There are few places as depressing as an illegal game room on a sunny Tuesday afternoon.
Inside the Capri Game Room on Telephone Road, the dozen or so patrons spread among the 122 video-slot machines aren't exhibiting any signs of happiness. The only people who look like they're actually enjoying themselves are the two security guards outside the front door. They're shooting the bull a few yards away from an open box of poker chips that patrons can pick up for a "match" from the house.
Don (not his real name) has chaperoned two Houston Press staffers to the Capri, one of many gambling halls known in Texas as game rooms, after a failed mission to visit the nearby Just Gold game room. A security guard at Just Gold, which shares a building with a lawn mower store behind a Dairy Queen, told us that they were allowing in only people with membership cards, and they weren't issuing any new ones. Fortunately, the Capri was wide open.
BLOG POST: Houston's Illegal Game Rooms, All But Immune to the Law
At a machine near the back corner of the former cabaret, Don calls out "Match," and after a little while, a woman in an apron strolls over and pulls out a wad of cash. The match system, where the house matches your bet dollar-for-dollar up to a certain amount, is an incentive some game rooms offer to get you in the door and keep you in front of their machines. At the Capri, players get one match per day.
Don hands her a poker chip with "$20" on it and puts a twenty in the machine; the woman adds another twenty and then produces a roll of masking tape from her apron. She tears off a little strip and covers the bill dispenser, a reminder that you're not supposed to cash out until the house says it's okay. The Capri's rules won't let Don cash out for anything under $80, even if he just wants to switch machines.
The lights are dim and the walls are painted a rather cold shade of blue, peppered with an occasional bunch of red cherries or black spades. Food and soda are free, but it's bring your own booze, and it doesn't look like anyone's drinking today. The few patrons, mostly middle-aged women, sit still and quiet, engaged in a staring contest with their Pot-O-Gold and Life of Luxury games. There's no music, so the only sound comes from the machines' electronic blurts. It's like you not only have to abandon all hope, but any joy, upon entering the Capri.
Or at least that's the way it is on a weekday afternoon. Don says he's driven by the place at night, when the parking lot is full and patrons pack the place for the big-ticket drawings: You can win a laptop, a 46-inch TV and lots of other cool stuff. Don likes playing every once in a while, but his wife, he says, has a problem. He says the marriage is crumbling after 20-odd years because she's blown more than $100,000 in game rooms. Her own family has practically disowned her, and nothing he says can get through to her. He doesn't blame the game rooms for her addiction, but he doesn't think law enforcement is doing enough to crack down on the owners.
What Don doesn't know is that, just three weeks earlier, Houston police arrested four people they believed to be the Capri's owners; the Harris County District Attorney's Office charged them with gambling-related crimes — misdemeanors — and three of them had already pleaded out. The three had already served their few days in jail and paid a few hundred each in fines, which is probably why it's still business as usual at the Capri. As long as gambling charges remain misdemeanors, there's not much the Harris County DA's office can do. Of the 97 gambling-related charges the DA's office filed in the last year, the harshest jail sentence so far was 25 days. Only one person was slapped with the maximum $4,000 fine; most were hit with two to four days and $100 to $600 in fines. (Some of the cases are still pending.)
The Capri is just one of dozens of illegal game rooms in Houston operating in broad daylight. They're like weeds; by the time police investigate and shutter one operation, another one springs up. As long as the machines themselves are legal and the penalties minimal, game rooms will thrive, and owners will hit the jackpot.
In an attempt to clarify gambling law and codify the difference between places like the Capri and Chuck E. Cheese's, the Texas Legislature in 1993 and 1995 amended the state penal code and gave birth to what's called the "fuzzy animal" exception.
To wit: Video gaming devices like 8-liners (so called because there are eight combinations of matching symbols) are legal to own and operate as long as there's no cash payout and you can't win anything of real value. Since the legislature didn't have a problem with children winning cheap trinkets, it had to find a way to express this mathematically; therefore, the fuzzy animal clause allows noncash payouts of anything less than ten times the amount of a single bet — or five bucks — whichever is less.
This appeared to have no deterrent effect on many illegal game room operators, who argued that paying out in gift cards met the "noncash payout" exemption. Game rooms boomed, and a 1997 bill to outlaw 8-liners altogether was dead on arrival.
But in a 2003 decision, the Texas Supreme Court whipped out Webster's Third New International Dictionary and ruled that gift certificates met the definition of "cash." The court further ruled that owners couldn't pay out in tickets for play at other machines if the player had to redeem the ticket for cash.
