Gambling gray area

Internet sweepstakes cafes operate in an unregulated gray area of the law that raises concerns about whether they could be fronts for illegal gambling. It's time to bring them into the light.

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Every day, thousands of Ohioans, many of then older women, sit in front of computer terminals in hundreds of storefronts across the state. They play what appear to be video slot machines. Customers buy phone cards to play the games. Winning earns them more Internet time, as well as points that give them chances in sweepstakes. The sweepstakes winners get money.

Is that gambling? The owners of these businesses say no. Sweepstakes have predetermined winners, they argue, so they are not games of chance.

Customers don't have to play the games to be entered in the sweepstakes, they add. The patrons can swipe their cards to see whether they've won, and use the cards to make telephone calls.

In 2009, now-retired Toledo Municipal Court Judge Francis Gorman ruled that Internet sweepstakes operations are not gambling. Opponents of the cafes, including law enforcement officers, state lawmakers, and Ohio Attorney General Mike DeWine, aren't so sure.

They say that because the businesses are unregulated, the temptation to cross the line into illegal activity -- such as making under-the-table cash payouts or manipulating computer game software -- is present. Other detractors call the cafes "convenience casinos,' and claim they promote criminal activity, prey on poor people, and increase gambling addiction.

Many local governments initially welcomed new businesses and jobs in tough economic times. But in Fremont, Cleveland, and other Ohio communities, undercover police investigations have led to arrests and accusations of illegal gambling. Internet cafe owners respond that the industry should not be judged by the improper actions of individual operators.

Last year, Mr. DeWine proposed that Internet cafes that offer sweepstakes or skill-based games be regulated, to prevent "unregulated operators taking advantage of Ohioans." Regulation also would protect the four casinos under construction in Toledo, Cleveland, Columbus, and Cincinnati, as well as horse track slot machines and legal charitable gaming such as church bingo, from unfair competition, he said.

A bill before the state House would require Internet cafes to be licensed, limit the number of cafes in a community, and allow local governments to prohibit them. The measure would put the Ohio Casino Control Commission in charge of licensing businesses and inspecting and certifying games.

Legal operators will not be hurt by regulation, except where communities decide to prohibit their activities altogether. And if the sweepstakes cafes are, as Judge Gorman said, "a clever promotional device to increase the sale of phone cards," they will be helped by the elimination of illegal operators that give them a bad name. The cost of licenses can easily be borne by an industry that reportedly collects millions of dollars a year.

More regulation, while not ideal, is needed to bring Internet sweepstakes cafes out of the shadows. That's the price Ohioans should pay for their decision to expand gambling in the state.