Legal Issues

In Wake of Racketeering Probe, Florida Bans Sweepstakes Cafes


The Winners Corner is what's known locally as a storefront gambling establishment in Palm Coast, Florida

Photograph by Michael Williamson/The Washington Post via Getty Images

The Winners Corner is what's known locally as a storefront gambling establishment in Palm Coast, Florida

Florida residents who like to play simulated slot machines at their local strip malls had better hurry up and enjoy one last spin.

On Thursday the Florida Senate voted 36-4 in favor of a bill that will ban so-called Internet sweepstakes cafes—the storefront businesses that look and feel like pop-up casinos. The bill had already passed with overwhelming support in the state’s House of Representatives, and Governor Rick Scott is expected to sign the bill into law. It will go into effect immediately.

The Senate is “giving law enforcement and prosecutors the tools they need when they find illegal gambling to shut it down,” said Republican Senator John Thrasher, the sponsor of the bill.

The controversial industry has been flourishing in neighborhoods around the Sunshine State for years. The sudden action on the part of the to address it comes in the wake of a federal racketeering probe, which last month made national headlines. In mid-March, federal and local authorities arrested more than 50 individuals as part of Operation Reveal the Deal. Prosecutors allege that members of Allied Veterans, a nonprofit that ran dozens of Internet sweepstakes cafes around the state, were racking up hundreds of millions of dollars of unreported profits.

At the time of the arrests, Florida Lieutenant Governor Jennifer Carroll—whose public-relations firms had previously done work for Allied Veterans—resigned. Afterward, various lawmakers in Tallahassee have scrambled to distance themselves from the industry, which in recent years has flooded the state capital with lobbying dollars.

There is precedent to suggest that the ban may not entirely shut down the sweepstakes cafe business. In 2010 lawmakers in North Carolina passed legislation outlawing the business model. (Other states, including Virginia, have passed similar measures.) But even after the law went into effect, the mini-casinos didn’t disappear from the state. Members of the industry challenged the ban in court and, in the meantime, kept operating their businesses with slightly altered legal justifications.

Just this week, two members of the North Carolina General Assembly introduced a bill that would legalize and tax Internet sweepstakes cafes across the state. According to the Fayetteville Observer, both lawmakers have previously received campaign donations from the sweepstakes cafe industry, including from one of the individuals arrested in Operation Reveal the Deal.

The battle over the future of the industry is hardly limited to North Carolina and Florida. It continues to play out county by county, state by state. In mid-March, officers in San Bernardino County in Southern California raided four Internet sweepstakes cafes. Meanwhile, up the coast in the Bay Area’s Alameda County, local officials are threatening to shut down a number of the businesses.

Members of the industry continue to argue on behalf of the legality of the sweepstakes games, which they say offer the illusion of gambling, not the real thing. “People like to feel like they’re gambling,” James Mecham, the managing director of SweepsCoach (a Sacramento-based company that provides startup services to new sweepstakes cafes) recently told the Mercury News. “The key piece is you’re not buying a chance to win. … Is there a gray area? Absolutely.”

Gillette_190
Gillette is a staff writer for Bloomberg Businessweek in New York.

Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus