Utah bill aims to crack down on fringe gambling

(Zoi Walker | The Salt Lake Tribune) Sen. Karen Mayne, D-West Valley City, talks about her coming anti-gambling bill during a Capitol news conference with supporters from law enforcement, local government and religious leaders, Thursday, Feb. 27.

Sen. Karen Mayne, D-West Valley City, is drafting a bill to close loopholes in state law that have allowed fringe gambling — any gambling, lottery or gaming device that is given by a business in exchange for money.

“It’s a cancer that needs to be out of the state of Utah. If they want this kind of practice, it needs to be elsewhere because it’s bringing down all our communities, and bringing drug use, more violence, all those kinds of things,” Mayne said Thursday at a Capitol news conference.

“These are slot machines that are in mini-marts, laundromats, beauty salons, and they’re more aggressive every single day.”

She argued that bad behavior brings on more bad behavior. Layton City Attorney Gary Crane echoed this with examples of two situations that have happened in his city..

One happened at the Cyber Cafe and two other businesses that had gambling machines. “We found out through subsequent investigation that they were funneling almost $200,000 across the Canadian border from just these three institutions every single month, which was a lot of money,” said Crane.

Layton also discovered the dangers of gambling when a business set up right next to a high school and a student spent close to $20,000 on his parent’s credit card playing on machines.

Crane said the city called in the State Tax Commission and the IRS, which discovered there were connections outside the country to money funneled from these machines.

“There really is nothing legitimate about these businesses … they’re there for one purpose and that is to take money from those individuals who can least afford it."

These machines are largely unregulated because the Utah Constitution prohibits gambling, so no city has rules in place to address specific varieties of gaming.

“The individuals and companies who are proliferating these machines all around Utah are doing so with no oversight, and no regard for the impact it has on the communities where they’re placing these machines," said James Russell, an investigator for Utah Attorney General’s Office.

The machines are often placed in lower income areas, independent convenient stores, ethnic markets, “places where they go to take advantage of those who are the least advantaged," Russell said.

Another issue is tax avoidance because gambling businesses say they’re unregulated so the state can’t collect any sales tax revenue.

Additionally, gambling is such a lucrative business that companies can hire sophisticated attorneys to defend them — which is what happened last year when legislators tried to stop them from coming to Utah.

Rep. Mike McKell and Sen. Todd Weiler sponsored HB23 in the 2019 session to clarify that fringe gambling was not allowed. But it wasn’t enough to keep out the gambling businesses. “They have the smart lawyers and experienced lobbyists. So they took that and said ‘here’s another loophole,’” said Mayne.

This new proposal will clarify which type of machines are legal, define what is considered a fringe gambling machine, increase criminal penalties for owners of gambling machines, and allow people to request double damages for money lost to the owner of the machine. The legislation focuses on machines that take and distribute money. It doesn’t modify existing laws that apply to bingo, valid promotional activities or other activities not involving a machine.

“We want to make sure that there’s no loopholes to say ‘Welcome to Utah.' You’re not welcome to Utah, we’re not welcoming you to do harm to us,” said Mayne.