INTERNET CAFE OWNER FIGHTS OHIO COUNTY CRACKDOWN

INTERNET CAFE OWNER FIGHTS OHIO COUNTY CRACKDOWN
Published: June 6, 2012 8:00AM

CLEVELAND (AP) — An Internet “sweepstakes” cafe owner is challenging efforts by a prosecutor in Ohio’s largest county who wants to shut down such businesses and says they’re really illegal gambling operations.

The businesses offer games that function like slot machines with cash prizes. Last week, the Cuyahoga (ky-uh-HOH’-guh) County prosecutor sent letters to about 50 cafe operators in the county ordering them to close immediately.

The Plain Dealer reports (http://bit.ly/M7i1Tp ) two of those facilities are owned by J&C Marketing LLC, which is asking a county judge to block the prosecutor from enforcing that order. A hearing is set for Monday.

An assistant prosecutor said the county was preparing a response to the court filing. He says most of the county’s sweepstakes cafes have closed since the order, but a few remain open.

http://www.the-press-news.com/ap%20state/2012/06/06/internet-cafe-owner-fights-ohio-county-crackdown

Free speech violation may give life back to Ohio Internet sweepstakes

CLEVELAND, OH (WOIO) -
Another twist in the battle over Internet gambling.

Last week, the Cuyahoga County Prosecutor Bill Mason filed indictments and ordered Internet gambling businesses to close after a statewide investigation. Ten people have been charged in the case. 

On Monday, some business owners filed a motion with Cuyahoga County court trying to get a judge’s order to allow them to stay open.

Mason’s cease and desist letters to Cuyahoga County’s Internet Cafe’s made headlines.  He was backed up by Ohio Attorney General Mike Dewine in the claim that the cafe’s violate Ohio’s gambling laws.

Cafe owners cried foul and filed a request for a temporary restraining order late Monday, saying Mason’s action was heavy handed.

“It’s like bringing a sledge hammer to do brain surgery,” said Daniel Gourash, attorney for the Sweepstakes Cafe.

One of their claims is that by shutting down the cafe’s, Mason was limiting free speech and access to the Internet.

Assistant County Prosecutor David Lambert says, ”We’re not seeking to prohibit any speech whatever, we’re seeking to prohibit the gambling itself.”

The cafe’s sell patrols phone cards, which are swiped into computers where they can wager on sweepstakes through the Internet.

Ohio’s definition of gambling says it is any game that includes chance, and a prize for consideration or payment. The claim of the cafe owner is that because phone cards are used instead of cash there is no consideration therefore no cash. No gambling.

The Internet access time purchased is never at risk of being lost in the sweepstakes.

Judge Nancy Russo said today she’s not comfortable making a decision either way today.  Russo has jurisdiction in the case so she wants clarification from the Court of Appeals before she rules.  She set another hearing for Monday morning.

In the meantime, the cafes can’t do business.  The entire matter could become a moot point as a House Bill on the Governor’s desk would grandfather in current cafes.

Copyright 2012 WOIO. All rights reserved. 

http://www.woio.com/story/18704931/internet-cafes-fight-to-stay-open

Internet Sweepstakes Network encourages regulation of the promotional sweepstakes industry.

 

Internet Sweepstakes Network encourages regulation of promotional sweepstakes industry in Ohio

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A crackdown on Internet sweepstakes cafes in Cuyahoga County led this week to indictments against 10 individuals and seven businesses, revealing a disturbing pattern of racketeering, illegal gambling and money laundering. The danger is, if the state does not act quickly, the scheme likely will be repeated across the state.

As matters stand, sweepstakes cafes are regulated at the local level, if at all. That has led to a confusing patchwork of regulations, allowing the operations to proliferate, to around 300. Although the legislature, as part of a recently passed gambling bill, imposed a moratorium on new sweepstakes cafes, legislators are still working on a bill to bring statewide regulations to what Ohio Attorney General Mike DeWine aptly describes as “a huge problem.”

How big? Over a period of four years, some $48 million allegedly was siphoned from 18 sweepstakes cafes in Cuyahoga County, the money flowing to a New Jersey-based company called VS2 Worldwide Communications, which supplied the equipment. The indictment named four Akron-area men who helped move gambling machines into Cuyahoga County, convincing operators that the devices, which resemble electronic slot machines, are legal in the state.

In sweepstakes cafes, patrons buy phone cards or Internet time to play sweepstakes games. While cafe owners compare their games to the games at fast-food outlets, Cuyahoga County Prosecutor Bill Mason ordered all 50 sweepstakes cafes in the county to close, accusing them of running illegal gambling operations. Operators, some of whom had local permits, and patrons are not being charged.

Mason’s office worked with multiple agencies on the crackdown, among them the Ohio Attorney General’s Office, the Secret Service and the U.S. Marshal Service. That it took such an effort to deal with sweepstakes cafes in one county should provide a signal to the legislature to make regulations a high priority.

DeWine correctly emphasized that the cafes are a consumer rip-off. Setting statewide rules for them is a must; otherwise, operators will simply move from location to location, taking advantage of the confusion.

