewise, there is a seemingly equal amount of sentiment against such currently illegal  payouts.  The lucrative and demand aspects of the equation have promoted a high incidence of owner/operator disregard for limiting payouts to less than $5, thus violating existing law against it. At this point, the burden is cast upon local law enforcement to enforce the law as it stands. Local law enforcement has struggled to keep up with the controversy centering on the $5 payout limit. Enforcement and penalties related to this type  crime have not deterred owners/operators from continuing to violate this law. City and County law enforcement agencies have incurred considerable cost in manpower and resources to monitor, arrest, and prosecute. An observation on the issue is that  the  violation in payment of over $5 is a criminal violation and therefore tends to attract a corruption element to the businesses, both from internal and external sources. Since businesses  have a need to conceal the violation of payout, they are susceptible to a myriad of other crimes to include extortion, money laundering, etc. If the State were to establish a Gambling Commission to regulate and enforce these types of gambling businesses then the local Police could redirect their efforts toward more substantive law enforcement objectives than enforcing a less than $5 payout limit.

Contact

Raymond E. Garner
Chief of Police
4712 Maher Avenue
Laredo, Texas 78041
Phone: (956) 795-2888
Fax: (956) 795-3120
Email: rgarner@ci.laredo.tx.us