Pa. lawmakers debate opening skill games to former criminals

Proposed skill games laws could bar people convicted of running illegal video gambling machines

By Sean D. Hamill
NewsWorks Lab contributor

John “Duffy” Conley was just 22 in 1985 and not yet known as the kingpin of video gambling in western Pennsylvania with over 4,000 illegal video poker machines. 

Over the next 40 years his rap sheep would include half dozen arrests, five convictions and so many years spent in federal prison – a dozen – for gambling conspiracy charges that a judge later gave him probation on another conviction because more time would be “unduly punitive.” Earlier this year, Conley avoided even more prison time by agreeing to close down his latest video gaming companies after Pennsylvania State Police confiscated 400 of his illegal games. 

But back then, just a year into his career distributing video gambling machines, Conley believed that someday some version of those games would become legal. 

That could now happen in the next few weeks if the Pennsylvania legislature approves a bill to legalize at least some video gambling machines to beat the state Supreme Court’s Oct. 13 deadline, or later if a proposal to delay that ruling by six months is approved. The court set that date in its June decision that found skill games – games that involve an element of skill, not just chance, to win – are illegal without a new law. 

“I always thought that my whole life that this day would happen,” Conley said in a recent interview with NewsWorks Lab. “I just didn’t think it would take so long. I always thought that all the way back in 1985.” 

As the state legislature hurries to debate multiple proposed bills over the next few weeks that could legalize some version of video gambling games, a critical part of the debate is whether the people who have been convicted of crimes for distributing illegal video gambling games, like Conley, should be allowed to be part of what is already a multi-billion dollar industry in Pennsylvania. 

“It’s gonna be an interesting discussion there,” said Mike Barley, spokesman for Pace-O-Matic, the skill games developer that has 20,000 of its machines in Pennsylvania and supports a bill that would allow only skill games like theirs to exist in bars and social halls across the state.  

“I think there’s got to be some solution that’s fair,” Barley said. “Attitudes have changed in Harrisburg where they’re looking for second chances for some people, depending on what the crime was.” 

The bill that Pace-O-Matic supports is sponsored by state Sen. Gene Yaw, R-Lycoming County, whose central Pennsylvania Senate district is home to Miele Manufacturing, which manufactures skilled games developed by Pace-O-Matic. 

Critically, Yaw’s bill would not necessarily exclude people from being allowed to distribute skilled games because of any criminal convictions in their past. Instead, his bill would leave that decision up to the state Department of Revenue, which regulates the state’s Lottery. 

The Gaming Control Board, which already oversees casinos and video gaming terminals (VGTs) in truck stops, operates under a much more restrictive existing state law when it comes to banning people with past criminal activity. 

“A criminal history may not automatically disqualify an applicant from obtaining a license,” Yaw’s proposed bill, SB 1079, reads. “The department shall have the discretion to decide whether any particular criminal history disqualifies an applicant for a license.” 

That language differs significantly from a bill Yaw proposed earlier last year, SB 626, that had a more black-line approach to peoples’ criminal background. 

That prior bill would have required that anyone who wanted a license to be a skill game distributor, operator or establishment would have to prove they did not have a felony conviction in the previous five years, or a gambling-related felony at any point in their life. 

The language from Yaw’s earlier bill would have potentially excluded Conley and many others who have been involved in illegal video gambling distribution over the years. 

It’s not clear why Yaw changed the language in his bill. His office did not respond to emailed questions. 

Another bill more recently proposed by state Rep. Russ Diamond, R-Lebanon, the top Republican on the House Gaming Oversight Committee, would potentially be even more onerous. 

Diamond, who has only issued a formal memo and not the full text of his bill, said in an interview with NewsWorks Lab that he intends his bill to give the current Gaming Control Board oversight of legalized skilled games. 

“Most of these other bills attempt to put this under the Department of Revenue, which has no experience whatsoever in regulating slot machines,” he said. “We only have one regulator in Pennsylvania who regulates slot machines, and that’s the Gaming Control Board. The lottery is not a slot machine.” 

His bill, he said, would use the current state gaming restriction that bans the state from issuing licenses or permits to people to operate in the state who are key employees or principals who have been convicted of a felony at any point in their life, or a gambling-related misdemeanor in the last 15 years. 

The same state gaming law – which applies to casinos and video gaming in truck stops – also denies permits to regular gaming employees if they have any felony convictions or a gambling-related misdemeanor in the last 15 years. 

Under the law, people with offenses prior to 15 years are reviewed by the Gaming Control Board, and a license or permit could be approved depending on the board’s review of all the factors around the crime and the person’s actions since conviction, including rehabilitation. 

At least one current skill game distributor believes a stringent law like that is needed. 

“There’s too many games everywhere, and there’s unscrupulous operators,” said Albert Unis III, a skill games distributor based in Ambridge. “They can weed them out with the stuff” Diamond’s bill would require.  

Unis, who was the distributor for the state’s first official skill game in 2013, said he doesn’t have much sympathy for competitors like Conley and others who have convictions on their record. 

“I don’t keep track of those people, but, whoever they are, if they got in trouble they need to be iced out,” he said. 