The legislature is wisely considering putting sweepstakes cafes under the Ohio Casino Control Commission. Operators should be required to post the odds and buy equipment from state-approved vendors, protecting consumers. The legislature should also limit the number of cafes and place restrictions on payouts. As the crackdown in Cuyahoga shows, there is no time to lose.

http://www.ohio.com/editorial/editorials/con-games-1.310920

Internet Sweepstakes Network encourages regulation of the promotional sweepstakes industry.

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Internet Sweepstakes in Ohio being pushed aside for Online Casino

As Internet sweepstakes businesses continue to proliferate across Ohio, several area cities are taking steps to control them out of concern the businesses will become havens for crime if left unchecked.

Ohio Attorney General Mike DeWine started pushing a year ago to have such sweepstakes cafes limited and licensed. But the legislation, which was introduced last March, is still awaiting review by an Ohio House committee and is expected to be modified.

Springfield and New Carlisle are among several area cities that did not wait for action from the state, enacting bans or temporary moratoriums.

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DeWine’s office surveyed Ohio municipalities and found 285 sweepstakes locations, up from 200 sites counted by the Ohio Lottery four months ago.

DeWine and others believe these cafes are a form of unregulated gambling where the odds are not clear. A loophole in the law allows them to operate, DeWine said.

“We don’t know who owns them,” DeWine said. “We don’t know if they are convicted felons.”

But Toledo Municipal Court Judge Francis Gorman in 2009 ruled that these sweepstakes cafes have no element of risk and are not gambling enterprises. The ruling cleared the way for such businesses.

Most of the cafes in the state appear to be located north of Interstate 70, according to information included in the survey, but area officials are working to fight an influx locally by either limiting their locations or enacting stiff licensing fees for the businesses, which DeWine calls “consumer rip-offs.”

Springfield in December approved a ban of sweepstakes cafes that takes effect in October.

Springfield City Manager Jim Bodenmiller said the City Commission was responding to “a lot of neighborhood complaints” about criminal activity associated with the cafes.

Springfield did not have bad experiences with all cafes, he said, but commissioners were concerned about the police department being saddled with months-long investigations needed to shut down the problem businesses.

“We have limited resources,” said Bodenmiller, and the commission asked itself, “is this something we want to see proliferate?”

New Carlisle Council members voted unanimously in February to extend a second time a moratorium on Internet cafes in their city. Council first approved a 6-month moratorium in February 2011 and extended it another 6 months in August 2011.

Kettering, Xenia, Miamisburg, Springboro and Beavercreek have adopted various restrictions and regulations including criminal background checks, and in some cases, fees and location restrictions.

The city of Dayton, which is believed to have at least two sweepstakes businesses, is awaiting guidance from state lawmakers before acting, city officials said.

Meanwhile officials in Beavercreek, home to at least one operating cafe, approved regulations on March 26 requiring a $7,500 operator’s license fee, as well as a $600 fee for each computer.

The law, which takes effect in less than 30 days, came as a surprise to cafe owner Johny Costandinidis. He would have to pay at least $13,500 in annual licensing fees to continue to operate his sweepstakes cafe inside of his business, Factory Drive Thru, 2508 Richmar Drive in Beavercreek.

The carryout has a bank of about 10 computer stations for sweepstakes play.

Costandinidis said he added the sweepstakes machines about two years ago to provide something unique to customers.

He said he is doing nothing wrong.

Beavercreek Planning Director Jeffrey M. McGrath said the regulations were designed so that “everyone understands the ground rules before they come in the door.”

“It wasn’t designed with the intention to eliminate the possibility (of these businesses) in the whole city, McGrath said. “It is a response to some of these things popping up across the state, us reading about it and being proactive.”

‘No skin 
in the game’

Owners say the sweepstakes are safe and offer customers incentive to buy phone cards.

Sweepstakes cafe owner Roy F. Smith of Englewood said it is not gambling because the sweepstakes have a predetermined outcome and the phone cards maintain their value after the game is played.

“You don’t have any skin in the game,” said Smith, the owner of Belle Phone Internet cafe in Bellefontaine and Erie Sweepstakes and Phone cards in Hamilton. What’s the rip-off?” he asked. Smith also has locations in Marysville and Sidney under the name Internet Cafe. He is planning a fifth location.

The owner of five hotels, Smith is considering legal action against the city of Xenia for council’s unanimous rejection in February of his request to rezone 605 W. Second St., the former Blockbuster location he rented for a sweepstakes business on the edge of downtown.

“You cannot zone a business out of a community,” he said. “Because of their action, there are five people in Xenia who don’t have a job.”

Xenia requires a $5,000 annual operators fee and a $50 fee for each machine up to 50 machines. Those with more than $50 machines are required to pay $150 per machine.

Smith has about 40 machines at his Bellefontaine store.

Brian Forschner, a Xenia city planner, said the city’s rules do not amount to a ban.

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http://www.springfieldnewssun.com/news/springfield-news/internet-sweepstakes-cafes-raise-concern-across-ohio-1356393.html