Local

Gambling's high stakes: Cash payouts persist in midstate despite law, raids

Fine Fare Grocery on Napier Avenue in Macon has a row of gaming machines.
Fine Fare Grocery on Napier Avenue in Macon has a row of gaming machines. THE TELEGRAPH

Three years ago, Karen Hughes started driving to Macon from her home near Dublin just to play convenience store gaming machines.

She’d started playing in 2008 after learning that some stores paid cash winnings.

But after police raids on stores near home made them reluctant to pay cash, Hughes made several treks monthly to stores she’d heard still did so.

A nicely dressed, middle-aged mother, she stuck out as someone new.

Hughes made a practice of telling store clerks in Macon, “I’m here to play, and I play big.”

She got cash in return.

Hughes, whose name The Telegraph has changed to protect her identity, estimated she’s probably fed $100,000 into the machines over the years.

She’s won thousands. But she’s also played six hours at a stretch and left with nothing.

Georgia law prohibits cash payouts. It allows stores to pay winners only in store credit that can be used for merchandise, gas or lottery tickets. Redemptions for alcohol and tobacco products are prohibited.

Despite more than a dozen raids across Middle Georgia in the past decade and the shuttering of 10 Bibb County stores this past fall, though, clerks are still offering cash prizes.

That’s what The Telegraph found when it and the newspaper’s Center for Collaborative Journalism partners visited 50 stores as part of an informal survey. Two stores offered cash payouts to winning players.

There’s big money at stake.

Last year, players in Bibb, Crawford, Houston, Jones, Monroe, Peach and Twiggs counties pumped more than $129 million into the machines, according to tallies from the Georgia Lottery Corp. provided through an Open Records Act request.

The top five playing and payout ZIP codes were located in a corridor stretching from central Macon west of downtown south to Warner Robins’ southern city limits.

Because the data is self-reported by the stores and machine owners, it’s unclear how much of the $101 million in players’ winnings was paid legally.

Graphic by Jonathan Heeter/The Telegraph. The data provided for this map came from the information stores self-reported to the Georgia Lottery Commission.

SOME SKILL REQUIRED

Coin-operated amusement machines -- they now take dollars instead of coins -- have been in Middle Georgia for decades.

Before voters approved the Georgia Lottery’s formation in 1992, the machines had games akin to slot machines in casinos. No skill was required, said Butch Foshee, president of the Georgia Music and Amusement Operators Association.

Those games were deemed illegal, though, when the lottery came to Georgia. Now, all such games must involve some type of skill.

“A blind man does not have the same ability to play (the legal games) as he does to play one in Las Vegas,” Foshee said.

He describes today’s legal games as “lineup matchups.” To win, a player must match three images in a row on the machine’s screen.

By law, the machines don’t automatically churn out a winning combination. Depending on the game, players must choose to raise, lower or swap out an icon to make a three-in-a-row match and win.

About 200 master license holders such as Foshee own the machines and strike agreements with businesses to put the games in their stores on a commission basis.

Before new regulations that went into effect in 2013, machine owners and stores could negotiate whatever profit split they wanted. Now, the split is mandated to be 50-50.

As part of the regulations, all machines must be hooked up to a computerized central accounting system by July 1. Many of them across Middle Georgia already are connected.

After a machine is connected, the lottery takes a 5 percent cut, split evenly between the machine owner and store. That cut will increase by 1 percentage point each year until it reaches a total of 10 percent. The lottery also gets proceeds from licensing and registration fees.

Machine owners and stores with the games are also required to submit a report to the lottery each month. The report includes gross and net proceeds from the games and gross retail receipts for the business.

The law prohibits gross receipts from the machines totaling more than half a business’s total proceeds. Stores are subject to audit, and citations are issued for violations, said Mike Parham, director of operations for the lottery’s Coin Operated Amusement Machine Division.

Once the central accounting system kicks in, it will provide a more reliable way to capture -- and analyze -- data electronically, said Joe Kim, a senior lottery vice president and general counsel.

For example, data analytics will help identify irregular activity that could trigger an investigation or an audit, said J.B. Landroche, vice president of corporate affairs for the lottery.

Six inspectors who work for the lottery also travel the state, inspecting machines and checking for cash payouts.

Although the new system is designed to help with compliance efforts and be a tool for law enforcement, it may not be a cure-all for potential abuses in the system.

