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Ohio Lawmakers Look At Tax As Option To Internet Cafes

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Ohio lawmakers may be about to suppress hundreds of Internet “sweepstakes” cafes that the state contends are unlawful gambling parlors in cover up.

The General Assembly may use the lame-duck legislative session’s waning days to send out Gov. John Kasich a bill to slim, if not close, the loophole in Ohio’s apparently ever-changing gambling law that has allowed such companies to proliferate.

Attorney General Mike DeWine would certainly like an outright restriction but, missing that, invitings strict laws on their procedure.

“There stop 800 gambling facilities with no policy,” Mr. DeWine pointed out. “The status of notting doing anything makes no feeling. There is no additional type of gambling exposed in the state of Ohio that is not totally managed by the state. … We do overview checks on managers and the people who work there. We comply with the money to see where the money’s going, exactly what the payout is. These are all standard points finished respect to some other forms of gambling.”

Such companies commonly offer prepaid phone cards or Internet moments to customers in exchange for plays on onsite electronic “sweepstakes” games that provide money payouts or various other prizes.

Earlier this year, lawmakers established a moratorium, by means of June 30, 2013, on the opening, growth, or moving of sweepstakes cafes, to at least briefly stop their spread while the state determines exactly what to do. The law called for existing facilities to sign up with Mr. DeWine’s office, and a shocking 819 did– 49 of them in Lucas County.

State Reps. Louis Blessing (R., Cincinnati) and Matt Huffman (R., Lima) recently introduced House Bill 605 to a minimum of remove the profit incentive behind such businesses. But in spite of those lawmakers’ roles in House authority, Mr. Blessing strained there is no agreed-upon foreign language entering legislative hearings.

The cafes “are cutting in to the state’s revenues from casinos and the tracks– not simply the state however all those other groups that get cash from those bodies as pointed out in the constitution,” he stated. “I’m a pro-gambling man, however I do not desire it on every road edge. It’s a complication.”

The two-year legal session will conclude before the year’s end. Any bills not passed at that time will certainly have to reboot the process following year.

Mr. DeWine had desired lawmakers to cope with the issue when they passed far a lot more sweeping legislation this year influencing casinos, racetrack slots, horse auto racing, lottery, and additional legal forms of gambling in Ohio. But lawmakers were stymied pertaining to exactly what to do and chosen the moratorium instead.

Regional law enforcement agencies have actually gone after such cafes in the past times, yet they’ve in some cases had difficultly making charges stick as magistrates mention defects in existing law as it applies to sweepstakes.

In 2009, Municipal Judge Francis X. Gorman, who now is resigned, threw away offense gambling fees from Robert Dabish, manager of the Players Club Cafes in East Toledo. The Main Street company is one of four Players Club Cafes that Mr. Dabish possesses in Toledo and Oregon that he has actually given that signed up with the state.

“The basis of the not-guilty finding was that there was absolutely nothing at risk,” claimed Jon Richardson, Mr. Dabish’s attorney in the case. “Gambling is determined as needing to have factor, threat, and perks. When a client entered the Internet cafe, he bought long-distance telephone minutes that he cannot drop no issue exactly how the game ends up. There is no danger of loss. You cannot have gambling if you can not lose.”

House Bill 605 would certainly restrict the sale of pre-paid phone cards, Internet time, or some other products at above-market prices to consumers in exchange for plays on electronic games that provide money payouts or some other prizes, also if the outcomes of those games are predetermined.

It also would prohibit clients from utilizing more than 50 percent of such phone cards’ value at any kind of one area.

Mr. Blessing said it would certainly be “nigh near inconceivable” for such cafes to lawfully offer gambling under such conditions. The concept is to follow them without forbiding valid sweepstakes, such as McDonald’s favored Monopoly game.

The bill will empower the Bureau of Criminal Investigation and Identification to examine what would be designated criminal business under the bill, along with call for the Ohio Lottery Commission to create regulations of what composes a “plan of possibility.”

