Palm Bay, FL-- Doreen Marceau, 67, a retiree from Massachusetts, invested $20,000 of her savings opening an Internet cafe in June 2009.
In trying to build her business, she offered an online sweepstakes -- giving 100 chances for every hour of Internet time purchased. Customers could see if they won by playing video slot machines online and redeem winning chances for cash prizes of $10, $25 or $100.
Authorities said it looked a lot like gambling, and the city's police department shut her cafe down three months after she opened.
Eighteen months later, the state attorney for Brevard County has dropped the gambling charges for a lesser misdemeanor for not properly advertising her sweepstakes promotion. Marceau accepted the deal this month. And the City Council that had her investigated has decided to make electronic gaming establishments legal.
"It's not gambling," says Marceau, who says she plans to reopen under the new ordinance. "The sweepstakes is just a way to get them in to use the computers."
Palm Bay's debate over Internet gaming cafes mirrors the problems cities and counties across the USA are having. The question is whether the casino-style video slot games are gambling under state law and whether the state allows that kind of gambling.
Keith Whyte, executive director of the National Council on Problem Gambling, says it is gambling.
"What we've seen a lot with these Internet sweepstakes cafes is it's a way to get around gambling laws," Whyte said. "The only reason people are going to these facilities and spending so much time and money is because it's gambling. If it wasn't gambling, it wouldn't be popular."
The assumption, he said, is people are going primarily to gamble and not to use the Internet, make copies or fax documents.
Last year, North Carolina's Democratic Gov. Bev Perdue signed a bill making the 900 or so cafes in the state illegal as of Dec. 1. She has subsequently said she would consider regulating the industry.
William Thevaos, president of the Entertainment Group of North Carolina an association representing Internet sweepstakes centers in the state says regulated Internet sweepstakes could generate $500 million a year for the state.
In other states:
- A bill introduced by Virginia state Sen. Mark Obenshain, R-Harrisonburg, that would make sweepstakes stores illegal was passed by the General Assembly last month. Gov. Bob McDonnell wanted the law to take effect immediately, but the General Assembly turned him down, said Jeff Caldwell, spokesman for the Republican governor. The governor will have 30 days to review the measure before signing it or vetoing it.
Jim Sutherland, a co-owner of Richards Internet Center in Harrisonburg, Va., says he had planned to open a second center in Newport News and had applied for a supplemental use permit. "Then this law came along, and they tabled it," he said.
- Ohio Attorney General Mike DeWine is working with the Legislature and the Ohio Casino Control Commission to license and regulate Internet cafes so people won't be ripped off. "Internet cafes and sweepstakes that are skirting the law are growing in many of our communities," he said.
In March, police in Salt Lake City and Ogden, Utah, raided cybercafes suspected of online gambling. Attorney Elizabeth Dunning has filed a lawsuit on behalf of Blue Sky Entertainment challenging the "fringe gambling" law.
- A federal judge in Texas convicted three men earlier in March of participating in an Internet gambling conspiracy using "computerized gambling machines using sweepstakes to attract patrons under the guise of internet cafes and e-business centers " U.S. Attorney John Bales said.
Even as Palm Bay officials consider legalizing Internet sweepstakes promotions, Florida Rep. Scott Plakon, R-Longwood, has introduced a bill that would make it illegal statewide.
"Anybody that goes into those places is obviously not checking their e-mail or their friends on Facebook," Plakon said.
Danny Black, a regional manager for Allied Veterans of the World, which has 38 cafes in Florida, said customers have the option of going to a quick open page to reveal all their chances at once to see if they won anything. The video games "are a more entertaining way" to find out what you won, he said.
No one in Florida has been convicted of gambling related to running an Internet cafe.
Marceau hopes it stays that way so she can reopen.
"I just want to run my little business, provide Internet and copy services," Marceau says. "I've done nothing wrong."
By Jeff Schweers, USA TODAY