Legal Fight Begins In Michigan Over Internet Sweepstakes Games

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Flint, Michigan – According to Jerold Jaffe, a 66 year old from Michigan, he said he was stunned to be facing up to 10 years in prison. “He’s had maybe three traffic violations in his whole life,” proclaims his son, David Jaffe.

Pre-Reveal-GoldThe Sylvania resident was charged with operating an illegal gambling operation at the end of June after the Michigan Attorney General closed 59 internet cafes across the state, including Mr. Jaffe’s Lambertville store.

It may look like a casino —even act like one — but Mr. Jaffe insists that no gambling ever took place at his establishment, which was located along Secor Rd. near Consear Rd. “From what my attorney tells me,” Mr. Jaffe said, “the definition of gambling in both Ohio and Michigan is that you have to put something of value up at risk based on a random event, like the turn of a card, the role of a dice, a horserace or a football game.” “There is no money to be put up. You just play the games and if you win, you win.”

Here’s how the games are played ; When a customer enters one of internet sweepstakes cafes, they purchase a certain amount of time on the Internet (much like purchasing a hamburger at Mcdonalds) They are given a card that allows them access to a computer. (Much like being given a Monopoly game piece on the sandwich wrapper at Mcdonalds) Once the computer is activated, the customer is taken straight to a Google browser where a timer in the upper right-hand corner of the screen indicates how much time they have left online. (The games do not effect the amount of time purchased) Should they decide to play the casino-style games, they simply click off the browser screen — causing the timer to freeze. They then can play games for as long as they wish and win a predetermined amount of money.  (Much like winning instantly at Mcdonalds or going to www.playatmcd.com) “No purchase is necessary — like Publishers Clearing House,” Mr. Jaffe said. “The games are pre-determined, therefore where the law says ‘random event’ this is not a random event.”  The strategy for determining the amount won is posted right there in the store. In fact, customers don’t even have to play the games in order to win the money.

“Some people will come in and say, ‘Hey, I want $5 of Internet time — tell me how much money I win.’ And they get (the money) right there,” said David, who acts as a regional manager for the business. “Some people do come in just to use the Internet, but almost everybody checks to see how much they have won.”  “This is a place that promotes sweepstakes. It’s a new thing, and I can see why they took a second look at us. But it’s the same as the sweepstakes you get in the mail,” David said.  The Jaffes said when they opened, they had a meeting with town officials to inform them of the business’ model and the township had no problem with them opening. Later, they employed Temperance attorney Tim Churchill to look into the issue further. Mr. Churchill said he met with the Monroe County prosecutor and was told no one at that time had been criminally charged for the activity.  “We did not just go in and open up these stores,” David said. “We were looking for a reason not to open up, but they couldn’t find one.”  They continued operating for two years under the assumption that if they were to receive a cease-and-desist order from the State of Michigan, they would close their doors as soon as it arrived but it never came, and Mr. Jaffe said he was shocked to receive a phone call that his cafe was being raided.  “They took all of the equipment,” Mr. Jaffe said. “They took $61,000 out of our bank accounts. And they said that we were breaking the law. “I don’t think it’s fair. I had permission from everyone to open. I would have closed on a minute’s notice had they told me to.”  Mr. Jaffe went to the cafe while it was being raided and told the police he was the owner — which led to him being charged in the crime. His 30-year-old nephew, Jacob Jaffe, was working at the store when police showed up. He also was charged.  “I walked in and said ‘I’m the owner, I’ll answer any questions — we’re not doing anything illegal here,’” Mr. Jaffe said. “I was grilled by the state police and answered every one of their questions.”  That same day, the Jaffes closed their Adrian cafe as well before it was raided by police. Now, they have customers from Bedford and Adrian coming to their Toledo store, where the sweepstakes — for now — are still legal.  Mr. Jaffe and his nephew are still amid court proceedings in the case. Mr. Churchill said he is currently negotiating with the Attorney General for a resolution, but nothing has been determined.  “The cops told me I was a standup guy because they usually have to chase the owner out the back door,” Mr. Jaffe said. “I said ‘That’s because you raid places that are illegal — I’m doing nothing wrong.’”

