A federal appeals court Thursday ruled in favor of the decision by Honolulu police to seize and hold 77 arcade machines as gambling devices in 2012.
The ruling by the 9th U.S. Circuit Court of Appeals upholds an April 2014 order by U.S. District Judge Leslie E. Kobayashi.
The ruling and order, which came in response to a civil lawsuit filed against the city by the machines’ distributor, arcade owners and employees, have no bearing on a separate order by a state judge for the city to return the machines. The state order, in response to a city forfeiture petition, is on appeal with the Hawaii Intermediate Court of Appeals.
City Corporation Counsel Donna Leong says the federal ruling is important “because these were deemed gambling devices; it undermines the appeal on constitutional grounds by the plaintiffs.”
Keith Kiuchi, lawyer for the machine distributor, arcade owners and workers, says Kobayashi did not find that the machines were gambling devices, but rather found “that the promotion at the time of the seizure constituted gambling as defined by Hawaii law.”
Under the Products Direct Sweepstakes promotion, people deposited money into the arcade machines to purchase discount coupons on items offered for sale online. In addition, people received free sweepstakes entries. They could find out instantly from the machines whether they were winners, or they could do it by playing casino-type games of chance.
Kobayashi ruled that the coupon purchase was just a ruse and that people deposited money into the machines just to play the casino games.
Kiuchi’s clients filed their civil lawsuit to get back the machines in October 2012. At that time no one had been charged with any gambling or related offenses. One day after Kobayashi’s ruling, the city prosecutor presented a case to an Oahu grand jury, which returned a 414-count indictment against the plaintiffs in the lawsuit. The charges included gambling promotion, racketeering and money laundering.
Honolulu City Prosecutor Keith Kaneshiro said, “The primary goal of this gambling prosecution effort was to stop illegal gambling. That goal has been achieved.”
“If more of these machines surface in our city, we will seek and seize them as well,” he said.
Honolulu police seized machines that they deemed gambling devices from other arcades, but no one associated with those other arcades has been charged with any crimes.
At the prosecutor’s request, a state judge dismissed the 414-count indictment after the two deputies assigned to the case admitted that they presented false information to the grand jury.
The state secured new indictments against the nine defendants last year, but another state judge dismissed them because the prosecutor took too long to take the case to trial. The judge made the dismissals permanent in part because in the case against five of the defendants, he said, the prosecutor withheld information from the defendants.
