City Prosecutor Keith Kaneshiro is warning businesses and their patrons to steer away from Products Direct Sweepstakes machines and other gaming devices that offer the possibility of a payout, saying they are illegal gambling machines.
But attorneys for the company that had 77 of its machines seized by Honolulu police in raids at six Oahu gaming parlors Thursday insist the machines are legal and should be allowed.
Kaneshiro, flanked by top police vice officers at a news conference Friday, said the seizures at the six Winner’z Zone arcades took place after an investigation of more than six months. The arcades raided are in Ewa Beach, Pearl City, Wahiawa, Waikiki, Waipio and on Ward Avenue.
Legal research showed cases in which courts in Mississippi and Missouri have determined the machines are illegal gambling devices, he said.
He stressed that "this investigation is ongoing" and that "other machines at other sites may be seized if they continue to operate."
Kaneshiro also said it should be easy for the public to determine whether a machine is illegal.
"I think it’s kind of elementary," he said. "If you put in money with the intent of winning money, and you either win or lose money, then that’s gambling. And the games that are played on those machines are basically gambling games."
He added, "Citizens are put on notice that these are gambling machines and gambling is illegal in Hawaii."
Police have not yet arrested anyone in connection with the raids. The overall value of the 77 machines seized has been put at more than $250,000, police said. Also seized were gambling records.
HPD Assistant Chief Susan Dowsett said six cases of second-degree promotion of gambling have been opened. While the six cases are misdemeanors, HPD and prosecutors are also looking at the possibility of other, more serious charges based on the investigation.
"This is the start of the investigation, just the start," Dowsett said.
The first Products Direct Sweepstakes machines showed on Oahu sometime last year.
"We strongly feel that it’s a gambling device," Dowsett said. "If you are putting money in for a chance of winning money, that’s your first clue that this is nothing you should be doing."
Kaneshiro said police and prosecutors are looking not just at Products Direct Sweepstakes machines.
An attorney for the local distributor for the Products Direct Sweepstakes machines said the devices have been deemed legal elsewhere.
Keith Kiuchi, who represents PJY Enterprises LLC and also does legal work for Winner’z Zone, said the South Carolina supreme court ruled that the machines are legal, adding that he knew of no rulings to the contrary.
Kiuchi said money is put into a machine for products that, in the case of the machines seized, are discount coupons that can be used to enter a sweepstakes.
"The key thing that (police and prosecutors) are missing is that you can enter the sweepstakes free; you don’t have to pay to enter the sweepstakes," he said.
The odds of winning the sweepstakes are the same whether you put in money or not, and the prizes come from the same prize pool, he said.
Kiuchi said the game is no different from McDonald’s nationwide Monopoly game, in which cash and prizes are awarded for participants even if they make no purchase. Similar to McDonald’s game, participants need to write in to be able to play. "The concept is the exact same," Kiuchi said.
He noted that the city Liquor Commission has allowed Products Direct Sweepstakes to go into 32 Oahu liquor establishments.
Liquor Administrator Greg Nishioka said the commission allowed the machines with the stipulation that the distributor would remove them if they are found by any law enforcement agency to be illegal.
Nishioka, who provided a list of the 32 liquor establishments, said the commission does not think it is in a position to determine whether the machines are legal.
Of the 32 businesses on the list, 21 had machines installed.
Imua Lounge on Keeaumoku Street, one of the 21 establishments, had two Products Direct Sweepstakes machines for about a month before owner Garrett Kam had them removed.
Kam said he chose to have the machines removed because customers weren’t playing with them, and they were taking up space, not because of any questions regarding legality.
Kam said he would not have allowed the machines if there were any legal questions, and thought the Liquor Commission’s approval of them validated that.
"All these bars are only following what the Liquor Commission allowed," Kam said. "That’s the reason why so many of them decided to do it."
