Distributor takes down machines ruled as gambling

HONOLULU — A company that distributes sweepstakes machines in Hawaii is taking the machines out of businesses after a federal judge ruled they are part of a gambling operation.

The Honolulu Star-Advertiser reported Friday that PJY Enterprises LLC is working to get the machines moved out of bars.

U.S. District Judge Leslie Kobayashi ruled this week that people who use the machines are gambling, which is illegal in Hawaii. Gambling in the state is defined as risking money on a game of chance.

The machines sold users discount coupons to buy products online. Along with the coupons, users got free entries into a sweepstakes to win cash prizes.

Kobayashi said in her decision that many coupons were left in the machines or discarded, showing customers were really looking to win cash.

Police seized many of the Products Direct Sweepstakes machines in raids in 2012 and 2013. The company sued the city of Honolulu to try to get the machines back.

The Honolulu prosecuting attorney’s office said the ruling confirms that the machines were gambling devices.

A lawyer for PJY Enterprises, Keith Kiuchi, said he plans to appeal the decision to the 9th U.S. Circuit Court of Appeals.

Kiuchi said the ruling was less about the devices themselves and more about the way the promotion was operated and the redemption rate of the coupons. He said several civil rights claims in the lawsuit weren’t resolved regarding people arrested without a warrant during raids, then released without charges.

Local lawmakers in Honolulu are considering a bill to make it a misdemeanor to own or possess gambling devices. It would define gambling devices as something with a video display that lets users play casino or other gambling-type games for an opportunity to win something of value, like cash.