Senate panel moves to ban Internet cafes amid vigorous protests from operators

03/18/2013 3:05 PM

03/18/2013 3:46 PM

A Florida Senate committee followed the House lead on Monday and passed legislation to effectively ban electronic sweepstakes games operated at Internet cafes statewide.

The move comes less than a week after a federal and state investigation led to the arrest of dozens of individuals defendants in Florida and five other states on racketeering and corruptions charges linked to gaming centers run by Allied Veterans of the World, a purported charity that collected about $300 million but donated just $6 million to veterans.

The fallout also prompted the resignation of Lt. Gov. Jennifer Carroll who previously represented the Allied Veterans in her consulting company.

In response to the Allied Veterans investigation, lawmakers have done an about-face on Internet cafes by seeking a ban instead of more regulations. Monday’s hearing was evidence of the Legislature’s desire to move fast.

The Senate Select Committee on Gaming voted unanimously to pass the bill, even amid concerns that there may be unintended consquences that could affect penny arcades for children and seniors. The House gaming committee passed a nearly identical bill on Friday and is expected to pass it on the House floor on Wednesday.

The Senate committee spent most of the meeting laying the foundation for why the bill is needed this year, when they had planned to wait until at least a year to rewrite of the state’s gambling laws.

"The events last week made two things very clear,’’ said Sen. Garrett Richter, R-Naples, chairman of the committee. "One, that we could not wait another year to address Internet cafes. Two, instead of a moratorium we need an outright ban."

He said the current bill clarifies that "gambling is illegal in Florida unless it’s legal" and there is nothing legal about the electronic sweepstakes games and online slot machine software used by Internet cafes, adult arcades and maquinitas.

Senate President Don Gaetz, R-Niceville, applauded Richter and Sen. John Thrasher, R-St. Augustine, the bill’s sponsor.

Said Gaetz in a statement: “The ongoing investigation concerning the immoral and perhaps criminal actions of the Allied Veterans organization clearly demonstrates that Internet cafes are operating in a grey area which has created uncertainty and inconsistency in the application of existing laws. Senate Bill 1030 will close the loophole illegitimate operators thought they found in current law and once and for all put an end to the gross abuses we have seen.”

Owners of adult arcade operators urged the Senate committee to reconsider. Under the bill, the so-called adult arcade may only offer games of skill and may not give patrons rewards valued at more than 75 cents.

Jason Fischer, of "Play it Again Arcade" in Davie, told the committee the bill discriminates against older people who see their amusement centers as their "home away from home."

He and his brother run two arcades and serve more than 5,000 elderly customers a year. The requirement that people will have to cash in a win and no longer accummulate credits will hurt their customers. "A 90-year-old woman will not understand this concept,’’ he said.

"Their families live out of state. They look forward to escaping the mentally draining effects of aging,’’ he said. "They use their cards to buy their groceries, to buy their medicines."

Several members of the American Legion and Veteran’s of Foreign Wars, whose organizations have benefitted from the charitable donations from the for-profit gaming operators, urged the committee to leave the loophole that allows the games to escape regulation if they operate on behalf of a charity.

But senators were clear they saw abuses. "We are not attempting to close down any of these legitimate business models,’’ Richter said. "We are attempting to close down illegitmate businesses that operate and sound like a gambling operation. If it’s a duck, we’re calling it a duck. They are illegal."

Several owners of Internet cafes pleaded with the committee to regulate, not ban them, warning that an estimated 13,000 people employed by the industry could lose their jobs.

Sen. Maria Sachs, D-Delray Beach, said she will attempt to refine the bill when it comes up before another committee to avoid unintended consequences. The House measure is expected to come to a floor vote on Wednesday. The Senate plans to review it for at least another week.

Law enforcement said the crackdown on Allied Veterans is the “first wave” of Operation Reveal the Deal, which targets illicit slot machine operators who exploited a loophole in the state’s sweepstakes laws.

Targeted in the crackdown were owners and operators of 49 gambling centers affiliated with Allied Veterans of the World, an organization registered as a charity but which gave only 2 percent of its profits over three years to charitable causes. None of the Allied affiliated Internet cafes were in Broward or Miami-Dade counties; three were in Monroe.

Carroll’s consulting company had represented Allied Veterans until she became lieutenant governor in 2011.

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