Jaffrey Police Department

Massachusetts Alcoholic Beverages Control Commission Investigation and Enforcement Division OPERATIONS MANUAL

CHAPTER: O-023

SUBJECT: Gambling Investigations

AMENDS/SUPERSEDES: All Previous

DISTRIBUTION: All Investigators ______

Discussion:

There are currently two primary forms of illegal gambling in the commonwealth, the traditional electronic video gambling device as well as the most recent influx of “Internet” and “Phone Card” devices. These devices fall within the jurisdiction of this agency when they are on premises licensed pursuant to the Liquor Control Act.

It is estimated that these bars and the vending companies that supply the devices profit an average of $5,000.00 per week, $520,000.00 annually. The profit is generally split at a rate of fifty percent each. In one bar records indicated gross revenue of $1,400,000.00 with a net profit of $450,000.00 each year over a period of ten years.

There are currently approximately 12 vending companies that are now furnishing these machines to bars in Massachusetts. Several investigations in Berkshire, Hampden and Plymouth counties have resulted in indictments of vending companies, some with alleged organized crime ties.

O-023: 1 Authority: Chapter 138: Section 56. A deputy sheriff, …or any investigator of the commission, may without a warrant arrest any person whom he finds in the act of illegally manufacturing, selling or exposing or keeping for sale, storing, transporting, importing or exporting alcoholic beverages or alcohol,… Such officers shall enforce or cause to be enforced the penalties provided by law against every person who is guilty of a violation of this chapter of which they can obtain reasonable proof, and shall make all needful and appropriate investigations for the said purpose.

Chapter 138: Section 63. Entry of licensing authorities upon licensed premises; taking of samples The local licensing authorities or their agents may at any time enter upon the premises of a person who is licensed by them, and the commission or its agents may enter upon the premises of any holder of a license, permit or certificate of fitness under this chapter, to ascertain the manner in which he conducts the business carried on under such license, permit or certificate…….

Chapter 138: Section 64. The ABCC “after notice to the licensee and reasonable opportunity for him to be heard by them, may modify, suspend, revoke or cancel his license upon satisfactory proof that he has violated or permitted a violation of any condition thereof, or any law of the commonwealth.”

Applicable Statutes: 204-2.05: (1) Slot machines or any other devices which furnish anything besides merchandise of a quantity and quality commensurate with the price deposited therein are prohibited on licensed premises. Gambling of any sort, except those games of chance authorized by the Legislature and/or local licensing authorities shall not be permitted on any license premises.

Chapter 140: Section 177A. (6) No person keeping or offering for operation or allowing to be kept or offered for operation any automatic amusement device licensed under this section shall permit the same to be used for the purpose of gambling.

Chapter 271: Section 17. Whoever keeps a building or room, with apparatus, books or any device, for registering bets, or buying or selling pools, upon the result of a trial or contest of skill, speed or endurance machine, or upon the result of a game, or whoever is engaged in such business or employment; or, being such keeper, registers such bets, or, being the owner, lessee or occupant of a building or room, knowingly permits the same to be used or occupied for any such purpose, or therein keeps, exhibits, uses or employs, or knowingly permits to be therein kept, exhibited, used or employed, any device or apparatus for registering such bets,

O-023: 2 Case Law: Com. v. Club Caravan, Inc. 571 N.E.2d 405 Video poker machines involved element of skill, qualifying machines for licensure as automatic amusement devices; machines rewarded prudent calculations of probability of filling in various “dealt” hands through discards and draws weighed against known rewards if draws were favorable, and paid off winners only with free games.

The judge ruled correctly that play on the video poker machines in question involved as matter of law an element of skill, thus qualifying the machines for licensure under G.L. c. 140, § 177A(1) and (2), as automatic amusement devices. The statute does not limit “skill” to physical skills, such as the hand-eye coordination or reflexes that help one playing a video action game machine.

Since the video poker machines involved an element of skill and ostensibly paid off winners only with free games, the judge correctly dismissed the indictments based solely on having such machines on hand for the use of patrons.

The evidence in some cases, however, showed actual use of the machines for gambling: i.e., paying off in money rather than free games. The machines were built to accommodate this. The running total of games credited to a player showed on the video screen. The total would rise by one for each quarter inserted-these could be stacked and for each game awarded as winnings; it would decline by one for each hand played, unless the player elected to bet multiple game credits on a hand so as to multiply his potential winnings. Where the machines were used for gambling, a player could cash in his accumulated game credits. The bartender would give the player twenty-five cents times the number of game credits shown on the machine, then activate a “knock-off” switch (sometimes a recessed button, sometimes a key switch, sometimes a magnetic switch operated by striking the machine in a particular spot) that would erase from the screen the total of credited games.

Two meters inside a locked compartment under the machine kept track of quarters inserted (i.e., games paid for) and games knocked off. The service man from the distributor would periodically open the compartment, repay the bar or lounge for the games knocked off, and split the net proceeds (games paid for less games knocked off) with the bar or lounge. This, at least, was the pattern in the bars, lounges, or clubs where payoffs had been observed and bartenders or other employees were willing to talk.