The potential to ban people who have a gambling-related misdemeanor is what worries many who had hoped to be part of the legalized skill game industry in the future. Many law enforcement video gambling raids over the past two decades resulted in misdemeanor guilty pleas by the distributors of the games. 

“That is a concern of ours,” said one Pennsylvania vendor who was convicted of a gambling-related misdemeanor in the past 15 years and asked to remain anonymous because he said he has worked hard to meet the letter of the law since his conviction.  

“There’s going to be a lot of people in our industry that are going to partner with other people to run that [skilled games] part of the business for them” to get around the 15-year restriction if it becomes part of legislation, he said. 

Such a restriction would prevent him from distributing the games. 

“It would,” he said. “Look, I’m not crazy about any of that. I’m not proud of my past but I did whatever I did to try to help clubs and bars stay open.” 

Pennsylvania has been through this debate before. 

In 1971 when lawmakers first legalized the state-regulated lottery, the legislature made a criminal gambling background something the state “may” use to ban someone from becoming a lottery agent. 

But in October 1980, members of a state Senate committee worried criminals had infiltrated the lottery and took a close look at who had become lottery agents. This was just six months after Pennsylvania’s infamous 666 Lottery fix – when the Daily Number lottery was rigged on the live TV drawing so the numbered ping pong balls drew only fours and sixes.   

The Senate committee found that 78 of 661 lottery “agents” – the people given licenses to sell lottery tickets, now known as “retailers” – in Pittsburgh and Philadelphia had criminal backgrounds, according to news stories at the time. 

The investigation also found that many of them had criminal convictions for “bookmaking” – a term then that included running both illegal numbers operations or sports betting – and half of them had failed to disclose that information on their applications.  

Another 144 registered agents were women who the state committee suspected were fronting for their husbands with criminal backgrounds. 

Howard Cohen, who was secretary of the state Department of Revenue at the time, admitted he had personally approved a lottery license for a businessman with a criminal background to “give him a chance,” according to a Pittsburgh Post-Gazette article. 

By the time the state approved casino gambling in 2004, the state took a very different tack with applicants who had criminal backgrounds. 

“The background investigation process, both at the corporate and individual level, is intended to keep unsuitable individuals and ‘bad actors’ out of Pennsylvania’s legalized gaming industry,” Richard McGarvey, spokesman for the Pennsylvania Gaming Control Board, wrote in emailed answers to questions from NewsWorks Lab. 

Rather than saying, as the lottery law does, that the state “may” deny a permit to someone with criminal convictions, the gaming act says the gaming control board “shall” deny a license or permit to key employees or principals with felony convictions or a gambling-related misdemeanor in the prior 15 years. It is not discretionary. 

As a result, McGarvey wrote, there is a lot of self-policing that occurs in the industry because “the casinos in Pennsylvania are aware of the requirement and will do pre-screening.” 

“In other words, if they see someone has a felony, the casino will stop the application process before it gets to the PGCB because they know that it will get rejected as soon as it is received by the Board,” he added. 

Pennsylvania’s evolution in how its gaming laws treats prospective gaming operators or employees is not unlike how Nevada’s laws evolved over the past century, said Alan Feldman, director of strategic initiatives for the University of Nevada-Las Vegas’s International Gaming Institute and an expert on gaming regulation. 

Gambling was first approved in Nevada in the 1930s, “but there were no licensing standards. It was basically like, ‘If you want to run a gambling joint, here are the rules’” to run the business, he said in an interview with NewsWorks Lab. 

As Las Vegas grew into the country’s legal gambling center, and mobsters infamously became part of the casinos’ operations, laws in the 1960s were changed to include licensing standards for owners and employees. 

“But they tried to acknowledge there were a lot of people probably who had been working for criminals, or who themselves might have been criminals in other places,” Feldman said. “And it became a question of, ‘How far back to you go?’” 

Conley believed that video gambling, like so many other former illegal rackets that are now legal in Pennsylvania – the numbers, slot machines, casinos, sports betting – would eventually get government approval for the same reason all those other rackets did. 

“Just cause it made sense. That’s the only reason. And nobody had a problem with the machines as far as the way things have changed with gambling,” he said. “Just with everything going on, it’s not viewed the same way it was maybe 50 years ago.” 

Conley could have a hard time getting a skill games license if he wanted one, said Roger Greenbank, who was an investigator in the Pennsylvania Gaming Control Board’s Bureau of Investigations and Enforcement for a decade until 2015.

Greenbank was also one of the FBI agents who did the investigative work that led to Conley’s federal conviction on gambling conspiracy charges and 12 years in prison: nine years in his initial sentence in 1995 and three more years for a probation violation on that sentence in 2006.  

“No, I think all of his prior acts would have been used against him,” Greenbank said.

Conley insists he is done with video gambling, legal or not. 

“I thought I stayed in the business all my life for this day [when video gambling would be legalized], and now I’m gonna miss out on it,” Conley, 63, said. “A little late for me, but, that’s the way it goes.” 

NewsWorks Lab is a public-benefit company owned by Trib Total Media to produce high-impact, accountability journalism as a free, open-source resource. You may find more information at NewsWorksLab.com. Questions, tips and comments maybe shared at Hello@NewsWorksLab.com.

Sean D. Hamill and Sophia Lucente are contributors to NewsWorks Lab.
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