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Internet cafes skirt gambling regulation - Columbus Dispatch

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If you want to gamble in Columbus, you don't have to wait until the casino is built. And you won't have to stray far from Broad and High.

Within a half-mile radius of I-70 and Alum Creek Drive, there are three "Internet cafes" with machines that play like slots and pay off in cash. A little further out on James Road, Lucky Internet Cafe recently opened in a former neighborhood grocery store.

Another such venue is in a flea market on Livingston Avenue. Yet another is advertised as opening soon in an old Sun TV building.

There are two dozen - and probably more - "Sweepstakes" or Internet game parlors throughout Franklin County, according to Attorney General Mike DeWine's office. Statewide, there are hundreds with thousands of machines.

"I've seen them everywhere in the state," said one of DeWine's investigators who The Dispatch agreed not to identify. "They are in gas stations and strip malls ... all the way up to game rooms that have hundreds of machines.

"I've played these machines in people's houses," the investigator said. "There were a handful of machines set up in a woman's living room. She paid off in her kitchen."

The thing is, they are legal in Ohio - sort of.

"There's no law that was designed for them. They kind of morphed out of other ways of making money," said DeWine, a Republican who took office in January. "Every other form of legal gambling in this state is somehow regulated. This is not."

New game locations are opening all over Ohio, mostly, but not exclusively, in urban areas. "It's like bailing out the ocean," DeWine said. "They're everywhere."

Working with Republican state Reps. Marlene Anielski of Walton Hills and Nan Baker of Westlake, DeWine is backing proposed legislation to bring the unregulated world of "sweepstakes" games and Internet cafes under control of the Ohio Casino Control Commission.

The proposal would require games to be examined, certified and stamped by the commission. Operators would have to be licensed and would be limited to no more than five games at a single location. Violators would face criminal penalties. Fees that operators might be charged were not specified by legislators.

The games go by different names - none of which mention gambling: Buckeye Internet Cafe, Chatterbox, Lucky Dog, Players Club, Sky's Net, Treasure Chest. Some offer business services, such as Internet connections and fax. Most provide customers with free food and non-alcoholic beverages.

Businesses contacted by The Dispatch would not comment or were unavailable.

The state investigator who has visited many of the game parlors under cover said customers purchase Internet time or a phone card. They use the cards on machines, usually computers and monitors which are loaded with poker or slot-machine matchup-style games.

Players bet points on their card until they run out. They then can cash out their winnings, if they have any, or transfer them to continue playing. Winners are pre-determined and are not based on skill, state officials said.

Winnings can be taken in cash or merchandise such as car wax, cans of coffee or gas cards.

"Nobody is there playing for the jumbo pack of paper towels," the investigator said. "They're there to win cash."

Much like pay-day lenders, Internet cafe businesses are opening in transitional neighborhoods. That worries advocates for the poor and seniors, two groups that often fall prey to gambling schemes.

"My concern is they're locating in areas where people have inadequate income and are desperate enough to gamble," said Cathy Levine, head of the Universal Health Care Action Network of Ohio. "They're clearly not marketing to people with discretionary income."

Indeed, many of the customers DeWine's investigators see while undercover are senior citizens, people in lower or fixed incomes and the disabled.

Rep. Anielski, co-sponsor of the Internet cafe legislation, has done her own undercover work, visiting 10 sites in four counties, including Franklin, over the past month.

"In one place, I was put on a waiting list because there were so many people playing," she said. "They had free pizza, soft drinks, hot coffee and an ATM machine."

Anielski said one location had 62 machines; the least she saw was 20.

She said the proprietors made it clear they understand they are skirting, if not outright defying, Ohio law.

"They were pretty open with me. This is what they were doing so they can get around the laws of Ohio and don't have to pay taxes.

"Some of the people were there, they would tell me, 'Don't keep a lot of money on your card because you never know when the state is going to come in.'"

Pete Thomas, head of the charitable law section in the attorney general's office, has a blunt warning for those visiting the cafes.

"You're walking into a real potential scam. You don't know the odds of winning or losing. It could be 1 in a million. You don't know if the operator is really paying out. A lot of people are getting ripped off."

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Source: http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFVk0l9JM2dUkG6H8UovFIM2u5RFA&url=http://www.dispatch.com/live/content/local_news/stories/2011/03/27/internet-cafes-skirt-gambling-regulation.html?sid=101

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