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County Finding It Difficult To Regulate Sweepstakes Cafes

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A year after Net Connection Internet cafe opened its doors on Hesperian Boulevard, county authorities are trying to

WIN-CAFE Sweepstakes Cafe

close it and a strand of similar companies in unincorporated neighborhoods after the state proclaimed them unlawful gambling procedures.
Net Connection sells consumers Internet time and, consequently, accessibility to online sweepstakes ready a minimal $ 5 cost. Payouts at Net Connection can easily get to $ 1,000, baseding on an online review of the operation. A private safety policeman stands guard outside the door.
A clerk behind the counter at Net Connection stated the shop offers Internet time and nothing else. Net Connection administration did not reply to a request for comment.

Cafes all over the country operate differently, with some providing consumers the selection between basic Internet access or sweepstakes games after visiting with a paid Internet time card. Others supply sweepstakes time, credits or cash as a promotion by getting the purchase of a soda, coffee, snacks or solutions like faxing. Sweepstakes games vary from video slots to poker, roulette, and blackjack threw on a local or distant software server.
Such facilities aim to skirt state gambling laws and are prohibited, baseding on the state Bureau of Gambling Control. The bureau issued a police force advisory on the subject matter in December and offered local governments aid in shutting them down.
The advisory provided the county the solid.

“I think individuals in the community don’t wish a flooding of specific sorts of businesses and we may just regulate based upon state law and various other points,” Chan claimed. “They call themselves Internet cafes, but they are really online gambling establishments.”.
The Alameda County Board of Supervisors released a moratorium on new cafes in October while the planning department examined the cafes’ procedures. The testimonial, completed late last year, ended the companies do not follow the region’s zoning statute since no company like it is detailed as a permitted or conditional land usage. The region managers voted to rescind the respite Jan. 8, claiming it was now moot because closures were being gone after.
Alameda County has actually sent out stop and desist letters to all 5 Internet cafes located in unincorporated locations, featuring two in San Lorenzo, two in unincorporated Hayward and one in Castro Valley, stated Alameda County Sheriff’s Sgt. Bret Scheuller, head of the region’s society policing device. All have actually levelled less than a year.
“We going many area issues from homeowners and company owners, and they range from auto parking issues to loitering to controlled substance use and revenues, so it operates the gamut,” Scheuller stated. “We are carefully overseeing the tasks of these areas while they are still open. We have made apprehensions at all 5 of the ones we currently have.”.
Region hearings for the businesses are upcoming, and if found, an appeal procedure, claimed Albert Lopez, planning supervisor for Alameda County. Lopez approximates all issues will certainly be cleared up and closed within 60 days.
The Internet cafe sweepstakes business– estimated to gross $ 10 billion a year across the country by a leading specialist to the sweepstakes market– has prompted legal restrictions and lawful battles in some states and efforts to shield the cafes in others.
Execs of Hest Technologies, a Texas-based firm that makes software used in the cafes, were arrested in August and face fees of felony gambling, money laundering and arranged criminal task. In Florida, proposed legislation to control or prohibit them leaves their fortune unclear.
In Contra Costa County, the urban areas of Antioch, Pittsburg and Oakley all placed reprieves on the cafes last year, and Brentwood positioned limitations requiring employee overview checks, limited hours of procedure and restrictions against adult-oriented company, among other demands.
James Saavedra, owner of Papa Ponchos Taqueria, found in the exact same San Lorenzo complex as Net Connection, welcomes the scheduled closure.
Saavedra stated he and 5 other tenants petitioned the property owner April 18 for aid addressing the problems they stated the cafe delivered, including concerns about security, hassles created by cafe clientele, junk accumulation and car parking issues in the 20-minute ton.
“We as business owners have actually learnt through our very own 20-plus-year clients that they do not feel comfortable regarding entering our outlets,” Saavedra claimed.” (The cafes) are deceiving. They inform the general people simply exactly what they wish to listen to. They are not sincere by getting just what they are really doing.”.
The board of directors for the Washington D.C.-based American Gaming Association, which markets the interests of the enjoyment gaming business, enacted the be up to oppose the cafes.
Kathy Martins, acting administrator at the San Lorenzo Village Homeowner’s Association, stated the organization has actually fielded many grievances regarding the cafes.
“We have 2 in a very little geographical area, which was really worrying,” Martins stated, adding that the decision to close them, “truly reveals that the board of managers are in touch with the communities they regulate.”.

http://michiganinternetcafe.com

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Internet Cafe Owners Have Evidence Casinos Had Hand In Internet cafe Bans

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Internet cafe owners have long suspected that the Horseshoe Casino in Cleveland is behind efforts to put them out of wp12business in Ohio, and lawyers for the cafe sector claim they now have evidence.

