Fort Worth gaming ordinance largely survives first legal challenge

In its first day on the books, Fort Worth’s new game room regulations survived their first legal challenge almost intact, although it was also unclear whether the city was enforcing the ordinance yet.

State District Judge Melody Wilkinson late Wednesday signed a temporary restraining order blocking the city from enforcing the licensing portion of the ordinances to 10 machines across the city. But she left intact for the time being the contested zoning and setback requirements.

Wilkinson signed the order at 8 p.m., capping a day when game room operators and individuals associated with the coin-operated-amusement industry were scrambling to prevent the city from enforcing the ordinance, which was approved in October and went into effect Wednesday.

Senior Assistant City Attorney Chris Mosley said Wednesday night that he couldn’t say whether anyone was enforcing the ordinance. “It is subject to enforcement, but I don’t know if anyone is trying to,” he said.

Wilkinson was responding to a lawsuit filed by attorneys representing Jack L. Davis and Stephannie Lynn Rylie, who distribute gaming machines throughout the city. The lawsuit, filed Tuesday, questions the ordinance’s constitutionality, saying it improperly pre-empts state laws.

It joined a similar lawsuit filed by game room operators Apolonio and Olga Garcia on Friday that sought to block the ordinance. A hearing on that case is scheduled to be held Thursday afternoon. The Garcias are also seeking a temporary restraining order.

Mark Haney and Stephen Fenoglio, two of the attorneys representing the game machine distributors, said the ordinance is too restrictive and unfairly punishes convenience stores, bars and bingo halls that may have only a few machines as part of their broader business.

While Haney and Fenoglio, an Austin attorney who attended the hearing via telephone, were trying to block the city from enforcing any of the ordinance, in the end Wilkinson only agreed to sign an order regarding the licensing of the machines owned by Davis and Rylie.

The game room zoning and licensing ordinances were unanimously approved by the Fort Worth City Council in the fall after council members expressed concerns about crimes that sometimes happes in and near game rooms and about the difficulty of investigating illegal gaming.

Before the ordinance, game rooms were largely unregulated by the city. During the hearing, Mosley said there are 130 to 150 game rooms — or sites with mulitiple machines — in the city

In the new ordinance, game rooms are only allowed to operate in industrial-zoned areas and would be considered legal if they offered only noncash prizes with a value of $5 or less.

The city also said that game rooms would not be allowed within 1,000 feet of a residential area, church, school or hospital. They also had to be marked with the words game room with at least one unobstructed window allowing a view of all the machines.

The ordinance also required game room operators to keep detailed records about the machines and to file a site plan of the facility that must be reviewed by an engineer or architect. It also requires the game room owner to seek permission from the city Planning and Zoning Commission.

The City Council also is expected to vote on creating a fee of $160 per machine annually and a $500 annual permitting fee. The proposed fees will help pay for enforcement, which consists of a team of six senior code compliance officers and one supervisor.

The lawsuit filed by Haney, a Fort Worth attorney, and Fenoglio challenges numerous aspects of the ordinance but simply states that the ordinance’s clear purpose is not to regulate but to “outlaw amusement redemption machines entirely or to render their operation impossible or impracticable.”

Councilman Danny Scarth called the legal challenges “disappointing” but not unexpected. “Change is never easy, and while there may be a legal battle ahead, it’s one worth fighting in order to protect the safety and sanctity of our neighborhoods,” he said.

During Wednesday night’s hearing, however, there was some question of just how prepared the city was to enforce the ordinance, despite the fact that last week city Code Compliance Director Brandon Bennett said the city had a contract to buy an unlimited number of shipping containers to store the confiscated eight-liners, sweepstakes machines and other games of chance.

Rylie, apparently with the help of one of Fenoglio’s assistants in Austin, tried to apply for a license but was reportedly turned away by city staff who didn’t seem to know what to do. According to Fenoglio, the city employee couldn’t determine how much the license should cost.

Rylie was told to come back Thursday, he said.

Wilkinson, who said during the hearing she had gone back and forth on exactly how far to go in the temporary restraining order, looked at Mosely and said: “I think that is a problem.”

Mosely and Senior Assistant City Attorney Harvey Frye said they had not heard about Rylie’s experience at City Hall.

According to the lawsuit filed by Haney and Fenoglio, over the years the Texas Legislature has passed laws to bring uniformity to game room operations that the Fort Worth ordinance violates, including that the distance separating a business that has the machines from a church, school or hospital only has to be 300 feet.

State law also dictates that beyond the $60 tax imposed by the state on the machines, any local levy cannot exceed more than an additional $15 per machine, the lawsuit states. State law also makes it clear that the Texas comptroller is the regulatory authority over coin-operated machines, according to the lawsuit.

“The ordinances, by their terms, entirely defeat the Legislature’s express stated purpose in having statewide uniformity in the regulation of amusement machines,” the lawsuit states.

Haney and Fenoglio said they understand that the city really wants to regulate the “true game rooms” with multiple machines and little else. The only problem is that 80 percent of the machines are in gas stations or other businesses where that kind of condition simply doesn’t exist.

“The state laws are very specific about what they [the city] can do, and we think they are way over the line,” Fenoglio said.

This story was originally published January 21, 2015 at 10:16 PM with the headline "Fort Worth gaming ordinance largely survives first legal challenge."