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State Legislature should ban Internet sweepstakes parlors

Published: Sun, November 25, 2012 @ 12:00 a.m.

Ohio Attorney General Mike DeWine, who has made no secret of his disdain for gambling joints cloaked in the innocent-sounding name of Internet cafes, would welcome the chance to take on these unregulated, unlicensed operations in a court of law. The Ohio General Assembly should make DeWine’s wish come true.

Rather than pass legislation that redefines the term sweepstakes in an effort to render the Internet cafes illegal, the Republican led General Assembly should act on a clean bill that would ban — the word is not open to interpretation — the 819 outlets already operating in Ohio. There are a significant number of the establishments in the Mahoning Valley.

Such a measure would undoubtedly trigger a court challenge, which would then give Attorney General DeWine a chance to strut his legal stuff. For the past two years, the state’s top lawyer has looked to the Legislature to pull the plug on these gambling parlors, but the best lawmakers could come up with was a moratorium on such places until June 30, 2013. In so doing, they gave de facto recognition to the cafes that have been operating outside the regulations that apply to gambling in Ohio.

Recognizing the shortcomings of the law, state Rep. Matt Huffman, R-Lima, has introduced a bill that he believes would have the effect of banning the Internet cafes because of the redefinition of the term sweepstakes.

But, as the Columbus Dispatch reported, a Columbus lawyer who represents many owners, said he believes that Huffman’s legislation would place the cafes under the authority of the Ohio Lottery Commission.

If Atty. Kurt Gearhiser’s reading of the bill is correct, the goal of a shutting down this unregulated $1 billion-a-year business, as the Dispatch defined it, would not be realized.

The 819 establishments do not have a constitutional right to exist. The creation of the Ohio Lottery Commission, gambling that benefits charities and Vegas-style gambling through the construction of four full-service casinos in specific cities in Ohio came about through amendments to the Ohio Constitution.

Internet sweepstakes cafes were not included in any of the ballot language. Ohio voters were never asked if they supported the creation of this unregulated, unlicensed industry that is now in competition with the Ohio Lottery and casinos approved for Toledo, Cleveland, Columbus and Cincinnati.

As Jennifer Kulczycki, spokeswoman for Rock Ohio Caesars, owner-operators of the Horseshoe Casino in Cleveland and a similar casino to open in Cincinnati next spring, told the Dispatch, the cafes are “conducting unauthorized gambling activity ... These businesses are skirting the law and avoiding basic scrutiny.”

She said casinos, by contrast, are “among the most-regulated businesses in the world.” Attorney General DeWine points out that the gambling devices used in the cafes are not policed by the state.

No inspections

He said they are not inspected and there is no required payout. On the other hand, slot machines and video-lottery terminals in casinos and soon-to-be racinos are closely monitored by the state. In addition, operators must pay out at least 85 percent of the money wagered.

The owners of the Internet cafes have been resourceful scofflaws. They’ll exploit any loophole the Legislature provides.

What must be done is rather simple: The General Assembly should pass a bill that uses the word ban with regard to Internet sweepstakes cafes in Ohio.


1palmer16121(116 comments)posted 1 year, 9 months ago

I disagree with this editorial, on the basis that they can be regulated. That is, I honestly believe that Pennsylvania's bannishment approach just wasted tax money that could have been made. For example, all they had to do was put them under he rules of the Lottery commission, and require strict security measures. Also require the appropriate tax forms for those who made $600.01 or more. I really see that regulation would keep he scoundrels out, and the legit businesses in. If the Vindy feels it must be banned, then I would blow a vessel if big gambling interests decide to come in, and they endorse it.

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2palmer16121(116 comments)posted 1 year, 8 months ago

NoBS, you're so right. I live in Sharon, PA within walking distance of the Plaza and downtown. There was a cafe there, but it's just sitting idle. Consider that the city also collects a mechanical amusement tax per each machine as well. Also here, only 5 people in the legislature voted against the ban. The exucse "to protect charity bingo" which never was in trouble in the first place.

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3Knowyourfacts(1 comment)posted 1 year, 8 months ago

It would be nice if any of the articles I've read or people making comments about these establishments had even one clue abouts the facts involved.
The fact these places exist in the first place is a "loop hole" in the way the law is written.. OK I get that.. But with that said.. It doesn't make it all the things BIG MONEY is making it out to be.
I've been involved in the industry for over 2 yrs. In that time the only LEGAL people that we've had any contact with is our local city offices. They inspect your location for an occupany permit, just like any other business, and they TAKE your MONEY for "Terminal LICENSE Fees" and a yearly "Operating Fee". In total the little 20 terminal location I'm talking about is exactly $12,200 a year. Remember that I said 20 seats.. some locations have up to 60-70 seats. And the fee is per machine. And oh yeah.. thats all paid 6 months in advance.
Lets just stop there for a second..
How is it our fault that the city we paid all these fees choice not to be more involved in regulating the location?
Being new to all this we made some mistakes along the way. But as it turns out, those mistakes also gained us a ton of inside KNOWLEDGE from more than one company.
I can guarantee that if any of these Law Makers actually looked into the record keeping involved in these businesses. They would look very stupid for saying the things they do.
There is not one thing about these business that can not be verified when it comes to payouts or winning percentages. And since they are making a comment about the fact a casino is so wonderful by having a 85% payout. I wonder why our machines having a higher payout % is somehow hurting anyone. Not one person has ever approached our location and asked to see the 1000 page sweepstakes % book that breaks down each and every sweepstakes by payout and the % of each. All someone has to do is run reports for what has been played and what is left to see if it is accurate. Its a "FINITE" Sweepstakes!!! Thats what it's about.. The locations DO NOT own the software and pay a percentage to that company to run their software. We have just as much at stake to make sure it is keeping accurate information. It is just like any other business when it comes to expenses, as well as employing people!
No ones talking about the expenses involved..
(pre opening site work,city fees,terminals,complimentary food & drinks,payroll,rent,utilities,insurance,etc...)
The owner(s) claim what is left on personal taxes...
So I'm sorry... Who is doing something crooked again? Its a Sweepstakes.. pretty simple..
I think it is nothing more than BIG MONEY CRYING FOUL!
Regulate the locations and put the safe guards in place..That absolutely needs to be done.. But then please just let us all deal with the real problems in this country! People are smart enough to decide if they want to patronize a location or not..
And oh yeah... Please know your facts before you repeat other peoples ignorant comments..

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4palmer16121(116 comments)posted 1 year, 8 months ago

Knowyourfacts, that's why I advocate these places being strictly regulated. I never played in these places...the people do deserve to have a right to know what their odds are. I also have stated, I will have a problem if a company like Penn National decided they wanted in, and the Vindy decides it's a good idea. Because now we're getting into hypocracy territory. Also, I will be very honest and say this is very tricky. Espcially with the tic-tac-fruit machines a year ago in Ohio that got shut down within 30 days through emergency legislation.

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