Police Seize Video “Sweepstakes” Machines

BY JIM DOOLEY – Honolulu police seized 77 video machines from six Winner’z Zone arcade locations yesterday, calling them illegal gambling devices.

No charges have been filed against the Winner’z Zone company owners or the distributors of the machines, but Prosecutor Keith Kaneshiro said an investigation is continuing.

“We estimate that there are 32 sites on Oahu with many more machines,” Kaneshiro said.

“The investigation is ongoing and other machines may be seized if they continue to operate,” Kaneshiro said.

The machines offer customers standard Las Vegas-style games including black jack and poker and other games including one closely resembling Monopoly.

They offer the chance to collect cash payouts of as much as $5,000.

Attorney Matt Matsunaga, who represents the local distributor of the machines, PJY Enterprises, said the devices are legal because users don’t have to pay to play them.

Through a time-consuming process, players can write to the Georgia company in charge of the sweepstakes, Product Direct LLC, to request “free promotional entries,” according to directions on the machines and on various websites.

Here are the directions to enable free play of the games:

“To receive free promotional entries (equivalent to a $1.00 purchase of discount coupons) by mail, you must obtain a request code from the game screen by pressing the “Primary Sweepstakes Rules” button and then the “Display Free Entry Request Code” button. After viewing the code, you must hand write on a three inch by five inch (3×5) index card the following information: (i) the request code; (ii) the location of the sweepstakes terminal (name of the retail sponsor’s establishment, city and state); and (iii) your name, age, street address, city, state, zip code and telephone number. You must mail the index card to Products Direct, LLC, P.O. Box 496, Norcross, GA 30071. Each 3×5 card must be mailed in its own separate outer envelope (i.e., limit one request code per envelope). The address on the envelope to Products Direct, LLC must be handwritten and you may not use a postage meter or other mechanical device to affix the postage on the envelope. Products Direct will reimburse you for the cost of a first class postage stamp. Incomplete, incorrect, illegible, lost, misdirected or damaged requests for a free entry request code are invalid. Please allow up to four weeks to receive your redeem code. To use the redeem code, you must return to the same sweepstakes terminal from which the request code was obtained. You must press the “Enter Free Entry Redeem Code” button on the screen and enter your redeem code on the pop-up key pad.”

Matsunaga acknowledged that the free-play option is cumbersome, but he said it is patterned after similar options offered in other promotional “sweepstakes” games hosted by companies such as McDonalds.

An attorney representing Winner’z Zone and PJY, Keith Kiuchi, said he wouldn’t use the word “cumbersome” but acknowledged that going the free-play route “is more than difficult than putting money in the machine.”

The machines are available to customers at least 18 years of age at the Winner’z Zone arcades, another local arcade chain called Sweepstakes Hawaii, and a variety of other locations here.

Matsunaga said no law enforcement agency contacted him or his client about the legality of the machines prior to yesterday’s raids.

“It was a complete surprise,” he said.

Matsunaga noted that the Honolulu Liquor Commission has allowed placement of the Product Direct video machines in bars and other establishments that sell liquor since last year.

“A government agency here has come to the conclusion that it is okay,” Matsunaga said.

Kiuchi obtained Commission approval for placement of the devices in liquor establishments last year.

The Commission required that poker games be removed from machines placed in liquor establishments, but those games are still available on the Winner’z Zone machines, Kiuchi said.

Matsunaga said South Carolina officials who investigated the machines determined that they are not illegal gambling devices.

Kaneshiro said today that other states, including Mississippi and Missouri, have reached opposite conclusions.

“I have no idea what he’s talking about,” Kiuchi said in response. “The only state that has made a determination about the machines is South Carolina, which found them to be legal,” he said.

Kaneshiro said his office has hired an outside consultant to study the legality of the devices.

Government agencies here and around the country have been wrestling with questions about the machines for years.

Matsunaga cited a 2004 letter from then-Big Island Prosecutor Jay Kimura which found that earlier forms of the machines and the sweepstakes games they offered were legal because no purchase was necessary to play them.

And the Honolulu Liquor Commission and Honolulu Police confronted questions about similar sweepstakes games in 2006.

Those machines offered customers long distance phone call cards in addition to participation in a sweepstakes game with a cash payout of up to $1,000.

The Product Direct machines now available here offer customers discount goods available on the company’s website, as well as a sweepstakes game that pays up to $5,000.

The Liquor Commission hired its own consultant, former FBI agent William L. Holmes, who said in 2006 that the phone card machines were illegal gambling devices.

Distributors of the machines, who at the time included an active Honolulu Police sergeant, Timothy Mariani, countered that customers could write away to obtain free game cards so the machines were legal. Mariani was represent by Kiuchi.

Mariani is now retired and no longerdistributes the machines, Kiuchi said.

HPD Asst. Chief Susan Dowsett said today no police officers are involved in distribution of the machines.

Another attorney who defended the machines in 2006, William Milks, used the same McDonalds defense that Matsunaga is citing today.

The phone card sweepstakes machines were no different from other legal promotional contests offered around the country by national firms like Coca Cola and McDonald’s, Milks argued, calling those companies “the big boys.”

“The big boys run international, nationwide and regional sweepstakes programs, promoting well-known products such as ‘Whoppers’ (and) ‘Double-Gulps,” Milks wrote in a letter to prosecutors.

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