INTERNET CAFES GAMBLING
Wednesday, 31. October 2012
Updated: 8:23 a.m. Wednesday, Sept. 14, 2011 | Posted: 10:12 p.m. Tuesday, Sept. 13, 2011
As Internet cafes spread, bans considered; owners say they’re just offering ‘sweepstakes’
By Andrew Abramson and John Kennedy
Palm Beach Post Staff Writer
At struggling shopping centers in Palm Beach County and across Florida, a new type of tenant is promising a way for customers to relax, check their email and maybe win a few bucks.
These Internet cafes – which some dub “casinos on the corner” – are flourishing in Florida’s punishing economy.
An estimated 600 to 1,000 cafes are operating in the state, part of what critics call a murky $1 billion industry accused of exploiting gambling laws and preying on those who can least afford to lose cash.
“They’re the crack cocaine of gambling,” said state Rep. Scott Plakon, R-Longwood, who is sponsoring legislation to outlaw Internet cafes.
Many law enforcement and local government officials also want the cafes closed, or at least tightly regulated. Industry leaders are pushing back with lavish contributions to charities, a muscular lobbying force in Tallahassee and rapidly growing influence.
“Our coalition members maintain they are acting within the law,” said Sarah Bascom, a Tallahassee spokeswoman for an industry group that includes five major cafe owners and software producers. “Some changes to state law may be necessary. But we will not support a ban.”
At Palm Beach Internet Connection, on South Military Trail near West Palm Beach, Dorothy Brown, 62, said she doesn’t get the fuss.
“I’d rather come here than go all the way to the casino,” Brown said. She draws disability payments, but she said she once won $400 playing one of the cafe’s computer games.
“They give you money when you win. And it’s something to do,” she said. “I’d be doing nothing if I was at home.”
At World Games in Greenacres, Claire Greenberg said the convenience of the Internet cafes is a big draw.
“The Hard Rock is an hour away,” Greenberg, 62, said of the Broward County venue. “Here, it’s so close. If I’m going food shopping or going to Walmart, I’ll stop here.”
How games are played
Cafe owners say they are offering a kind of “sweepstakes” promotion, which is legal under Florida law.
Players purchase Internet time – $15, $25, more or less – in the cafes. They can browse the Web if they want. But most play what are billed as free sweepstakes games, in which computer credit or time is won. It can be redeemed for payouts of as much as a few hundred dollars.
Customers bet credits that are valued at between 25 cents and $5 per play. In a wide variety of games on the computer screen, players click a mouse to match fish, four-leaf clovers, cherries and other objects to win.
But it’s not gambling, cafe owners say.
The industry coalition fighting Plakon’s push to ban the games has issued a release that insists electronic game promotions are legal because players don’t pay for the chance to win a prize.
Instead, electronic game promotion entries are free as a bonus for buying a product or service, the industry says.
But Brian Kongsvik, a director at the Florida Council on Compulsive Gambling, said the industry has only found a way to nuance state gambling laws. Its growth and its targeting of working-class neighborhoods also are key threats, he said.
“How many of the people that come to these cafes are going to make their way to a casino or a track?” Kongsvik said. “But these places are right down the street. You can go four or five times a week, and that’s how you run into financial trouble.”
Arnie Wexler, a compulsive-gambling counselor from Lake Worth, said he has been advising a Palm Beach County woman who recently received a $22,000 second mortgage on her home to help cover gambling debts. Internet cafes were part of her addiction, he said.
“I’m sure when people run out of money at these places, they’re going to the ATM next door in the shopping mall to get some more money to play,” said Wexler, who formerly ran New Jersey’s counseling program for compulsive gamblers.
Old laws, new industry
Since emerging in Florida in 2006, Internet cafes have evolved into a $1 billion industry, said Marc Dunbar, a Tallahassee lawyer who teaches gambling law at Florida State University and lobbies for the Gulfstream Park horse track in Broward County.
The cafes are in more than 20 states but are most dominant in the South, he said. And they have found a way to navigate state gambling laws that haven’t kept up with advancing technology.
“Our statutes were created in the 1970s and 1980s – pre-computer,” Dunbar said. “It’s a mess.”
But industry leaders also are shrewd political players.
Allied Veterans of the World and Affiliates Inc., based in St. Augustine, operates Internet cafes at 39 sites around the state, mostly in North and Central Florida.
It claims to have contributed more than $2.5 million to veterans and first responders in the past year, although documents submitted to the state’s Department of Agriculture and Consumer Services, which regulates charities, provided no detail of the donations.
Lt. Gov. Jennifer Carroll also reported on her latest state-required financial disclosure form that a public relations firm she and her husband owned, 3N and JC Corp., had an Allied Veterans site as its major client, although she claimed less than $1,000 in net income from the company.
“She no longer has any affiliation with them,” said Lane Wright, a Scott spokesman.
Another major industry player, the Children’s Cancer Cooperative, is a South Carolina nonprofit corporation partnering with 105 Internet cafes across Florida. Its cafes use software supplied by another gaming company, Arcola Systems, which is part of the coalition fighting Plakon’s legislation.
The Children’s Cancer Cooperative draws a portion of the revenue from the Florida cafes, said Melissa Barfield, director of the organization. Donations handed out by the cooperative provide a window into the kind of cash flowing through the cafes.
The cooperative’s contributions include $1 million to Wolfson Children’s Hospital in Jacksonville and $100,000 to the Tallahassee Memorial Healthcare Foundation, whose president, Paula Fortunas, said it “came out of the blue. But it made a really positive impression.”
The contributions also could help shape the industry’s future in Florida.
Sen. Mike Fasano, R-New Port Richey, is preparing legislation that would allow Internet cafes to endure – but be subject to state and local regulations, a measure he also sought to pass last year.
Plakon and the House, however, seem intent on demanding a ban, Fasano said.
Meanwhile, Fasano said the Children’s Cancer Cooperative came through this summer with a “major contribution” that allowed the Pasco Association for Challenged Kids to continue a camp it runs in his district.
“We heard they just wanted to do that,” Fasano said.
Governments start to act
Barfield, of the Children’s Cancer Cooperative, downplayed the potency of the cash.
“Every one of our cafes is independently owned and operated,” she said. “We just happen to be the lucky charity. But I assure you, no one is getting rich around here.”
With no state action, and the cafes spreading across Florida, local governments have been trying to take action.
Jacksonville has imposed fees and limits on the number of cafes that can operate there. Tallahassee recently enacted a similar ordinance.
Polk and Jackson counties have shuttered cafes as illegal gambling, and North Palm Beach is among a few cities, towns and villages that have enacted moratoriums.
The industry is fighting in court a Seminole County measure aimed at banning the cafes. And amid the action by local governments, critics say Florida lawmakers need to enact a statewide standard.
But for now, at World Games in Greenacres, the games go on.
“I don’t expect to make any money,” said Jack Hayes, 72, of Boynton Beach. “It’s entertainment. Odds are you’ll lose.”
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