The Fraternal Order of Police of Ohio last week urged lawmakers to seek a statewide restriction.

“We believe these establishments are, at greatest, unlawful gambling operations, and at worse fronts for additional much more severe criminal activity,” FOP President Jay McDonald filled in a notice to Mr. DeWine and major-party legislative innovators.

“Despite demonstrations to the contrary, encounter has actually presented us that exactly what happens inside Internet gambling cafes is, in reality, gambling,” he composed. “Local police force has no choice however to handle it as such.”

In its personal notice, the Ohio Prosecuting Attorneys Association also backed a straight-out ban, not regulation.

Law “thinks ongoing operation, and we believe that policy would certainly be inconsistent with the truth that they are illegal under existing law,” created John Murphy, the organization’s exec supervisor.

Sweepstakes Cafes Regulation And Tax Being Considered By City Council

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Fostoria City Council started looking at an ordinance that would offer the city the authority to moderate “sweepstake terminal cafes” Tuesday.

Called for by Councilman Thomas Lake, the ruling looks to moderate this company type to “ensure that such businesses are in compliance with the laws of the State of Ohio and the City of Fostoria.”

The ruling further looks to moderate these businesses to prevent “safety and fire hazards, disturbances, disruption of pedestrian traffic, disorderly assemblies, theft of personal property, illegal gambling and truancy with the city.”

If the ruling passes, the city would utilize city workers to supervise the affair of such companies to guarantee they are in conformity with federal, state and local laws.

A sweepstakes terminal cafe license would definitely even be needed to perform or run such a business within city limits, and would certainly be provided by the Safety Service Director.

An initial studying of the ruling was listened to Tuesday.

Individually, council took on a regulation authorizing Law Director Tim Hoover to carry out a last settlement deal included in a judgement entry in the case “the City of Fostoria, Ohio vs. Codding Properties, LLC” in Seneca County Common Pleas Court.

The case, submitted on May 23, 2012, additionally calls by name Norfolk-Southern Railway, CSX Transportation and Seneca County Treasurer Damon D. Alt as co-defendants.

Hoover refused to discuss the pending litigation, but explained it was a peaceful title meet, or a suit submitted to develop property of real estate.

Councilwoman Teresa Lee did without the vote due to a possible conflict of interest. The claim refers to estate at 401 Columbus Ave., commonly known as the Rail Park, and Lee helps on the Fostoria Rail Preservation Society board.

During his mayor’s report, Eric Keckler reported the city will definitely observe Patriot’s Day with a 9/11 remembrance service at 1 p.m. Tuesday in the Key Bank parking area.

Before legislation, Hoover asked for an executive session to review property acquisition and pending litigation.

In new business, council:

- Adopted a resolution accepting the amounts and prices as identified by the Budget Commission authorizing the essential tax levies and certifying them to the county auditor. This resolution is proposed per year by the director of finance.

- Heard a very first studying of a statute amending Section 941.03 RATES, Section 941.09 TAP-IN CHARGES and Section 941.10 DUMPING FEES of Chapter 941 of the Codified Ordinances of the City of Fostoria.

- Adopted a regulation to modify the traffic control map, marking Thomas Street, east of Union Street, a one-way street (westbound) from 2-4 p.m. for all motor vehicles, apart from college buses, on school days throughout the university year of Fostoria City Schools.

- Heard a very first reading of a ruling to repeal Ordinance 2010-04 worrying the sale of realty, generally known as 0 E. Center St., Fostoria. This residential property is a city-owned car park.

In old business, council:

- Adopted an ordinance to change the Use Table included in Section 1127.01 (C) of the Codified Ordinances of the City of Fostoria.

- Heard a 2nd studying of a resolution authorizing the mayor to file an application to the Hancock Park District to take part in the 2013 Community Parks Improvement Grant Program.

City council will meet again 7:30 p.m. Sept. 18 in council chambers.

