Englewood residents woke up one October morning last year to find fliers on their doors announcing the impending opening of a new business, with images of video-arcade games that pay cash to players. …
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The Colorado Skill Games and Entertainment Association, a group including business owners and others advocating for what they call skill-games arcades, has made the argument several times since October that its games are no different from those at Chuck E. Cheese’s or Dave and Buster’s.
“Why are coin-pusher machines or fish-arcade games illegal in a smaller arcade, but A-OK in larger entertainment centers according to the CBI and Division of Gaming?” said Chris Howes, executive director for the association, in a January news release.
Fox 31 reported May 10 on games at La Fortuna arcade, which offered what resembled slot machines.
Players won money by pushing a “spin” button and having three icons match up on a screen, the report said, but they only had influence over the icons in the third column — only if the first two matched up by chance could players move the third up or down one spot with their finger.
Other games performed similarly to the one described as requiring matching icons, the report said.
The association disputed that story as misleading and said players have the chance to win 100 percent of the time if they’re able to complete a correct pattern — icons don’t have to line up as identical, said Meg Dubray, public-relations representative for the association. The game explains how to play and lays out patterns before someone plays, Dubray said to Colorado Community Media.
A filing in a district-court case involving Trey Franzoy, an association member, said Franzoy’s attorney conceded, and a county court agreed, that the games at businesses like Dave and Buster’s are games of skill.
Another difference is that outlets like Dave and Buster’s do not pay out cash as prizes. However, current law on simulated gambling defines prize as a “gift, award, gratuity, good, service, credit or anything of value.” A state House bill, which advanced to the Senate March 26, would exempt “paper or electronic coupon(s),” including tickets or tokens, that cannot be exchanged for money.
The state’s constitutional definition of “slot machine” includes mechanical and video devices that, after inserting tokens or “upon payment of any required consideration whatsoever ... is available to be played (and) ... by reason of the skill of the player (or) the element of chance, or both, may ... entitle the player ... to receive cash premiums, merchandise, tokens, redeemable game credits, or any other thing of value.”
State law defines gambling as risking money or other value for gain that depends in whole or in part on chance, but makes exception for “bona fide contests of skill.”
The state House bill, HB 18-1234, would define simulated gambling devices without that exception.
Englewood bars opening of arcade 'skill games' business
Englewood residents woke up one October morning last year to find fliers on their doors announcing the impending opening of a new business, with images of video-arcade games that pay cash to players.
In the following days, the Golden Dragon Arcade Games storefront on South Broadway, adorned with a “coming soon” banner, saw its planned “opening day” come and go without opening — and with only an indignant poster added to the lit-up doors alleging that improper actions by the City of Englewood had kept the business from opening.
Now, partners associated with that arcade, whose group billed similar businesses as “mom and pop shops,” face up to a collective hundreds of counts related to illegal gambling after being arrested March 27 by Denver police — following raids of three related businesses that same day, two of which saw raids before on Oct. 4.
But the laws that authorities say prohibit so-called “skill-games arcades,” some argue, are far from clear — despite investigations around the state dating to at least 2015 — and could soon get an update.
An association representing arcade gaming in several Colorado cities — of which Tammy Garamova, one of those arrested, is a leader — argues that a proposed state law to clarify Colorado gambling law, which the association opposes, proves the businesses are innocent.
“The Association has repeatedly made one very important point,” wrote Chris Howes, executive director of the Colorado Skill Games and Entertainment Association, in a statement.
If “officials are so certain that the current Colorado law is clear enough to seize property at members’ arcade locations, then why is House Bill 1234 necessary?”
Whether it’s the authorities, or the arcades, who have the law on their side depends on a story that unraveled over several years and in several Colorado cities.
‘They get ahead of themselves’
In Englewood, Golden Dragon Arcade Games on South Broadway was the city’s first known brush with what an attorney for owner Bagrat Garamov said are “games of skill,” not chance.
The City of Englewood sent Garamov an email the morning of Oct. 12 that said the city cannot process Golden Dragon’s sales and use tax-license application without a letter from the Colorado Division of Gaming to confirm that its devices don’t conflict with state gambling law. The tax license is part of what would have allowed Golden Dragon, at 4011 S. Broadway, to operate in Englewood.
The email included a copy of a letter dated Sept. 25 from the city, notifying Garamov of the need for confirmation from the Division of Gaming to process its tax license and amusement-license applications.
Garamova, the owner’s wife, said she never received that letter. The city said it was not returned as undeliverable.
Golden Dragon also lacked an inspection by the fire marshal’s office, which the city needs to issue a certificate of occupancy.
The halting of the Golden Dragon’s opening — which was advertised for Oct. 13 — came just a week after the Oct. 4 raids by Denver police of La Fortuna and American Pride Skill Games, two similar businesses Garamov had ownership in, related to suspicion of illegal gambling. Those businesses are in west Denver at 9 S. Federal Blvd. and in southeast Denver at 10890 E. Dartmouth Ave., respectively.
“It’s fair to say that they get ahead of themselves,” said Dan Rowland, a former official with the Denver Department of Excise and Licenses, in October.
La Fortuna had a pending application for a license to run an amusement facility, but American Pride had no such records in the department, Rowland said at the time, when he worked there.
Sheridan Skill Games LLC, another entity Garamov owns at 2544 Sheridan Blvd., had a pending amusement-license application. That business and the Dartmouth Avenue location had use tax and occupational-privilege tax accounts — through the city, La Fortuna had only the latter, Rowland said — as of February.
