SLED Raids Internet Sweepstakes Cafes

Internet Sweepstakes Cafes Raided by SLED, Richland County and Lexington County Sheriff Deputies

By Paul Gable

Two internet sweepstakes cafes, one in Richland County and one in Lexington County, were raided and shut down yesterday for illegal gambling by a combination of SLED agents and sheriff’s deputies.

End of problem right? Business owners trying to get around the state ban on gambling, except of course for the lottery, are now out of business.

Not really. Despite yesterday’s raids, an earlier opinion from Attorney General Alan Wilson that sweepstakes cafes are illegal gambling and confident statements by SLED chief Mark Keel that the games are illegal, they are NOT gambling.

In point of fact they are worse, but we’ll get to that later.

S.C. law requires law enforcement officers to seize machines they believe are illegal, bring them to a magistrate in the county in which they were seized for a machine by machine determination by the judge as to whether they are illegal or not. In Wednesday’s raids, officers got creative by bringing magistrates along with them to declare the machines illegal.

But, it is not that simple. The law is basically non-existent in the state with regard to internet sweepstakes games and their legality. Individual magistrates and circuit court judges around the state have come to contradictory conclusions.

Internet sweepstakes cafes sell Internet access or long-distance phone cards. With each purchase, a customer receives free sweepstakes entries to play casino-style computer games for cash prizes.

The winning tickets or chances provided to sweepstakes players are predetermined by sweepstakes software. There is no element of luck or skill involved in the games and, therein, lies the difficulty in proving these games are gambling.

Generally, the software associated with these games allows winning tickets, if any, to be revealed to the player immediately or they can be revealed more slowly through games that resemble slot machines, poker or other casino style game.

The entries into the sweepstakes are held in a computer, much like numbers in a hat, and the sweepstakes entries are assigned to a player’s account when purchased. The games themselves just replicate the results already determined by the sweepstakes software. For example, if playing a slot machine game and the sweepstakes results say you win on this turn, the slot machine will show the equivalent of three cherries.

The theory is that the sale to the customer is internet access or cell phone minutes and the free game tickets/tokens are used to promote these sales. The example most often used for comparison is McDonald’s Monopoly sweepstakes games used to promote the sale of its food.

Furthermore, the payout on these games is considerably less than would be the case with legalized, regulated gaming casinos. It’s unclear just what the odds are because the sweepstakes are unregulated. The cafes do not have to guarantee a return for their patrons in the way casinos do. Each operator sets the payback amount on their own. They get what they want, the customer gets the remaining scraps.

And it is big money. Good sweepstakes café rooms can bring in $25,000 per day or more, according to information gathered nationwide.

Regardless of Wilson’s opinion, Keel’s statements and the ruling of individual judges, getting a conviction for illegal gambling against the operators of these cafes is going to be very dicey.

Consider this – the 15^th Judicial Circuit in South Carolina covers Horry and Georgetown counties. Within Horry County, a county magistrate has determined sweepstakes cafes to be illegal and county police have shut several down in the unincorporated areas of the county. The county government will not sell business licenses to sweepstakes cafes.

However, the cafes are considered legal within the city limits of Myrtle Beach and several are open and operating with city business licenses at this time. In Georgetown County, a magistrate has ruled the café games legal and cafes in the county are currently operating.

Yet, Wednesday magistrates in Richland and Lexington counties, both interpreting the same state law as the magistrates in Georgetown County and the City of Myrtle Beach, ruled the café games to be illegal. The same problem is being repeated in cities and counties throughout the state.

The real problem lies with the General Assembly and its refusal to address the difficulties in the law. Legislators took a pass on legislation to regulate sweepstakes cafes during the recently completed legislative session, even though several bills were introduced for that purpose.

Until legislators step up and pass clear language to regulate or eliminate the cafes, they will continue to operate in certain areas of the state while being illegal in others. Is that any way to run a state?