I'm wondering if OP was able to check on his state laws/jurisdictions?
In a very corrupt system, raising the attention of the authorities to issues like this will have no effect because they will turn a blind eye to it when they are offered a bribe by these owners of small gambling machines.
it's not even about turning a blind eye on your request, how do you even tender a request with the surge of corruptible practices everywhere? In what sector do you begin with? Who's gonna listen to you?... I bet they all know these things but since it fetches them good money, If anyone shows up to counter them, that's it for them.
But after all money is everything, anyone can be free from lawsuits or problems with the authorities when they have money for guarantee, this kind of thing happens lot even though basically the country has clear laws regarding the prohibition of gambling.
As in the country I live in where many cases like this happen, there is no way out and no solution that is truly wise for all places because they always pay taxes every month, no matter who with any background reports it, it will still be in vain.