The Sheridan Boulevard location, which opened on Nov. 11 without an amusement license and called itself El Dorado Skill Games, applied for the license Sept. 26 and was awaiting a fingerprint review as of Feb. 26, according to the City of Denver. La Fortuna — called GBE LLC in filings — applied for a license May 31 but still needed to pass a fire inspection, according to the City of Denver. A Fox 31 Denver KDVR story examined how games worked at La Fortuna May 10.
Meg Dubray, public-relations representative for the association that includes Howes and Garamova, said the business was not aware of updated license requirements.
American Pride tried to apply for such a license years prior, but Rowland’s office said the business didn’t need one because it had fewer than five arcade devices and computers didn’t count, according to Dubray. La Fortuna opened November 2016, and American Pride opened March 2015.
Dubray said law enforcement decided to intentionally “sit on the application process and leave the entertainment license in limbo” for El Dorado, adding that Garamov passed all inspections necessary aside from the pending fingerprint review.
An attorney for Garamov, Jan Douglass, said a detective with Denver police — Daniel O’Bannon, who began the investigations into the businesses — told Garamova, “You will never see a license until we determine these games aren’t slot machines, which we know they are.” That happened at the Oct. 4 raid of La Fortuna, Douglass said.
Denver police declined to answer a question about whether that happened, citing the ongoing investigation into the businesses.
But the conflict has also been played out in the courts.
‘Arbitrary and capricious’
Garamov brought legal action against the City of Englewood in a complaint in Arapahoe County District Court dated Nov. 7 over the city’s stopping of Golden Dragon’s application.
“We believe our rights have been violated,” Garamova said in October about Englewood’s halting of the application process. The move was “arbitrary and capricious,” Douglass said at the time.
The case had not moved forward as of April 3, and if Golden Dragon’s attorney for that case doesn’t file something by April 12, the court will dismiss the case, according to the 18th Judicial District.
At the core of the legal action was, in part, whether Colorado’s gambling laws apply to the business.
Garamov and Garamova — her name ends with an “A” in Colorado Secretary of State documents but not in Denver arrest documents — both were arrested on suspicion of 99 counts each. Those include 46 counts related to improper shipping or receiving of slot machines, 46 counts of possession of a gambling device or record, one count of professional gambling, two counts of maintaining gambling premises and four counts related generally to unauthorized gambling operations.
Police also arrested Eduard Gugulyan, Garamov’s partner in GBE LLC, on suspicion of 15 counts related to improper shipping or receiving of slot machines, 15 counts of possession of a gambling device or record, one count of professional gambling, one count of maintaining gambling premises and two counts related generally to unauthorized gambling operations. Gugulyan and Garamov show the same date of birth, June 20, 1979, in arrest documents.
The City of Denver sent cease-and-desist letters dated March 23 addressed to Garamov, Garamova and Gugulyan ordering them to stop operating La Fortuna, American Pride and El Dorado without valid amusement licenses.
The investigation into La Fortuna and American Pride began in May 2017. Police raided the three locations March 27.
A Colorado Bureau of Investigation PowerPoint slideshow obtained by Colorado Community Media that gives an overview of state gambling law lists “robberies, burglaries, drug activity, money laundering” and “tax evasion” as possible concerns for unregulated gambling environments.
The Golden Dragon’s legal action against Englewood argued the business’s games involve skill, speed or endurance and thus do not qualify as gambling under state law. It also argued that Colorado’s laws regarding simulated gambling are unconstitutionally vague.
One part of a law regarding simulated gambling was declared unconstitutionally vague by the El Paso County District Court on June 21, but Denver police’s arrests are not based on that simulated-gambling statute.
In recent years, similar businesses in Delta, Evans, Pueblo, Colorado Springs and Denver have seen raids by law enforcement. In 2015, the state Legislature passed a bill aimed at curtailing gambling at internet cafes, or “sweepstakes” cafes, and five businesses were ordered shut down by Mesa County in the Grand Junction area, the Grand Junction Daily Sentinel reported. The law is House Bill 15-1047.
In February 2015, a business entity called Internet Cafe Dartmouth, registered to Garamova, gave a lobbying firm $20,000 in opposing the sweepstakes bill, according to filings with the Colorado Secretary of State’s Office.
Cafe Cherry, an internet cafe that opened in 2013, was run by Garamov at the same address as the American Pride arcade. It closed after the law passed, which outlawed operations where customers engaged in sweepstakes that the bill said amounts to simulated gambling.
The skill-games association has described itself as made up of “mom and pop” shops in news releases and responses to questions.
Similar arcades have opened in Commerce City and Aurora in recent years. Palace Skill Arcade is listed in state filings at 7045 Pecos St. in Adams County near Westminster.
‘Elements of chance and skill’
State House Bill 18-1234, which passed the House March 26 and moved to the Senate, would define simulated gambling without an exception for “bona fide contests of skill, speed, strength or endurance” — meaning simulated gambling would include risking money or other value for gain that depends on skill, or in whole or in part upon chance.
It would “include devices that combine the elements of chance and skill, in accordance with the state Constitution,” according to the Legislature’s website.
Slot machines, including electrical or video machines that take tokens or payment according to the state Constitution, would be defined as a simulated-gambling device if results are determined by the skill of the player or the element of chance, or both, as the state Constitution outlines. Devices that pay nothing of value and are not used for gambling would not qualify as a simulated gambling device under the bill.
The bill redefines “prize” such that prizes of tickets, or electronic coupons, that can’t be exchanged for money would not fall under the definition as it relates to simulated gambling.
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