The judge drew the lines as follows. Where a machine was used for gambling, i.e., where there was evidence of a payoff to a customer, the judge ruled that the machine, by the express terms of G.L. c. 140, § 177A(6), was in violation of that statute and thus lacked protection from the prohibitions of the gaming laws such as G.L. c. 271, §§ 5, 7, 8, and 17. The mere keeping of such a machine (§ 5) was unlawful

Only with respect to the last ruling do we adjust the line drawn by the judge. The evidence presented to the grand jury, we think, was sufficient to allow an inference that the servicing companies are probably reimbursing bars that make payoffs to customers, whether or not the settling process was the subject of direct testimony. The meters in the locked compartment are specifically geared for such reimbursements, seemingly having little function other than to enable the servicing company to verify the number of game credits knocked off. There was evidence of a pattern of reimbursing bars for the payoffs before splitting the net take, and, judging by the typical weekly figures from the club (an American Legion post) where the evidence was most complete, it would make little financial sense for a bar to pay off customers for their game credits unless reimbursement were to be made from the

O-023: 3 machines' gross take. Com. v. Club Caravan, Inc. 571 N.E.2d 405

Investigation Procedures:

Safety Procedures: A. When approaching vehicles or individuals, Investigators should: 1. Decide who will be the contact Investigator and who will be the cover Investigator; 2. Have their neck or wallet identification badge visible; 3. Determine need for police assistance; 4. Determine an appropriate interview and process area; 5. Avoid uncontrollable space; 6. Identify Interference; 7. Identify Safe Exit Strategy 8. Document all potential verbal or physical incidents.

Interaction with Individuals B. When approaching vehicles or individuals, Investigators should 1. Be courteous, civil and respectful 2. Be sensitive to the subjective perception of those that you approach. 3. Maintain proper decorum of a professional investigator at all times. 4. In non-conflict situations be pleasant and personal. 5. In situations calling for regulation and control be firm and impersonal. 6. Maintain an even temperament and verbal tone under varying situations. 7. Refrain from using harsh, violent, coarse, profane, sarcastic or derogatory language that would demean the inherent dignity of any person. 8. Investigators should maintain a close distance to each other to validate any statements to and by the fellow investigator.

Gambling Investigation Procedures This section covers the administrative and procedural duties of all Investigation and Enforcement Division Investigators when conducting both overt and covert gambling investigations and enforcement.

1. The safety of the Investigator and others is the first priority of any covert Investigation

2. Investigators should have a verbal and or written operational plan in place before entering a premise. Prior contact with local or state police departments should be made when it is feasible to do so.

3. During undercover operations Investigators should make every effort to maintain cover for any other Investigators or other Law Enforcement personal that are part of such investigation.

4. When conducting undercover investigations, Investigators may purchase alcoholic beverages in order to support their cover. Investigators should make every effort not to consume said alcoholic beverages, they should utilize the methods they have been trained in to dispose of said beverages. If unable to do this they should consume as little as possible. Under no circumstances should any Investigator become intoxicated in the process of an undercover investigation.

O-023: 4 5. Investigators may operate the video gambling devices in their official capacity during both overt and covert gambling investigations. a. Investigators should document all monies expended for this purpose. b. Investigators should, at the earliest possible date, submit an official reimbursement voucher along with the undercover voucher to the Chief Investigator for approval. c. Investigators should not expend more than $50.00 at any one location on any one day without approval of the Chief Investigator. d. When conducting undercover investigations, Investigators may take receipt of any gambling winnings provided to them by the licensee and or staff. Investigators should attempt to provide an opportunity for a second Investigator to observe said payment of winnings. At the earliest practicable opportunity, both Investigators should count the US currency and place it in a sealed evidence envelope. e. When conducting gambling investigations where US currency is received as gambling winnings, the primary Investigator will secure the US currency until such time as it can be recorded and entered into the designated evidence locker. f. In the Chief Investigator’s office there shall be a locked file where said evidence shall be maintained. g. The primary Investigator shall place the US currency in a sealed envelope on which will be recorded his/her signature, date of receipt, licensee and amount of US currency. h. The primary Investigator will then record all pertinent information on the evidence inventory form located in the evidence folder. i. This form shall be filled out whenever the evidence is removed from the evidence file for hearing, disposition, or any other reason. j. After 90 day from the date of hearing decision, the Director of Operations will arrange for the US currency to be forwarded to the appropriate authority for deposit to the General Fund.

6. While on the premises Investigators should make detailed observations and record any and all information that is pertinent to the investigation, which shall include, but may not be limited to: a. Statements by the licensee and or staff. b. Ledgers, payout slips and other written records of illegal gambling c. Recognized elements of an electronic devised used for illegal gambling such as: i. A meter recording the credits earned by a player: ii. A knock off button to erase credits when an individual is paid off. iii. A knock off button producing a receipt detailing the number of credits won. iv. A provision for multiple coin insertion in order to increase the reward. v. A great number of credits that can be achieved by an individual: vi. A meter that recorded only those credits that are knocked off:

Investigation Conflicts Each Investigator shall make every effort to avoid patronizing licensed establishments that he or she knows or believes to be under ABCC Investigation, or that he or she knows of believes to be a licensed establishment that has a history of violations of the Liquor Control Act. Each Investigator shall withdraw himself or herself from any investigation of a licensed establishment; of which he or she is a frequent customer, or of which he or she has a personal relationship with the owners of said establishment.

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