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Ohio lawmakers are considering competing bills on Internet cafés. One would regulate and tax the gambling establishments, but leave them intact. The other — better — bill likely would regulate them out of existence.
Ohio Attorney General Mike DeWine estimates there are 840 of these “mini-casinos” across the state. Some operators have ignored state law and not registered with his office.
Mr. DeWine doesn’t know who owns most of the Internet cafés either. Last year, he sought information from owners about their businesses. Most responded by providing the street address of the café and nothing more.
Ohio officials do not know how much profit the owners make, although it’s likely hundreds of millions of dollars a year. They don’t know where the profits go, although Ukraine appears to be a popular destination. And they don’t know how much is given out in prizes, or what the odds of winning are for customers who play the games that mimic slot machines and video poker terminals.
One owner, Robbie Rogers, says he runs legitimate businesses that give seniors a place to gather, talk, and have fun — but not to gamble. He told the Cleveland Plain Dealer his customers are well-to-do, he employs a lot of people, and he has a positive economic impact on neighborhoods where his businesses are.
But such establishments are not typical of Ohio sweepstakes parlors. Many Internet cafés are in poorer neighborhoods, their customers are working-class at best, and a number of their operators have been investigated for illegal activities.
A report by the Columbus Dispatch revealed Internet café owners across the state who had tax liens, bankruptcies, and criminal records that might bar them from working for one of Ohio’s four casinos. That hasn’t kept them from running their own quasi-gambling sites.
That they are in business at all is the will of state lawmakers. The café owners are entrepreneurs who have taken advantage of Ohio’s lack of regulation.
Last year, the Ohio House passed a bill sponsored by Rep. Matt Huffman (R., Lima) that would have strictly regulated sweepstakes parlors and set a $10 limit on prizes. The bill died in the Senate.
Mr. Huffman’s bill, which likely would kill the cafés, is back. A competing bill sponsored by Rep. Matt Lundy (D., Elyria) includes less-stringent regulations that would allow Internet sweepstakes to survive and prosper.
Unregulated Internet cafés siphon customers from Ohio’s legal, highly regulated casinos. They also will compete with tightly regulated slot machines at horse racing tracks. That lessens these venues’ economic impact (tax revenue, employment, multiplier effects) on the areas around them, which was the only legitimate reason for voters and state officials to legalize limited gambling.
Internet cafés also hurt charitable bingo, which helps fund scholarships, service programs, and parochial schools. They add to problem gambling without contributing to treatment. Because they often are in low-income neighborhoods, they encourage people with limited resources to make bad economic choices.
For all these reasons, Mr. Huffman’s potential death sentence is preferable to Mr. Lundy’s accommodation of Internet cafés. But it would be intolerable for the legislature — again — to do nothing.