CEDAR RAPIDS, Iowa -- The Iowa Legislature's decision to ban TouchPlay lottery machines last month set in motion the destruction of a Cedar Falls business that invested millions to buy and operate the devices, company attorneys said Wednesday, according to an Associated Press report.
The ban, scheduled to take effect May 4, is unconstitutional and amounts to a government seizure of private property, said Roger Marzulla, an attorney for Hawkeye Commodity Promotions Inc.
The company, which spent nearly $7 million to buy and install [image-nocss] nearly 600 Touchplay machines across Iowa, is asking U.S. District Judge Linda Reade to delay the law and declare it illegal.
The legislature's decision "destroyed business, the value of the TouchPlay machines...and in the process violated the Constitution," Marzulla said during a two-hour trial.
The lawsuit, filed last week, names Governor Tom Vilsack, Attorney General Tom Miller, Public Safety Commissioner Kevin Techau and the Iowa Lottery Authority and its director, Edward Stanek.
Judge Reade did not give a deadline for issuing a ruling, but gave both sides until April 17 to file additional briefs.
Iowa lawmakers approved TouchPlay gaming in 2002 and a year later tested the first 30 machines in locations in Waterloo and Des Moines for six months. Since then, the game's popularity has expanded. State officials said 6,432 machines have been installed in 3,839 licensed grocery stores, bars and convenience stores across Iowa.
Under agreements with vendors like Hawkeye, the state is paid 24% of total revenues from TouchPlay, and lottery officials estimated the machines would net more $381 million this year.
But lawmakers overwhelmingly approved a ban in March amid criticisms that TouchPlays resemble slot machines, which are only allowed in casinos.
Marzulla scoffed at the TouchPlay ban and the intent by lawmakers to slow the proliferation of gambling in Iowa a year after the legislature approved licenses for several new casinos.
Defending the legislature's decision, Assistant Attorney General Julie Pottorff said the lawsuit should be dismissed because the federal courts lack jurisdiction to decide the case. She also addressed the company's hardship claims, saying Hawkeye and other vendors accepted the riskspelled out in the licensing agreementsthat the law allowing Touchplay could one day change. "People entered this business at the risk the legislature could change its mind," she said.
Pottorff also told the judge that states are not always liable for reimbursing businesses when changes in law take away private property. She cited four cases in which the courts upheld the state's decisions to outlaw video poker machines without compensating vendors. "Termination of the TouchPlay program is a legitimate exercise of the executive and legislative policy decisions to limit proliferation of gambling into settings that impact the daily lives of Iowans," she wrote in a brief filed before the trial.
The AG has recently proposed a deal to lawmakers designed to halt possible lawsuits filed by TouchPlay operators. The plan would allow the machines to remain in operation until September 30 to give companies more time to recoup their investment in the machines. Senate Republicans have criticized the compromise.
At least one other TouchPlay operator attending Wednesday's trial said other lawsuits will likely be filed in the next week.
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