While the decision made it easier for district attorneys to prosecute owners, it of course did nothing to stamp out the existence of game rooms. As long as the penalty remained a misdemeanor, the businesses weren't going anywhere — especially if enough people looked the other way. Estimating the number of 8-liners is tricky, as there is no single spot for them in the state's six coin-operated-machine categories. A 2004 study conducted for the governor's office produced a wildly expansive estimate of between 44,000 and 143,000 machines, with a "point estimate" of 74,500. In 2001, the Texas Department of Safety estimated the number to be 40,000-45,000.
Game rooms aren't just moneymakers for the operators, but for ancillary players as well: Many rent space in strip malls, where only a landlord missing a significant part of his frontal lobe could be oblivious to what his tenants are up to.
They're also good for security companies, like Lake County Patrol, who provided guards for the Capri. They're good for the vendors, who lease the machines, and for the suppliers who sell the machines to the vendors.
However, there seems to be a belief among suppliers that the machines in game rooms just happen to appear there magically. Incredibly, in the entire history of game rooms, no one has ever knowingly sold or leased a machine that they knew was being used illegally. For example, Houston Slot Machines, which bills itself as "The Biggest Slot Supplier in the Southwest," has apparently never sold a machine that wound up in a game room.
Before owner Ernie Layman got mad at us for even asking how tens of thousands of machines wound up in game rooms in the first place, he told us that the machines come "from all over the world, really."
But when asked if he thought any of the machines are sold by companies in Texas, he advised that "You might be barkin' up the wrong fuckin' tree. I'm tired of talking to you."
At Pioneer Amusement on Harwin, where one of the people charged in connection with the Capri said he got his machines, the listed owners, Mehdi Ali and Tajuddin Ali, didn't want to talk. But another employee, who said she had permission to talk, told us that it's not the company's job to find out if a customer plans to stick a machine in an illegal game room.
"We don't sell it for those intended purposes," she said. "It's not our obligation to do it...That's not under our control."
Because 8-liners are legal, there is no way to cut off the proliferation of game rooms at the supply. Suppliers are completely left out of the permitting process for the machines and game rooms themselves — a process that makes extra cash for local and state governments but that is easy to manipulate.
Machines must have state and county inspection permits in order to operate legally; some cities, like Houston, require an additional sticker. Each governing body assigns a different number to each machine, and each has different application requirements. Theoretically, all three entities should have identical owner names on file, or at least the same applicant's name.
And because there's virtually no way to make money off an 8-liner being used legally, any establishment with multiple machines is a red flag, which is why, inside Houston city limits, prospective game room owners must hand-deliver an application to the Houston Police Department's vice squad. Of course, only a bona-fide idiot would do such a thing, so it's best to pay a straw man for that duty. An alternative is to use an actual owner's name without his knowledge, which we discovered when we picked one machine's permit numbers at random and discovered the numbers were part of a state criminal investigation. Of all the thousands of game room machines in Houston, we just happened to find one with a fraudulent paper trail — imagine the odds.
Walking into this tiny game room off Almeda-Genoa is like jumping into a swimming pool filled with bleach.
The owner is mopping the tiled floor with something she says is Lysol but that gives a mean ammonia headache; the fact that there is no air-conditioning and the air is only tentatively circulated by a weak electric floor fan doesn't help. Somehow, the lone patron clicking away at his machine doesn't seem to care.
It's a small space — only 28 machines — in a strip mall, and the owner, a Hispanic woman who looks to be in her thirties, likes it that way. Cessy, as she wants to be called, tells us after our visit that she's been in the business for nine years, and while she knows she could be making a lot more money, she likes keeping a low profile. Ethically, she has no qualms with what she's doing.
"Out of all the illegal things, c'mon, it's a game room," she says. "I'm not selling drugs to anybody."
She says she makes about $600 a week, which she supplements by selling insurance and doing taxes on the side.
"I'm making a regular paycheck," she says. "I'm not making a lot...I could make this place packed. All I have to do is say I'm going to do drawings and, you know, [add another] 40 machines. I don't want the stress."
A few weeks before, she actually had 30 people in her room — that was a big day. But mostly, it's a hit-and-run crowd. Unlike the Capri, which matches players up to $20, Cessy has a $5 max, and you can cash out any time.
"There's some people that come in, play their match and leave immediately afterwards," she says. "Then you have the people that, 'Oh, I told my husband I went to the grocery store real quick,' and will spend an hour. 'Oh, my husband thinks I'm doing laundry.' And then you have the players — really good players — four or five or six hours."