Internet Sweepstakes Cafes in Toledo Qualify For Licenses

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The target date for Internet “sweepstakes” cafes in Toledo to qualify for licenses under a new city statute reoccured Wednesday with just a handful of businesses providing their documentation to abide by the law.
Scott Searle, management services officer in the city’s Department of Finance, said just five cafes away from a list of about 16 had actually applied for running licenses as of 4 p.m. Wednesday. Councilman D. Michael Collins, who financed the legislation, has actually approximated there are about 28 Internet cafes in Toledo.
Mr. Searle pointed out the city will still accept applications after the deadline, yet cafes could be subject to charges. He didn’t state just what those penalties would be.
However, Mr. Collins stated he will pursue to close down any companies who fall short to administer and pay for their licenses by Sept. 30, when the cash is due.

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“If there isn’t total agreement by the end of September, at that point it would be my hope that the City of Toledo would by that time cease their affairs,” he said.
Cafe owners are demanded to pay a $ 5,000 operating cost annually, along with $ 200 every machine, to the city for the certificate.
Joe Rigali, who has Kings Internet Cafe in South Toledo, stated he had provided his permit application and was surprised many additional entrepreneurs had not. He stated the city needs to shift without delay to crack down on those that aren’t satisfying the law.
“If the City of Toledo has the authority to pass it and make it legislation at that point I sure would expect they will have the authority to implement it, and heavy handedly as well as quickly,” he said. “There’s no excuses.”
Mr. Rigali said the new law is harming his company. He stated he is lessening personnel and shifting 2 thirds of his machines up to Michigan to avoid paying a few of the Toledo fees.

Registered Ohio Internet Sweepstakes Total Increases After First Number

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State officials as well as lawmakers said they will certainly focus on moderating Internet cafes after studying the number of questionable establishments is much higher than formerly expected, especially in southwest Ohio.

The state attorney general’s office obtained affidavits from 667 Internet cafes, additionally called Internet sweepstakes companies, it announced this week. That was far greater than the estimated 280 that were mentioned in a state survey earlier this year accompanying a new law that specified a moratorium on new cafes as well as needed existing cafes to sign up with the state.

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There are at the very least 66 Internet cafes in Butler, Champaign, Clark, Greene, Miami, Montgomery and Warren counties, a 371 percent boost from the 14 approximated earlier this year.

The greatest variations were viewed in Montgomery (29 more than previous estimate of 5) and Clark (18 beyond previous appraisal of four).

A majority of the cafes, which allow customers to acquire phone or Internet cards and use the points on terminals that offer games, are located north of Interstate 70 as well as are prominent in the Cleveland, Akron and also Youngstown spots.

Countless area municipalities have generated legislation pertaining to Internet cafes, however this week’s affidavit count offers the first precise picture of the Internet cafe landscape in Ohio.

Attorney General Mike DeWine has pushed for higher regulation of the cafes. On the other hand, Internet cafe operators have actually argued that their establishments are legal and deliver customers with a cost-effective amusement alternative.

“Ohioans presently have no way of understanding that these games are exactly what the cafes report them to be or if they are being absolutely swindled by the managers,” DeWine pointed out in a news release.

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Saying they are shocked by the high totals, some lawmakers will turn attention to promoting legislation to govern as well as license Ohio’s Internet cafe sector. 2 bills that might establish laws for the cafes– one in the Ohio House and yet another in the Ohio Senate– are in the early stages of review.

Some have called the cafes forbidden gambling ventures, yet proponents say their games are similar to McDonald’s Monopoly or other sweepstakes.

“Call it just what it is, it’s gambling,” pointed out state Sen. Joe Schiavoni, the sponsor of the Senate bill that would certainly moderate Internet cafes. “People are going in there to attempt to earn cash, not to get a phone card.”

Schiavoni worried that legislation would not intend to shut the businesses however discover which ones are operating inappropriately and best inform customers about where the money goes and their possibilities of success with the games.

In a state gambling environment viewing a rise in casino and also racetrack slots activity, Schiavoni pointed out the Internet cafes must be just as moderated as those other ventures, even as they deal with more competitors from the larger ventures.

