Big gambling venture in Venice

By Zac Anderson
© 2009 Sarasota Herald Tribune
Monday, August 3, 2009

VENICE - Few people could mistake the new Royal Palace Arcade in Venice with the glitz of Las Vegas.

The Royal Palace has room for 250 slot machines in its 12,000- square-foot building. Instead of complimentary buffets, the Royal Palace has all-you-can-eat hot dogs. Instead of Siegfried & Roy, there is Wes Meltzer, part owner and amateur magician, hamming it up for customers with a few disappearing aces and a rope trick or two.

Still, in the world of "penny arcades" -- small-time slot machine operations that skirt gambling laws by offering gift cards instead of cash -- the Royal Palace is a new breed.

The Palace has room for 250 slot machines in the 12,000- square-foot building.

"That's enormous for an operation like this," said Nova Southeastern University law professor Robert Jarvis.

Bells ring constantly. Free drinks and poker tables in the back complete the atmosphere.

It feels like a mini-casino. But the largest bet is by the 13 investors who have plunked down $800,000 on the gamble that, despite a down economy, there will always be people who like to mix entertainment with a little financial risk.

Not long ago, a venture like the Royal Palace would have been risky in Southwest Florida, as sheriffs and prosecutors cracked down on the operations as illegal gambling dens.

But a series of court victories since 2006 has emboldened the industry. New arcades have been popping up across the region and the Royal Palace, with its grand size and owners' ambition, could signal a significant shift.

A new kind of arcade?

Business was slow at the Royal Palace one recent weekday afternoon. Six retirees quietly tried their luck amid the expanse of machines.

The arcade opened in early July, and does not even have all of its signs up yet, but Meltzer has big plans.

A restaurant will open in a few weeks, and charity poker events should begin soon on four back tables.

When built out, the Royal Palace will have 15 to 18 employees.

"We want to see people's jaws drop when they walk in here," Meltzer said. "If we can't make it better than everyone else, why do it?"

Experts say most arcades are low-budget operations, with a few dozen machines crammed into a nondescript storefront.

"You never see those kind of amenities at these places," Jarvis said of the Royal Palace, noting that waning law enforcement pressure may be tempting arcade operators to go bigger and bolder. "Usually they try to spend as little as possible."

Waitresses work the crowd at the Royal Palace, offering free drinks. Patrons also receive a free breakfast, lunch and dinner.

The largest jackpot is $1,000. Customers who win more than $100 receive a Visa debit card. All other prizes are paid in gift cards to places such as Outback Steakhouse and Wal-Mart.

A typical bet is 16 cents, but the wagers go up to 60 cents on some machines for games that last a few seconds.

Venice resident Larry Gaudin, 67, has visited the arcade a dozen times since it opened.

He recently put down $10 to play the "Fruit Genie" game and had $9.64 left after playing for more than an hour.

"You're not going to go broke," said Gaudin, a former New York train conductor. "It's just a place to relax and keep you entertained for a few hours. I just popped in on my way to buy some chicken for dinner."

Venice retiree Del Scott, 74, said she was impressed by the Royal Palace's size.

"I went to the big casinos but they're too smoky," she said. "This is clean and it's right by my house."

Located halfway between the big Seminole casinos in Tampa and Immokalee, Royal Palace could tap into a market that wants "casino-like gambling closer to home," Jarvis said.

Legal turmoil

Between 2002 and 2007, law enforcement officials in Sarasota and Manatee counties cracked down on the penny arcades as illegal gambling operations. Businesses were shuttered, machines confiscated and the owners prosecuted.

A Sarasota County jury convicted one game-room owner in 2004, but the industry fought back and won cases across the state.

Arcade operators rely on the state's so called "Chuck E. Cheese" statute, which permits games that take coins, have some element of skill and pay off in prizes instead of cash.

In August 2006, a Broward County jury acquitted Florida Arcade Association president Gale Fontaine of operating illegal slot machines in in a case that industry watchers say was critical.

And in 2007, a Sarasota County jury acquitted Nick's Game Room owner Phillip Workman on two counts of operating an illegal gambling establishment. A judge ordered the Sheriff's Office to return Workman's confiscated machines.

Sarasota Sheriff's Major Kurt Hoffman testified before a state legislative committee last fall, seeking a more enforceable law. The Legislature did not act, said sheriff's spokeswoman Wendy Rose.

"We're dealing with some ambiguous stuff," Rose said. "But if we receive a complaint we'll certainly look into it."

Jarvis noted that "the way the economy's going, sheriffs have much bigger issues to worry about than penny arcades."

But the Royal Palace's size surprised him.

"The court cases have certainly gone their way lately, but it's one thing to put up a penny ante operation in a strip mall," Jarvis said. "If you make a palace you definitely get on the radar screen of prosecutors and sheriffs."

Royal Palace investors take pains to praise county officials.

"The county has been nothing but helpful," said part-owner Julio Bagiardi, a former restaurateur and owner of another arcade in Port Charlotte. "I think people are becoming more accepting; they see the jobs we're creating."