Internet cafes may get reprieve

Signatures could put issue on Ohio ballot

Internet cafes, such as the Player's Club (above), say they provide real services such as phone cards or Internet time for use on the sweepstakes machines.

COLUMBUS — Some 340 Internet cafes that Ohio lawmakers have been trying to put out of business possibly bought themselves at least a year’s reprieve on Tuesday with the filing of 433,884 signatures.

If roughly 231,000 of those hold up as valid signatures of registered voters, citizens will weigh in next year on whether a new law designed to remove the appeal of the cafes’ “sweepstakes” machines should stand.

In the meantime, the cafes would continue to operate, assuming lawmakers don’t move forward with Plan B, a second ban that would take effect immediately instead of the typical 90 days. That would effectively render moot the current effort to undo House Bill 7.

“We are for regulation. … We would like to get rid of the rogue operators,” said Robert Dabish of Oregon, the largest operator of Internet cafes with more than 20 in the state. His Players Club cafes, employing 168 people, include several in Toledo and elsewhere in northwest Ohio.

“We’re going to do this process to show that we are a legitimate retail establishment, that we’re not what [Attorney General Mike] DeWine says — gambling establishments that do drug trafficking and stuff like that” he said.

House Bill 7 was set to go into effect today, but will now be put on hold at least through the signature verification process by county boards of elections and potentially through the November, 2014, election.

Sixteen cafes in Lucas County are among those that have registered with Mr. DeWine’s office under a continuing moratorium preventing the opening of new cafes or expansion of existing ones.

Rep. Matt Huffman (R., Lima), House Bill 7’s sponsor, favors moving ahead with a separate bill that Senate President Keith Faber (R., Celina) pushed through his chamber just before the General Assembly recessed for the summer. It would, with a super-majority vote of both chambers, essentially re-enact the ban immediately with no referendum option available.

He said he believes House Bill 7 would survive a vote of the people, but the state can’t afford to let the cafes operate for another year in the meantime.

“The strategy on the part of the operators is about making so much more money,” he said. “They know that, even if they lose, putting this on the ballot will mean a lot more money in the next year. … This is a very high profit margin, especially when they’re not abiding by state law. The casinos have to have a certain [payout] percentage.”

Mr. DeWine and other critics of the cafes argue that the sweepstakes machines look and act a lot like slot machines that are legal in Ohio only at four voter-approved casinos, including Hollywood Casino on Toledo’s riverfront, and, in a different form, at racetracks.

The law tries to make the sweepstakes machines less attractive to consumers by prohibiting cash payouts and capping the value of noncash prizes at $10.

The Committee to Protect Ohio Jobs — consisting of cafe owners, their employees, and some supporters in local government — maintain that their businesses dotting suburban strip malls and downtown storefronts create jobs and generate local tax revenue.

The courts, as well as cafe supporters, have disagreed as to whether the machines are indeed gambling.

The owners argue that the real products sold at these cafes are phone cards and Internet time that can be used to play the machines. They contend the cards are preprogrammed for use with the sweepstakes machines and, therefore, can’t be considered games of chance.

If the referendum qualifies for the ballot, the resulting campaign will likely cost millions on both sides with the casinos expected to step in to fight what they consider to be unfair competition that is not subject to the same rules they are.

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.