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Game machine business loses round in rules fight

Representatives of Maryland's game machine businesses lost a round in their fight against proposed state regulations they say could cripple the industry.

Sen. Paul G. Pinsky, co-chairman of the Joint Committee on Administrative, Legislative and Executive Review, said his panel won't ask that the rules proposed by the Maryland Lottery and Gaming Control Commission be put on hold to allow for committee hearings.

Under the proposed regulations, operators would have to register all their machines with the lottery agency, pay fees for some of them and file reports on when they are moved. The Maryland Amusement & Music Operators Association said the burdensome rules and fees would put many operators out of business.

Pinsky said he and his co-chairman, Rep. Samuel I. Rosenberg, feel the regulations are appropriate and decided to take no action in time for a deadline last week.

"It's been a pretty unregulated industry," said Pinsky, a Prince George's County Democrat. "We also thought there was some oversight needed in the industry."

Kevin O'Keeffe, the lobbyist for the amusement operators group, said he'll keep talking with members of the legislature and the administration of Gov. Martin O'Malley, hoping that "as the process continues to move forward that people will listen to us."

He said he hoped the commission would be persuaded by public comments to change the proposed rules. He and others say the rules would drive many people out of business with new costs and paperwork.

"I don't have any idea as to why they want to regulate legal machines," said Larry Bershtein, the association's president and owner of Capitol Amusements, a game distribution company in Laurel.

He said the lottery agency overstepped its authority, drafting rules that are confusing and poorly written. He estimated that the new rules would cost him 150 man-hours a year, which he said he cannot afford in a shop with three employees.

Required by a law adopted in 2012, the rules cover an array of game machines that are not now regulated under state law, including skill-based games found in restaurants, bars, bowling alleys and Ocean City boardwalk arcades. The law gave the Maryland Lottery and Gaming Control Commission the final word on deciding what electronic game machines are legal and expanded the agency's enforcement authority.

The rules, which would take effect next June, with fees starting in 2016, would require all machines to carry a lottery agency sticker. To continue to run so-called "claw machines" and other games that award prizes worth more than $30 on one play, operators would have to apply for permission and pay a $50 annual fee per machine.

For those games, manufacturers and distributors also would be subject to a $150 fee per machine, either paid one time or annually if there is a standing service contract with the operator. Games that award only free plays, or tickets that can be redeemed for prizes, are required to register and have stickers, but would not be subject to fees.

Erica Palmisano, a lottery agency spokeswoman, said officials are considering emails and letters about the regulations received during the public comment period, which ended July 14, and would not discuss the remarks or disclose them until they have had more time to consider them. She said the agency probably would withhold comment until the fall.

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