Company yanks sweepstakes machines

(Via Star Advertiser)

COURTESY HPD / 2012

An Oahu business has shut down its Products Direct Sweepstakes machines after a federal judge ruled that use of the machines is gambling.

Attorney Keith Kiuchi said his client Tracy Yoshimura, owner of PJY Enterprises LLC, which distributes the machines, is working with the Honolulu Liquor Commission to get the machines removed from bars.

“Mr. Yoshimura has shut all the machines down that are in bars,” he said. “I’ve called a couple of people that bought the machines that placed them and asked them to start working to remove them.”

Kiuchi said he didn’t know how many of the machines were on the island, but said police have seized about 175 of them since September 2012. On Tuesday police seized more of the machines from an Aiea store.

Police are targeting machines in game stores only and not in bars, Kiuchi said.

U.S. District Judge Leslie Kobayashi on Wednesday ruled that users of the machines risked their money on games of chance, meeting the definition of gambling in Hawaii.

The ruling applies only to Products Direct Sweepstakes machines seized by police in raids between September 2012 and February 2013.

PJY Enterprises filed a lawsuit against the city in October 2012 to get those machines back.

Kiuchi said the decision does not resolve civil rights claims in the suit about several people arrested without a warrant during a raid and later released without charges. Kiuchi said he plans to appeal Kobayashi’s ruling with the 9th U.S. Circuit Court of Appeals.

A Honolulu prosecutor’s office spokesman said the office is “pleased” with the ruling, which confirms “that the machines are gambling devices.”

The machines worked by selling a discount coupon that customers could use for products online. After buying a coupon, a customer would receive free entries into a sweepstakes with a chance to win cash prizes.

Kiuchi said Kobayashi found using the machine to be gambling because the redemption rate of the coupons was too low.

“It’s not the machine (that was gambling),” Kiuchi said. “It’s the way that the promotion was operated.”

In her decision, Kobayashi said coupons were discarded on the store grounds or left in the machines, showing customers were not spending money for the coupons, but for a chance to win more cash.

Kiuchi said the machine was the main source of income for his client’s business, and Yoshimura will talk to the manufacturer about other devices he can bring to Hawaii.

There are many other similar gaming machines on Oahu, but law enforcement agents pursued only his client’s machines, Kiuchi said.

The decision comes one week before the Honolulu City Council’s public hearing on Bill 30, which would make it a misdemeanor to possess or use gambling devices on Oahu. The bill defines a gambling device as something with a video display that allows a user to play casino or other gambling-type games for a chance to win cash or something of value.

The offense would be punishable by up to 30 days in jail and a $1,000 fine.

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