VIDEO: 592 Gaming Machines to Be Licensed; All of Them Belonging to Guam Music Inc.

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Guam – The Department of Revenue and Taxation is working on inspecting and re-licensing an additional 192 gaming machines owned by Guam Music Inc.

In April, Rev and Tax moved quickly to license the first 200, another 200 were licensed last month. This latest number will raise the total of  licensed gaming machines to 592, all of them owned by Guam Music Inc.

The rush to re-license Guam Music’s machines happened shortly after the Attorney General,  Rev & Tax, and Guam Music all agreed to drop a 5 year old lawsuit over the legality of the gaming machines, before the Court reached a decision on their legality.

As PNC News reported in April, Rev and Tax acted at the direction of the Governor who told Guam Music’s  Attorney Randy Cunliffe “We could use the money.” 

Guam Music’s Gil Shinohara confirmed for PNC News that the total number of the company’s machines that will eventually be re-licensed is 592. However he said in a phone interview that “most are under repair, and not in operation as of this time.” He declined to answer any further questions and referred us to company attorney, Randy Cunliffe, who is off island.

Shinohara is the former Chief of Staff for former Governor Carl Guiterrez. In 2005 he was convicted in Federal Court of Conspiracy to Commit Money Laundering and Bank Fraud.

Why are the gaming machines owned by Guam Music the only ones being re-licensed?

Rev and Tax Director John Camacho told us “We follow the regulations. And the regulations only authorize us to register machines that were registered on or before August 1st 2001.”

That regulation is now codified in Public Law 32-60 [formerly Bill #19], a law that also authorizes a 4% tax on the income that will be generated by Guam Music’s 592 gaming machines.

Governor Calvo allowed this gaming machine tax to lapse into law Monday night. 60% of the tax revenues from it will pay for an Urgent Care Center at GMH. The remaining 40% will go towards debt service payments and ongoing expenses at the hospital, including payments to vendors.

How much money could this 4% tax on gaming machines generate for the hospital?

Rev and tax Director Camacho said a preliminary report estimates that 200 gaming machines could generated between $50 and $60 thousand dollars a month.

4% Tax on Guam Music Inc.’s Gaming Machines

Machines Estimated Monthly Revenue for GMH
200                                $50,000 to $60,000
400                                $100,000 to $120,000
600                                $150,000 to $180,000

With 400 machines licensed Camacho said “your probably looking at maybe $100 to $120 thousand a month.”

And with 600 licensed? “If you keep increasing those machines, its going to keep building up,” said Camacho.

With 600 licensed, the tax revenue could climb as high as $180 thousand a month.

“It could be, if those numbers are right,” he said. “We looked at one particular month,” said Camacho and found “$63,000 of reporting on those [200] amusement devices.”

12 months of taxes on roughly 600 gaming machines could potentially rake in $2.2 million for GMH. That presumes $55 million dollars in taxable income generated by Guam Music’s roughly 600 gaming machines.

However, Camacho cautioned that “we’re still looking at it right now. And those are very rough estimations.”

Still, that is millions in potential income that D&D Games is being shut out of,  because their machines were not licensed until 2003,  2 years after the adoption of those August 1, 2001 regulations that are now part of  P.L. 32-60.

Why was that date chosen as the cut-off date for the current re-licensing of the gaming machines only to Guam Music Inc.?

“You know when you draft regulations … it maybe because of that,” said Camacho. “I mean if your drafting a regulation in 2003, or 2002, you look at the past, you don’t look forward. “

However D&D Games owner Darryl Styles argues that his machines were validly licensed for 6 years, until 2008 when former Attorney General Alicia Limtiaco seized all the gaming machines as illegal gambling devices in that case that was dismissed, without resolution, this past April.

Styles told PNC News Tuesday that he is planing a lawsuit over what he says is the monopoly that Governor Calvo and the Senators of the 32ed Guam Legislature have created which will benefit Guam Music Inc., only.

“I understand where he is coming from,” said Camacho, but “the only thing that allows us to register at this time is the regulation, that we follow. In the event … that the Legislature wants to amend that, which is probably the cure for it, is to amend that particular section to open it .. I’m just following the law,” said Camacho.