The owners and their lawyers point to testament and an email documenting consults between a casino lobbyist and 2 individuals– a district attorney and investigator– included in criminal charges brought on a company that supplies software to the cafes.

Cuyahoga County Assistant Prosecutor James D. May and state detective Robert Boldin witnessed last month in Columbus in support of House Bill 605, which will have properly wiped out the controversial cafes had it been passed prior to the legislative session ending Dec. 31.

May sent Boldin an email the night before they went downstate, identifying casino lobbyist Leah Pappas Porner as their “contact” for a Senate committee hearing.

According to the transcript from a court hearing in the criminal case (see the full transcript in the document viewer below), Boldin testified that he sent Porner an advance copy of remarks he planned to make before the Senate committee. He also testified that Porner was present when he prepped for the committee meeting with his superiors from the Ohio Department of Public Safety.

Washington, D.C., defense lawyers handling the criminal case filed a motion Monday in Common Pleas Court, asking Judge Deena Calabrese to remove May from the proceedings. Attorney Mark Schamel declined to comment, but the court filing says the email is evidence that May is “aligned with the casino.”

Cafe owners believe casinos are out to stifle competition, though they deny that their operations involve gambling.

Besides contact with casino representatives, lawyers are upset that May and Boldin traveled to Columbus in the midst of a two-day hearing on defense motions. The trip delayed the proceedings until the afternoon of the second day and came while Bodin stillwas under oath.

May cannot discuss the case, said Maria Russo, spokeswoman for Prosecutor Timothy J. McGinty. In a statement released late Monday, McGinty discounted the complaints made by lawyers for the owners of the software company, New Jersey-based VS2 Worldwide Communications.

“Take a minute to think about what they are doing,” McGinty said. “The purveyors of these gambling dens want to punish the prosecutor who testified with the Attorney General’s Office before the Legislature that their totally unregulated mini casinos, using rigged video slots to bilk little old ladies out of their pensions and pin money, are absolutely wrong and illegal under Ohio law.”

Porner, a Columbus-based attorney for Calfee Halter & Griswold, could not be reached for comment. Jennifer Kulczycki, a spokeswoman for Rock Ohio Caesars, the casino owners, said she did not know enough about the allegations to comment.

“Leah is a lobbyist for us,” Kulczycki said. “She was involved in our support of the bill, but I can’t comment on ‘He said, she said.’ ”

Joe Andrews, a spokesman for the Ohio Department of Public Safety, said May asked Boldin to testify at the Senate Committee meeting. Andrews said he had no indication that Boldin or other department officials acted improperly.

Owners of up to 800 Internet cafes deny they are illegal gambling operations. They say their businesses consist of selling phone or Internet time. The cafes also providecomputers for patrons to play slots-like games, and cafe owners offer cash as prizes.

But Ohio Attorney General Mike DeWine and other critics say the storefront businesses’ computer terminals run illegal games of chance and should be strictly regulated, if not shut down. House Bill 605 would have likely accomplished the latter by forbidding the cafes to award cash to sweepstakes players and capping the value of other prizes at $10.

Schamel and other lawyers in the criminal case have claimed selective prosecution. They have asked Calabrese to make former Prosecutor Bill Mason, in office when the case was filed, testify and explain why he did not go after businesses offering other types of sweepstakes contests.

Mason ordered Internet or sweepstakes cafes across the county to shut down or face possible criminal charges. Cafes obtained a temporary restraining order from Judge Nancy Margaret Russo, and a trial is pending.

Lawyer Daniel Gourash, who represents several cafes in the case, has asked for copies of all communication between the prosecutor’s office and casino representatives. Russo ordered the prosecutor’s office to respond by the middle of last week, but Gourash said he had not received a response as of Monday.

“We want to get to the bottom of it,” he said of the reported contact between May, Boldin and Porner. “It’s highly unusual.”

http://michiganinternetcafe.com

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Sweepstakes Case Headed To Appeal

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An Internet cafe operating below under the name Shamrock Sweepstakes closed its doors after a neighborhood court ruled that electronic sweepstakes games are a form of unlawful gambling, said local news outlets.

