LAKEWOOD, Colo. — The City of Lakewood has shut down three secret gaming arcades city leaders say were violating state laws, following a Denver7 Investigates undercover investigation.
That undercover investigation revealed that Lakewood had several of these arcades, or gray casinos, operating within the city while state officials and local leaders in other cities looked to crack down on these businesses.
Lakewood Mayor Adam Paul told Denver7 Investigates that three of the businesses voluntarily closed and one is still being monitored by the city.
“It’s pretty clear that in the City of Lakewood, you’re not allowed to operate, you’re operating illegally,” Paul said of these businesses. “We really appreciate you shedding light on this.”
Lakewood officials had previously declined interview requests, and Paul said that was to protect an active police investigation.
However, Lakewood City Councilwoman Anita Springsteen said she feels the city should have been more transparent.
“It has now been several months since you’ve been doing your reporting, and I have heard nothing further,” Springsteen told Denver7 Investigates.
Gray casinos are somewhat common in strip malls across the state. Denver7 Investigates’ hidden camera investigation found that the businesses tried several different ways to get around Colorado’s gaming law, which only permits gambling operations in the towns of Blackhawk, Central City and Cripple Creek.
Some businesses offered payout in crypto currency, while others offered other prizes and allegedly bought them back from the customer. A few simply offered cash for cash when asked by Denver7 Investigates producers. Players and employees told Denver7 Investigates that the businesses were operating legally.
“These are tricky, that’s why they call them gray casinos,” Paul said. “These folks are smart. They understand the law, they understand how to manipulate things.”
While other municipalities, such as Montrose and Aurora, have taken steps at the municipal level to deter these gray casinos, Paul said Lakewood took action under existing state law that makes it illegal for “games of skill” to payout monetary rewards. However, he feels the state could do more to shutter these businesses so they don’t pop up in other areas.
“I think the tools really lie at the state,” he said. “We look at it as these are illegal no matter what. And so it’s a matter of us just finding the means and the proof to be able to shut them down.”
Earlier this year, the state did pass a law to give the state’s Division of Gaming more authority to help communities shut down these arcades.
“We’ll be working to get this gray market out of Colorado,” Division of Gaming Director Dan Hartman said to Denver7 Investigates shortly after the law was passed.
In addition to the business possibly operating illegally, some municipalities also expressed concern over other activities occurring at these businesses, such as robberies.
Montrose Police Chief Blaine Hall previously told Denver7 Investigates that the gray casinos in his cities were a hotbed for other serious crimes.
In Lakewood, one store owner next to a now closed gray casino said she noticed lots of illegal activity while the business was operating, such as drug use, drug deals, theft and people selling stolen goods for gambling money.
“Everyone’s excited that they’re gone,” she said. “Everyone felt unsafe.”