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Ohio Legislature Restricts Sweepstakes Cafes

The Ohio Senate followed the House in approving a bill that strictly regulates Internet sweepstakes cafes, followed by Governor Kasich’s recent authorization. Typically, these storefront venues sell phone cards or Internet access time along with a chance to win prizes. Many have sweepstakes computers that mimic slot machines. While supporters point out that these businesses provide much needed jobs and local revenue, not to mention entertainment to many Ohio citizens, detractors maintain that unregulated Internet cafes are thinly disguised illegal gambling operations that siphon money away from legitimate charitable lottery games.

House Bill 7 contains the following provisions:

  • Maintain moratorium to prevent any new cafes from opening
  • Cap value of sweepstakes prizes at $10
  • No cash prizes allowed

There are no definitive figures for the amount of revenue that Internet cafes make, though estimates range from millions of dollars to 10 billion annually — this last number from the American Gaming Association, a lobbying group for the casino industry. The Internet sweepstakes café industry spends money lobbying legislators, as well. In fact, several Ohio legislators returned donations from sweepstakes café lobbyists before House Bill 7 came to the floor. As of June 9, the issue may appear on Ohio’s November ballot for voters to decide.

Earlier this year, an investigation into Cuyahoga County Internet cafes resulted in the indictments of over a dozen operators and businesses for breaking Ohio gambling laws. Some lawmakers had proposed an alternative bill giving the Ohio Lottery Commission oversight over these enterprises, with the authority to punish those engaging in illegal activities. This bill did not gain enough traction and the more punitive bill passed by a 27 to 6 majority. These harsh restrictions are so extreme, however, that they are expected to put Internet sweepstakes cafes in Ohio out of business.

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