Internet sweepstakes cafes pop up in Michigan

Internet sweepstakes cafes are popping up in Michigan, raising questions about their legality among local government leaders and law enforcement agencies. The businesses offer computer terminals on which customers, who buy Internet time, can play casino-like sweepstakes games online.
AP Wire
Nov 22, 2011

More than 10 of the cafes, which have become established in some other states, are open in Michigan, The Detroit News reported. The state lacks regulations for such businesses, the newspaper said, and some local zoning ordinances don’t address the matter.

Operators say the cafes are legal businesses because the games they offer have predetermined winners and no chance is involved, unlike casinos, and are regulated by the state’s sweepstakes laws.

At Jerry Diamond’s former Restaurant & Lounge in the Detroit suburb of Wyandotte, images of slot machines, gold coins, dice and cards line the windows. Earlier this year, he renovated the downtown business as Pot of Gold Internet Sweepstakes Cafe.

“Some people refer to it as gambling, but it’s not,” said Diamond. “It falls under the sweepstakes law — the same laws that McDonald’s, Wendy’s or Pepsi use for their sweepstakes. They’re selling the product and you can enter the sweepstakes. I’m selling Internet time.”

The games, which include blackjack and classic slot machines, offer cash prizes of up to $3,000.

Opponents say the operations are Internet cafes in name only.

“Communities think they’re getting trendy coffeehouses that will attract tech-savvy 20-somethings who want to Skype and sip espresso,” said Sarah Traxler, director of community development for planning and design business McKenna Associates, which works with several Detroit-area communities. “They end up with a gambling house. It’s a bait-and-switch for communities who fall for it.”

The Michigan State Police gaming section is investigating two complaints about Internet sweepstakes cafes made to the Michigan Gaming Control Board. If police find violations, they would forward their investigation to the state attorney general’s office.

“We’ve been getting a lot of requests from a lot of different police departments, wondering if they’re illegal,” said John Lessnau, manager of the regulatory investigations support section of the gaming control board. “We are looking at these on a case-by-case basis. ... It’s a felony to operate a gambling establishment without a license from the Michigan Gaming Control Board.”

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