The Ohio government wants to put internet sweepstakes cafés out of business as soon as possible. As such, both sides of the state legislature have passed House Bill 7, which will effectively do just that.
The term “internet sweepstakes café” is a bit vague-sounding, so let’s discuss what they are: unlicensed gambling halls. They are often simple storefronts, though sometimes shoehorned into an existing business, in which people can gamble at computers. They get around gaming regulations by claiming to actually be selling internet time or long-distance phone minutes, though nobody actually buys those things at one of these cafés (and in the year 2013, who actually needs those products, anyway)? Once a customer pays for the alleged “product,” he receives “entries” for a “sweepstakes.” He can then take a sweepstakes card or code to one of the computer terminals to see what he has won. Oftentimes, the customer has a couple options at the computer: he can just have it simply tell him what, if anything, he won (called a “simple reveal”), or he can have it display a slot machine or video poker-like animation. Sometimes the displays are interactive, allowing the player to stop the slot reels. Behind the scenes, though, the outcome is already determined once the “game” starts; the animations are just for show.
So, really, they are video gambling parlors. The “entries” are credits for a slot machine. If a player wins, he wins more credits. He can buy more of whatever “product” the café sells for more credits. When he wants to stop playing, he can then redeem his credits for cash, just like at a casino.
Somehow, internet sweepstakes cafés have been able to convince courts in some jurisdictions that they are not gambling operations, even though they clearly are. Some will even give free initial “entries” to patrons so that they can claim that nobody has to pay anything to play.
Governments and law enforcement have numerous issues with internet sweepstakes cafes, such as:
• Owners do not have to go through a vetting process
• The games are not monitored for fairness
• There is no obligation to keep children away
• They do not have to report their financial figures
• They do not pay taxes at the same level as licensed gaming establishments
Interestingly, House Bill 7, which has passed through both the Ohio House and Senate and will soon be on the desk of the Governor, does not outlaw internet sweepstakes cafés outright. Instead, it limits payouts from sweepstakes machines to just $10. Some critics argue that the cafés are already illegal, but those in favor of the Bill say that the law is too vague, allowing the cafés to find loopholes and stay open. The $10 max payout will supposedly discourage people from patronizing the establishments because they would be extremely limited in how much they could possibly win. Thus, as fewer people want to play, the cafés will disappear.
Some legislators also argue that this is just a way for law enforcement to avoid actually doing their jobs and going after illegally operating cafés. A better solution, some believe, would be to properly regulate the betting halls.
