With legal gambling seemingly everywhere, people who follow the industry closely are keeping a close eye on the proliferation of so-called Internet Sweepstakes Cafes, which they say are competition for casinos.
On Wednesday, The Wall Street Journalreported that in recent months dozens of these cafes have been raided and branded illegal gambling parlors.
“Gambling has become more morally acceptable and more present,” said Nelson Rose, an expert on gambling laws. “If you open the door a crack, entrepreneurs are going to try to find a way to force it wide open.”
In a typical cafe, customers get “sweepstakes” entries as a promotion for each dollar they spend on Web time. The sweepstakes typically involve points that are often placed on plastic swipe cards. The customers can then play simulated slot-machine games to find out if they have won cash prizes.
Critics say it is just a ruse for illegal gambling. The cafe owners say they adhere to the letter of the law and their sweepstakes are no different than the ones long-offered by McDonald’s, for example.
Mr. Rose puts it this way: “What these operators are trying to do is create machines that are as close to slot machines as they can that will not be considered gambling.”
So far, courts have offered mixed views on the legality of the cafes, says Joseph Kelly, a business-law professor at SUNY College at Buffalo, who has been studying the growth of the industry.
“You get people to show up at these internet sweepstakes cafes and play, and the operators can make a good deal of money,” Mr. Kelly said. “On the other hand, the states are worried about whether these … are gambling establishments.”
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