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California Takes Aim at Internet 'Sweepstakes Cafes'

While the California legislature continues to ponder a couple of online poker bills that would allow state residents to compete against one another on the virtual felt, another bill has been proposed that would prohibit “sweepstakes cafes” from offering casino-type games that offer cash and prizes to winners.

The cafes have been operating in the Golden State and use computers that simulate games of chance and slot machines that are common to casino gamblers. However, the winners are not selected randomly in the fashion that games of chance normally do. The results are already predetermined and it is that difference that operators of the sweepstakes cafes point to when claiming their customers are not actually gambling.

Assemblyman Rudy Salas (D-Bakersfield) is not buying it, however, and has proposed AB 1438. Salas’ measure would allow state officials to sue operators who continue to offer such gaming at sweepstakes cafes and could result in civil penalties for those found to be non-compliant, USA Today reported.

This is a prolific problem that we’re seeing in our neighborhoods up and down the state, where we’re seeing these illegal gaming sweepstakes cafes opening up with a myriad of problems and issues … of drugs, of prostitution, impacts to local legitimate businesses in these strip malls where these things are occurring,” Salas said.

Earlier this month, authorities raided one such sweepstakes cafe believed to be an illegal gambling den in a run-down area south of Sacramento. That marked the second time this year such a raid occured. Agents with the California Bureau of Gambling Control have reported that the number of businesses investigated for illegal gambling have doubled in just two years.

More than three dozen groups that represent government and law enforcement interests are supporting Salas’ proposal. Also on board are 15 more groups that represent the state’s powerful card rooms and Indian tribes. The latter organizations, who operate legal land-based gaming operations, claim to be losing revenue to the sweepstakes cafes.

The problem is not specific to California, as the American Gaming Association has released statistics showing that sweepstakes cafes can be found in 19 states. The AGA has estimated the market to be worth $10 billion per year throughout the nation. A couple of states, Georgia and New York in particular, have already advanced legislative efforts to ban such operations.

In California, Salas’ bill is currently before the Senate. But the California Supreme Court is also involved, as the justices have agreed to hear a case that centers around whether or not predetermined results of the casino-type games can be constituted as gambling.

On the surface, it looks like it’s illegal,” said Philip Walker, a Bakersfield Internet cafe owner and founder of the Internet Cafe Association of California. “But once you get down to the meat inside, it really isn’t.”

The 5th District Court of Appeals in California ruled a few months ago that the computers in use at sweepstakes cafes are against the law despite the predetermined results argument. The state Supreme Court will now have a final say in the matter.




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Charles Rettmuller

Charles has been an avid poker player for a number of years, both live and online. He holds a degree in journalism and previously worked as a reporter for a Chicago-based newspaper. Charles joined the PokerUpdate team in early 2012 and writes daily news articles for the site.