The size of her operation keeps not only the authorities off her back, she says, but the parasites who like to knock over game rooms as well.
"Who's going to rob a place if they only see three people at a time?" she says.
She says she leases her machines from a vendor who gets a 25 percent cut of each machine's daily net. She won't name her vendor, who she describes as a rather refined Indian gentleman: "He wears the polo shirt and the polo shorts, and you know they're ironed, but not with the crease...He's weird — he plays cricket."
Before we left Cessy's game room, we got the city, county and state sticker numbers from one machine. The state lists a 22-year-old woman as the owner. When we gave the woman the address for Cessy's game room, she said she had no machines there, and that all of her machines were currently in storage.
The city issued its sticker to Best $ Choice Investments. Texas Secretary of State corporate filings list the owner as Mehboob Sutaria. The county's computer database also lists Sutaria, only it refers to his business as Best $ Vending. However, the handwritten application submitted to the county bears the name of a Vietnamese woman — we'll call her Sue — who spells her last name two different ways. Sue asked for 100 stickers for a game room on Bellaire, which actually exists, and 100 for a nonexistent address on Cullen.
When we asked Cessy who Sue was, she said, "I know that my vendor uses different people, but I don't know...For all I know, that could be his wife, or his cousin."
She adds, "He doesn't plan to get caught, either. That's why he chooses people like me...He's a very low-key man."
A note on top of the application lists the name "Sonny" next to a cell phone number that is also one of the two numbers listed for Sue. The other number listed for her, it turns out, belongs to a medical device salesman in Pearland who told us he's had the number for six years and has no idea what it would be doing on an 8-liner permit application.
Neither the mysterious Sonny nor Mehboob Sutaria returned our calls, but Sue told us that Sonny — whose actual name she claimed not to know — was a former partner. Only a few days before, when she applied for additional stickers from the Texas comptroller's office, did she discover that Sonny had used her name to apply for 603 stickers. A spokesman for the comptroller's office confirmed that Sonny's application was currently the subject of a criminal investigation.
The day we spoke with Sue, she told us that Sonny said he'd straighten things out when he stopped by her game room that night. We figured we'd try to talk to him as well, but when we showed up at the game room, neither Sue nor Sonny was there.
The game room was open only to current members that night, but when we identified ourselves as the Press and asked to speak with Sue, the older Vietnamese doorman with a snap-brim hat let us in. He told us in broken English that Sue was home with the flu but that he would try to get ahold of her husband.
About 20 patrons were spread out over 60-odd machines, playing for the various kitchen appliances and gadgets lining the walls. Chips and sodas were available in the back of the room, beside a table with what looked like homemade food in disposable tin trays. After a few minutes, a young woman strolled into the room and prepared a to-go plate. She introduced herself as Sue's daughter and explained that she was making the food run for Sue.
We didn't expect to see Sue that night, but a short while later she showed up and explained that she had missed Sonny's calls because she turned off the phone to nap. She showed us all the permits for her game room and explained once again that Sonny used her name on the county tax office application without her knowledge.
For Sue, who says she just got into the business when she bought another woman's game room a year ago, the whole thing has been more trouble than it's worth. She says she's hardly making any money off the game room. When asked about the legality of her business, she says everything is aboveboard because she's not paying out in cash, only in quality appliances. It's an absolutely incorrect interpretation of the law, and it appears to be something the previous owner told her. Sue seems to genuinely believe it.
She says that, if she could, she'd unload the business and focus on her nail salon. Who's going to forge your name over mani-pedis?
On one of his undercover game room operations, HPD investigator David Devora recalls, he saw an eightysomething woman glued to her machine for the whole day.
She was already there when he went to the room around ten in the morning. He played for about an hour in order to gather information, then returned around six to see if there'd be another crew of employees for the night shift. She was still there. Her eyes were watering; he thought maybe she was crying, but on closer look, he concluded that it was severe eyestrain. She'd been looking at the screen for at least eight hours straight. Finally, she played her last bet and walked outside to catch the bus. Someone's grandmother, throwing her money away, thinking she actually had a chance to win big.
"I've seen people do the sign of the cross," Devora says. "I've seen people trying to count the reels, like in the old days."
Because 8-liner gambling is illegal, there's no gaming commission to regulate and inspect the machines for acceptable payoff percentages. An owner can set a machine for 1 percent or 100 percent. It's just like playing with loaded dice.
