And trust me, it is far more dangerous having people outside because it's legal than having people two machines per store because how --
But to my point, you have those machines and you said people outside selling drugs. When I go to see these stores, the people who I see on these machines are people who are high on drugs at these stores. So you know who follows --
-- addicts? Drug dealers follow the addicts. They're going to go to where the addicts are. So --
-- if the addicts are at these stores, that's where they're going to go.
I believe what you're saying. But then it becomes a two-way problem. Drugs have been in this country and in this state for more -- I wasn't even born in that time. So if you think about it, if you want to kill the problem from the inside, kill the drugs. And why don't you guys do it because don't tell me that the greatest country in the world don't have the means to kill actually the drugs. It does. There's enough police. There's --
I want you to know you were winning up until -- you were winning up until a point and then you flipped the script on me.
No, I'm not flipping it. I'm just saying that if we keep that closed mind and we're not able to grow, for us as small businesses we have to -- even you guys are the ones deciding if we can keep our business, you have to keep an open mind and think about -- it's not me. I have two childs. My father, he has four. If you think about everybody that was here and all the store owners, there's over 400, 500 stores just in Philadelphia. If you think 500 times 5 counting their families, times 6, actually counting their employees, 7, you're talking about with this business we are trying to protect over 2800 families. So it's not just the community that are getting hurt. I'm not saying it is not. I'm just saying you can keep them. You're right, but we can regulate it. We can keep two machines.
You're winning again. Stop. Member Lozada, comment. And a question, Member Harrity.
I just want to make a comment. You know, I think that what is important to note here is that we're not against small businesses. I want to say that again.
We are not against small businesses, but we have a responsibility to protect quality of life in our District and in our City. When a business becomes a nuisance business because of the activity that they are allowing to concentrate in their establishment, we must respond to it. And so, I think that this is what I hope is the beginning of many conversations about how we support small businesses, how do we allow and help and connect you to grow to be able to take care of your families for generations, but how do we keep quality of life intact in our communities. And I think that's very important, right. Because where you live and where your family lays their head to rest at night, you want it to be a safe, peaceful space, right. And I think across the City of Philadelphia everyone wants the same thing. So we're not saying you're wrong. We're not saying anybody here -- I think that this is the beginning of us having a conversation about how do we create a balance where small businesses can take care of their families and grow while we still protect quality of life in neighborhoods.
We can definitely do that by being organized. Within the organization we can actually do everything we want to. You're totally right about what you're saying about quality of life. I'm just saying if we organize within the City, not because you guys have the power to actually say there's only two machines, there's only four machines, there's only one machine per store, it's fine. We're not saying that you should not do that. We're saying you should just control it, organize it. Seven machines per location is a lot, which it's not just a lot. It cost a lot of money to put six machines. So just by you organizing how these machines must be placed, they must be within 6 feet within each other, you must have enough space for somebody to be playing and somebody to be walking right behind you so they can go through the store, it's totally fine because it's organized --
The only way we can get to there, the only way we can get to a balance is that, that you all as the operator understand that there is a problem --
-- right. Again, we need you all to assume responsibility, accept --
And that some of your business is hurting quality of life. We need you to get there in order for us to have honest conversation about how we regulate and what we regulate, what is the max and what is the minimum --
-- what comes along with that. If you all are not willing to have that conversation, then we're not going to get anywhere. We're going to continue to go in a circle, and two years from now we're going to have this same conversation.
