“Games of skill” arcades are growing in Colorado, but are they illegal gambling? State lawmakers trying to crack down on them think so

Colorado lawmakers are moving to crack down on a growing number of “games of skill” arcades, where people can win money and prizes in a manner critics liken to gambling.

A vote Monday on House Bill 1234 in the Business, Labor & Technology committee was 7-0, and the measure now heads to the full Senate. It passed the House in March.

Bill proponents say businesses that offer such games have sprung up in Colorado and that they run afoul of a nearly 30-year-old state law restricting gambling to the three mountain towns of Cripple Creek, Black Hawk and Central City.

“There are arcades out there that use devices that under the Colorado Constitution are defined as gambling,” said Sen. Bob Gardner, R-Colorado Springs, one of the bill’s chief sponsors.

At the center of the debate is whether the businesses are offering the equivalent of slot machines — or “simulated gambling devices” — for use by customers, and if so, whether that means gambling is occurring absent of state oversight and without tax revenues being remitted to local governments.

According to multiple media reports, police in several Colorado communities — including Denver, Evans, Colorado Springs and Delta — have raided arcades in recent months and seized machines that they say violate the state’s gambling laws.

“These are slot machines,” Mark Grueskin, an attorney representing the Colorado Gaming Association, told lawmakers Monday. “They are mini-casinos. But they are not licensed by the state, they are not licensed by their city, they are not licensed by anybody.”

Arcade owners argue they offer games of skill, rather than games of chance, and thus are not gambling halls. They say their games are little different from the ones offered at Chuck E. Cheese’s and Dave & Buster’s, which dispense prizes to those who play them.

“There is no payout unless the player takes action and shows skill,” testified Chris Howes, executive director of the Colorado Skill Games & Entertainment Association.

He said the casino industry is trying to drive “mom-and-pop” operations like those he represents out of business and that law enforcement has overreached in its efforts to close down arcades. Tammy Garamova, who with her husband owns several skill game arcades, gave the committee a tearful account of being arrested earlier this year and having hundreds of thousands of dollars of equipment confiscated.

“We’ve done everything we could do to be good actors,” she said Monday.

HB 1234 is not the state legislature’s first crack at regulating arcades like the ones in the spotlight Monday. The bill is actually an attempt by lawmakers to revisit a 2015 measure that targeted establishments in Colorado offering “internet sweepstakes” games, which the legislature defined then as a form of illegal gambling. That bill was preceded by an opinion issued in 2014 by the Colorado Attorney General’s Office concluding that “cybercafes” were a venue for illegal gambling.

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