David Cooke, district attorney for the Macon Judicial Circuit, said he supports the lottery’s efforts to provide greater accuracy in reporting, but he added, “Anytime there is this much cash at stake, people will work to falsify their records.”

‘HOT TAMALE’

Data obtained by the Telegraph was aggregated from the reports filed with the lottery by stores and machine owners. The lottery cited a trade secret exemption to the state’s Open Records Act in declining to release figures for individual stores.

An estimated 25,000 machines operate throughout the state. About 500 Middle Georgia stores had them in 2014.

In The Telegraph’s survey, about 20 players were given $5 to play at assigned stores chosen from a broad geographic swath of Macon, Warner Robins and Centerville. Nearly all the players were first-timers.

Out of the 50 games played, there were a dozen wins. Some players won as much as $20 in a sitting.

Clerks at 10 stores where players won refused to pay cash. Two clerks offered cash without asking players how they wanted to receive their winnings.

Some clerks told players directly: “We don’t pay cash.” A few clerks went further, saying they noticed that the players weren’t their regulars.

Clerks at a couple stores pointed out other sites they said would pay out in green.

Many stores, including one in Warner Robins that offered cash, had signs posted saying they wouldn’t pay cash or that cash payouts are illegal. Some stores had video surveillance cameras pointed at the machines.

The stores visited had between two and 10 machines. The average was about five.

The machines look much like coin-operated video games. They are black boxes about 4 feet high. Some of them had a foot rest and pads on the front for players’ wrists. Ashtrays sometimes sat on top.

Games included a variety of themes, many of them cartoonish and comical.

There were the traditional cherries, triple 7s and other recognizable slot machine characters. Players also had to match rubber ducks in “Bathtime Bucks;” chili peppers, sombreros and Chihuahuas in “Hot Tamale;” and trash cans, dog bowls and dog houses in “Crazy Cat 2.”

In some stores, the games were openly visible from the front door. In others, they were obscured by aisles of merchandise or in a back room. One store in Warner Robins had them nestled in a dark storage room down a hallway past the restrooms.

Signs banning children and cellphone use were common.

The machines are profitable for stores -- even if they’re abiding by the law and not paying out cash, said Angela Holland, vice president of the Georgia Association of Convenience Stores.

“If they weren’t, convenience stores wouldn’t have them,” she said. “They wouldn’t have them in there long if there wasn’t a market for it.”

She said her association holds seminars and has hosted speakers to educate store owners about the regulations governing the machines. The association represents nearly a third of Georgia’s estimated 6,000 stores, but the classes are open to anyone in the industry. The lottery also has posted educational materials online.

As recently as November, classes were offered in Macon at the Southern Convenience Store and Petroleum show.

Holland admitted that stores sometimes get a bad reputation when a clerk illegally pays out winnings in cash.

Likewise, Foshee said machine owners sometimes are cast in a bad light.

“It gives the industry a black eye, and it’s embarrassing,” he said. “There’s more of us trying to do it right and work to get it right than outright lawbreakers.”

‘CRACK ROCK MACHINES’

Each year, the National Council on Problem Gambling’s help line fields about 4,000 calls from Georgia area codes.

The majority of callers want help to stop playing the gaming machines, said Eric Groh, president of the Georgia council’s board of directors.

Call centers staffed by gambling addiction specialists offer referrals for counseling and local support groups, such as Gamblers Anonymous.

Outside metro Atlanta, most calls come from Bibb County, said Groh, also an Atlanta-based gambling addiction counselor.

Over the years, gamblers and gambling counselors have nicknamed the gaming machines “crack rock machines.” The high comes on fast when players hit a hot streak and winnings stack up. But it can fade just as fast when losing begins, leaving a player with two options -- feeding in more money or leaving with empty pockets.

The dance between a clerk and a player who wants to be paid cash is akin to the “hidden language of a drug dealer” with a buyer, Groh said.

“Store owners get to know the patrons, and the patrons get to know the store owners,” he said. “They know who they can pay cash” to.

LOST HIS RENT MONEY

Although some people say that crimes associated with the games are victimless, the fallout can be deadly.

Nearly three years ago, about 9:20 p.m. June 4, 2012, Howard Allen went to Pop’s Food Mart on Davis Drive in Warner Robins with several hundred dollars in his pocket. It was the then 67-year-old Warner Robins man’s rent money.