Of course, and you're 100 percent -- that's exactly what I'm trying to say. You're 100 percent right about everything you just said. We already -- we actually know that there is a problem with having seven machines. Trust me, us as operators, we're not happy to put six machines in one store. They cost over $10,000. So just imagine $60,000 sitting in the store making $500 a week doesn't make the numbers. You're totally right about what you're saying. The problem is if you don't put six machines, then somebody else come in and put six machines, and then somebody else come in and they put two more machines and you have a store with machines. 4
So what 5 we're going to do is let Member 6 Harrity -- 7
Yeah. 12 My thing is just I think we're losing track on the fact that these are licensed businesses that are licensed grocery stores. They're not licensed casinos. They're not licensed for gambling. You guys may be right, it's our fault for letting you get away with it because it's illegal. The machines are illegal. It's illegal to pay them out. You're paying them out, that's illegal. It's not registered. It's not licensed. We gave you a license as a small business to sell groceries. That's what you're licensed for, and that's what we got to come to grips with, that we did not give you a license to be a neighborhood casino. We did not give you a license to have illegal stuff going on in your thing. It may not be hurting anybody as far as you know, but they are illegal.
We can say -- that's what I'm saying about being organized. You're totally right, but we can say that same thing happens with the ATMs. ATMs is a bank. The ATM is --
They are not illegal and you are making money on the ATM, $3 a pop.
I'm trying to get there. We're trying to get there. It's not like we're not trying. We are trying to be legal. We are trying to actually have licensing. We are trying to actually have all the paperwork that you guys need for you to be safe. But like I said, we are one part. Remember, this is a two-way street. One way is really to work with you guys. We're just waiting for you guys to work with us.
But one of the things you said was that, you know, the fact of the matter is that they're doing these machines because they're oversaturated with grocery stores in neighborhoods. Maybe that's where we go, limiting the number of grocery stores per neighborhood. Would that make you feel better?
Of course not, because you would be -- if you eliminate the grocery stores, do you know how many families would that actually harm?
That's why they have to use the gambling machines to supplement their income. So if --
So if we cut the number of stores, then that would definitely take care of itself, correct?
Of course. But it doesn't matter if you have 10 stores of if you have 5. If you have 5, then the --
We got your point. We got it. Thank you for your testimony though.
That's where honest dialogue comes in. Mr. Glass, do we have the last person to testify?
Mr. Xavier, thank you for your patience. Please begin your testimony.
Thank you. Thank you, Mr. Chairman. I appreciate the opportunity. Thank you to all the members. I -- like he say, my name is Juan Xavier. I partner a few business in the City of Philadelphia. I'm here not to testify for myself. I'm here to try to be part of the community in this testimony and not talking just for the business I partner in Center City in this great City of Philadelphia. But before I start, I would love to ask a few questions and introduce myself and a little bit of my background so you can understand all my point of view. My first question is going to be, is there somebody here who owns a grocery store can you please raise your hand? (Hands raised.)
Okay. There is somebody here who being robbed in the grocery store because of the machines? Oh, I love the noise. A question for you, a lot of members of this concept, do you before own a grocery store? (Two Councilmembers raised hands.)
You did? Great, I love that. Do you as members take the numbers based on your two Members with all due respect with your experience, with your investment, inventory, profit and lifestyle, do you take that numbers before into this bill and did that analysis?
So I was at 16th and Cecil B. Moore, the old Philadelphia Company store. It was a training program, but it was operated in the model of 7-Eleven and I did terrible. So I understand how it is so --
Thank you, Mr. Chairman, for that explanation because you better understand how struggle it is to run a business, running a grocery store day-to-day hours to make $80 sometimes. It's hard. You have to be there, you have to leave and work 16 hours a day making $5 an hour to understand how that feels being a business owner. I am talking from the bottom and (inaudible) having an inventory, getting cost and the store not getting sales because we may not have traffic. I'm getting from the point of view of the business. Now, let's go down a little calm and let me introduce myself. My name is Juan Xavier. I am the first-generation Dominican American. I am a technology expert. I have a great family who gave me the opportunity to be in college, become a systems engineer with two Master's degrees. I have a Master's degree in systems engineering and architect solutions. I used to work for Microsoft. I was years in 3 Microsoft South American market. I 4 was part of the team who created 5 Office 365. I was part of the team 6 for cloud technology with Grupo 7 Carso creating satellite network. 8 I've been in skill games for about 9 six years creating technology and 10 understanding how the system works. 11 And my next question is 12 going to be for you, Notable Members, do we understand what is skill games? Do we understand that terminology? Are we (inaudible). What is a skill language, what's that, because it's something different. I heard this terminology gambling back and forth, and we understand gambling. We understand the luckiness part. We understand the game of chance part, why this is called skill game. Why the court case back in 2013, the M.D. 965 in 2013 allowed this to become legal. Another word I heard in this Committee, in this hearing, what I understood when I was taking my citizenship test, this system in this country is checks and balance, administrative or legislative, administrative and judicial, right. You know this better than I do. In order to become legal, you need (inaudible) -- you need one of the point of view and one of the point of view have to say you are legal. But getting back to the technology and getting back to our amazing concept, do we understand what is the difference between gambling and skill games? Are we confident on that?
