Attorney general says Internet cafe businesses ‘ripe for money-laundering’

12/5/2012

COLUMBUS — A bill that likely would put most Internet cafes using electronic “sweepstakes” machines out of business is expected to clear its legislative logjam today when a committee votes on the measure.

Attorney General Mike DeWine warned a House committee that doing nothing is not an option.

“It is ripe for organized crime,” he said. “It is ripe for money laundering. We do know that some of the money is going not only out of the state of Ohio, but at least some of it is going overseas. We know that for a fact.

”So as attorney general, quite frankly, my hands are tied until you untie them,” Mr. DeWine said. “Law enforcement’s hands are tied until you untie them. Whatever you do, please do something.”

Opponents of the cafes argue that the sweepstakes machines look and operate like slot machines that are legal in Ohio only at its four voter-approved casinos. Lawmakers also have sanctioned slotslike video lottery terminals at new racetrack parlors as an extension of the lottery.

The General Assembly earlier this year put a moratorium on the opening of any sweepstakes cafes through June 30 and required businesses to register with the state. More than 800 did.

As amended on Tuesday by the House Judiciary and Ethics Committee, House Bill 605 would prohibit cash payouts and cap the value of prizes at $10. That could lead most of these businesses to decide it’s not worth it, said the bill’s sponsor, Rep. Matt Huffman (R., Lima).

“This is the fundamental question,” he said. “Do we want to have for-profit gambling throughout the state of Ohio? There’s only one other state that does that, and that’s Nevada.”

Rep. Tom Letson (D., Warren) said the measure looks like a “casino-protection” or “racetrack-protection” bill.

“If that’s the kind of myth that we are going to tell ourselves, that we are going to this end of it because this end of it is better, why don’t we just license and tax these and put that money to good use?” he asked. “When did we become anti-job, because that’s kind of what this does?”

Elaine and Roger Ribby of East Toledo, who patronize a local Internet café, made the trip to Columbus to listen to Tuesday’s testimony.

“It’s a smoke-free, alcohol-free environment because I don’t smoke and I don’t drink,” Mrs. Ribby said. “I hide out from the kids and grandkids there. It created a lot of jobs in our community. We need jobs there bad. It’s a nice place to go and relax.”

She took issue with the suggestion that the machines are gambling, because she is not paid in cash winnings but rather in additional Internet and long-distance phone minutes.

“We’re not playing,” she said. “We’re using phone time.”