South Carolina

A losing hand? S.C. gambler asks high court to let her sue over losses

A long-banned video poker machine
A long-banned video poker machine FIL EPHOTOSGRAPH

For compulsive video poker gambler Lauren Proctor, a hearing in her case Tuesday at the S.C. Supreme Court is just about the last game in town.

The five justices will hear a high-stakes case in which Proctor’s lawyers argue that even though she lost some $700,000 gambling on illegal video poker machines at the Rockaway Athletic Club eatery in Columbia, she should have the right to sue Rockaway’s, as it’s commonly known, to get her money back.

That’s because under state law, gamblers are entitled to file a lawsuit to recoup their losses, her lawyers argued in a brief on the case filed with the high court. The law does not specifically cover illegal gambling losses; video poker machines were outlawed in South Carolina in 2000.

The case asks the Supreme Court to consider the recouping of illegal losses. Proctor won at both the circuit court and appeals court level.

If the court rules that illegal gamblers can recover losses, losing gamblers all over South Carolina will be able to sue any illegal gambling establishment where they lost money, Proctor’s lawyer, Pete Strom, has predicted.

Arguing against Proctor is a lawyer for Rockaway’s owners, Whitlark & Whitlark, who asserted in a brief that Proctor’s legal arguments are the equivalent of a worthless poker hand.

Proctor was clearly engaged in an illegal activity when she lost money on Rockaway’s unlawful video poker machines, and the law doesn’t allow “one criminal to sue another for losses in an illegal transaction,” wrote Rockaway’s attorney Jim Griffin in his brief.

Allowing criminals to sue each other in disputes over their illegal deals “leads to an absurd result and should not be adopted,” Griffin wrote.

In any case, the hushed Supreme Court courtroom is a far cry from Rockaway, just two miles away on Rosewood Drive and a popular eating and drinking spot that for years sported video poker machines in addition to tasty hamburgers and beer. Its clientele includes college students, working folks, university professors and professionals. It is so well-known it has no identifying sign. Rockaway’s is known for its pimento cheeseburgers and a visit from President George W. Bush in 2005.

The legal collision between Proctor and Rockawa’s has its origins in a true-life story worthy of a crime novel. There’s embezzlement, FBI handlers and a gambler turned FBI informant – Proctor herself – participating in an undercover sting operation against an illegal gambling operation.

In 1999, Proctor began playing Rockaway’s and Pizza Man video poker machines. In 2000, the machines became illegal, but Rockaway’s and Pizza Man continued to have the machines, and Proctor continued to play them, according to court records.

Proctor is also suing Pizza Man, which is owned by the same company, and is just across the street from Rockaway’s at Rosewood Drive and South Woodrow Street.

From 2000 to 2005, Proctor played so much at Rockaway’s and Pizza Man that she lost between $1,000 and $5,000 a week, according to a decision by the S.C. Court of Appeals in the case.

Pizza Man’s and Rockaway’s staff “would provide her cash advances on her credit cards to enable her to fund her gambling,” according to her original lawsuit in the case.

All the while she was gambling and losing, Proctor began to embezzle money from State Title, a company her mother owned that provided real estate closing services. She used the money to finance her gambling.

Sometime after 2000, the FBI learned of her embezzling. Proctor, in an effort to get a lighter sentence, agreed to help get evidence about the illegal video poker machines by wearing hidden audio and video equipment on her visits to Rockaway’s and Pizza Man.

All told, she compiled about 20 hours of secret audio and video – evidence that helped the FBI seize the illegal gambling machines and arrest Forrest Whitlark, one of the owners. Whitlark, who was charged with operating an illegal gambling business, was admitted into a pretrial intervention program and did not serve time.

Proctor was given a one-year sentence for mail fraud and agreed to pay restitution of $689,000 to those from whom she embezzled money, according to federal records.

Those records say that if Proctor ever wins any money in a lawsuit against Rockaway’s and Pizza Man, she will pay $689,000 to TransUnion National Title Insurance Co., and $195,000 to a local attorney who worked for the company her mother worked for.

Before 2000, when video poker was legal, it was a booming, multibillion-dollar, little-regulated business throughout South Carolina. Video poker machines, with their bright, flashy screens, were everywhere: in gas stations, bars, restaurants and parlors dedicated solely to video poker. Businesses that kept the machines in their places made a profitable cut of the proceeds.

Thousands of people became gamblers, and the stories of men and women who lost their paychecks were legion.

After 2000, the machines – which gambling experts described as highly addictive – were largely banished from the state.

Still, some businesses secretly keep the illegal machines because of the profits they could generate.

“We are continuing to seize video poker machines,” Kathryn Richardson, a spokeswoman for the State Law Enforcement Division, said last week. “Since January, we have seized 184 machines at various counties across the state.”

THE RISE AND FALL OF VIDEO POKER

Some major events in video poker’s lifespan:

May 1986: The late state Sen. Jack Lindsay, D-Marlboro, gets a budget proviso passed that says cash payouts from video poker machines are legal. After this law passes, video poker machines begin to appear across South Carolina.

April 1991: The S.C. Supreme Court rules cash payouts from video poker machines are legal.

November 1994: 34 counties vote to keep poker payouts legal. But 12 counties, mostly in the religious Upstate, ban cash payouts.

June 1995: Gov. David Beasley vetoes the state budget. He says the state relies too much on the $27 million generated annually by video poker machine licenses. The veto incurs the wrath of the gaming industry.

November 1995: The Supreme Court rules the 1994 votes by counties to choose whether they wanted video poker were illegal. Video poker moves back into counties that had voted it out.

November 1998: Beasley loses bid for second term. Video poker interests help elect his opponent, Democrat Jim Hodges.

October 1999: The Supreme Court cancels a statewide referendum on video poker, thereby ruling that the rest of a state law that made video poker illegal goes into effect.

July 2000: Video poker is banned in South Carolina. By then it was a $2.8 billion a year business that generated about $62 million annually in revenue for the state budget. Since then, the video poker industry has failed in numerous attempts to re-establish a major foothold in the state, including with computerized “sweepstakes” machines of several years ago involved only luck, not skill, and so weren’t gambling.

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