A Bill on Sweepstakes Cafes in Ohio

May 28, 2013

Officials in Ohio are setting their sights on dealing with the issue of internet cafes that allow customers to take part in a sweepstakes form of gambling online. Ohio is the latest in a slew of states that have decided to take a proactive step toward dealing with this issue. The bill, if enacted into law, would crackdown on some 600 Internet sweepstakes cafes in Ohio.

Some feel that the bill is unnecessary since Ohio already has laws in place that make Internet sweepstakes cafes illegal. However, others argue that the current law is vague and contains enough loopholes to allow such establishments to flourish. In fact, such cafes have been thriving in Ohio for quite some time.

The bill would not outlaw the Internet cafes completely. Instead, it stipulates that a maximum payout of $10 can be taken from a single machine. The next for the bill is the governor’s office, where Gov. John Kasich will most likely sign it into law.

A bill to shut down cafes that provide sweepstakes games in Ohio

A bill that would allow Ohio to curb illegal gambling obtained legislative approval. The House Bill 7 was passed on a margin of 26-7, and with the governor’s signature, it would be enacted into law. Those who support the bill argue that a startling number of Internet sweepstakes cafes are currently engaging in illegal gambling. While the bill will not shut down these establishments, the restriction on payouts is believed to effectively stop these storefronts’ operations. Attorney General Mike DeWine points out that operations dealing with cash are nearly impossible to regulate. Additionally, many of these establishments also carry out money laundering operations. The bill would take the state a step toward eliminating these illegal activities.

A few Senate Republicans have argued that the bill will not be as effective in shutting down on the illegal gambling industry as some believe. However, Gov. John Kasich is set to sign it once it lands on his desk. Café operators are expected to lobby to overturn the bill in the November 2014 ballots. However, they are unlikely to gather much support. Senate President Keith Faber stated that any sort of referendum support would be shocking.

According to Faber, the supporters and law enforcement officials have asked the Senate to pass the bill without making any changes. He believes that the state lawmakers will continue to deal with gambling issues in the near future. The Casino Control Commission has been getting numerous requests dealing with minors entering casinos. In addition, DeWine has given fraternal and veterans groups until August 1 to prove that their gambling activities are legal. There may also be talks regarding the consolidation of all gambling oversight (which includes charitable gaming, horseracing, lottery, and casinos) under the Casino Control Commission.

Owners of Internet cafes as well as municipal leaders that are involved in collecting fees and taxes from businesses have said that the state should not close down storefronts outright. They should try to regulate their activity. They argue that such businesses provide opportunities for employment and legal entertainment, and that the sweepstakes used in these Internet cafes are used for selling phone cards. Some Senators, such as Bill Seitz, believe that measures to regulate gambling will be as ineffective as they have been in the past. However, others argue that past failures should not deter the Senate from passing legislation to restrict statewide gambling for profit. The House also extended the moratorium of opening new Internet cafes, and approved more stringent registration requirements for Internet café operators.

Sweepstakes games cafes in other states within the US

Ohio is not the only state that is targeting Internet cafes providing sweepstakes. Such establishments are now practically everywhere, and California might be considering legislation to outlaw them as well. Florida is ahead of the pack, having passed anti-café laws in the beginning of 2013. The law has been successful in shutting down many cafes engaged in illegal gambling. However, the law has also has some unforeseen consequences.

Many believe that businesses that have very little connection to gambling might be in danger due to the law. For example, establishments such as Chuck E Cheese and Dave and Busters, may be considered illegal under the Florida law. Additionally, the AARP recently restricted Florida residents from entering any promotions that are based on sweepstakes. The broad nature of law makes it problematic for many businesses. Online poker sites have also been affected by the new law. ClubWPT, one of the few sites that accept players from the US, recently decided to exit the state with the fear of running afoul of the law.

Comparison of Ohio’s bill with Florida’s bill

The broad nature of the Florida bill has had detrimental effects on many businesses. The bill sought to completely outlaw sweepstakes café in an indiscriminate manner. The goal was to make sure that no establishments could take advantage of any loopholes in the legislation. Such measures, however, only invited political controversy.

On the other hand, Ohio has taken a more inventive route toward targeting these cafes. By restricting payouts, they have essentially made it impossible for café operators to make a profit running sweepstakes. This measure should deter café owners from running their business within the state. So, it is expected that the Ohio bill would be more successful in eliminating illegal gambling, provided that businesses do not find loopholes with that bill as well.