Internet cafes face stricter regulations

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YOUNGSTOWN, Ohio (WKBN) — New stricter restrictions on Internet cafes took effect Friday, leaving patrons and parlor owners wondering what comes next.

Lucky’s Internet Café on U.S. Route 224 in Boardman has a new sign on its door saying the café is temporarily closed but will re-open. It was a sign Kathy Rober wasn’t happy to see on Friday night.

“We were all friends. We all would sit together and cheer each other on when you would win, and when you’d lose you’d say ‘oh, the machines are bad,’ but now we don’t have that anymore,” Rober said.

New legislation, known as House Bill 7, that went into effect Friday bans cash payouts and puts restrictions non-cash prizes, including a $10 limit on the value of prizes. The new law also prohibits prizes in the form of cash, gift cards, lottery tickets, bingo, instant bingo, alcohol, tobacco, firearms or vouchers for any such items.

The restrictions essentially cut down on consumer incentive for playing, and several area cafes already had closed by Friday evening.

The new law also draws a distinction between the casino-style games played at internet sweepstakes cafes and traditional promotional sweepstakes offered by retailers. Retailers who offer promotional sweepstakes via a terminal device will have certain restrictions and registration to ensure compliance with Ohio law.

The Committee to Protect Ohio Jobs said its petition-gathering firm was unable to collect the roughly 71,000 additional valid signatures needed by Thursday’s deadline to put a repeal of the legislation on the November 2014 ballot.

The committee said in a statement that it was the first to operate under Ohio’s new, more stringent signature gathering rules and that the restrictions hampered its effort. And even though the petition initiative failed, the battle is far from over.  Some internet café owners across the state are threatening to challenge the new rules with a lawsuit.

Backers of the measure, including top state law enforcement officials, say the parlors harbor illegal gambling. They have cautioned that no single law enforcement agency has authority to investigate or pursue criminal charges statewide for any illegal activity at the cafes, which they argue leaves the industry open to money laundering and other crimes.

Foes of the crackdown say the law went too far in limiting activity at the parlors, many of which they describe as mom-and-pop operations that provide jobs in local communities.

“We would rather support local workers. There were a lot of jobs that were lost between all of these Internet cafes and it’s just a sad event. For years, we’ve been coming here and it’s been a lot of fun,” Rober said.

A statement from Attorney General Mike DeWine said the law is now clear on which activities are illegal. He announced Thursday afternoon that his office would begin enforcement efforts for the internet sweepstakes café regulations.

Each county will be able to decide how to enforce the new law.

“We’re going to have to come up with a plan of action to deal with this law and we’ll need guidance, obviously, through the prosecutor’s office and then we’ll go from there,” said Mahoning County Sheriff Jerry Greene.

Ohioans Against Illegal Gambling, a casino-backed committee fighting the repeal, said Ohioans didn’t sign the petitions because they don’t support Internet cafes in the state.

“House Bill 7 is a well-reasoned bi-partisan measure that gives law enforcement officials strong tools to fight illegal gambling and other serious criminal activity occurring at many Internet cafes,” spokesman Carlo LoParo said in a statement. “The push by cafe owners to halt this important law came up short because Ohioans refused to aid and abet a known criminal enterprise.”

House Bill 7 gives the Attorney General’s Office regulatory authority over sweepstakes terminal devices used by internet sweepstakes cafes. Cafes are required to obtain a certificate of registration from the Attorney General’s Office and file monthly reports.
The Attorney General’s Bureau of Criminal Investigation (BCI) also now will have explicit authority to investigate gambling law violations alleged to occur at internet sweepstakes cafes.
Ohio Gov. John Kasich signed legislation in May that halted the expansion of Internet cafes, extended a moratorium on any new cafes and required those currently in operation to submit new affidavits to the state.
More than 620 Internet cafes were in operation across the state in May when the legislation was signed, according to the Attorney General’s website. At the time, there were  five in Columbiana County, 37 in Mahoning County and 47 in Trumbull County.
The Associated Press contributed to this report.
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