SULLIVAN
CITY, Tex. — Casino gambling with cash payoffs is illegal in Texas.
But on a drizzly Tuesday afternoon in February, you could not tell it by
the scene inside a former tire shop near this Rio Grande Valley border
town: a few dozen men and women gambling on 75 slot machines in
windowless rooms.
Among
the cattle ranches and wind-battered palm trees on U.S. Highway 83, the
setting was lowbrow — free chips and soft drinks were the only
amenities — but the payouts, in one of the poorest sections of Texas,
were substantial, up to $4,000 per play.
After
sliding their money into the machines, gamblers who scored jackpots
raised their hand, yelled “Ticket!” and waited for a worker carrying a
thick wad of bills to convert the points they had won to cash.
Despite
laws saying otherwise, casinos thrive throughout the state, an
underground billion-dollar industry that operates in a murky realm and
engages in a perpetual cat-and-mouse game with the authorities. It is
unlawful for slot-machine casinos to pay cash to gamblers, but it is
legal to own, operate and play the machines in Texas, as long as the
prizes are cheap noncash items such as coffee pots.
The
legal gray area has grown even grayer as the state and several cities
and counties have required gambling room operators to pay taxes and
fees. But lax oversight by the state and local authorities helps explain
how casino gambling has become so common even in a state like Texas,
which publicly and officially is keeping casinos out while quietly and
unofficially allowing them to proliferate.
Texas
has 30,000 to 150,000 illegal slot machines that make an estimated $1.9
billion annually, according to the Texas Lottery Commission, which runs
the state-approved lottery. The slot machines — known as eight-liners,
for the variety of lines that need to match up for a player to win — are
often hidden in abandoned or fake businesses, and have turned up in
spaces that from the outside appeared to be karate schools, car
dealerships, lawn mower repair shops and, in the South Texas town of
Alton last year, a molecular lab.
“It’s
like the poor man’s speakeasy in Texas,” said Richard B. Roper III, a
former federal prosecutor who oversaw a 2007 case that shut an Amarillo
gambling room that made up to $4,600 weekly and whose operators bribed a
law enforcement official to avoid being raided. He added, “If the guy’s
willing to pay off a cop, there’s got to be some money to be made.”
Some
of the machines the authorities have confiscated in raids have official
state tax decals — the Texas comptroller’s office collects $10 million
annually on eight-liners, pool tables and other devices as part of a
coin-operated machines tax. But state officials have no idea which slot
machine operators are making illegal cash payouts, saying it is up to
local authorities to enforce gambling laws.
Yet
many local officials lack the resources and the will to prove whether
cash is being exchanged. And some communities have had even less
incentive to investigate gambling rooms since officials began requiring
casinos to pay for costly permits, bringing in revenue to needy cities
and counties.
Workers
at two gambling rooms on Highway 83 in Starr County — one in the former
tire shop and the other in a renovated gravel warehouse, both of which
openly paid players in cash during a visit in February — claimed to have
county permits but declined to comment further. “You’re not a cop,
right?” a worker at one said. “Then we don’t have to talk to you.”
Starr
County charges eight-liner operators $500 per machine, through an
annual licensing fee approved by the County Commissioners’ Court last
year. Starr County’s top elected official, County Judge Eloy Vera, did
not respond to requests for comment, but he told a local television
station, KGBT, that the fees generated $1.7 million.
“They
frankly are turning a blind eye to illegality,” said the county
attorney, Victor Canales Jr., who opposed the ordinance allowing
eight-liner permits. “As pretty much everybody in the county knows,
there are cash payouts. You see postings on Facebook of people winning.”
The industry has grown so large, particularly near the border, that it has attracted the attention of the federal Department of Homeland Security.
And it has injected an illicit attraction into small towns that now hum
at all hours with a scaled-down Las Vegas Strip experience of chiming
slot machines, free all-you-can-eat buffets and uniformed security
guards.
The
gambling room on Highway 83 at the renovated gravel warehouse featured
at least 100 machines; a giant, sparkling chandelier; pictures of
Marilyn Monroe on the red walls; and free hot dogs. Dance music blared.
One gambler wore medical scrubs.
Esperanza
Salinas, 70, a retired middle-school teacher, went there with her
72-year-old husband, Jorge Salinas, and her brother-in-law, Armando
Salinas Jr., 68, a former city commissioner in the town of Elsa. When
she is not busy deer hunting or volunteering at her church, Mrs. Salinas
said, she gambles on eight-liners about twice a month.
That
February afternoon, the three of them spent a few hours gambling at the
renovated tire shop and gravel warehouse. Mrs. Salinas lost $70, while
her brother-in-law lost $50 and her husband won about $80.
“We’re
not hurting anybody,” she said. “We see it as entertainment and have
fun. I’ve never been in one where there’s a fight or an argument or a
disagreement, anything like that. You don’t see any riffraff.”
Gamblers like Mrs. Salinas have an unlikely group to thank for the slot-machine boom: the Texas Legislature.
In
1993, lawmakers approved legislation that seemed so innocuous it was
known as the “fuzzy animals” bill. It was intended to ensure that
amusement games, such as those played by children at Chuck E. Cheese’s
or a carnival that awarded stuffed animals, would not be considered
unlawful gambling devices. The bill, signed into law by Gov. Ann W.
Richards, legalized any device made for “bona fide amusement purposes”
that awarded noncash prizes with a value of $5 or no more than 10 times
the amount charged to play the game.
But
operators of illegal gambling rooms began exploiting the law. Hundreds
opened in Houston’s Harris County, until county leaders approved tough
regulations that required them to close between 10 p.m. and 8 a.m., to
have untinted windows and to be at least 1,500 feet from schools,
churches and residential neighborhoods. In 2011 in Brownsville in South
Texas, the federal Homeland Security Investigations began looking into
money-laundering activity associated with eight-liner establishments.
They uncovered an estimated 9,000 machines making $300 million annually
in Cameron County.
“That
amount of money is just a huge red flag for us at the federal level,”
said Kevin W. Benson, assistant special agent in charge of Homeland
Security Investigations in the Brownsville area.
Cameron
County’s eight-liner industry has been largely dismantled, after the
federal investigators shared their intelligence with the district
attorney, Luis V. Saenz. About 40 raids have been conducted since April
2013 as part of Mr. Saenz’s Operation Bishop, including one at the
American Legion in Port Isabel and others at empty houses that were
turned into illegal gambling rooms with automated teller machines for
customers to use.
“I’m
not here to judge morally,” Mr. Saenz said. “I’m the chief law
enforcement officer of the county, and it’s my job to enforce the law.
We hit this place in La Feria that had been called ‘Little Vegas.’ It
was like a compound where they had three different gaming rooms. They
had their strobe lights, and their blinking lights, and their signs.
They’re doing it out in the open, blatantly.”
Mr.
Saenz’s focus on eight-liners has cost him votes, led to a death threat
against him and supplied him with his own gambling room, of sorts.
About 100 slot machines seized in the raids sit in a brick warehouse.
Roughly 500 others were sold to a company that paid the county $100,000.
Mr. Saenz said environmental regulations prohibited him from destroying
confiscated eight-liners.
“I wanted to steamroll them to send a message,” he said.
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