Pew States – Many Internet cafes that have popped up in suburban strip malls and gas stations offer something more than coffee and access to the Web and email. Known as Internet sweepstakes cafes, they sell time on computers that can have the look, sound and feel of slot and video poker machines, sometimes with cash payouts for winners.
State and local authorities say the operations are illegal gambling, but shutting them down hasn’t been easy.
More than $10 billion in revenue a year is the incentive to stay in business for these storefronts, numbering in the thousands. For some gamblers, the allure of cybercafe gambling is that the facilities are as near as the local mall or service station.
Customers purchase time on a computer or in some cases, long-distance phone time, and are given free entries into a “sweepstakes.” They then go online and play a game that looks like slots or poker to see if they won.
Some in the gaming industry say this is no different from playing McDonald’s Monopoly game, which is a sweepstakes. Customers who buy a Big Mac or chicken McNuggets get a free entry into the game, which offers prizes.
States disagree. States largely allow McDonald’s-like sweepstakes for marketing purposes, but consider many of the Internet sweepstakes cafes as fronts for illegal gambling.
Ohio, Florida and Mississippi passed laws in 2013 banning Internet sweepstakes cafes, and similar bans are pending this year in Connecticut and California. And yet the operations still exist in those states that prohibit it. “It’s foolish for anybody to think they are not going to come back in a different form,” Ohio Attorney General Mike DeWine said at a recent gathering of attorney generals in Washington, D.C.
The reason? “There is so much money involved … tremendous amount of money, hundreds of millions of dollars,” DeWine said.
And since these Internet sweepstakes cafes aren’t regulated, states aren’t collecting tax revenue on any wagering. The 22 states that have legal commercial casinos collected $8.6 billion in state and local tax revenue in 2012, according to the most recent information available from the American Gaming Association.
