Galveston County Sheriff’s Office deputies in the morning hours Thursday assembled in front of an unassuming strip center on state Highway 146 in Bacliff.
At the signal, more than 40 deputies descended on two so-called game rooms in the strip center.
By the afternoon, deputies had recovered a motorcycle registered as stolen out of Houston, arrested two people on outstanding misdemeanor warrants, seized about 100 electronic gambling machines and about $18,000 in cash, Maj. Barry Cook, of the sheriff’s office, said.
Each of the two game rooms housed about 50 gaming machines, Cook said.
The raids came after an investigation revealed that clerks at the game rooms had been giving illegal cash prizes of more than $440 to those frequenting the establishments, the sheriff’s office alleges.
Law enforcement officers have long and loudly said game rooms operate illegally and can become hubs for other criminal activity, including armed robbery. Yet the county, which has jurisdiction over unincorporated areas, and cities have been to slow to regulate them, even though they have the power. One reason is, some cities are finding game rooms to be highly lucrative.
OUTLAWED IN TEXAS
Gambling with electronic devices is officially outlawed in Texas, but businesses claiming to offer small non-cash prizes, limited to $5 or 10 times the cost of the game, whichever is smaller, are exempted.
Game rooms around the county use the exemption to operate facilities that have eight-liners, coin-fed electronic devices that operate similarly to slot machines.
The businesses have come under official scrutiny, however, because many violate the law by paying winners with money, numerous law enforcement officials have said.
SLOW TO REGULATE
Galveston County received authority to regulate game rooms during the 2014 legislative session, and the law took effect Sept. 1, 2015.
Despite being allowed to make the regulations, progress on getting them passed has stalled for years.
One plan would require game rooms to be permitted by the county, if the businesses operated six or more eight-liners. The businesses would also be subject to inspections.
County commissioners initially passed the rules in December 2016, but later delayed them over questions about how the regulations would be enforced.
FOR SOME CITIES
Commissioners were set to consider regulations during the summer, but that was delayed because of Hurricane Harvey. Initially, the plan was for the regulations to be back before the court in January. That didn’t happen.
Commissioner Joe Giusti recently said he thought the matter would be addressed shortly.
But why do cities, which also have regulatory authority, allow game rooms to operate given the warnings from law enforcement officials?
Hitchcock, a community of about 7,800 people in the midst of a severe budget crisis, is home to 11 game rooms and almost 700 slot machines. Together, they account for about $400,000 in revenue, or 8.6 percent of the city’s total projected revenue of $4.58 million.
Several Hitchcock city officials, including Mayor Dorothy Childress, did not respond to a request for comment about game rooms in the city.
‘THEY WANT THE MONEY’
But other county officials were more vocal.
“Under the previous mayor, the city really embraced illegal gambling,” Galveston County Judge Mark Henry said of Hitchcock. “They want the money more than they have a problem with the violation of state law.”
The former mayor, Anthony Matranga, did not respond to a request for comment.
Henry said he voted in favor of passing county regulations in January 2017, and was concerned there hadn’t yet been movement.
But even without county regulations, cities are still free to pass ordinances over game rooms, Henry said.
“You can ordinance them into compliance, but they don’t do that,” Henry said. “They have had the power we just got for decades.”
Giusti, meanwhile, said he had concerns about any county regulations infringing upon cities’ abilities to regulate game rooms.
Hitchcock city ordinance requires each game room to pay a $5,000 establishment fee and an additional charge of $400 per year for each video device in the room, according to city documents obtained by The Daily News through an open records request.
‘THEREIN LIES THE PROBLEM’
The specific number of video devices in each game room varies dramatically, ranging from 45 in the smallest to 93 in the largest.
There is a total of 696 video slot machines registered in Hitchcock, according to city documents.
“Therein lies the problem,” Sheriff Henry Trochesset said. “How, with all these fees, can that be profitable unless the business were not being above the law?”
City commissioners in August 2017 also passed rules aimed at limiting the number of video gaming rooms operating in the city to 14, despite the fact that there were only 10 game rooms operating in the city at the time.
The city’s stance on game rooms may have changed slightly since Childress took over as mayor in November 2017, Henry said.
“We’ve had three or four meetings and I think she’s on the right track,” Henry said.
Henry hasn’t spoken to Childress specifically about game rooms, but he said he didn’t think she shared Matranga’s philosophy about them.
‘TOO MUCH IS UNKNOWN’
Childress didn’t respond to comment, but in a March 18 response to an editorial in The Daily News, she made several comments about game rooms.
“I do not have one constituent that has come to me in favor of, but have heard from many citizens and others opposing game rooms,” she said.
Childress said she would prefer revenue from amusement permits go into a reserve account, but that city officials don’t have the means to shut down existing game rooms or deny applications for new game rooms.
Another member of the city’s commission took a stronger stance, however.
“This is not the direction we need to develop a community-minded area,” Commissioner Monica Cantrell said. “There need to be more ordinances passed. Too much is unknown. We need more accountability.”
Adding regulation to one of the cash-strapped community’s major revenue sources could prove difficult, however.
The city in 2015 received about $2.38 million in sales tax revenue from the state comptroller’s office. That number declined to $1.53 million in 2016 and down to $1.19 million in 2017. That was about a 50 percent decline in two years.
Revenue from amusement permits is an amount equal to 35 percent of the city’s projected property tax revenue of about $1.14 million and is almost 37 percent of its projected sales tax revenue of about $1.09 million. Revenue from amusement permits is the fourth largest revenue stream for the city, behind only property, sales and gross receipt taxes.
Hitchcock may possess a heavy concentration of game rooms, but it’s far from the only area in the county to be home to them, officials said.
The unincorporated areas of the county have about 15 active game rooms, and other cities, such as La Marque, are also home to them, sheriff’s deputies said.
Many of the game rooms are operating illegally, but building cases to prove that are often time-consuming and expensive, Cook said.
“With new rules, hopefully we can unlock some of these places,” Cook said.