Cafes continued on A4
As Internet sweepstakes businesses continue to proliferate across Ohio, Butler County jurisdictions — concerned the locations will become havens for crime if left unchecked — are taking steps to control them.
Hamilton and Monroe have ordinances restricting where Internet cafes can be located, while Fairfield, Liberty and West Chester townships prohibit them from obtaining zoning certificates and opening.
Middletown City Council has discussed Internet cafes, but has not yet moved to restrict them.
Meanwhile, local owners say the cafes are safe and offer customers incentive to buy phone cards without the risk of losing any money.
Ohio Attorney General Mike DeWine started pushing a year ago to have such sweepstakes cafes limited and licensed.
But the legislation, which was introduced last March, is awaiting review by an Ohio House committee and is expected to be modified.
Internet sweepstakes cafes sell Internet minutes and/or phone minutes. Customers can use the Internet time to play games, where they might receive cash rewards.
DeWine’s office surveyed Ohio municipalities and found 285 sweepstakes locations, up from 200 sites counted by the Ohio Lottery four months ago. DeWine and others think these cafes are a form of unregulated gambling where the odds are not clear. A loophole in the law allows them to operate, DeWine said.
Toledo Municipal Court Judge Francis Gorman ruled in 2009 that these sweepstakes cafes have no element of risk and are not gambling enterprises. The ruling cleared the way for such businesses.
Most of the cafes in Ohio are located north of Interstate 70, according to information included in the survey.
Butler County officials are working to fight an influx locally by either limiting their locations or enacting stiff licensing fees for the businesses, which DeWine calls “consumer rip-offs.”
An Internet sweepstakes cafe opened in June 2011 on Erie Boulevard in Hamilton, and the same company opened another location in Middletown in January, said Roy F. Smith, owner of the company.
Proponents of these establishments argue that the game playing is not gambling because the amount of a person’s winnings are established at the time online minutes are purchased. The only legal gambling in Ohio is through charitable bingo, locations cleared for casino operations, the Ohio Lottery and horse race tracks.
In Hamilton, an ordinance that took effect in March states Internet cafes are permitted only in three areas of the city: community business, limited industrial and industrial zoning districts.
Within those designated zoning districts, the city has placed further restrictions. The business cannot be within 500 feet of a school, religious institution, public playground or library and another Internet cafe. Also, an Internet cafe cannot be within 500 feet of a business that has been issued a liquor permit.
In Middletown, a motion to establish a six-month moratorium on “Internet sweepstakes cafes” in the city was left on the City Council floor last year as two council members — Anita Scott Jones and Josh Laubach — were at odds with the ordinance.
Police officials say the cafe located in the Middletown Shopping Center on Breiel Boulevard has created no police action, city Prosecutor Carrie Carpenter said. But last month, she compared the 24 video terminals to slot machines, “essentially gambling.”
Middletown Law Director Les Landen said he was concerned that Internet cafes could become “a baby casino.”
City Manager Judy Gilleland said the business is on the city’s “watch list.”
In June, Liberty Twp. Trustees approved an amendment to the township’s zoning laws effectively prohibiting “Internet Sweepstakes Cafe” establishments from obtaining zoning certificates and opening.
The moratorium was declared in February by trustees, suspending the issuance of certificates to such businesses until research was conducted into how the businesses operate and how zoning laws would apply to them.
Research by the trustees found that the businesses may tend to increase crime rates, contribute to financial hardships for low-income customers and have a negative effect on property values, according to the resolution.
Late last year, Monroe City Council approved legislation that put tight restrictions and heavy financial disincentives on Internet gambling cafes if they wished to open in the city. These cyber-cafes, officially known as “entertainment device arcades,” are considered quasi-gambling establishments where patrons buy an Internet access card that acts as the entry point to a lottery sweepstakes.
Monroe’s new ordinance calls for the establishment of a three-member regulatory board to oversee the cyber-cafes. The board would be composed of the mayor, city manager and city finance director. Each cyber-cafe would also have to pay a $3,500 licensing fee as well as a $200 semi-annual fee for each machine in the premises. These fees are less than what Mason charges ($5,000 per year plus $30 a month).
In March 2011, DeWine announced his support of Internet Cafe oversight legislation in House Bill 195. Among other things, it would set license requirements, limit locations, cap the worth of merchandise winnings and prohibit the use of cash prizes. City laws would be pre-empted by the state law.
‘No skin in the game’
Smith, the owner of Internet cafes in Hamilton and Middletown, said the sweepstakes are not gambling because they have a predetermined outcome, and the phone cards maintain their value after the game is played.
“You don’t have any skin in the game,” said Smith, the owner of Internet Sweepstakes Cafe in Middletown and Erie Sweepstakes and Phone Cards in Hamilton. “It’s not gambling. It’s not a game of chance.”
He called the cafes “Cheers without the beer,” and added they’re misunderstood by officials.
He said the odds of winning are posted at each site and patrons, typically middle-aged, are treated to free beverages and food in a safe environment.
Opponents of the Internet cafes worry they will attract unsavory clientele and increase crime.
Smith defends his establishments: “We are not doing all the bad things that we are accused of doing.”
Contact this reporter at (513) 705-2842 or rmccrabb@coxohio.com.
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