The West Virginia Lottery Commission on Friday approved an order giving all fraternal organizations with video lottery machines, and all limited video lottery distributors who provide those groups with machines, 30 days to self-report any violations of Lottery regulations — or face large fines and license revocations.
The order stems from an ongoing investigation of two LVL distributors, Action Gaming of Wheeling and Buck’s Inc. of Clarksburg, which are accused of setting up 23 video gaming parlors, using identities of fraternal organizations, to have 10 machines at each location, double the maximum of five permitted in bars and clubs.
Officers of the fraternal groups testified to the commission that they rarely visited, and in some cases, had never been to the “lodges” operated by the LVL distributors in their organizations’ names. Others testified that they had entered into the arrangement to raise funds for charity but often received little or no profits from the gaming operations.
“We know what’s going on out there, and we know what to expect from the self-reporting,” Lottery Director John Musgrave said.
He said that, in addition to the 23 sites under investigation, Lottery inspectors have visited all 168 fraternal organizations in the state with limited video lottery machines.
Any fraternals or distributors that fail to self-report or comply with subsequent corrective-action plans will face fines of $10,000 per violation and revocation of Lottery licenses.
Organizations that self-report violations and correct them will be subject to reduced fines, Musgrave said.
In the case of Action Gaming, that could reduce possible maximum fines of $760,000 to $190,000, while Buck’s Inc. could have $200,000 of potential fines reduced to $60,000.
Also Friday, the commission heard testimony from officers of a fraternal organization that was operating a 10-machine lodge in Elkins, who accused their machine distributor of attempting to seize control of the organization.
David Gordon, president and manager of the Order of the Orioles Nest 299, said the owner of Advanced Lottery Technologies, Jamie Grape, added some people, including his son-in-law, to the fraternal’s list of officers to control management of the gaming facility.
“They basically came in and said I would still have a job . . . but they had put other people on the license,” Gordon said.
The dispute came to a head on the afternoon of April 25, and Gordon said he responded to the takeover attempt by removing the fraternal charter and Alcohol Beverage Control Administration licenses from the premises.
ALT continued to operate the facility through the weekend, until the Lottery shut off the video lottery machines Monday morning, commissioners were told.
“I wonder what they did with the money from that weekend. I guess ALT put it in their pocket,” former manager Sandy Miller told the commission. “This is wrong, in so many ways.”
Gordon said the lodge has been closed since May 5, and the national organization has given members 30 days to find a new location before it revokes the charter.
Musgrave said the commission would not take separate action against ALT or the lodge regarding the allegations, but both will be mandated to self-report violations of Lottery regulations, along with all other fraternals and machine distributors.
Reach Phil Kabler at firstname.lastname@example.org or 304-348-1220.