In My Opinion | Fred Grimm

Fred Grimm: An Internet cafe epiphany for cash-collecting legislators

It was a stampede of the disingenuous last week, as our astonished state legislators discovered what was at the crux of Internet cafes. Suddenly, like Captain Renault in Casablanca, they were shocked, shocked to find out that there was something hinky about Florida’s storefront casinos.

In the movie, Renault utters his famous lines as the croupier hands him his winnings. In Florida, our shocked, shocked legislators have been collecting millions from Internet cafe operators in contributions to their campaign funds and political action committees.

Their great epiphany came courtesy of the Florida Department of Law Enforcement and the Internal Revenue Service, which, with help from local law enforcement, busted 57 people associated with the state’s largest chain of Internet cafes, a not-so-charitable charity called Allied Veterans of the World.

Investigators also had a heart-to-heart talk with Lt. Gov. Jennifer Carroll, whose Jacksonville-based public relations firm, 3 N. and J.C., had done work for Allied Veterans in 2009 and 2010. Carroll promptly resigned, the only honest reaction out of Tallahassee to the big bust.

Allied Veterans’ other political beneficiaries only feigned surprise. They were just flabbergasted when they were told that the source of all those fat contributions was an illegal gambling operation.

Police said the various entities connected to Allied Veterans of the World and its 49 strip mall casinos contributed $2 million statewide and legislative candidates and their various committees in the last three years.

The Miami Herald’s Mary Ellen Klas reported that another Internet cafe chain, Arcola Systems of Florida, had greased our elected leaders in Tallahassee with $864,000.

The money explains the proliferation of low-rent casinos, known variously as Internet cafes, adult (or sometimes “senior citizen”) arcades and, down our way, maquinitas.

The scourge started back in 2000, after South Carolina outlawed so-called “video gambling terminals” that had infested mom-and-pop businesses and spawned hundreds of rural roadside casinos housed in plywood shacks. The South Carolina ban left operators with some 38,000 homeless slots. They headed out for Georgia, to an unkind reception, then on to Florida, where they found refuge in the state’s “Chuck-E-Cheese” loophole, an exception in the state gambling law meant to allow certain children’s arcade games.

It was telling, perhaps, that these arcades exploiting the child-oriented Chuck-E-Cheese loophole, supposedly allowing only noncash prizes, prohibited actual children. Operators claimed, laughably, that their terminals, unlike slot machines, required skill, not luck, based on a “stop” button that allowed the customer to physically stop the whirling cylinders.

Later, they discovered another legal loophole, claiming that the machines were actually mini-sweepstakes gadgets connected by the Internet, and were therefore covered by the same regulations that might cover a cereal company or a hamburger chain sweepstake.

The sham didn’t fool local law enforcement or state prosecutors.

But the state gambling laws were so nebulous that prosecutions were dicey. Storefront casinos thrived amid the legal ambiguity. More than a thousand popped up around Florida, generating so much money (about a billion dollars a year) that the industry could hire clever lawyers and “expert” witnesses to confuse juries. And, with enough money, they could persuade politicians to stymie unfavorable legislation..

Sheriffs, prosecutors, local city and county commissioners, religious business groups and parimutuels incensed that they were forced to compete with untaxed, unregulated slots operations, begged Tallahassee to fix the law. But money, funneled to political power boys, preserved the status quo.

Allied Veterans’ front as a charity looking out for veterans provided lawmakers a fine excuse to bank the contributions and ignore pleas to do something. It was especially nice that Allied Veterans gave the Republican Party of Florida about $300,000. And, just to show that unseemly gambling proceeds were unbound by political affiliation, $150,000 went to the Florida Democratic Party.

Miami’s own Sen. Miguel Diaz de la Portilla, who fought to keep his fellow legislators from banning Internet cafes, had accepted political donations from four of the Allied Veterans who were busted last week.

But, like I said, Allied Veterans’ status as a charity allowed politicians to rationalize their support of its chain of gambling joints. But this nonprofit was awfully damn profitable. The FDLE confirmed last week what newspaper reporters had been writing for the last two years: The so-called charity took in $300 million, but only contributed $5.8 million to charitable causes. So far this week, investigators have seized 80 vehicles, including a Maserati, 170 properties, 260 very fat bank accounts and, of course, a yacht.

Attitudes in Tallahassee didn’t so much shift after the arrests last week as lurch. Some of the very legislators with Allied Veterans money in their political bank accounts abruptly disowned the very notion of Internet cafes, forgetting that these wildly profitable, unregulated, untaxed gambling enterprises had only prospered and proliferated through their own willful inaction.

On Friday, a bill sponsored by Rep. Carlos Trujillo that would ban storefront casinos zipped through the House Select Committee by a 15-1 vote. “We are finally seeing what an epidemic this is that as elected officials we’ve closed our eyes to,” Trujillo told The Miami Herald. The Senate leadership promised to get to a similar bill come Monday. All it took was 57 arrests and the promise from FDLE that more busts were coming.

Suddenly, Florida’s shocked, shocked legislators could see the obvious.

Read more Fred Grimm stories from the Miami Herald

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