At least a dozen Mount Pleasant businesses hold licenses for illegal games of chance — and the village won't renew them later this spring.
State law defines games of chance as any machine — including video poker or slots — that pays out cash for prizes either directly from the machine or through tokens or tickets redeemable for cash. Under state statute these machines are illegal, but the level of illegality depends on the type of establishment playing host to these games:
- Businesses with a Class "A" liquor license — retail sales only — and/or those without any license cannot have games of chance for any reason. Owners in this situation caught with gambling machines could be charged with a Class I felony.
- Businesses with a Class "B" liquor license — typically a tavern or restaurant — face misdemeanor charges and forfeiture of up to $500 per machine up to five machines. Mount Pleasant has been collecting fees of $100 per machine for these businesses.
Roger Johnson with the state Department of Revenue said no matter how you slice it, the games are illegal and licensing them amounts to licensing illegal activity.
"The games are illegal. Period," he said. "Municipalities can enact ordinances for local enforcement, but they can't license what is essentially contraband."
DOJ visit sparked awareness
The gaming issue came to light in Mount Pleasant because John Verney, a partner owner of Passehls BP Service gas station on Taylor Avenue, received a spot visit from a special agent with the Department of Justice on March 8. He was advised in person, and again in a letter, to have his machines removed immediately or face the felony charge.
"I had no idea the machines were illegal," Verney stated. "I wasn't trying to break the law."
For small local businesses, the video gambling machines help boost revenue, Verney added.
"Customers don't always have a ride home while we work on their car and this gave them something to do while increasing my inside store sales, too," he said. "Now the machines are gone and I changed my hours to close earlier during the week and not open at all on Sundays."
Village estimates put the annual revenue from each machine at between $10,000 and $15,000. Verney didn't confirm how much he was making, but he did say he paid taxes on the money used at each machine.
In any case, the games of chance licenses issued last year will not be renewed this year, Clerk/Treasurer Veronica Rudychev said.
"I refuse to sign anything illegal," she stated.
Trustee Karen Albeck originally wanted an item on the Finance/Legal/License Committee meeting agenda to explore amending the village ordinance in some way to allow these games. Now that she has learned more about the state statutes, she expects the discussion to include beefing up enforcement language instead.
"A village ordinance cannot override a state statute so we are bound by the current law," she said.
Local police departments have jurisdiction over Class "A" businesses or those without any license or if a Class "B" establishment has more than five machines. Their action can include including seizure and destruction of the machines. Otherwise, only an agent with the Department of Revenue has the authority to fine a business owner with a Class "B" license with five or fewer machines.
Legislation passed in 2003 by former Gov. Tommy Thompson is what decriminalized the Class "B" businesses. At the time, Thompson's brother, Ed, was president of the Tomah Tavern League, a position he took after he and several other Tomah tavern owners faced felony charges for allegedly having illegal gambling machines in their bars.
"It's undoubtedly a move by the tavern league that this leniency was created," Johnson said.
Captain Brian Smith of the Mount Pleasant Police Department agreed.
"Former Gov. Thompson made enforcing these laws almost impossible," he said. "We don't have the resources and neither does the state. And it's not fair for small business owners in tough times because the machines help keep the customers there, spending money."
The state DOR only has seven agents to enforce gambling laws across the state. The lesser penalty for the misdemeanor, combined with a lack of enforcement capability, presents a conundrum to local business owners with a Class "B" license. Is the revenue greater than the risk in being caught? Johnson equated the forfeiture of $500 per machine to getting caught speeding.
"You'll get the ticket, but will you stop speeding? Probably not," he explained. "It's just a matter of when or if you'll get caught again."
Typically, it is up to local District Attorney's offices to prosecute, but since most DA's have more important cases to try, gambling machines rank low on the list. Patch has a call into the Racine County District Attorney's office and will update this story when we hear back from them.
As for Verney, he said he is going to apply for a Class "B" liquor license even though he has no plans to serve alcohol at his service station or add on to his building.
"I know the village will say 'no,'" he said. "But I figured I should try."