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Monday, January 24,2011

Internet/sweepstakes cafés

City planners express gambling concerns

By David DeWitt
The Athens Planning Commission is in the process of reviewing the possibility of regulating so-called “sweepstakes cafés,” at the request of City Council's planning committee.

One planner who supports such a regulation says the Planning Commission hopes to head off potential negative effects associated with such establishments.

This is following a nationwide pattern of municipal governments taking action against these businesses for essentially sidestepping regulations on gambling. Last summer, Cleveland Police officers raided one of these businesses and shut down its operations after accusations of gambling arose.

The businesses in question refer to themselves as “internet cafes” but operate in such a way that customers buy computer time, then enter sweepstakes on gaming websites. The idea is that technically they’re not paying to play a game to win money, which would be illegal.

After players “buy time,” they can win credits in various online sweepstakes that can then be transferred back to cash. Winners are based on predetermined sweepstakes systems instead of by chance, thereby circumventing the current gambling laws.

Planning Commission member Nicholas Bitner said in the group's meeting on Wednesday that City Council Fourth Ward member Christine Fahl, who chairs City Council's planning committee, had asked the body to review and make recommendations regarding possible regulation of these establishments.

City Planner Paul Logue presented the commission with various pieces of literature and information about these cafes and what is going on in other parts of the state.

He said that a court case in either Lucas County or the city of Toledo ruled that these are indeed legal businesses and do not meet the definition of a gambling parlor.

“What they are advertising versus what they are doing appear to be two different things, to give you an idea of why a lot of cities are addressing this,” Logue said.

He pointed to laws adopted by North Royalton in northeast Ohio to address these businesses. Various cities have enacted ordinances addressing these establishments both through their business and zoning codes, Logue said.

North Royalton, he said, created distance requirements from churches, schools, playgrounds and the like. The best practice identified at a seminar on the subject, he said, recommends both business and zoning code regulations.

Logue said that the businesses limit the number of websites a person can go to when they visit a café to four or five different sweepstakes sites. For instance, customers normally can’t check their email.

“You buy minutes on sort of a calling card and you use those minutes to access the sites,” he said. By winning, he said, minutes are added back onto the card, which can then be exchanged for prizes, cash or otherwise. “Or you might lose it all. You put $20 on, and then five minutes later your $20 is gone.”

Athens Mayor Paul Wiehl said that it's tricky to regulate the businesses.

“It's still legal, technically, to do this,” he said. “What we're trying to say is, OK, can we actually restrict the locations and the prevalence of this.”

Logue said that from a legal sense, if the business is legal to operate, a municipality can't zone it out of existence.

“So it would be a question of location,” he said. “You have distance requirements, etc. It's a business, so clearly it can't go in a (residential) district.”

So far, no developers have said they plan to open one of these businesses in Athens, but the goal of planners, according to Fahl, is to be proactive about how the city deals with them before any of them start popping up around town.

In November 2009, Toledo Municipal Judge Francis X. Gorman ruled that an East Toledo sweepstakes cafe, the Players Club, did not violate Ohio gambling laws. This is the ruling that Logue was referring to. There is no statewide regulation on the cafes, which leaves the decision as to whether or not to allow the establishments or to establish regulations up to individual cities.%u2028


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