Authorities Crack Down on Underground Casinos in South Texas

In the little border town of Falfurrias, Texas, hundreds of law enforcement officials recently raided a dozen illegal casinos that attracted hundreds of daily visitors. The casinos' gambling machines are legal but under Texas law, it's illegal to award cash prizes or prizes above a certain value. In a related move, the American Gaming Association and AGEM have joined forces to battle illegal gambling in Texas.

Nearly a dozen illegal casinos recently were shut down in Falfurrias, Texas as part of Operation Lil Vegas. Hundreds of federal, state and local law enforcement officials raided abandoned buildings used as gaming parlors featuring gambling machines that drew hundreds of daily visitors. The machines are legal and taxed in Texas but under state law, cash prizes or prizes above a set value may not be awarded.

Officials are working to close underground casinos which continue to spread throughout South Texas, particularly along the Texas border. The businesses attract criminal activity and regularly are the scenes of armed robbery. Mexican drug cartels on both sides of the border also use the casinos to launder money, officials said.

The illegal casinos began operations about 10 years ago in Cameron County, but the Cameron County District Attorney’s office launched Operation Bishop to shut them down. As a result, the operations moved to Brooks County, where casino owners took advantage of limited law enforcement in the area. The casinos also have opened in Starr County and Western Hidalgo County, where officials either ignore them or have worked with local governments to legalize the gaming parlors.

To battle this proliferation of illegal gambling in Texas, the American Gaming Association (AGA) and the Association of Gaming Equipment Manufacturers (AGEM) today announced a new partnership to highlight and combat the rapid spread of illegal gambling machine activity in the state. With an estimated 100,000-150,000 “8-liner” and illegal slot machines now present in Texas, the state has become the most glaring example of widespread illegal gambling activity in the United States.

“Over the last several months, AGA has been shining a spotlight on the vast, dangerous illegal gambling operations running rampant across the country, and few places exemplify the thriving nature of illegal gambling better than Texas, where hundreds of thousands of black market machines are currently in operation,” said Geoff Freeman, president and CEO of the AGA. “By partnering with AGEM and building off of the already strong support of law enforcement officials at every level, we will make real progress in shutting down illegal operators.”

“AGEM represents the most respected licensed and regulated gaming suppliers in the world, and we no longer can remain silent about the current environment of widespread illegal gambling in Texas,” said Thomas Jingoli, AGEM president and chief compliance officer for Konami Gaming. “On behalf of our 140-plus member companies who supply gaming equipment and technology to regulated markets around the world, we are asking for law enforcement in Texas, from the highest levels in Austin to the smallest communities, to enforce the state’s existing laws that forbid the kind of uncontrolled activity that continues to spread.”

In a letter to elected officials and law enforcement in Texas, AGA and AGEM are inviting them to join this initiative and to take action. Among the recipients are: Texas’ congressional delegation, Governor Greg Abbott, Attorney General Ken Paxton and state legislative leaders.

Since launching “Stop Illegal Gambling—Play it Safe” in April, the AGA has worked hand in hand with law enforcement, attorneys general and other agencies to expose illegal gambling. While “8-liner” machines are not technically illegal in Texas, payouts by law must be limited to $5 in non-cash prizes. Game rooms in most cases are clearly not following the law, creating a statewide environment of illegal gambling activity that has spread rapidly over the past few years.

According to a recent New York Times article and local media reports, illegal gambling activity is taking place in various locations such as windowless former tire shops and tractor-trailers parked along busy roadways. In some cases, illegal slot machines brought in from other states are mixed with the “8-liners” in an attempt to expand the illegal gambling activity. The current “8-liner” landscape is a breeding ground of criminal activity, including robberies, assault, money laundering, tax evasion and organized crime.