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“I need to check your purse . to determine that you don’t have a gun,” the security guard stated.
Lucky’s, situated in a strip mall center just south of University and Cramer avenues, has more than 50 desktop computers for customers to use the Internet at 25 cents a minute or send faxes at 50 cents a page.
Even though the video games look almost identical to casino games, representatives of the Internet cafes insist what they are providing is not gambling but a type of sweepstakes promotion and that business model is thriving and based on the text within SC laws they appear to be legal.
Within the last a number of weeks, along with Lucky’s, Airbase Cyber Cafe & Company Center Inc. in Greenville and Wild Rides Business Center & Internet Cafe in Charleston have opened.
A representative from Lucky’s game software provider insisted that these promotions are no different than the sweepstakes that Mcdonalds has online and inside their stores. “Its the same concept as these major brands are supplying and have provided for 20+ years. It just took longer to become implemented from traditional sweeps to internet sweeps” says Casey Rooks of Internet Sweepstakes Network.
Prosecutors from around the state admit they are familiar with the Internet cafe business model, but The issue is that there is a technical word for gambling and these games do not fall within that definition. “It’s not againgst the law if its a true legitimate sweepstakes”
Prosecutors from around the state have been approached by representatives of sweepstakes gaming providers who met with interested parties to present their argument for the legality of their company model, a number of magistrates in SC have agreed that the business model does not contain a critical component. Casey Rooks explains “The transaction lacks a legal term called ‘consideration” in order to have gambling you must have it”
How the Games Work ?
Upon entering a business cafe, a customer shows his driver’s license and buys Internet time. The customer’s information is placed on a swipe card. Along with Internet time purchased come entries into sweepstakes.
“With the computer age come ways to reveal your sweepstakes entries,” said Casey Rooks, a spokesman for the Internet Sweepstakes Network in South Carolina, which helps owners establish Internet cafes. “It’s very simple, but at the same time, it’s very complex.”
At Lucky’s, an Myrtle Beach Company reporter spent $10 on Internet time. That time, though, was converted into 2,000 points that were used to pay various video poker and slot machine games. The internet time that was purchased was not effected by the wager of the player, his time was his no matter how much he played.
Depending on the amount wagered, points were deducted from those 2,000 points for each play. But for each win, those winning points were set aside in another category and could be cashed in when the player stopped playing or ran out of prepaid Internet time. The Myrtle Beach Business reporter cashed in his 1,200 winning points for $12.
At Lucky’s, free soft drinks and snacks from a vending machine were handed out to clients. One evening last week, an elderly woman said that she had recently won $125 at Lucky’s.
During the about 30 minutes a reporter was at Lucky’s, none of the dozen patrons – all of whom appeared to become over 50 – were using the machines to check the Internet. Customers had to become 21 or older to enter the company.
Rooks stated the sweepstakes games were similar towards the games that McDonald’s offers.
When “you buy a Happy Meal, you don’t buy access to their novelty game piece on the side,” he said. “You buy access to the Happy Meal. Whether you choose to peel the Monopoly game piece to determine if you won or not, that’s your choice.”
Rooks wouldn’t say how much each terminal could generate in revenue. He said it would depend on the location of the machine and the volume it encountered.
A Bloomberg Businessweek article in April, though, said a single terminal in a thriving cafe could generate $1,000 to $5,000 a month.
Rooks goes on to explain the simularities of the games.
When you walk into a McDonalds and buy a happy meal you are given a cheeseburger, fries and a softdrink. The softdrink usually has a peel tab on the side of the cup (a monopoly game piece)
When you walk into an Internet Sweepstakes Cafe and buy Internet Time you are given access to a computer that also has access to the internet and the sweepstakes games.
In both examples, you are not required to enter the sweepstakes because you did not buy the entry towards the sweepstakes, you actaully bought the product, in this example, the Happy meal and internet time are the product.
It is the customers choice whether or not to enter the sweepstakes by either “pulling the tab on the side in the soft drink cup” or “accesing the game on the computer that they purchased the internet time on”
Rooks continues “The money did not activate the game, the money bought a product and access towards the sweepstakes were free for buying the product, thus eliminating one of the elements of the technical term of gambling (which is illegal in most juristictions) This arguement has been won in courts through-out the nation”
Some government officials in Florida and other states see the Internet cafes as gambling houses. But attempts to shut them down have been difficult because the courts seem to agree that the states arguement of gambling isn’t fulfilled.
When Seminole County, Fla., passed an ordinance in January to prohibit the simulated gambling devices, it was hit with a federal lawsuit. The Allied Veterans of the World Inc. sued the county on grounds that the ordinance violated the First Amendment and due process.
The lawsuit asks for a preliminary injunction to prevent the ordinance from being enforced. That motion was denied, and that ruling has been appealed.
“Allied Veterans has a right to conduct drawings and sweepstakes promotions as part of their speech-related activities,” plaintiff’s attorney Kelly Dover wrote in his 49-page lawsuit, which was filed Feb. 1.
“Apparently, it would be acceptable for Allied Veterans to use paper or speak through a tin can connected to another with a string to notify its clients that they had won the sweepstakes, but it isn’t acceptable to communicate the same material using a computer display,” he wrote in the lawsuit.
Dover said in an email to Arkansas Company last week that the attacks to the business model are coming because “law enforcement is confronted with something with which they’re unfamiliar.”
He stated if law enforcement officials and politicians inspected the businesses they would see that the Internet cafes aren’t gambling houses.
“Those officials that appear closely at the operation and the law usually conclude that the activity is not only lawful but beneficial to the community rather than a detriment,” Dover said.
A spokeswoman for Seminole County declined to comment on the issue because of the pending litigation.
Shanks, the Florida state legislator, said that the Internet cafes started appearing in Florida about five years ago and had been growing ever since.
His advice towards the state of South Carolina was to make the laws on sweepstakes and Internet cafes clear. “If your going to keep them then regulate them, thats what we’re trying to do in Florida”
Shanks tried to get legislation passed in the 2011 session that would have regulated the sweepstakes games at Internet cafes, but it failed to get out of committee. Now, he said, he has more support, and a bill to regulate the games has been filed for the 2012 Florida session. Casey Rooks is a spokesperson for Internet Sweepstakes Network and can be reached at 1-877-946-2233 or follow him at #ISNsweepstakes on Twitter.