March 20, 2013

Miami Mayor Regalado says all video-gaming machines in city are illegal

Two-and-a-half years after pushing through a controversial ordinance to regulate video-gaming machines, Miami’s mayor acknowledges the measure has never been enforced and that all the machines are illegal.

Across Miami, all video-gaming machines — more popularly known as “ maquinitas ’’ in the Little Havana cafeterias and Flagler Street video arcades where most are installed — are illegal, now say the mayor and a top city official.

The reason for the change of heart: A controversial October 2010 bill championed by Mayor Tomas Regalado that required owners of an “amusement game or machine” to pay $500 a year for a license called a “business tax receipt.”

In the 2½ years since the ordinance was adopted, not a single machine owner has purchased the license, for what are believed to be hundreds if not thousands of the devices, administrators say.

“Every one of those machines is illegal,” said Noel Chavez, the city’s occupational license supervisor.

“That’s what I think,” agreed the mayor, whose support for the video-gaming industry caused so much friction between himself and Police Chief Miguel Exposito that it led to the chief’s ouster.

The issue came to light this week as bills rocket through the state legislature that would outlaw video gaming machines at Internet cafes and adult arcades throughout the state. The measures would apply to the type of machines sprinkled around Miami and Hialeah, legislators say.

The argument over the machines turns on the question of whether they are games of chance or skill. Florida law — outside of specified pari-mutuels — broadly forbids gambling, outlawing machines with “any element of chance.’’ The state law says it is “the duty’’ of law enforcement to “seize and take possession’’ of gambling machines.

But maquinita owners have sought to exploit an exception in the law that allows amusement games of skill, like video games at arcades, which can pay small prizes.

In the past week, the state Senate and House have proposed matching bills that would make the video-gaming machines illegal.

Controversy about the gaming machines led to the resignation of Lt. Gov. Jennifer Carroll last week. She resigned under pressure after state investigators questioned her about consulting with Allied Veterans of the World, a charity involved in an alleged illegal gambling operation. An investigation into Allied Veterans led to 57 arrests.

Locally, the lucrative machines are popular in Miami and Hialeah, and some of the profits they generate wind up in campaign coffers.

Records show that during Regalado’s 2009 mayoral campaign, he received at least $14,000 in contributions from video-gaming industry leaders, their businesses and relatives. Former Hialeah Mayor Julio Robaina, during his failed 2011 bid for county mayor, received more than $20,000 from the industry, records show.

Hialeah Mayor Carlos Hernandez collected just over $15,000 in contributions from industry leaders and the restaurants and businesses where their machines are licensed, during his 2011 victory.

Regalado argued for Miami’s ordinance, which is modeled on Hialeah’s law, maintaining that it would allow code and law officers to know the location of every machine. Moreover, the special license would generate as much as $750,000 at a time when the city was going through a debilitating economic downturn.

But Miami hasn’t collected a cent. None of the machines have been licensed, and the city apparently has not written any tickets enforcing the law.

Code Enforcement Director Orlando Diaz, only at his post for three months, said no violations have been issued since he’s been there. He said he did not have time this week to check if any had been issued since the ordinance passed.

Regalado said as far as he knows, none have been handed out since the ordinance took effect in October 2010.

Asked why code officers haven’t ticketed violators, Regalado said: “It’s because we don’t know where the machines are. Usually they have them in the back rooms, where we don’t go, unless it’s the police.”

Police Chief Manuel Orosa said the city has confiscated 156 machines, most during Exposito’s tenure and some since Orosa took over. Of those, 51 have been destroyed after being labeled “contraband’’ by the courts.

The rest remain the subject of litigation. Orosa said before confiscating a machine, his officers must play it and win a prize three times. Both the Miami and Hialeah ordinances prohibit awarding cash prizes valued at more than 75 cents.

Nobody was more high profile in trying to eliminate the machines than former Chief Exposito, whose fight with the mayor over the machines eventually cost him his job in the summer of 2011.

Exposito, now retired and writing his autobiography, led several raids on establishments with the machines, confiscating them and arresting operators. He said the industry was linked to organized crime, and accused the mayor of being in bed with the industry.

Exposito said those highly-publicized arrests — as well as a handful made after he left — have scared maquinita owners from getting the new license.

“When you put in paperwork for a permit, you have to put in a location. You’re telling the police department, ‘Here’s where we have a machine. Come and get it,’ ” he said.

José W. Lorenzo, who owns El Bocadito cafeteria at 330 NW 27th Ave., was surprised to learn the owners of the single maquinita in his restaurant never obtained a permit. The machine belongs to Odayls and Jesús Abreu, major players in the local industry. The Abreus did not respond to a phone message.

Lorenzo does not favor the permitting requirement, saying too much regulation hurts small businesses.

“The machines are a way to draw in clients,” he said. “A senior citizen might come in and spend $20 and a few hours playing on a machine and drinking some cafecito .”

The Abreus, Jesus Navarro and Orlando Cordoves own a major share of the thousands of machines throughout Miami-Dade , records show. City administrators have acknowledged Cordoves helped the mayor write the city ordinance. None of the three groups returned phone calls this week.

In 2011, after Exposito led raids that ended in the confiscation of dozens of his machines, Cordoves sued Exposito and his top aide, Maj. Alfredo Alvarez, for defamation. That suit was dismissed.

The city still faces a lawsuit by several video slot machine owners who are seeking the return of more than 100 machines seized during an October 2010 raid.

Of the 20-plus people arrested in the raids, charged with possession of illegal gambling devices, the majority entered a pre-trial intervention program that saw their charges dropped in exchange for paying fines, doing community service and taking classes.

Last week, Miami-Dade Mayor Carlos Gimenez commended the state for acting on the machines, and issued a statement saying he has opposed them since he was a commissioner and sponsored legislation to create an Illegal Gaming Task Force. The legislation passed, but a task force has yet to be formed.

“I believe that maquinitas have been behind the proliferation of illegal gaming operations, which are associated with organized crime,” Gimenez said.

In Hialeah, the city’s 2,269 licensed video-gaming machines brought in more than $1 million in fees last year. Like Regalado, Hialeah Mayor Carlos Hernandez argues for the local ordinance, saying it pinpoints the locations of the machines and helps regulate how they are used.

On Tuesday, Hernandez declined to speculate on how the legislation passing in Tallahassee could affect his city.

The Miami ordinance caused a blowout between Regalado and his handpicked police chief, Exposito, that could not be repaired.

The friction came to a head during New Year’s week 2011, when Exposito claimed Regalado had made several phone calls to the city manager trying to stop an October raid. Regalado angrily denied the claim, though he later admitted he’d asked whether the raids could be delayed.

A week earlier, Exposito complained bitterly in letters to the city manager and federal law enforcement that Regalado had been tampering with the planned sting operation.

Exposito was fired by City Manager Johnny Martinez six months later for insubordination.

On Tuesday, Exposito said he feels “vindicated” by the Tallahassee arrests and that he continues to believe that the machines are used for gambling, not mere amusement.

Miami Herald staff writer David Ovalle contributed to this report.

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