So can you kind of get to your point in your testimony?
Okay. What is the difference or there is some difference between skill games and gambling. There is some difference between skill games and game of the chance. There is something because it has to be something, because why that name. Simple, I will do a little brief and I will be open to any question. I am technology expert. I am not ready. I am not prepared for this. But I am pretty confident I can answer any potential question it can come.
So pretty much for me, if it walked like a duck, if it quacked like a duck, it's probably got feathers, it's a duck. And so, whether somebody says to me logically that if I press this button at a certain point, the skill of it allows the rotation of the piece to give me a payout, it's no different than if I pull that one-arm bandit and get a rotation and a probability and a percentage payout based on the algorithm that is set by that. Now, I don't know what you know, but I know if it walked like a duck, if it makes me broke like a duck, it's probably a duck. So that's my point. And whether it is a duck or a bald eagle, we need to figure out how to regulate. We need to figure out where they are. We don't know where they nest. It was testified today that we're over 50,000 machines. We don't have a clue where they are. We don't have a clue how much they made last year. We don't know much they paid out to the customer. We don't know any of those things. And my point is, this hearing is not to be against the small businesses in this room that have testified today but to figure it out. And that's our job, to try to figure out those answers.
I apologize for all the interruption, Mr. Chairman. I agree and (inaudible) your point. But before get to your point, I would love for you to understand where everything comes from, what is the difference. Game of the chance is luckiness, it's luckiness. It's gamble. It's not interaction. Who makes the last decision is the software. Who makes all of the patrons is the software, it's the machine. I am agree 100 percent to want legality. I am agree. Game of skill has three major components. Number one, who makes the last decision is you. You walk away whenever you want.
Number two, you can't see before you put a penny in there if you're going to win or you're going to lose, and you make the last decision. And you have a second part of the software to go into and just with memory, memorizing this tic-tac-toe games, you can win 105 percent of the time if you play. That is a skill because software don't make the last decision. There is a problem, 100 percent I agree. Skill game wasn't created to try to compete with casinos, to try to create mini casinos. The gentleman with the prior testimony, he did it perfect. It has to be regulated. Yes, I am agree 100 percent as the business owner and the business partner, and as the machine operator I 100 percent agree. I heard you guys keep saying your intention is not kill the small businesses. That's why I started that way. That's why I started with those questions. Solutions, yes. Kill, I feel this is not the intention with this bill. The intention with this bill 1 to me from my point of view with all due respect to this notable Council and all the members is killing the small businesses. Because me as a partner in the small business and multiple small businesses in Philadelphia, without investment, without inventory, how this machine now help to pay the mortgage.
And now, we 14 need a solution. Regulations, yes, 15 we need it. That's why we see in 16 so many years fighting this at the 17 state level to get these regulated. 18 Illegal machines, there is so many. 19
Okay. 24 Duly noted. We're going to move on 25 because I got one more one more to hear from, and I want to hear from them. They were so patient. So I'm going to give you two minutes. (Witness approached Witness table.) UNIDENTIFIED SPEAKER: Yeah, I'm going to try to make it as brief as possible. I know it's a long night.
