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On the TV series Young Sheldon, Connie secretly runs an illegal casino (slot machines and card games where you can earn cash), which is shut down by the police.

Connie’s grandson Georgie thinks she can reopen the casino by making all the games only give out prize tickets, which can be redeemed for teddy bears, and then adding a side desk where Connie buys back bears for $100 each.

Would this really be legal?

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    This sounds like it is exactly describing the children's section of casinos in Nevada, from personal experience Harrahs, Stateline Nevada. My guess would be the TV series is critiquing that practice.
    – Dave
    Commented Nov 6, 2021 at 11:50

2 Answers 2

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Potentially -- this is almost exactly how Pachinko parlors in Japan operate, with non-cash prizes being given out, but with "known" nearby establishments (sometime located in the same physical building) that will buy them for cash. Other options include the giving of vouchers/gift cards as prizes.

Whether this is legal or not is a question of if the buyer is "truly" acting independent of the gambling establishment. The general legal term for this is "arm's length transactions".

A completely unrelated organization is presumed to be acting in its own best interest, in an "arm's length" manner, though this can be overcome with evidence of collusion. If the casino is willing to "buy back" its marker at a given price (much like Las Vegas casinos are required to do), this can be done with independent intermediary negotiators in a legitimate arm's length transaction.

In the Japan example above a "three-shop system" of nominally independent shops circle goods between them to effectively "legalize" (or at least not draw the ire of authorities over) cash gambling payouts.

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    I came here to say just that (upvote). I remember pachinko parlo(u)rs fondly from my time in Yokohama. Wikipedia describes how they circumvent Japan's strict gambling laws
    – Mawg
    Commented Nov 6, 2021 at 8:13
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    This makes me wonder, what stops people from obtaining these (apparently cheap) tokens on their own and attempting to redeem them through the "independent" redemption establishments? Since they are supposed to be independent anyway, it's hard for them to show why they would have a business reason to only want to buy markers/tokens from the Pachinko parlor and not any other location. Commented Nov 6, 2021 at 11:40
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    @RobertColumbia The casino presumably buys them in bulk so they get a discount. Patrons may not be able to get the same discount -- certainly not the windfall they hope to get by gambling in a casino.
    – Barmar
    Commented Nov 7, 2021 at 14:18
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    @RobertColumbia The Yakuza is what stops people from trying to beat this system with counterfeit tokens.
    – Philipp
    Commented Nov 8, 2021 at 9:12
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    @DarrelHoffman In a regular casino, the chips represent money, and the money is explicitly the thing that the player cares about. At a pachinko parlor, the business and the players are both nominally claiming that the little trinkets are the things the players want. It's a "coincidence" that there's a nearby shop offering cash for those trinkets, and the players are "surprised" when they have a change of heart and decide to sell those trinkets that they wanted so badly. In reality they're basically the same, but chips lack the fiction that's trying to skirt the gambling laws. Commented Nov 8, 2021 at 19:09
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It's been used in other places legally.

I don't know whether or not it'd be legal in Texas, but similar schemes have been used legally in other places. For example, in Queensland, Australia, during the 1930s, what eventually became the Golden Casket lottery corporation originally bypassed now-repealed anti-gambling laws by running a lottery that awarded the titular "golden casket" as its prize, which was then bought back by the organization running the lottery for a sum of money that was the de facto cash prize.

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