North Dakota judge rules phone cards are an illegal form of gambling

John MacDonald

Thursday, March 2, 2000 | 4:08 a.m.

FARGO, N.D. - Machines that dispense prepaid phone cards along with a chance to win cash prizes are an illegal form of gambling, a state district judge has ruled.

East Central District Judge Lawrence Leclerc said the machines are essentially disguised slot machines, devices that are prohibited under North Dakota's gambling regulations.

The state attorney general's office, which demanded the machines be removed last year, called Leclerc's decision a victory.

"This is what we have argued from the beginning - that these machines are nothing more than thinly disguised slot machines," assistant Attorney General Dave Huey said Thursday. "They were being used for gambling, and the selling of the phone cards was, at best, incidental."

Jim Maxson, an attorney for one of the companies that operated the machines, declined to comment at length Thursday.

But he said lawyers have 60 days to decide whether to appeal Leclerc's decision, which was made following a Feb. 28 court hearing in Fargo.

Last July, the attorney general's office ordered Midwestern Enterprises Inc. of Bismarck and United Music Co. of Fargo to remove the machines from truck stops and stores.

United Music complied. Midwestern Enterprises also removed its machines, but filed a lawsuit against the attorney general, claiming the machines were legal vending devices and that the attorney general's office had overstepped its authority.

Midwestern was asking Leclerc to rule that the machines are a legitimate vending business with a legal promotional sweepstakes.

Heitkamp said Thursday that Leclerc "clearly saw through the disguise."

"My concern is that legalizing these machines would have resulted in just the sort of gambling expansion that North Dakota voters have soundly rejected in several recent elections," she said in a statement.

The video vending machines, which closely resemble Las Vegas-style slot machines, dispense what distributors advertise as "emergency" telephone calling cards.

Each card costs $1 and allows the buyer up to two minutes of long-distance phone service. But attached to the cards are small tickets similar to pull-tab games that contain a series of figures. If the figures on a buyer's card match those displayed on the machine's video screen, the buyer can win up to $500.

The company claimed its machines were not slot machines because people could get free tickets, on a limited basis, by writing to an address in Texas.

"These are in operation in many states and, to the best of my knowledge, these are considered to be legal in the overwhelming majority of the states," said Maxson, who represents Midwestern Enterprises.

Heitkamp and Huey said few people actually asked for free tickets.