Thank you. UNIDENTIFIED SPEAKER: I'm feeling I got to go get something to eat and get hydrated, and I know you guys are --
Three-and-a-half. What was it, three-and-a-half hours. UNIDENTIFIED SPEAKER: But I'm here. I'd like to show -- tell you I appreciate that you mentioned how can we help the business owners. I'm not directly involved. I'm indirectly involved. I help a lot of them. There's a language barrier, so I'm very supportive and I have made observations through the years. One of the things is increase police presence. They're alone out there. As far as Councilwoman Lozada and Councilman Young, what you guys call a nuisance is actually security for them, believe it or not. The skill machines had actually helped them with decreasing robberies in the stores. Why? Because when you have a presence in the store, it's a deterrent for the robber to come in. They wait precisely for the moment that the store is empty to go in and do their thing. So as a result, it has decreased, the incidence of robberies. Why do they feel that you're not for the small businesses is because when sugar tax increased, that put a dent to them. Cigarette taxes, another dent. Skill machines come up, we have a savior. It has helped. There's no 4 fluff that the businesses are suffering. A store that used to make $2,000 now makes $1200, $1000 if they're lucky. I'm here because I was asked by various of the store owners that don't speak the language to communicate this to you guys. So I don't know if this would make a difference in what you feel, but it is a big help. These skilled machines is a big help to the business. It has helped them stay afloat. Literally, no BS.
I just want to say I'm not entirely sold on it deters robberies, right, especially not in Districts like mine, where police will tell you that many of these guys who take over the establishment conduct their business inside. So, yeah, they're not going to stick each other up. They're friends with one another, right. They hang around with one another. So, yeah, they may not be sticking up that business at the moment, but it's because they're all involved. And if the business does get held up or get stuck up, none of them inside or none of them who have been hanging outside loitering for hours in the day are going to give up the individual who stuck up the business. That's just my experience in my District. UNIDENTIFIED SPEAKER: Let me make a clarification here. Hold on.
I beg your pardon? UNIDENTIFIED SPEAKER: Because I don't want you to get this wrong. I'm not saying that they're working -- the way you're saying is that they're in cahoots with people that are doing bad business.
No, that's not what she said. UNIDENTIFIED SPEAKER: Did you understood that or -- I didn't understand what you were saying.
She pushed back gently that the more casino or people playing the machines creates an atmosphere that is safer for the store merchants. Is that what you said?
-- or that people being stuck up -- UNIDENTIFIED SPEAKER: Because there's a large --
-- that the business being stuck up is lessened because these people are in their establishment. I'm saying in Districts like mine that is not the case. UNIDENTIFIED SPEAKER: I'm talking about Southwest Philly particularly.
So my point exactly. That's doesn't happen across the City, right. It depends on where you are. And in Districts like mine, that is not the case and I have to advocate, like many of my colleagues up here, we have to advocate for our constituency, right. Again, this is not about not wanting to support small businesses. This is about speaking up for the constituency that you represent. And the Districts -- UNIDENTIFIED SPEAKER: We understand that. I'm just telling you what they feel, why they feel that you're against them. Because when pre-sugar tax or pre-cigarette tax, now we have a solution to the problem and now we're going to ban that as well. I'm just letting you know why they feel the way they do.
The solution that you guys came up with is not the right solution. The machines for whatever reason, they may be helping them out now in the short run. The fact -- UNIDENTIFIED SPEAKER: Financially.