Ingham County Circuit Court Judge Rosemarie Aquilina located in favor of the state’s attorney general, turning around a pro-sweepstakes judgment given out by an additional court on Nov. 20.

The attorney general’s Alcohol & Gambling Enforcement Division had actually issued an end and desist order to the area owner in mid-October. A spokesperson for the AG’s office claimed the Michigan State Police and Michigan Gaming Control Board have investigated sweepstakes games and determined them to be illegal gambling.

As earlier stated by Vending Times, the AG’s office announced the “voluntary” closure of 8 sweeps places last springtime.

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Court Ruling Closes Down Burton Internet Cafe

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An Internet sweepstakes cafe in Burton has closed down observing a court ruling in favor of the state’s Attorney General to end claimed unlawful gaming procedures at the facility.

The business shut after Ingham County Circuit Court Judge Rosemarie Aquilina turned around a temporary hindering order Nov. 20 and asked for the business at the edge of Fenton Road and Maple Avenue to adhere to a cease and desist letter it obtained Oct. 18 from the Attorney General’s Alcohol & Gambling Enforcement Division.

“The letter asks the business to quit performing internet sweepstakes gambling that breaches state law (within 14 days),” stated Joy Yearout, Attorney general spokeswoman in an email. “They can easily continue to be open and promotion some other goods and services, as long as those items and solutions do not break state law, like the unlawful internet sweepstakes gambling.”

Many end and desist notices walked out to internet sweepstakes cafes from the state Attorney General’s Office previously this year, Yearout stated, complying with an investigation by the Michigan State Police and Michigan Gaming Control Board.

Several Genesee County cafes– Flint Business Center in Flint, East Point Business Center & Internet Cafe in Genesee Township and West Point Point Business Center & Internet Cafe in Flint Township– obtained notices in April and June and have considering that shut.

“The Attorney General is complimentary to take whatever action required to end unlawful gambling procedures in the state of Michigan,” Yearout said.

A sign on the front door of Shamrocks Sweepstakes on Fenton Road in Burton consists of a contact number for individuals to call pertaining to the closing and the best ways to get cash still owed.
Lauren Justice|MLive.com Patrons still owed money by Shamrocks were steered in an information left taped to the door Sunday– which specifies the facility was shutting Nov. 15 and reopening Nov. 21– to call the business number, and someone would certainly call them on the best ways to collect the rest of the balance owed to them and supply an update on the scenario.

Multiple phone calls by The Flint Journal to the business number for comment on the closure and feasible additional legal action were not promptly returned.

Shamrocks was opened in June 2012 by John Cofhlin III, who began arcades and internet sweepstakes cafes in 2002 around the nation, adhering to 18 years in the gaming business.

Customers at the new cafe purchased phone cards, with sweepstakes points having the investment of the cards– much like businesses such as McDonald’s offering game pieces during an advertising period, Cofhlin formerly said.

Cards could at that point be swiped at a front counter to see if they were a determined winner or check by swiping their card on a readily available computer terminal where they may play games, strictly for amusement purposes, or search the internet.

Burton Mayor Paula Zelenko pointed out in spite of the state’s issue in regards to the internet sweepstakes bistro companies “We actually had no problems because of the sweepstakes area, the internet cafe.”

“We didn’t have any type of problems, no authorities relies on the very best of my expertise,” she pointed out.

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Attorney General Cracks Down On Sweepstakes Cafes