He played a gaming machine -- and lost it all.

After losing, he got into a fight with a store employee. He wanted his money back.

Allen struck the employee, 66-year-old Dahyalal Amin, in the head with a metal pole, fracturing his skull, said Dan Bibler, Houston County’s chief assistant district attorney.

Amin died four days later at the hospital. Allen was charged with murder.

The case against Allen was placed on inactive status last month because Allen, who has brain cancer, is unable to stand trial, according to Houston County Superior Court records.

In 2013, nine days before the one-year anniversary of Amin’s death, authorities raided eight Houston County stores, and prosecutors filed a civil racketeering case against the store owners.

Three of the stores had little to no inventory to offer customers aside from the gaming machines, records showed.

Data from the seized machines showed that the stores netted $2 million or more annually. Store owners had acquired property and assets totalling more than $6 million, according to the records.

Prosecutors contended that the store owners under-reported income and falsified state income tax returns. They also alleged that stores laundered gambling proceeds by purchasing alcohol for a liquor store involved in the bust.

The case ended in a $4.5 million settlement a year ago, District Attorney George Hartwig said.

Criminal cases still are pending from the raid.

‘TARGET THE PUSHER’

In Bibb County, prosecutors filed a racketeering case in November after raiding 10 stores, choosing to pursue civil sanctions rather than concentrating solely on criminal charges.

Filing racketeering cases seems to be the most effective remedy for “getting the particular person who’s doing it to stop. ... It hits them in the pocketbook. For an operation that’s designed to make money, that’s about the biggest hit you can make,” Cooke said.

One of the 10 stores closed after Bibb County’s raid struck a $175,000 settlement with prosecutors in December. The case against another nine stores still is pending. Criminal charges also are pending.

Although state law also prohibits players from receiving cash for winnings, Cooke said it’s impractical to build criminal cases against players who do. Authorities must prove that players knew that receiving cash is illegal -- and catch them in the act.

“It makes more sense to target the pusher than the addict,” he said.

Bibb County’s recent raid, the largest ever in the county, was prompted by a series of complaints to the GBI.

Because of the amount of cash held on hand for illegal payouts, businesses that pay cash for winnings can be targets for robbery attempts that could lead to bystanders getting injured, Cooke said.

Machines played the most are usually ones at businesses that pay cash. Clerks or an owner could become a target for someone wanting to steal a bank deposit, he said.

Foshee, president of the Georgia Music and Amusement Operators Association, said stores must keep enough cash on hand to pay out legal lottery winnings. For example, stores pay out winnings on scratch-off games up to $600.

He countered that the machines can actually help deter crime. When a player is sitting at a machine -- no matter what time of the day or night -- the clerk isn’t alone and a would-be robber might choose another target.

Cooke said an extra person in a store isn’t necessarily a guarantee against a robbery.

‘I’M NOT HIDING’

Hughes, the woman who drove to Macon from Dublin to play the games, said she’s tried to stop playing three times, each after a hospitalization for a suicide attempt or suicidal thoughts.

One time, she admitted herself for care after losing at a machine.

Just like an alcoholic might drink to escape pain, Hughes said the machines offered her a similar haven from reality.

“When I’m playing a machine, ... my focus is on that machine,” she explained. “All my worries, all my concerns, all my everything goes away.”

Although winning can bring a rush of excitement, “losing caused me to go to the bottom,” she said. “I lost all respect for myself because I used to be the person in control, and I wasn’t anymore.”

With each effort at quitting, Hughes attended support group meetings.

Her last bet was just a couple months ago.

She’s hoping her third time in recovery sticks.

This time, she’s confiding in her husband when the urge to gamble hits. She’s given him her debit cards and checks.

He gives her money when she needs to buy something.

“I’m not hiding,” Hughes said.

To contact writer Amy Leigh Womack, call 744-4398.

Use an address to find gambling machines near you in Bibb, Crawford, Houston, Jones, Monroe, Peach and Twiggs counties. Data from the Georgia Lottery Commission. Mapping by Google.

The following map is the reported location of gambling machines in the aforementioned counties. There were inconsistencies in the data provided to The Telegraph, such as mis-listed zip codes for locations. Businesses with gambling machines self-reported numbers and addresses to the Georgia Lottery Commission.

Map by Jonathan Heeter/The Telegraph

Related stories from Macon Telegraph

  Comments