-- of the matter is they're not supposed to be there in the first place. A machine that pays out is not legal. Now, video games, something like that in the store that do it, that's completely different. We're talking about a machine that when somebody hits it, they go, take the ticket and they get paid, you know what I'm saying here. This is not something their license was granted for in the first place. You mentioned cigarettes. That's already -- UNIDENTIFIED SPEAKER: There's a legal issue with that and that's a reason why they have it. And now, I know you're saying this is not right. But what's to say that it's not right, you know, legally. Otherwise we wouldn't be at square one, you know. And I know you're trying to correct it. You're trying to make it right because it's -- I don't know if it's a moral issue or --
I'm sorry. You can finish. I didn't mean to cut you off. UNIDENTIFIED SPEAKER: No. 4 I know it's a big issue but how are we going to address it, how are we going to fix it, you know. And you're thinking banning it because you feel it's morally wrong?
We're -- UNIDENTIFIED SPEAKER: I mean, people are going to pay for services. There's no license.
In order for me to keep a quorum, can you finish your testimony. UNIDENTIFIED SPEAKER: No, it's fine. He has a question for me?
Yeah, I have a question. I mean, essentially when some of the folks you're representing, when they go into this business, right, they're going to the business as a convenience or grocery store, from helping develop business plans for grocery stores and things like that, I have never seen this as a part of their business plan when they're opening up a grocery store to make money. And so, I just want to get the small business owners to know how we can help you in your small business endeavors for what you're licensed for, that's what we want to try to do. We want to try to lower your cost of doing business in the City. However, when you're operating in a manner that is outside the scope of your business, right, this is not a convenience. You're not selling something to the public when you have these machines in there. So why as a City, as a body when we've seen these machines have negative impacts on our communities, why should we continue to allow these things when it's already outside the scope of your business? UNIDENTIFIED SPEAKER: Does it really have a negative effect?
All right. Thank you for your testimony and I think we've received your point. There are certain questions that you're making, is it legal, is it moral. And we're not questioning the moral aspect of it. We are questioning the legality. UNIDENTIFIED SPEAKER: I just hope you guys come up with a great solution. I hope that the business owners are able to continue business. One way to help, I don't think it will happen. Let's cut back on the sugar tax. Let's cut back on the cigarettes and let them keep it within their scope so that we don't need skill machines if you don't want them there, and let's have businesses operate as it was operating prior to the damage that was done when we increased those taxes. That might be a solution.
Thank you for that. And for the record, none of these individuals voted for the sugar tax. That was all me. I apologize. I apologize. With that, do we have any others to testify?
I appreciate your testimony. UNIDENTIFIED SPEAKER: Thank you for your time.
I appreciate your testimony. I appreciate your patience and I understand when we are better for it because of your testimony. Thank you. This concludes our public hearing of the Committee on Public Safety dealing with Bill No. 6 240010. We will now conduct our public meeting. And with that, we have a quorum. And the Chair recognizes Member Lozada for an amendment to Bill No. 240010.
Thank you, Mr. Chair. I offer an amendment to Bill No. 240010. A copy of the amendment has been circulated to all members of this Committee. I move that the amendment be approved. (Duly seconded.)
It has been moved and properly seconded that the amendment to Bill No. 24 240010 be amended. All those in favor will say aye. (Aye.)
The ayes have it. The Chair again recognizes Vice-Chair Lozada for a motion on Bill No. 240010 as amended.
Thank you, Mr. Chairman. I move that Bill No. 240010 as amended be reported from this Committee with a favorable recommendation and further move that the rules of Council be suspended to permit first reading of this bill at the next Council session. (Duly seconded.)
It has been approved -- it has been moved and properly seconded that Bill No. 25 240010 as amended be reported from this Committee with a favorable recommendation and further move that the rules of Council be suspended to permit first reading at our next session of Council. All those in favor will say aye. (Aye.)
The ayes have it. Bill No. 240010 as amended has been approved. Thank you. This concludes our business for this Committee on Public Safety, and thank you for your endurance.
Thank you, Chair. (Committee on Public Safety concluded at 4:50 p.m.) C E R T I F I C A T I O N I, hereby certify that the proceedings and evidence noted are contained fully and accurately in the stenographic notes taken by me in the foregoing matter, and that this is a correct transcript of the same. __________________________________ TANEHA CARROLL