Hearings Begin on State Bill Which Would Effectively Close “Internet Cafes”

Ohio Attorney General Mike DeWine told an Ohio House committee Wednesday that internet sweepstakes cafes are ripe to become dens of criminal activity.

“I will guarantee you there is money-laundering, and I will guarantee you there is organized crime,” DeWine said, testifying for a bill that many say would drive the cafes out of business.

DeWine, who showed an undercover video shot inside one of the businesses in Columbus, said the lack of regulations for the 800 or so cafes in Ohio make them prime opportunities for crime and corruption. He told committee members in the packed hearing room that he could not fully brief them at a public meeting, but he is certain that at least some of the parlors consistently break the law.

A Northeast Ohio caf owner said DeWine’s claim is an unfair portrayal of his industry, and he disputed assertions that the sweepstakes offered by the cafes are gambling.

A nearly identical bill died last session after it passed the House, but lawmakers quickly reintroduced it in January. If passed, sweepstakes prizes at cafes would be capped at $10, and cash giveaways would be prohibited.

The cafes sell Internet and phone time, but the controversy stems from cash-prize contests included with those purchases. Winners are predetermined, but customers can use computers that resemble slot machines to find out if they’ve won.

Rep. Matt Huffman, a Lima Republican, said his bill is not a question of regulation or elimination — it’s a question of legality. If these parlors are allowed to legally participate in for-profit gambling, then Ohio would be obligated to end all restrictions on gambling — otherwise it’s a double-standard, he said. Casinos and racetracks are taxed and heavily regulated.

“I don’t want anybody to misunderstand us,” Huffman said. “As painful as this is for me to say or for us to hear, this bill will by-and-large put most of the entities we call ‘sweepstakes parlors’ out of business.”

Rep. John Adams, a Sidney Republican, disagreed with Huffman and said the contests are not gambling. The bill “redefines” sweepstakes to outlaw Internet cafes, he said.

McDonald’s, for example, often offers sweepstakes prizes, but Huffman said the fast-food restaurant is not comparable to the cafes.

“No one goes into McDonald’s … and spends $5,000 on hamburgers to pull little tickets off to see if they win money,” he said.

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