Internet Sweepstakes Cafes and Online Gambling

Published Thursday, September 05, 2013 -
Internet Sweepstakes Cafes and Online Gambling

A recent white paper based on a survey conducted by the American Gaming Association has exposed a flaw in American gambling laws referring to what are known as Internet Cafes.

The recent scandal in Florida that involved internet cafes and millions of dollars being fraudulently collected on behalf of a veterans group has brought the issue into the headlines.

The white paper addresses the proliferation of Internet sweepstakes cafes, including a thorough history of the venues and a look at where and how they operate. It outlines legislation and legal activity that already has taken place related to the issue in various states across the country. Finally, it addresses the legal arguments against sweepstakes cafes and offers expansive definitions for the prohibition of the machines through state law.

Internet Sweepstakes Cafes: Unregulated Storefront Gambling in the Neighborhood was prepared by David O. Stewart, Ropes & Gray, LLP and presented to the AGA in June of this year. The paper suggests that internet cafes in America earn as much as $10 billion usd per year and none of it is regulated.

It says the internet café owners have used high pressure lobbying tactics and legal loopholes to keep the authorities from shutting them down in various state jurisdictions. The argument that the unlicensed gambling parlours are in fact just vendors of sweepstakes prizes it is not illegal just as other major retailers have used sweepstakes as promotions so do the internet cafes’

The white paper points out all the problems associated with the proliferation of internet cafes that are virtual gambling establishments. The fact the games are not regulated means they could be rigged and underage gambling at the terminals on games that look and sound like slot machines for possible cash prizes presented a compelling argument.

The AMA is calling for some sort of regulation regarding these Internet Sweepstakes cafes and soon.

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