Effective July 26, 2003, the video gambling statutes were amended to provide that only a Special Agent of the Department of Revenue that is certified as a law enforcement officer may investigate or enforce video gambling violations on Class B alcohol beverages licensed premise, if the Class B premises has no more than five video gambling machines.
The penalties for having five or fewer video gambling machines on a Class B premises include seizure of the machines, seizure of money in the machines, and a penalty of $500 per machine per incident. A municipality may also enact ordinances regulating these machines.
It is a felony for a Class B establishment to have more than five video gambling machines on premises; it is also a felony for a Class A licensee to have any video gambling machines on premises. In these instances, the licensee may be arrested either by a Special Agent of the Department of Revenue or a law enforcement officer in the jurisdiction where the arrest is made.
The Department of Revenue conducts tax audits of both machine operators and Class B establishments. The gross receipts from these illegal machines is also subject to Wisconsin sales tax, the net income is subject to Wisconsin income or franchise tax, and the purchase of the machines is subject to Wisconsin sales and use tax.