The Honolulu Liquor Commission last night heard testimony for and against "telephone calling card" machines now installed in some 80 Honolulu bars, including an expert opinion from a retired FBI agent who said the devices have been outlawed as gambling devices throughout the country.

But Brad Wong, a distributor of the machines through a company called Reliable Vendors Co. Ltd., told the commission that his company and others in the business only began operations here after the commission approved the installation of the devices in bars.

Now the commission, under the leadership of new administrator Dewey Kim Jr., is re-examining the issue and that, Wong said, could cost those businesses the money they invested after the commission first approved the machines.

"There has been considerable money invested after we did our homework and we would stand to lose that," Wong said.

William Holmes, the national expert hired by the Liquor Commission to review the legality of the machines, said he believes they are illegal. He told Commissioner Iris Okawa that "to my knowledge" no other state in the country has allowed the devices, except in legal gambling casinos.

Keith Kiuchi, a lawyer for a company that distributes the machines, disputed that testimony, saying there have been recent court or government rulings allowing use of the machines in North Carolina, Alabama, Texas and Kansas.

The company Kiuchi represents is owned by a Honolulu police officer. HPD officials said in recent interviews that they are conducting their own investigation of the legality or illegality of the devices.

FREE PLAY CITED

Holmes in his testimony did not cite sections of Hawai'i state law that he believes the machines violate.

The calling cards cost a dollar each and allow customers to make long-distance telephone calls lasting two or three minutes. The cards also are entries in "sweepstakes" games that can pay winners cash prizes of $1 to $1,000.

Distributors of the machines say that anyone interested in entering the sweepstakes can get a free entry card by mailing a self-addressed, stamped envelope to the organizers of the sweepstakes. By allowing free play in the sweepstakes, the machine owners say, the calling cards are not a form of gambling because no money is paid.

Many of the machines here require the requests for free sweepstakes cards to be written to an address in Goose Creek, S.C., although Kiuchi said his client, HPD officer Timothy Mariani, offers free cards through a local post office box address.

GROUP SUPPORTS BAN

Holmes said that because the free cards are taken from different "pools" of cards contained in the vending machines, the sweepstakes games are illegal. National sweepstakes game promotions run by companies such as McDonald's operate a single, huge sweepstakes pool that affords all players the same chances to win, Holmes said.

Judy Rantala, president of the Hawaii Coalition Against Legalized Gambling, told the commission her organization supports a ban on the devices. Past president Dorothy Bobilin said she believes the machines are a "foot in the door" for the forces supporting legalized gambling in Hawai'i.

Machine distributor Wong told the commission his company only installs the devices in licensed liquor-selling establishments, purposely keeping them out of convenience stores or other venues where children could be tempted to use them.

DECISION TO COME LATER

The commission has held up some 14 requests to install more machines in bars here and Wong said vendors have been "very tempted to just stock them in convenience stores" or other retail establishments where permission from the liquor commission isn't required.

Wong said after the hearing that some machines contain a set of 4,882 cards and pay out about 68 percent of their revenue in winnings.

Vendors can order sets of cards that pay out as little as 50 percent in winnings while others pay as much as 70 percent, Wong said.

Commission administrator Kim said his office has received complaints from card buyers who said they can't use them to make telephone calls.

Telephone calls were successfully made using five cards purchased by The Advertiser from four different machines in recent weeks, although two cards required multiple attempts before a connection was made.

Commission chairman Dennis Enomoto said a decision would be made on the devices at a later date.

Reach Jim Dooley at jdooley@honoluluadvertiser.com.