Chuck E. Cheese at center of new legislation

Jack Elliott Jr

Wednesday, Feb. 6, 2002 | 9:20 a.m.

JACKSON, Miss. -- Mississippi's amusement company owners are hoping to ride the broad coattails of the Chuck E. Cheese's pizza parlor/kids arcade chain to get relief from a state law that makes their gaming machines illegal.

Legislation pending before the full state Senate -- and supported by Chuck E. Cheese's parent, CEC Entertainment of Dallas -- would make the kids' arcade games legal under Mississippi gambling law as long as the coupons dispensed can be redeemed for merchandise with a wholesale value of $40 or less.

The Mississippi Gaming Commission's crackdown on gaming devices located away from licensed casinos had prompted state Supreme Court decisions that found such machines illegal under existing law. The machines have been found in truck stops, convenience stores and gas stations around Mississippi, says J.W. Ledbetter, chief of enforcement for the commission.

Stanley Wright, owner of Midway Truck Stop in Greenville and SD Amusements of Mississippi, had machines seized by regulators in 1999. He won a challenge to the Gaming Commission in a Washington County court but lost in the Supreme Court.

Last December the Supreme Court refused to reconsider its ruling in Wright's case that amusement machines that dispense something of value upon the insertion of a coin are illegal slot machines.

The justices said the issue of payoff under state law is not limited to tokens and coins. They said there was no practical difference between a credit awarded to a player and a token dispensed from a machine.

"The award of tokens is a payoff regardless of whether the tokens are redeemable for cash, merchandise, or for additional plays of the machine," the court said.

It said the award of credits to play free additional games "is likewise something of value, as a credit to play a free game necessarily has the same value as the amount it would cost to play that game."

Because the machines required consideration, had an element of chance and returned a thing of value, they are considered illegal gambling devices, the court held.

Wright says whatever Chuck E. Cheese's can get out of the Legislature needs to also cover amusement companies.

Otherwise, Wright said, "all of their machines are illegal, too."

Chuck E. Cheese's and arcades at malls, Kmarts and Wal-Marts all offer machines that dispense a toy, coupon or some other reward and commission enforcement officers must go after them, Wright said.

Ledbetter said the CEC machines are the typical children's games with the outcome decided by skill, not chance.

"CEC machines offer participation for a fixed price," he said. "On the other hand, video poker and the video eight-liners found in truck stops and convenience stores will allow you to 'double down' or 'raise your bet' to increase the odds or the amount of the prize."

The CEC chain is known for its mouse mascot -- originally a wisecracking rat named Chuck E. -- singing and dancing robotic characters, video games and play areas.

At the restaurants, located in 45 states, children are given gold tokens to use in coin-operated rides and arcade games. Tickets are awarded based on how a child -- or adult -- fares at basketball shooting and other games.

To win trivial items such as plastic rulers, coin purses and curly straws, a child need win only 60 tickets or so. Winning the biggest prizes, such as Barbie dolls and beach towels, takes upward of 800 tickets.

Jon Rice, CEC's vice president of marketing in Dallas, said most children win anywhere from 100 to 200 tickets a visit and redeem them for a prize worth $2 or less.

"I don't think the Legislature or the public in general is looking to restrict the way we operate," Rice said. "I don't think anyone confuses what happens at Chuck E. Cheese's with video gambling."

However, CEC has gone to other states with concerns similar to what they fear in Mississippi.

In Georgia, Missouri, Alabama, Texas, Arkansas and elsewhere, CEC has sought clarifications of state laws that address what is legal and illegal gambling.

In Alabama, a "Chuck E. Cheese's Law" cleared the way for businesses to have machines that awarded prizes in games of skill. The supposed intent was to let kids win trinkets at pizza restaurants such as Chuck E. Cheese's.

But arcades that cater to adults by awarding gift certificates sprung up across Alabama, prompting a legal fight over the law.

A lawsuit is pending in Montgomery County, Ala.

"We'll do whatever we can to cooperate with these legislatures and hopefully at the same time allow our stores to continue to operate," Rice said. "I don't think these laws were intended to target family entertainment centers like Chuck E. Cheese."

Sen. Neely Carlton, D-Greenville, who sponsored the Senate bill, said the gaming law did not envision shutting down a Chuck E. Cheese's or similar family oriented operations.

"We're talking about children's games. We're not talking about games of chance similar to a slot machine, which is what we think about when we think of casinos," Carlton said. "Obviously, we're talking about tickets which are redeemable for merchandise of little or no value."

Carlton said she was told for a child to win a $40 prize would require 40,000 tickets.

Carlton said she intends to look further into how other states have addressed defining what are gaming devices as the legislation makes its way through the Senate and House.

Ledbetter said the Gaming Commission also is interested in the bill.

"These Quarter Pushers, these Cherry Masters, the Lucky Shamrocks, these video poker machines are located in every city and county in this state," he said.

Ledbetter said a recent raid in Indianola found machines "in a glass business that sold no glass, a produce stand that sold no produce and a travel agency that never booked a trip."

Ledbetter said the Gaming Commission needs to have its 41 enforcement agents in the casinos where they belong. He said agents could spend "24 hours a day, 365 days a year on this other problem and trying to help sheriffs and police departments enforce their laws by training and instruction."

"We have had success but we've got to start backing off and getting into the casinos," he said.