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Michigan Attorney General Bill Schuette bought nine more Internet sweepstakes cafes to halt affairs as he continues to crack down on what he calls “illegal casinos.”
Schuette sent cease and desist notices to the cafes on Friday, warning the users of possible prosecution. The letters came about a month after Schuette got to an agreement with eight other sweepstakes cafes to shut down.
However one of those cafes, the Flint Business Center, submitted a suit from Schuette on Thursday and requested a preparatory injunction to prevent the state from prosecuting the cafe or confiscating its possessions.
“We’re confident we’ll prevail in court,” pointed out Schuette’s spokeswoman Delight Yearout. “Michigan law does not authorize unregulated pop-up casinos to provide online gaming.”
A number of cafe owners could not be contacted for remark. Flint Business Cafe’s attorneys would not comment.
Internet sweepstakes cafes market Internet accessibility or long-distance phone cards. With each purchase, a client obtains free of charge sweepstakes access to play casino-style computer games for cash prizes. Some cafes serve snacks, like soda and chips.
Cafe owners compare their affair to McDonald’s Monopoly game, where clients purchase a hamburger or French fries and receive pull-tab game pieces with the chance to gain money and additional rewards.
Michigan law bans gambling that contains components of factor to consider, award and possibility, unless especially authorized by statute. Operating an unlicensed gambling task is a felony punishable by up to 10 years in prison and/or a fine of up to $ 100,000.
Cafe owners state they provide prizes, however not factor to consider or chance. Factor implies the player needs to spend cash or sizable effort to participate, while possibility means the outcome is past the player’s command.
The Flint Business Center suggests in its claim that there’s no consideration given that sweepstakes entries are supplied free of charge with purchase or a minimal quantity are provided free upon request. The cafe even contends there is no component of chance, given that sweepstakes entries have predetermined prize worths.
“The graphical interface displayed by the computer terminal is merely a simulation that reveals the predetermined prize value of the points in a fanciful manner,” according to the suit.
The state argues that sweepstakes cafes are illegal for basically offering access to the game through the sale of Internet access. State law permits a limited exemption for proms, like McDonald’s Monopoly game, that are periodic and ancillary to the major company.
“These establishments may be run under the false premise they are conducting legal promotional sweepstakes. But, there is no such exemption for this type of gaming under Michigan law,” according to an educational guide on sweepstakes cafes from the Michigan Gaming Control Board.
Michigan courts may accustomed a broad interpretation of the law and consider an operation illegal even if it does not have all 3 components of award, opportunity and consideration.
Genesee County Circuit Judge Judith Fullerton will conduct a hearing on Flint Business Center’s motion on June 18.

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Michigan Internet Cafe lawyer says games do not violate states gambling statues

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BURTON, MI – John Cofhlin III said a new internet café he’s opening in Burton will provide a service for residents and a place for them to congregate in the neighborhood. Roberto Acosta | MLive.com An empty storefront near the corner of Fenton and Maple roads is set to become the city of Burton’s first internet cafe by early June.START A INTERNET CAFE 1-877-WIN-CAFE (946-2233) His application to open the new business at the corner of Fenton and Maple roads in one of two suites was recently approved by the city’s planning commission.The cafe is the first Cofhlin has opened in Michigan. After 18 years in the gaming business, in 2002  he began opening arcades and internet sweepstakes cafés in Florida and Georgia.“I heard it was a new territory and I came up here,” said Cofhlin, noting a saturated market in Ohio while other markets such as Massachusetts, Pennsylvania and California are noticing an increase in business.

“The fact that there were some players up here already was plus.”

Cofhlin said patrons at the new café purchase phone cards, with sweepstakes points coming with the purchase of the cards — much like businesses such as McDonald’s offering game pieces during a promotional period.

START A INTERNET CAFE 1-877-WIN-CAFE (946-2233)

Patrons may then either swipe their cards at a front counter to see if they were a predetermined winner or check by swiping their card on an available computer terminal where they can play games strictly for entertainment purposes, Cofhlin said, or search the web.

Burton Mayor Paula Zelenko said “The gaming aspect is a grey area” in terms of the cafés, said Burton Mayor Paula Zelenko. Flint Business Center in Flint recently closed after receiving a cease and desist letter from the state Attorney General’s Office.

“You can’t deny it with a lack of attorney general’s opinion,” she said, while noting planning commission members are tasked with regulating zoning parameters and not the legality of businesses.

Cofhlin said he’s providing a tangible, taxable product by selling phone cards, and hopes it will bring some economic boost to the area.

“It’s hopefully bringing some vitality into a depressed area, such as Flint,” he said, stating as many as six local people would be hired to work at the facility when it opens, including police officers for security purposes.

Once equipment is in place, Cofhlin hopes to open by the first week of June with an inviting atmosphere for residents.

“I want a business for the community where people can come in and socialize. You see a lot of the same faces every day with first-rate customer service,” he said. “I’m trying to be the Cheers of the business world.”

START A INTERNET CAFE 1-877-WIN-CAFE (946-2233)

http://www.mlive.com/business/mid-michigan/index.ssf/2012/05/burton_planning_commission_app.html

 

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