If ever there seemed a place immune to bureaucratic meddling, it would be inside “the claw,” a glass box piled high with plush “Despicable Me” dolls, waiting to be plucked by a claw crane.
And yet, state lawmakers have managed to wriggle inside, not to play but to regulate.
Yes, beachgoers, a staple of summer could be at risk — at least that’s what arcade owners are warning. For the first time, amusement-game operators are facing some of the same requirements as the state’s casinos, and they fear additional fees and paperwork will make it impossible to make a profit on Skee-Ball, crane games and other classic summertime pursuits.
“I am not going to be regulated out of business,” said Jerry Greenspan, the second-generation owner of Sportland and Fun City, two of the Ocean City boardwalk’s biggest arcades. “My dad worked too hard.”
The regulations proposed by the Maryland Lottery and Gaming Control Commission would apply to games everywhere, including at restaurants, roller rinks and bars. But the loudest outcry against them has come from Ocean City, where arcades are as much a part of boardwalk memories as Thrasher’s french fries and Fisher’s popcorn.
“These businesses are the heart of Ocean City, especially our boardwalk,” said Melanie Pursel, executive director of the Greater Ocean City Chamber of Commerce, which has criticized the proposed rules. “They contribute to the family-friendly atmosphere that makes Ocean City a premier tourist destination.”
Having weathered the arrival of the PlayStation and Xbox and the fallout from the Great Recession, Greenspan said he plans to fight the new rules as long as possible to protect his family’s business.
His arcade got its start in the 1970s when his father, a developer, found himself without tenants for a commercial building he had just finished along the boardwalk. With the start of the summer just weeks away, Greenspan said, his father’s business partner suggested they fill the empty storefronts with arcade games.
Greenspan took over the business in the 1990s and now runs two arcades, Fun City and Sportland. As he walked through Sportland, at the southern end of the boardwalk, on a recent afternoon, he pointed out the games he would have to get approved by regulators under the proposed rules.
Almost all of them are a variation on “the claw,” the glass box filled with prizes that played a memorable role in the movie “Toy Story.” Instead of a claw crane, however, customers maneuver a stick through a hole, or stack digital blocks, and the prizes are much more precious than a stuffed animal. At Sportland, they include GoPro cameras, iPod Nanos and Beats headphones.
Greenspan was one of nearly 20 operators and distributors who showed up at a lottery agency hearing last month to vent their frustration over the proposed rules.
The last day for the public to weigh in was Monday, and the lottery commission will now review the comments. It has almost a year to finalize them. But agency officials have said further changes are unlikely, because lawmakers gave specific instructions.
A 2012 bill passed by the General Assembly sought to clarify what constitutes a legal electronic gaming device, partly in response to Internet sweepstakes cafes that use technology to skirt the law between legal sweepstakes promotions and illegal gambling. The bill banned Internet sweepstakes machines and gave the commission the job of overseeing skills-based amusement games and electronic gaming devices.
Under the proposed rules, most arcade games would need only a free registration sticker, agency officials said. For games that award prizes with a wholesale value of more than $30, operators would have to pay a $50 electronic gaming device licensing fee and get approval from the lottery commission. Manufacturers and distributors would also have to pay fees. The games must be tested and their locations documented in quarterly reports.
The licensing requirements do not apply to machines that award only tickets, such as the ones commonly found at Chuck E. Cheese’s or Dave and Buster’s, even if the tickets can be redeemed for prizes worth more than $30.
Operators said they already pay thousands of dollars in fees to local governments, including amusement taxes that can be as high as 10 percent. And they called the extra paperwork impractical. Machines, they said, can be moved frequently because of the seasonal nature of their business.
“Just the time requirements alone for operator and machine registration and move reporting are beyond the scope of any small operator,” said Larry Bershtein, owner of Capitol Amusement in Laurel and president of the Maryland Amusement and Music Operators Association.
Greenspan said he tested the new rules and came to the same conclusion. For three weeks, he replaced the prizes in three machines so they met the new requirements. Out went the iPad Minis that would trigger fees and paperwork, and in went less expensive snap-back hats.
“It was a disaster,” he told lottery officials at the June hearing. Instead of bringing in $400 a week, each game brought in closer to $50. “I might as well take them off the floor,” he said.
“If that is your intent,” he said at the hearing, “you can just have my keys.”
Lawmakers have said they are not trying to close down arcades. They did not intend to “unduly burden” amusement device owners, wrote Sen. Edward J. Kasemeyer (D-Baltimore County), chairman of the Senate Budget and Taxation Committee, and Del. Sheila E. Hixson (D-Montgomery), chairwoman of the House Ways and Means Committee, in a February letter to the commission.
Greenspan said that if the industry were more profitable, the new rules would be less of a problem. But these days, “every game is important,” he said.
He estimated he spends about $250,000 a year on prizes for Sportland and Fun City, ranging from bouncy balls to a 39-inch television.
“I want people to win, otherwise they won’t come into my arcade,” he said. “They know they can go to Wal-Mart or Target and buy these things, but they like the atmosphere. It’s a tradition that has gone on for more than 100 years.”
Ken Krysiak, 55, who lives north of Baltimore in Abingdon, has not been coming to Ocean City for quite that long. But when he does, he always stops at Sportland. He said it still holds its allure even for the iPhone generation. “You don’t see anybody here on a cellphone,” he said.
The experience matters more to him than the prizes. He said that has been true since he came to the arcade as a kid, then as a father of five, and now as a grandparent.
“We spent $4 to get these two-cent things,” he said pointing to his granddaughter, Amber, as she held up two small rubber ducks.
“To see their eyes,” said his wife, Liz Krysiak. “They love it.”