"You're playing against a computer," he says. "You're playing against a person who's operating this computer illegally. How do you think that's going to come out in your favor?"
It's especially bad when house rules won't let you leave a machine unless you hit a certain amount, like at the Capri. Devora has worked places like that, always mystified by the philosophical implications: "The whole place is illegal. So we're looking at an illegal operation making you do something even more illegal. You know what I'm saying?...It's like: How much more illegal can we get?"
Devora has 29 years with HPD; he's been investigating game rooms since 2005. His stings have resulted in the seizure of more than 1,500 machines and $250,000. Six weeks earlier, he hit a game room on Almeda-Genoa where employees had $97,000 in cash on hand just for change. If run right, the places can be gold mines.
Which is one reason Houston City Council passed an ordinance in 2007 mandating that game rooms have a "game room" sign and unobstructed views of the interior, among other things. (A year later, according to a letter then-HPD Chief Harold Hurtt submitted to the Houston Chronicle, the newly formed "Video 8-Liner Enforcement Team" issued nearly 20,000 citations and shuttered 72 game rooms.)
The ordinance was passed in part because of a rash of game room-associated crime in and outside of city limits. Three months before the measure went into effect, a woman was accidentally shot and killed when the owner of a game room in northwest Harris County tried to prevent a "suspicious-looking" fellow from entering his establishment by shooting at him. Unfortunately, the 31-year-old woman passing by took the bullet in the head instead. Three months before that, a game room employee hopped in his van to chase down — and ultimately run over — a man he claimed had just robbed the place.
More recently, three teenagers were charged with capital murder in January for allegedly killing a game room manager in west Harris County. Almost exactly a year before that, three men were charged with capital murder in the shooting death of another game room manager.
Devora says he occasionally has trouble getting into game rooms undercover because he doesn't fit the profile of the typical patron — most often senior citizens. Picture the stereotypical bingo crowd, and you'll be in the ballpark. They're not bad people, he says. But they're breaking the law. And they often tend to forget that minor fact.
Sometimes, vice officers get calls from disgruntled customers, "like, 'Hey, I just won $500 in there, and [the owner] only gave me $200.' So are you saying you just committed a crime?...People don't think."
This tendency not to think also applies to owners and vendors, who are often just as dim-witted as they are greedy. Because operating a game room is so easy, it appears that it's all too easy to forget that there is a risk, even if it's minimal. Take the operators of the Capri, who in a magnificent demonstration of chutzpah were running an illegal game room across the street from a Houston Police Department substation.
Less than a mile away, in a strip mall on Almeda-Genoa, Looking Good Game Room owner Faridali Maredia seems to be playing it cooler.
For one thing, Maredia, who's the registered owner of several other game rooms, is operating out of an address that, for reasons unknown to a Harris County Appraisal District official we asked, is not on the Harris County tax roll. This works out well for Maredia, who, according to Appraisal District records, owes $14,000 on his addresses that do exist.
Maredia confirmed that he owns Looking Good, but that's all he wanted to say. But while state corporate filings include the game room's correct address, as well as listing Maredia as the owner, they also contain contact information for an owner named Maria E. Gonzalez.
In her county application, Gonzalez listed a game room at a nonexistent address on Almeda-Genoa that would otherwise lie in an undeveloped stretch of land belonging to the Harris County Flood Control District. Fortunately, Gonzalez included her real phone number; unfortunately, her explanation was weird.
After insisting that it was the correct address, she said she got rid of the business last year — but she says she didn't sell it or otherwise sign any documents transferring ownership.
"No, I just passed it on," she said. She declined to provide the name of the guy she gave the business to. She described the verbal transaction this way: "I said, 'I don't want the business anymore. Do you want to take it over?' He said 'Yes.' That's it."
When asked why she got out, she said, "It didn't work for me, so I let it go."
But the game room business seems to work for Maredia.
According to a breach of contract lawsuit filed by two former employees, a game room Maredia ran on Homestead Road grossed more than $500,000 annually. The plaintiffs described their jobs as "assisting customers who played the coin operated amusement machines owned by [Maredia], ordering, purchasing, and restocking supplies..."
Perhaps not so incredibly, the two men were able to find a lawyer named Christopher Grier willing to sue on behalf of employees of a game room that somehow grossed a half-million a year. The suit was ultimately dismissed; Grier declined to comment.
But down in Cameron County, another attorney has filed a far more ambitious lawsuit.
