By Marianela Toledo | Florida Watchdog
MIAMI — This time Lady Luck went against the “house,” at least for those Florida gambling venues that run virtual games.
The state House of Representatives voted today to ban electronic Internet gaming that’s been played in an estimated 1,000 Internet cafes and adult arcades throughout the state. It could be the death knell for those neighborhood casinos that have grossed an estimated $1 billion annually if the Senate concurs.
Last year the House passed a similar bill to ban them, but the measure never reached the Senate floor.
“The Internet cafes have been under attack before, but the recent scandal involving Lt. Gov. (Jennifer) Carroll, which led to her resignation, just threw more fuel on the fire,” said Robert M. Jarvis, law professor at Nova Southeastern University Law Center.
Carroll resigned last week after she was questioned by police officers about her ties to the organization Allied Veterans of the World, which is at the center of an investigation into organized crime in several states.
Under the guise of a nonprofit organization that helps “fellow veterans in need,” Allied Veterans operated gaming cafes throughout the state and allegedly raised about $290 million for charitable causes. Yet according to Attorney General Pam Bombi, only $6 million of that made it to charities.
Carroll’s involvement in the ordeal extended to her ownership of the public relations firm that represented Allied Veterans. Through the investigation, police arrested 60 people on charges of money laundering, extortion and illegal gambling.
Virtual one-armed bandits
Internet cafes are thinly-veiled gaming outfits that allow customers to to play video games that imitate spinning slot machine wheels on computers for prizes. The cafes are also used to raise funds for nonprofit companies.
“Most people see the cafes as ‘convenience gambling’ and even the gaming advocates oppose such gaming,” Jarvis said.
The cafes have cut into the income of other gambling interests in Florida, including Native American casinos and the state lottery.
“These interests are working hard to close the cafes, which is one of the few things in that state gambling operators and those who fight against gambling agree on,” Jarvis added.
The cafes, also known as “sweepstakes cafes” or “strip-center casinos,” often offer food and drinks as well. While they dine, customers pay to use the Internet, which also allows them access to the computers. Since the law prohibits receiving cash prizes, they earn credits that can be redeemed for merchandise.
Merchants are prohibited under state law from accepting payments connected to betting. To get around this, they simply charge for the online use.
Ryan Pontsuka, spokesman for the Florida Council on Compulsive Gambling, said his organization takes a neutral stance on the prohibition proposal.
“But these sites are not regulated. At least we would like to see some kind of regulation and the implementation of programs of responsible gambling,” he said.
Internet cafe proliferation
A recent study by the National Council on Problem Gambling found that such cafes are proliferating throughout the United States, with Ohio and North Carolina also being hotbeds.
The study suggests that Internet cafes expanded in places where gambling legislation was unclear.
‘‘Suffice it to say that neither the Florida legislature nor the courts have provided a clear answer as to whether the video game activity employed here in connection with sweepstakes involves the use of slot machines or is otherwise illegal gambling,’’ said Jarvis.
He believes the proliferation of quick-stop gambling cafes hasn’t resulted in a boost to the local economy.
“Internet cafes add little to the economy because they provide few jobs,” he said. “Banning them won’t have an adverse impact on the economy, but instead, the real impact will be on those who have made the cafes part of their social life.”
Many experts argue that the cafes prey on the poor and that the social benefits are overstated, since community centers and houses of worship could just as easily fill the void.
Cafe owners and managers are neither licensed nor subject to criminal background checks, and the American Gaming Association said there’s no regulation of the machines either.
New Hampshire, Massachusetts, Pennsylvania, Virginia and Pennsylvania have enacted legislation prohibiting sweepstakes cafes.
Contact Marianela Toledo at Marianela.Toledo@FloridaWatchdog.org.