Internet “Sweepstakes” Cafés: Law Enforcement’s Growing Battle Against Illegal Gaming

By Dave Malone                                                                 

More than coffee and cake can be had at some cafés springing up in the Midwest and throughout the rest of the country.  For a fee, customers are offered Internet access on computer terminals to play games of chance or, in some cases, to purchase phone cards for the same purpose. Some of these Internet sweepstakes cafés are using these false premises in order to conduct illegal gaming and the non-taxed income it can produce. In Michigan, this type of scam is illegal.

On September 6, 2012, at the MI FBINAA Annual Retrainer, Donald McGehee, Division Chief, Department of Attorney General Alcohol & Gambling Enforcement Division for the State of Michigan, gave a presentation on the growing menace of illegal gaming through the services of “Internet Sweepstakes Cafés.”                                                       

Chief McGehee reports that several states have for seven years been fighting the legality of the pop-up casinos in North Carolina, Georgia, Florida, Texas, Utah, Massachusetts, Ohio and now in Michigan. This article points to the growing number of “sweepstakes” establishments multiplying across the nation and the battle law enforcement faces in their effort to shut down these cafés. For example, many cities and states are facing lawsuits after passing ordinances to try to get rid of these establishments.

That’s because the stakes are high.

Owners of these mini-casinos are fighting hard for their high-margin, cash-rich businesses, which is estimated to be a $10 to $15 BILLION industry. According to the article, each terminal at a mini-casino typically grosses $1,000 to $5,000 per month. Therefore, a medium-size business with 100 machines would gross approximately $250,000 a month, $3 million a year.

Chief McGehee pointed out that police in Virginia Beach, Va., raided a dozen game rooms and confiscated more than 400 computers.  It has been recently estimated, Chief McGehee reported, that Ohio had over 600 locations! If you think it is just a small problem consider this: A search on Google Maps for sweepstakes café turns up 2,823 results in North America.  And, those are just the ones listing their services.

Many legal battles remain to outlaw this predatory form of gaming.  There seem to be many who feel easy access gaming is a genuine extension of casino gambling and a legitimate entrepreneurial enterprise. One thing seems that seems clear to me: Local law enforcement, state police and prosecutors will soon be faced with this growing menace affecting many of our citizens who are unable to curb their gambling habits. The victims of gambling addiction are often those among us who can least afford to gamble at all!

Does your state have a problem with Internet sweepstake cafés? How is your department handling this growing problem?

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