Sweepstakes café laws, meant to apply to promotional contests, have led to an unexpected industry in many states that now generates billion annually, according to the American Gaming Association. Sweepstakes cafés set up a network of computers in a retail store, selling time on the computers through a prepaid card as well as offering long distance phone cards. The prepaid cards come with a game patrons can play on the computers, which observers say are strikingly similar to online slot machines.
States have been cracking down on sweepstakes cafés. Florida banned the machines in 2013 in the wake of a scandal. North Carolina banned them in 2010; the state Supreme Court declared the machines to be illegal. In December 2012 the California Bureau of Gaming Control issued an advisory explaining that the devices were illegal gambling machines. Ohio banned sweepstakes cafés in 2013, one year after casinos opened in the state. Mississippi and South Carolina also banned the games in 2013.
In New Jersey, in an effort to combat sweepstakes cafés, businesses operating for the sole purpose of providing access to online gambling, including regulated sites, were banned. Similar legislation is pending in California.
Naturally the casino industry opposes sweepstakes cafés. Chris Moyer of the American Gaming Association, said, “These illicit operators elude licensing, criminal background checks and other safeguards required of legitimate gaming operators to ensure the integrity of games, prevent the participation of minors and protect players’ safety. Furthermore, these illegal gambling businesses threaten to undermine legitimate gaming operators because they pay zero gaming taxes, yet siphon gaming revenue from regulated casinos. As a result, states lose tax revenues intended to support critical public education, health and social programs.”
But a new version of sweepstakes café games is showing up in several states, where a pre-reveal option was added to comply with new laws. This eliminates chance so the games clearly not gambling, operators claim. For example, in Alabama, manufacturers created a bingo display to remain lawful.
Typically state legislatures are unable to keep up with sweepstakes café technology. It takes a few days to introduce new versions of the games but it may take two years to pass a law regulating them.
In spite of the fact that local law enforcement agencies in Ohio continue to regularly raid skill game parlors, they continue to be popular with both operators and customers.
Last year a police raid in the small community of Perry Township hit five of these parlors and confiscated machines that had previously been confiscated in raids in other parts of the state. The operators were able to get the machines returned and simply moved them to another part of the state.
Although Buckeye state lawmakers continue to wrestle with trying to adopt laws that will stick, the laws often have loopholes that allow operators to return with variations that don’t violate the vaguely worded laws.
Townships in the state have issued many business permits for skill game establishments, amounting to hundreds of thousands of dollars in fees.
Games of chance are only legal in the state’s four casino resorts, seven racinos and in the state lottery. Games of skill are legal, but the definition of what constitutes such a game is often a matter of judgment.
Games of skill are limited to $10 prizes of merchandise, but not cash.
According to Matt Schuler, executive director of the Ohio Casino Control Commission, interviewed by the Canton Repository, “After the General Assembly passed the law that essentially outlawed sweepstakes and Internet cafes, we saw a number of those establishments simply rebrand themselves as skill games. We realized this was prevalent and happening all over the state.” Although it is happening in all of the state, it appears to be concentrated in the Cleveland, Akron, Canton and Mansfield areas, in addition to Toledo.
The state authorities have been trying to stamp out the games for many years, long before the voters authorized the four casinos. They frequently get phone calls from residents complaining that the skill game parlors make their towns and their business districts look bad.
Not all residents feel that way, obviously since many people, often senior citizens, play the games for recreation.
Besides the fact that the laws are vaguely written, they don’t have very sharp teeth. At the worst an operator faces misdemeanor fines that many consider the cost of doing business, according to Schuler.
In addition, many local sheriffs would rather expend their resources fighting drug dealers. One sheriff commented, “I’d rather use my resources toward that. I won’t say I don’t want to do something about it, but when you try to deploy your resources as effectively as you can, it’s not as high in the pecking order. We really, really hope the legislature will take another look at this.”
Making a violation a felony will introduce serious jail time and fines into the equation, they say.
