business

Englewood bars opening of arcade 'skill games' business

State must confirm games aren't gambling, city says; owner to take legal action

Posted 10/13/17

Skill or chance? That's the legal distinction that led the city of Englewood to put a hold on a business license application for Golden Dragon Arcade Games, owned by an individual who had ownership in two similar businesses that were raided by …

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business

Englewood bars opening of arcade 'skill games' business

State must confirm games aren't gambling, city says; owner to take legal action

Posted

Skill or chance? That's the legal distinction that led the City of Englewood to put a hold on a business license application for Golden Dragon Arcade Games, owned by an individual who had ownership in two similar businesses that were raided by Denver police Oct. 4 on suspicion of allowing unlicensed gambling.

Tammy Garamova, wife of owner Bagrat Garamov, said Oct. 13 that the business in Englewood would not open as scheduled that day. Garamov's attorneys informed the city in a letter dated Oct. 13 that they would "proceed with legal action necessary to address" what the letter argues is a denial of a license Golden Dragon needs in order to open.

"We believe our rights have been violated," Garamova said.

Golden Dragon was advertised to open Oct. 13 at 4011 S. Broadway, but Englewood officials said the business lacks legal approval to open. Jan Douglass, an attorney for the business owner, said the owner already filed the necessary documents and that Englewood's requirement is "arbitrary and capricious."

The city sees things differently. "They have failed to follow through on a requirement to reach out to the Colorado Division of Gaming," said Eric Keck, Englewood city manager.

Golden Dragon needed a letter from the Division of Gaming, an office under the state Department of Revenue, to confirm that what it advertises as "skill games" - where winning is based on skill, not chance - are not gambling games under state law, Keck said.

Keck also said Golden Dragon still needs a fire-marshal inspection and an overall approval by the Englewood Building Division. Douglass said final inspections happened Oct. 11. Garamova provided the Englewood Herald a photo of what appears to be a signed form indicating all building inspections had taken place as of that date. Garamova is an employee of the business, Douglass said, but she and the city have corresponded about licensing matters.

The City of Englewood clarified that Building Division inspections were complete but that the form does not include inspections conducted by the fire marshal's office, which the city needs to issue a certificate of occupancy. Golden Dragon's contractor was informed Oct. 12 to request a final fire inspection, city officials said, and an "urgent fire inspection" was requested at about 2:30 p.m. and 3 p.m. that day.

Some fire inspection had already taken place in the "last couple of weeks," Garamova said, but she couldn't say exactly what inspections were completed by Golden Dragon's contractor.

City stays firm on requirement

Englewood sent Garamov an email the morning of Oct. 12 that said it cannot process his sales and use tax license application without the letter from the Division of Gaming. That tax license is part of what would allow the business to operate in Englewood. The email included a copy of a letter dated Sept. 25 from the city, notifying Garamov of the need for confirmation from the Division of Gaming. Tammy Garamova said she never received that letter.

The city said the letter was not returned as undeliverable, and Garamova said the city had sent two or three other letters to her house during the overall approval process and that she received those letters. But she said she usually received the messages in email and letter form.

The business also applied for a sales tax license through the state of Colorado likely in or before early May, Douglass said. Douglass said the state Department of Revenue told Garamova the morning of Oct. 12 that she needed the Division of Gaming letter.

Douglass said Garamov and Garamova were not notified previously of the need for an Englewood sales and use tax license - saying they were only told of a license to operate a business - but the city's Sept. 25 letter said Englewood had received their applications for both. Douglass said the tax license wasn't one of the criteria the city gave for the business application process.

"They have added additional requirements after the fact," Garamova said. "We've met all the requirements they originally set for us to open."

Keck said the city was told in June that the business wanted to run video games. An advertisement for Golden Dragon shows images that look similar to video slot machines.

Garamov also had ownership in La Fortuna and American Pride Skill Games, businesses located in west Denver at 9 S. Federal Blvd. and in southeast Denver at 10890 E. Dartmouth Ave., respectively. Both were raided Oct. 4 by Denver police and are adult "skill game" arcades, Douglass said.

"We disagree with ... the execution of these warrants ... these are games of skill," Douglass said about the American Pride and La Fortuna businesses.

The Denver Department of Excise and Licenses told the Englewood Herald that neither La Fortuna nor American Pride have any record of being licensed with the department. Fox 31 Denver KDVR first reported on that information May 10.

Douglass said her law firm's position is that the Fox 31 report was "inaccurate and misleading" but said she is "unable to comment on specific details at this time" because her firm is preparing for legal action.

Douglass argued that state law is ambiguous regarding games of skill and games of chance, the latter of which are regulated as gambling. The Colorado Skill Games and Entertainment Association, an entity Douglass' law firm also represents, argued in an afternoon Oct. 12 news release that games of skill are protected as legal under Colorado statute. Garamova sits on the board of directors for the entity.

Garamova said the Division of Gaming "has no oversight over our business."

City calls for expertise

Englewood officials said they need the state's input because the city doesn't have "the expertise in-office" to determine if Golden Dragon's arcade games are in conflict with state law.

Fox 31 reported May 10 on how games worked at La Fortuna, which offered what resembled slot machines that take money to play. Players won money by pushing a "spin" button and having three icons match up on a screen. Players only had influence over the icons in the third column on screen - if the first two matched up by chance, players could move the third column's icons up or down one spot with their finger. Because the first two wheels did not always match up, it was impossible to always win, regardless of skill.

Garamova said to Fox 31 that a skillful person can win every time.

Douglass told the Englewood Herald that the Colorado Skill Games and Entertainment Association filed Colorado Open Records Act requests around 11 a.m. Oct. 12 for records on communication between law enforcement agencies and casinos. The association's news release alleged that enforcement against "skill game entertainment centers" was done at the urging of "big casinos."

Records were requested from the Colorado Department of Revenue Division of Gaming; the Colorado Attorney General's Office; the Colorado Bureau of Investigation; the Colorado Limited Gaming Control Commission; the police departments of Colorado Springs, Pueblo and Denver; and the sheriff's offices of Weld and Adams counties, Douglass said.

Englewood code enforcement or licensing officials would be involved if Golden Dragon opened without a license, Keck said Oct. 12.

Englewood's revenue and budget manager included the city attorney and Englewood chief of police on an Oct. 12 email to Garamov, so they would be "prepared to take appropriate enforcement action," the email said.

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