“It’s my point of view that most individuals believe there must be some law,” he pointed out. “It’s simply how to do it in a means that is practical as well as acceptable.”

How Many Ohio Internet Sweepstakes Cafes ? New Number Is 770

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The due date to submit those affidavits was this previous week. The last tally: 667 gaming parlors, operating outside of state law, with no checks or balances or almost anything to guarantee they’re not swindling the Ohioans who frequent the premises.
The end result was greater than two times the estimation Lawyer General Paul DeWine had actually furnished earlier in the year, as element of his continuous telephone calls on the legislature to do something to quit the business expansion of these parlors and need such locations to get state licenses as well as be subject to some other gambling laws and also requirements.
Three northern Ohio counties– Cuyahoga, Lorain and also Lake– accounted for a blended 211 Internet cafes. Fifteen others, consisting of Stark, Trumbull, Mahoning, Summit and also Portage, had double-digit websites.
Twenty-eight of Ohio’s 88 counties had no signed up places.
It’s a winner that there are possibly a lot more of these companies that either failed to remember to subscribe or didn’t learn about the need.
Parlors began starting outlet in earnest after the state cracked down on skill-based gaming, governing jackpot values and positioning some other restrictions on such operations to stop the proliferation of slot machine-style gambling that was taking place at the time.

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Yet Internet Cafes proprietors determined away to carry on supplying electronic gaming that, adversaries say, is incredibly like slot machines.
Legislation has been offered in both the Ohio House and also Senate that would definitely require sweepstakes parlors to fulfill gaming procedures equivalent to those in location for casinos, but those statements have gone no place over the previous year.
That seems odd, offered the proceeding pricing constraints encountering the state and the prospective money-flowing tap that moderated Internet cafes would supply to the state coffers.
Yes, people who check out these businesses are adults. They could spend their funds anyway they choose within the confines of the law. If they desire to dump bucks into the wallets of parlor operators, so be it.
However Ohioans should be aghast that that legislators have not done a little something to guarantee these companies aren’t swindling citizens.
“These internet cafes are growing at a disconcerting price, and also I once again am supporting the Ohio General Assembly to function swiftly to govern them with the same analysis as some other kinds of gaming in Ohio,” DeWine said in a discharged statement. “Ohioans presently have no means of understanding that these games are just what the cafes state them to be or if they are being completely swindled by the managers.”

Ohio has 667 Internet cafes with games, attorney general reports

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COLUMBUS (AP) — Attorney General Mike DeWine says Ohio has 667 Internet cafes, or more than twice the state’s earlier estimate for the “sweepstakes” businesses, which offer games functioning like slot machines with cash prizes.

The new count is based on affidavits submitted by businesses under a law that created a one-year moratorium on new Internet cafes, where customers can play largely unregulated games. Customers pay for Internet time or phone cards and use them to bet points on computers loaded with games such as poker.

DeWine is pushing lawmakers to enact more regulations for such facilities. He says the cafes could be generating hundreds of millions of dollars and there’s no way to track where that money goes.

He says the cafes are primarily found in the northern half of the state.

http://morningjournal.com/articles/2012/07/13/news/doc5000090a05381629560194.txt

State counts 667 — not 280 — Internet cafes

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COLUMBUS — Ohio Attorney General Mike DeWine reports his office has counted 667 Internet and sweepstakes cafes in the state, up from 280 counted in March.

The businesses, including 10 in Sandusky County, filed affidavits with DeWine’s office as part of the state law signed by Gov. John Kasich June 11 that placed a moratorium on any new cafes.

“These Internet cafes are multiplying at an alarming rate, and I again am encouraging the Ohio General Assembly to act swiftly to regulate them with the same scrutiny as other forms of gaming in Ohio,” DeWine said. “Ohioans currently have no way of knowing that these games are what the cafes report them to be or if they are being completely ripped off by the owners.”

The businesses in Fremont have been in the news lately after city police in January raided three such establishments, resulting in several criminal charges against owners and employees.

