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Groups face penalties after video lottery probe

By Phil Kabler

Staff writer

Five “faux” fraternal organizations were hit with fines and reductions in limited video lottery machines, as the Lottery Commission Tuesday took its first actions in an ongoing investigation of video lottery operators that have violated state Lottery regulations.

Commissioners imposed $1,000 fines and ordered the reduction of LVL machines from 10 to 5 against Monongalia-Preston Fraternal Order of Police Lodge No. 87, Princeton FOP Lodge No. 89, the Vietnam Veterans State Council, Marshall County FOP No. 112, and the West Virginia State Lodge FOP.

“We think we’re being quite generous, and yet it’s going to be serious fines and punishments,” Lottery Director John Musgrave said of the organizations and LVL machine distributors that operated the faux fraternal lodges.

According to the investigation, which included a series of show-cause hearings conducted by the commission in January and February, the organizations operated video lottery parlors with 10 LVL machines - twice the number allowed in bars and clubs - under the guise that the locations were fraternal lodges.

However, officers of the organizations testified they had no control over day-to-day operations of the gaming facilities, and in at least one case, had never been to their “lodge.”

At May’s commission meeting, commissioners will vote on sanctions for LVL machine distributors -- known as operators in Lottery terminology -- who set up “turn-key” gaming facilities for the organizations, including providing locations and staff for the gaming facilities, in violation of Lottery laws.

Those operators - Action Gaming of Wheeling, and Buck’s Inc. of Clarksburg - will have 30 days to self-report all violations, or face major fines of $10,000 per violation and the loss of state Lottery licenses.

According to the Lottery’s investigative report, Action Gaming is believed to be operating 19 faux fraternal locations, primarily in the Northern Panhandle and Wood and Pleasants counties, while Buck’s Inc. has four faux fraternal locations, three in Clarksburg and one in Nutter Fort.

Musgrave said Action Gaming owner David Shriver is cooperating with the Lottery in order to receive reduced fines and keep his Lottery license.

“Action Gaming, like a lot of operators, indicated they were just trying to be helpful,” Musgrave said of the arrangement with fraternal organizations. “They’ve offered to find a solution to get these issues settled.”

Action Gaming faces fines totaling $760,000 for numerous violations with the faux lodges it operates.

If the company self-reports all violations, and submits a plan to bring those locations into compliance with Lottery laws, the fine will be reduced to $180,000, with no loss of license, Musgrave said.

“We’re giving people the opportunity ... to come forward and self-report, and we’ll give them a way to get back into compliance,” he said.

Commissioners also fined Elks Lodge No. 482 of Clarksburg $500 for allowing their lodge to be operated by staff provided by Buck’s Inc.

The Lottery launched the investigation last fall, after the Association of Club Owners submitted a complaint that some LVL locations were claiming to be fraternal lodges, in order to operate 10 video lottery machines in each location - double the maximum of five machines allowed in bars and clubs with limited video lottery licenses.

Reach Phil Kabler at philk@wvgazette.com or 304-348-1220.


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