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Council awaiting state action on Internet cafes

Although city officials have not said “no dice” to Internet sweepstakes cafes, they are letting the idea ride, pending a clearer definition of those facilities from the state.

Legislation that calls for a one-year moratorium on permits for the cafes was recently approved by City Council. The measure replaces a similar resolution for a six-month freeze, which was approved in December 2010 and has now expired.

“It’s not a question of moral right or wrong, but how the operations can be scrutinized,” stated Law Director Andrew Bemer. In a recent interview, Bemer said proper taxation, as well as the definition of gambling and entertainment from the state, must be considered before giving the go-ahead for the city.

HB 195, which was introduced in the Ohio April 12 in the General Assembly, addresses the licensing of “amusement machines,” including sweepstakes terminals, and makes changes to bingo and other gaming laws. Councilman at-Large James Schieda stated at last week’s meeting, “We want to wait until we get the verbiage correct to either regulate or put a (permanent) moratorium on them.”

Bemer said potential restrictions from the state include allowing no more than 65 terminals per county, with a limited number at each location. Licensing fees could run between $5,000 and $10,000.

Internet sweepstake or cyber cafes usually open in former shops or restaurants and offer computer-based services such as faxing and copying, but primarily sell phone cards with Internet minutes. Players then use the cards for Internet games that resemble video slots. They can win more online time and points, which have no cash value, but give them a chance in sweepstakes for cash prizes. Because there is a predetermined outcome, this is not considered gambling and is legal in the state.

Schieda pointed to the murky definition as well as the close relation to gambling as a negative, even though the city would make money from the cafes.

“Why do we need them? It would be a source of income, but why do we have to resort to this? It will be interesting to see what casinos do to Cleveland,” he stated.

Bemer compared the idea of the cafes to bingo halls, and did not anticipate as much trouble with clientele, as stress on the city. “It would be an imposition on city services. If there were a large number of users, there would be traffic issues,” he remarked, adding that the facilities should be kept strictly to areas zoned for business. “I can’t say it will draw the wrong crowd, but the potential is there,” he remarked.

The impact of cyber sweepstakes in other communities is also being considered before the city takes a chance. Bemer said that the city of Akron is still trying to determine if the cafes constitute a business or a gambling venture. Earlier, he had reported 25 arrests were made by police when a café opened in that city.

Locally, North Olmsted has passed legislation governing the facilities. While there have been no incidents reported at the city’s one sweepstakes cafe, City Council President Duane Limpert remarked, “There are other businesses we’d rather see.”

He added his city decided to take a “proactive” stance.

“We wanted to get some things out there before the general assembly makes its decision. At first we wanted to wait, but if we waited for the state to come out with a definitive word, some things may have to be grandfathered in,” Limpert stated.

The North Olmsted legislation prohibits cafes from being within 500 feet of residential property, and from being closer than 1,000 feet to another “arcade.” It limits the number of game terminals to 20 per building, and requires one parking space per terminal, and one for each employee.

While Westlake has two cyber cafes, a call to City Hall revealed there was no legislation governing them.

Bemer stated, however, that Rocky River officials felt it was more prudent to wait for the outcome of the state vote. “My attitude is to figure it out based on the latest decision from Columbus. What is it really? Gambling or a business venture?” he asked.



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