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Published: Sunday, 12/5/2010

Gambling ‘cafes' in area drawing legality concerns

The computer began to jingle like a Las Vegas slot machine, and East Toledo resident Suzanne Ortiz excitedly called over a fellow player to show him that she had won her second jackpot in 15 minutes.

"You gotta love it," shouted Ms. Ortiz.

But owners and employees of the local establishments insist that the activity going on inside is legal. Even so, one suburban community has acted to curb the so-called "Internet cafes" after the opening of at least a dozen in strip malls across metro Toledo.

Along busy Reynolds Road in southwest Toledo, there are four of the cafes — also known as "sweepstakes centers" — with two more on the way.

Rob Dabish, a grocer who waged a successful court fight to keep Toledo from shutting down his establishment in 2008, said so many rivals have opened that his business has dropped by 25 percent.

"After my court case, I saw a tremendous amount opening up," said Mr. Dabish, who operates Players Club Internet cafes next to his grocery store on Main Street in East Toledo, at Reynolds and South Avenue, and on Navarre Avenue in Oregon.

Judge Francis X. Gorman's November, 2009, written opinion exonerating Mr. Dabish of gambling charges is among the most popular reading at Toledo Municipal Court because so many lawyers have come in requesting copies, according to court personnel who keep it close by in a desk drawer.

The opinion, which was upheld by Ohio's 6th District Court of Appeals in Toledo last January, ruled that the activity at Mr. Dabish's original Main Street Internet cafe lacked the element of risk needed to sustain charges that it was a "gambling house" under Ohio law.

And, according to reports across Ohio, entrepreneurs statewide have used the ruling as a green light to open more of the establishments, although elected officials in some communities are beginning to push back.

Stop Predatory Gambling, a Washington organization that opposes state lotteries and the spread of casinos, is critical of Internet cafes. "They're trying to bring these minicasinos all over the community," said Les Bernal, executive director.

"We're living in a period of time when people are looking for ways to get out of their financial predicament. More than one in five Americans thinks the best way to long-term economic security is to play the lottery."

How it works

Mr. Dabish's system, which is used by many — but not all — Internet cafes, operates like this:

Customers purchase long-distance phone cards from a cafe cashier in denominations starting at $5.

Along with the minutes, each card comes with multiple chances at a cash prize up to $5,000.

Buyers can immediately find out if the card is a winner by asking the cashier to swipe the card on his or her cash register.

Or they can find out themselves by heading to a computer, swiping the card, and playing electronic versions of slot machines, video poker, bingo, and other games.

Regardless of which option they choose, customers can't win any more, because prizes — if any — are predetermined. But they can use up their winnings by continuing to play.

The motivation for continuing to play is that, because each card carries multiple chances to win, the customer doesn't know if, for example, the $2 they just won is the top prize they stand to collect.

The more long-distance minutes customers buy, the more "sweepstakes points" they get and the longer they get to play.

Owners of Internet cafes compare the system to scratch-off tickets given away by fast-food restaurants to promote sales of food.

To encourage customers to play, Internet cafes give away coffee, soft drinks, popcorn, hot dogs, and other snacks. They do not serve alcohol.

The establishments have drawn criticism in states such as California and Florida from people who contend that they attract lower-income people who don't need the long-distance minutes and don't realize that they can't win any more than the predetermined amount.

Mr. Dabish disputes those claims, saying that 80 percent of customers use at least a portion of the phone time they buy and that they understand how the system works.

Regardless of the outcome of the games, the customers still walk away with the phone minutes purchased.

Absence of risk

And, Judge Gorman ruled, that is how the establishment stays above the law.

"The element of risk is absent from this case inasmuch as the purchaser of the phone card risks nothing," he wrote Nov. 18, 2009.

Such "Internet cafes," often operated in connection with small phone companies that provide phone and Internet minutes and marketing plans, have been popping up across Ohio and the nation, according to Mr. Dabish.

Some Internet cafes operate differently, selling time on the Internet and then directing customers to on-line gambling sites.

Police in Cleveland this summer shut down an Internet cafe allegedly operating in that manner. Cleveland City Council last month placed a moratorium on openings of new sweepstakes centers. A number of nearby communities including Medina and Parma have taken similar action.

Maumee Council enacted a moratorium Sept. 20 that is due to expire Jan. 18.

The suburban city's planning commission last week approved the businesses in some industrial and commercial areas outside the historic downtown and city council tomorrow will consider the zoning proposal.

Bruce Wholf, building and zoning official for Maumee, said the zoning restrictions didn't stem from any specific objection to Internet cafes.

"It's a new business that's definitely arriving," he said.

Playing to win?

Ms. Ortiz, the East Toledoan, says she has won up to $200 at Players Club on Main Street. "It's better than going to the casinos in Detroit," she said.

Thu Vo, a 41-year-old roofer, has won up to $60 in a day at the establishment but loses more than he wins. "It's an entertainment expense like going to a dinner or movie," he said.

A 47-year-old who didn't want to give her name said she shows up at Players Club three to four times a day. "I'm chasin' my money," she lamented. "I'm chasin' it and I can't get it back."

Regina Ramirez, a cashier who issues phone cards and dispenses winnings from a counter at the rear of the club, estimates that half of customers are regulars. Like many Internet cafes, Players Club is open 24 hours.

The East Toledo location is busiest on weekends and at the beginning of each month "when there is more money in the economy," Ms. Ramirez added.

It and the other two clubs operated by Mr. Dabish draw about 300 customers a day, he said.

The cafe, in a large open space in a strip center, has the look of a minicasino with chandeliers, cozy seating areas, and 130 computer stations with comfortable office-type chairs.

At noon on a recent weekday, a line of customers waited to buy additional time or collect winnings.

At Diamond's Internet Cafe & Sweepstakes Center on Reynolds at Glendale Avenue, just one of the 48 computer stations was occupied on a recent weekday afternoon. The establishment opened in March and averages 30 to 90 customers a day, according to a clerk who declined to give her name.

Two establishments making plans to open are King's Internet Cafe in Stockton Commons Plaza at Reynolds and Southwyck Boulevard and Skillz Internet Cafe in Jesse James Plaza at Reynolds and South.

Keeping things legal

Mr. Dabish, whose court case led to a wave of openings, says he has called on city officials to crack down on a number of clubs that are operating illegally.

Adam Loukx, Toledo law director, said police will investigate establishments that go beyond Judge Gorman's ruling and watch for contradictory opinions. But "right now Judge Gorman's opinion is the law in the city," he added.

Mr. Dabish continues to defend his establishment, however.

"It's an entertainment place," he said. "You have friends that are there. You walk into a nice area. It's comfortable."

Contact Gary Pakulski at: gpakulski@theblade.com or 419-724-6082.



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