A closer look Internet cafes
As Internet sweepstakes businesses continue to proliferate across Ohio, several area cities are taking steps to control them out of concern the businesses will become havens for crime if left unchecked.
Ohio Attorney General Mike DeWine started pushing a year ago to have such sweepstakes cafes limited and licensed. But the legislation, which was introduced last March, is still awaiting review by an Ohio House committee and is expected to be modified.
Springfield and New Carlisle are among several area cities that did not wait for action from the state, enacting bans or temporary moratoriums.
DeWine’s office surveyed Ohio municipalities and found 285 sweepstakes locations, up from 200 sites counted by the Ohio Lottery four months ago.
DeWine and others believe these cafes are a form of unregulated gambling where the odds are not clear. A loophole in the law allows them to operate, DeWine said.
“We don’t know who owns them,” DeWine said. “We don’t know if they are convicted felons.”
But Toledo Municipal Court Judge Francis Gorman in 2009 ruled that these sweepstakes cafes have no element of risk and are not gambling enterprises. The ruling cleared the way for such businesses.
Most of the cafes in the state appear to be located north of Interstate 70, according to information included in the survey, but area officials are working to fight an influx locally by either limiting their locations or enacting stiff licensing fees for the businesses, which DeWine calls “consumer rip-offs.”
Springfield in December approved a ban of sweepstakes cafes that takes effect in October.
Springfield City Manager Jim Bodenmiller said the City Commission was responding to “a lot of neighborhood complaints” about criminal activity associated with the cafes.
Springfield did not have bad experiences with all cafes, he said, but commissioners were concerned about the police department being saddled with months-long investigations needed to shut down the problem businesses.
“We have limited resources,” said Bodenmiller, and the commission asked itself, “is this something we want to see proliferate?”
New Carlisle Council members voted unanimously in February to extend a second time a moratorium on Internet cafes in their city. Council first approved a 6-month moratorium in February 2011 and extended it another 6 months in August 2011.
Kettering, Xenia, Miamisburg, Springboro and Beavercreek have adopted various restrictions and regulations including criminal background checks, and in some cases, fees and location restrictions.
The city of Dayton, which is believed to have at least two sweepstakes businesses, is awaiting guidance from state lawmakers before acting, city officials said.
Meanwhile officials in Beavercreek, home to at least one operating cafe, approved regulations on March 26 requiring a $7,500 operator’s license fee, as well as a $600 fee for each computer.
The law, which takes effect in less than 30 days, came as a surprise to cafe owner Johny Costandinidis. He would have to pay at least $13,500 in annual licensing fees to continue to operate his sweepstakes cafe inside of his business, Factory Drive Thru, 2508 Richmar Drive in Beavercreek.
The carryout has a bank of about 10 computer stations for sweepstakes play.
Costandinidis said he added the sweepstakes machines about two years ago to provide something unique to customers.
He said he is doing nothing wrong.
Beavercreek Planning Director Jeffrey M. McGrath said the regulations were designed so that “everyone understands the ground rules before they come in the door.”
“It wasn’t designed with the intention to eliminate the possibility (of these businesses) in the whole city, McGrath said. “It is a response to some of these things popping up across the state, us reading about it and being proactive.”
‘No skin in the game’
Owners say the sweepstakes are safe and offer customers incentive to buy phone cards.
Sweepstakes cafe owner Roy F. Smith of Englewood said it is not gambling because the sweepstakes have a predetermined outcome and the phone cards maintain their value after the game is played.
“You don’t have any skin in the game,” said Smith, the owner of Belle Phone Internet cafe in Bellefontaine and Erie Sweepstakes and Phone cards in Hamilton. What’s the rip-off?” he asked. Smith also has locations in Marysville and Sidney under the name Internet Cafe. He is planning a fifth location.
The owner of five hotels, Smith is considering legal action against the city of Xenia for council’s unanimous rejection in February of his request to rezone 605 W. Second St., the former Blockbuster location he rented for a sweepstakes business on the edge of downtown.
“You cannot zone a business out of a community,” he said. “Because of their action, there are five people in Xenia who don’t have a job.”
Xenia requires a $5,000 annual operators fee and a $50 fee for each machine up to 50 machines. Those with more than $50 machines are required to pay $150 per machine.
Smith has about 40 machines at his Bellefontaine store.
Brian Forschner, a Xenia city planner, said the city’s rules do not amount to a ban.
“We are permitting them. We are just restricting where they are located and we are sort of keeping an eye on their conduct,” he said.
‘Cheers without beer’
Smith said he operates a legitimate business and employs about 50 people.
Calling these cafes “Cheers without the beer,” he said they are misunderstood by officials.
Patrons at his Bellefontaine store sit in comfortable chairs in front of touch-screen computers that display colorful games and are offered free coffee, chips, hot dogs and other refreshments.
Machines sound when someone wins big.
Smith said Internet cafes are social centers where players — many of whom range from age 40 to age 70 — catch up with friends.
Like many Internet cafes owners, he gives patrons free coffee and pop as well as snacks like hot dogs, Little Debbie cakes and chips.
His stores have regular pizza days.
Huber Heights resident Derrick Moore sometimes plays at Cyber Cafe Sweepstakes near Third and Keowee streets in Dayton.
The most he’s lost is $12 and the most he’s won is $700, he said.
He called the sweepstakes fun, social and relaxing — a far cry from casino gambling.
“You can’t go to the casino with $3,” the warehouse worker said.
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