One of the Fremont owners has agreed to plead no contest to a lesser charge. All other criminal charges have been dismissed and Fremont City Council has passed an ordinance to regulate the businesses locally.

Any Ohio sweepstakes businesses open before the governor signed the law in June were allowed to stay open, as long as they reported details about their operation to the state by Wednesday.

Two bills aimed at passing statewide regulation of the industry are currently pending in the Ohio General Assembly, both of which the attorney general has supported.

Email Mark Tower at mtower@gannett.com

http://www.thenews-messenger.com/article/20120713/NEWS01/120713001/State-counts-667-not-280-Internet-cafes

North Carolina considers “Sweeps Tax” to fund educational funding deficits

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 New tax would go toward education

RALEIGH, N.C. — Thursday in North Carolina, Governor Beverly Perdue requested that the state begin regulation and taxation of web sweepstakes gaming in order to produce revenue for public schooling.

Cafés that offer patrons a chance to play sweepstakes style games in exchange for the purchase of Internet time or phone time have been a scourge for North Carolina lawmakers for year.  Most recently, the North Carolina Court of Appeals struck down yet another attempt to legislate against businesses’ constitutional right to operate them.

That issue will be taken up to the NC Supreme Court.  However, Perdue has recently decided that the need for additional educational funding has forced her hand, and that she now considers sweepstakes cafés as a potential revenue source.

In a recent news conference, Perdue expressed that her distaste for the machines remains, but that in the absence of their illegality, she believes that they should be taxed and regulated quite heavily.  She also noted that other municipalities have already begun to tax and regulate such machines.

Recent statistics from North Carolina Education Lottery indicate that the state stands to gain in the ballpark of $350 million during the initial year that they begin to tax sweepstake cafés and that by the year four the revenue may increase to $576 million by the fourth year.  Another study indicated that $300 million yearly revenue could be gained by taxing sweepstakes games, but some researchers state that this number may be skewed.

Representatives from the sweepstakes games industry applauded and embraced Purdue’s suggestion of taxing their industry.  However, some citizens and lawmakers are less hesitant to embrace the plan. Casey Rooks, spokesperson of the Internet Sweepstakes Network commented “this is a positive step in the right direction and we are overwhelmed and enthusiastic about providing tax revenue that go toward educating our children.”

Critics point to the difficulty of regulating the rapidly growing sweepstakes industry, and also point out the rise in the incidence of gambling addiction that is related to sweepstakes games.

Some lawmakers, like NC State House Representative Harold Brubaker, refuse to consider the suggestion until after the courts have definitively decided if NC’s proposed pan will pass the constitutionality test applied by the higher court.

NC Budget and Tax Center Director Alexandra Sirota believes the Governors idea is not a responsible fiscal decision, and worries that such a solution to the problem of video-game style sweepstakes games is not enough, and will have a disparate impact on the middle class and those with lower incomes.

However, some lawmakers such as NC State House Representative Bill Owens, do support Perdue’s proposal, and even wish to legalize this style of sweepstakes game once and for all, in order to secure a long-term source of revenue.

Still other lawmakers have a ‘if you can’t beat them’ type of attitude, figuring that the only sensible response to this fast growing trend is to begin regulating and taxing, especially considering that industry representatives have expressed agreeability to being taxed.

The proposed NC 2012-2013 budget cuts educational funding significantly.  It remains to be seen whether the proposal passes.  If it does pass, it will only worsen the degree of need for alternative sources of revenue to fill gaps in educational funding in North Carolina.

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Internet cafe closures may have violated constitutional rights

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CLEVELAND, OH (WOIO) -
Another twist in the battle over Internet gambling.

Last week, the Cuyahoga County Prosecutor Bill Mason filed indictments and ordered Internet gambling businesses to close after a statewide investigation. Ten people have been charged in the case. 

On Monday, some business owners filed a motion with Cuyahoga County court trying to get a judge’s order to allow them to stay open.

Mason’s cease and desist letters to Cuyahoga County’s Internet Cafe’s made headlines.  He was backed up by Ohio Attorney General Mike Dewine in the claim that the cafe’s violate Ohio’s gambling laws.