On behalf of customers he claims were lured to game rooms by false promises of big winnings, former Willacy County District Attorney Juan Guerra last December filed a Racketeer Influenced and Corrupt Organizations Act suit against nearly 150 owners and operators of 8-liners in the region. (Civil RICO suits allow alleged victims to act as "private attorneys general," seeking civil remedies for violations of criminal law, such as gambling, that fall under the RICO Act.)
The suit appears to be the only one of its kind filed in Texas, and it's no wonder that it would fall to someone like Guerra to file it: In 2008, when he was still the district attorney, Guerra made national headlines when he got a grand jury to indict then-Vice President Dick Cheney and former Attorney General Alberto Gonzales for allegedly engaging in organized criminal activity with a company that operated a federal detention center in Willacy County.
Prior to that, Guerra had waged war on county officials he had accused of corruption, only to find himself the subject of a criminal investigation for which he was arrested on charges of felony theft and tampering with government records. While awaiting court hearings, he camped out in an R.V. across the street from the courthouse, keeping company with a horse, three goats and a rooster that he said represented the "circus" atmosphere of the charges against him. The charges were ultimately dismissed.
Guerra's suit, filed on behalf of two unnamed plaintiffs, alleges that the defendants own or operate nearly 9,000 machines that generate an average of "$20,000 in illegal earnings per month." That totals nearly $180 million per month.
Guerra told the Press that "My deal is trying to get a little bit of money set aside for the elderly, because [they are] the ones that I'm worried about...I'm not trying to shut them down. I'm [not] law enforcement."
Never one to miss a conspiracy brewing, Guerra said that many district attorneys in Texas, especially those in smaller, poorer regions, don't want to crack down on illegal game rooms because of the permit money they generate each year.
"Nobody's interested in shutting them down, because it is the way that they are supplementing their budgets," he said.
He said he's already settled with some of the defendants. If that's true, it's likely because admitting ownership isn't a big deal in a civil case.
In a criminal case, according to Devora, it's not uncommon for defense attorneys to claim that, although their clients are charged as owners, they're actually just employees.
"They're always saying, 'Well, this guy doesn't own the place. This guy's just working for them...they're just trying to make a living,'" Devora says. "...I would love for the owner to come up to me and say, 'Hey, I own this place, don't put...whoever this person is in jail that I pay $3 an hour...Of the hundreds of thousands of dollars I've seized and the thousand machines I seized, no one has ever done that.'"
So it's not surprising, then, that one of the people charged as the owner of the Capri is claiming he's not the owner.
On a return trip to the Capri, the parking lot is empty and there are no smiling security guards shooting the breeze outside.
A knock on the door results in a pair of suspicious eyes peering through a sliding peephole. When we identify ourselves and ask to speak to the owner, the man, who says he's a security guard, steps outside and says the place is closed indefinitely. We give him a card and ask him to have the owner call, but we never hear back.
We do, however, get a chance to speak briefly with Shiraz Manesia, one of the men charged with possession of a gambling device in connection with the Capri.
According to an undercover officer's affidavit, a confidential informant "had multiple interactions with Shiraz Manesia inside of the Capri Game Room and he held himself out as the owner of the location. She can identify him by name and sight."
Maybe Manesia was just selling the woman a line; he told the Press he's merely the vendor, and he has no idea why police and prosecutors think he owns the place. All he did, he says, was buy 115 machines from Pioneer Amusement on Harwin, the 8-liner supplier that has absolutely no legal obligation to find out if they're selling to sketchy dudes. He then apparently placed 115 machines in a business on Telephone Road that did not appear to provide any other revenue-generating goods or services.
"...What they're doing, I don't know," he says, in broken English. "That is nothing concern about me."
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When asked what he thinks people who play his machines can win, he says they play for prizes like barbecue grills, cameras and TVs. When asked if he's sure that that's legal, he says, "Maybe, I don't know, because the owner knows everything. I'm the lease guy. I'm the vendor. So I don't know."
The recent arrests at the Capri have scared some of the nearby game rooms. In a strip center just up the road, two others have closed. But the Just Gold game room a few hundred yards from the Capri is still open. The owner, Lourdes Rodriguez, is just one of many game room owners with landlords who won't ask any questions as long as the rent is paid every month.
While Just Gold, and this stretch of Telephone Road, is quiet for right now, the heat will blow over as it always does, and things will get back to normal. The promise of big money might just be an illusion for the suckers who play, but for the owners and vendors, the money is very real indeed.