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HOLYOKE - The state Lottery Commission has removed all lottery terminals, tickets, Keno and other Lottery products from the Spud's convenience store and from the Sandcastle Lounge following a July 26 state police raid at Spud's for suspected illegal gambling.
State records list Joan Daigle, of 14 Orchard St., as the president and a director of both Spud's Inc. and DKM Corp.
In two identical Aug. 3 letters to Daigle last week, Lottery Executive Director Joseph C. Sullivan stated, "It is my intention to revoke your license as a sales agent" for both Spud's and the Sandcastle. The letter cites a Lottery Commission morals clause in its sales agreements and gives her 20 days to appeal.
According to a returned search warrant affidavit by the state police organized crime unit, police removed three illegally rigged video slot machines from 436 South St., a two-family house located next door to Spud's.
The affidavit, obtained by The Republican from Holyoke District Court, said that the weeks-long investigation involved police surveillance, an undercover informant and court-approved audio wiretaps.
In the affidavit, police alleged that Daniel A. Knapp, of 8 Glen St., and Daniel J. McMahon, of 298 West Franklin St., approved payouts to regular customers who used a key from Spud's, at 420 South St., to enter the house next door and gamble.
City and state records list McMahon as the manager of Spud's and as a director of Spud's Inc., which owns the store. State records also list McMahon as the secretary and a director of the DKM Corp., which owns the Sandcastle at 2213 Northampton St.
McMahon last night declined to comment. Neither Daigle nor Knapp could be reached for comment.
In May, the Sandcastle was one of 11 area bars, clubs or convenience stores that had their Lottery privileges suspended for a month after state police raided 15 establishments, seizing 38 slot machines, four of them from the Sandcastle.
Lottery spokeswoman Beth A. Bresnahan said bars signed agreements in June vowing to ban on-site illegal gambling or face revocation.
The office of Hampden County District Attorney William M. Bennett also pressed all 15 establishments to sign letters agreeing to prohibit illegal gambling or risk prosecution.
State police Sgt. Michael Imelio, a member of the organized crime unit, said yesterday the Sandcastle was one of only two bars that has not signed the agreement.
The returned search warrant affidavit states that, during the July 26 raid on Spud's, police seized a cigar box containing three remote radio transmitters from the store and an envelope with $470, six master lock keys and miscellaneous paper slips with number figures.
County records list the adjacent house from which the three slot machines were seized as owned by Knapp's late son, Daniel M., who died in 2002.
Knapp, an alderman in the 1960s, pleaded guilty in 1989 to setting up and promoting a lottery and was fined $1,250.
The raid on Spud's was instigated after a 50-year-old Chicopee man told federal agents and state police that he had lost about $2,000 on the slot machines next to Spud's, the affidavit said.
It said that Knapp was caught on tape admitting he was moving the slot machines to avoid state police detection.
Longtime Knapp lawyer and business associate Thomas J. Moriarty, of Holyoke, did not return phone calls for this story.
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