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The Service Games Syndicate

Discussion in 'General Sega Discussion' started by Black Squirrel, May 26, 2022.

  1. Black Squirrel

    Black Squirrel

    no reverse gear Wiki Sysop
    Northumberland, UK
    steamboat wiki
    So we're not spamming the "things to mirror" topic:

    Before Sega were Sega, they were Service Games, and Service Games has a... colourful history. There was a series of US Senate hearings in 1969 followed by a report in 1971, brought about by... erm... something in Vietnam(?) and Service Games was a major player. Among the conclusions:


    Basically the distribution of slot machines (and other such devices) across US military bases in the Pacific was illegal after a certain date. But that was Service Games' business... so distributors started bribing military higher-ups, who in turn looked the other way, and everyone made lots of money. It mattered because:

    - It's against the law lol (and gambling was still a touchy subject in many American states)
    - It's corruption featuring US taxpayer's money
    - Vietnam in particular was an active war zone, so maybe not the best place for slot machines

    Much of this lies at the door of a Mr. William Crum, owner of Sarl Electronics, who just happened to be Service Games' distributor in Vietnam. But Service Games was also messing around, such as smuggling slot machines into military bases (and being banned by the US Navy in The Philippines), pretending Japanese-manufactured products were from the US (which would net them preferential treatment from US military bases), and almost certainly evading tax by having complex banking arrangements in Panama.

    Basically, "buy our slot machines and we'll give you a free, all expenses paid holiday to a five star resort. Or lots of booze. Or whatever". Slot machines themselves weren't banned, just the purchasing of new ones, so yeah - messy.

    Luckily for them, by the time the US government caught up, Gulf+Western had stepped in to buy 80% of what was then Sega Enterprises. The business dropped its less legitimate operations (not least because the market was less lucrative by this point), and those at the forefront (such as Martin Bromley and Richard Stewart) walked away with a lot of money. The survivors, David Rosen and Raymond Lemaire (who where based in Japan and not really involved in the above), would then shape the Sega we know today through the 1960s and 70s.

    In fact strictly speaking the "Sega" part was mostly off the hook because it just manufactured the devices. Distribution, and in turn all the less ethical tactics, lie with Service Games, Panama (which became Club Specialty Overseas, Inc. when the "Service Games" brand got too tainted). The Japanese business was just making equipment and distributing nice things like jukeboxes and pinball tables, and all ties were severed between the two by 1973. The only question mark on the early Japanese arm is the decision (assuming they were calling the shots) to manufacture Mills knock-offs, but that wasn't technically a crime.

    So did the bad guys win? Maybe. It's telling this report calls Service Games a "syndicate", and it's obvious why modern Sega would like to pretend none of this happened. The tax situation is not great, although you'd have a hard time proving how "not great" it was. Proving there was a human cost on the Service Games side is also hard - it really depends on your position on gambling as a concept, and there's plenty of general Vietnam war controversy (or US military occupation full stop) to think about too. Most of this report seems to be about highlighting failures in the US military - it's all well and good Service Games offering bribes, but you could always choose not to take them.

    tl;dr early Sega was probably crooked, but at least they weren't supplying the Yakuza and running brothels like a certain other big video game company.
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  2. Asagoth


    Behold! The mighty, the flawless, salted cod eater Member
    wiki stuff... and a beer... or two... or more...
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  3. Brainulator


    Regular garden-variety member Member
    One of them dates to 1969 and the other 1971... I wonder how much Gulf and Western (of Paramount Pictures fame) plays into this, that being an American company.
  4. Billy


    RIP Oderus Urungus Member
    Colorado, USA
    Indie games
    Y'know, it just clicked for me that the "Service" in "Service Games" was referring to, like, military service. I feel pretty silly not realizing that until now. Can't say I'm the least surprised there was shady stuff going on, especially since the U.S. military was involved. Interesting stuff.
  5. Ted909


    the future kick your ass Member
    Recently debunked here - there's no evidence from the time of that love hotel business ever happening, at the very least.

    All of this kind of stuff has had its waters very much muddied by unverified sources with resultant regurgitation by others (usually YouTube channels looking for easy shock views), and the actual truth with the companies concerned here can mainly be boiled down to little more than selling hanafuda cards to the yakuza + bribing the military for gambling.
    Last edited: May 28, 2022
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