Cafe owners cried foul and filed a request for a temporary restraining order late Monday, saying Mason’s action was heavy handed.

“It’s like bringing a sledge hammer to do brain surgery,” said Daniel Gourash, attorney for the Sweepstakes Cafe.

One of their claims is that by shutting down the cafe’s, Mason was limiting free speech and access to the Internet.

Assistant County Prosecutor David Lambert says, ”We’re not seeking to prohibit any speech whatever, we’re seeking to prohibit the gambling itself.”

The cafe’s sell patrols phone cards, which are swiped into computers where they can wager on sweepstakes through the Internet.

Ohio’s definition of gambling says it is any game that includes chance, and a prize for consideration or payment. The claim of the cafe owner is that because phone cards are used instead of cash there is no consideration therefore no cash. No gambling. AN ARGUMENT THAT’S BEEN WON IN COURTROOMS AROUND THE NATION

The Internet access time purchased is never at risk of being lost in the sweepstakes.

Judge Nancy Russo said today she’s not comfortable making a decision either way today.  Russo has jurisdiction in the case so she wants clarification from the Court of Appeals before she rules.  She set another hearing for Monday morning.

In the meantime, the cafes can’t do business.  The entire matter could become a moot point as a House Bill on the Governor’s desk would grandfather in current cafes.

Copyright 2012 WOIO. All rights reserved. 

http://www.woio.com/story/18704931/internet-cafes-fight-to-stay-open

Internet Sweepstakes Network encourages regulation of promotional sweepstakes industry in Ohio

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Internet Sweepstakes Network encourages regulation of promotional sweepstakes industry in Ohio

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 A crackdown on Internet sweepstakes cafes in Cuyahoga County led this week to indictments against 10 individuals and seven businesses, revealing a disturbing pattern of racketeering, illegal gambling and money laundering. The danger is, if the state does not act quickly, the scheme likely will be repeated across the state.

As matters stand, sweepstakes cafes are regulated at the local level, if at all. That has led to a confusing patchwork of regulations, allowing the operations to proliferate, to around 300. Although the legislature, as part of a recently passed gambling bill, imposed a moratorium on new sweepstakes cafes, legislators are still working on a bill to bring statewide regulations to what Ohio Attorney General Mike DeWine aptly describes as “a huge problem.”

How big? Over a period of four years, some $48 million allegedly was siphoned from 18 sweepstakes cafes in Cuyahoga County, the money flowing to a New Jersey-based company called VS2 Worldwide Communications, which supplied the equipment. The indictment named four Akron-area men who helped move gambling machines into Cuyahoga County, convincing operators that the devices, which resemble electronic slot machines, are legal in the state.

In sweepstakes cafes, patrons buy phone cards or Internet time to play sweepstakes games. While cafe owners compare their games to the games at fast-food outlets, Cuyahoga County Prosecutor Bill Mason ordered all 50 sweepstakes cafes in the county to close, accusing them of running illegal gambling operations. Operators, some of whom had local permits, and patrons are not being charged.

Mason’s office worked with multiple agencies on the crackdown, among them the Ohio Attorney General’s Office, the Secret Service and the U.S. Marshal Service. That it took such an effort to deal with sweepstakes cafes in one county should provide a signal to the legislature to make regulations a high priority.

DeWine correctly emphasized that the cafes are a consumer rip-off. Setting statewide rules for them is a must; otherwise, operators will simply move from location to location, taking advantage of the confusion.

The legislature is wisely considering putting sweepstakes cafes under the Ohio Casino Control Commission. Operators should be required to post the odds and buy equipment from state-approved vendors, protecting consumers. The legislature should also limit the number of cafes and place restrictions on payouts. As the crackdown in Cuyahoga shows, there is no time to lose.

http://www.ohio.com/editorial/editorials/con-games-1.310920

Internet Sweepstakes Network comforms to all state and federal regulations and we encourage regulation of the promotional sweepstakes industry.

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