California Cities Unsure How To Tax Emerging Cyber Cafe Businesses After Court Win

Pre-Reveal-GoldVISALIA, California – The members of the city of Visalia Planning Commission denied an appeal that an internet business was a retail business and not an arcade which required a conditional-use permit.

The Commission voted unanimously against Wonderland who claimed that the establishment offering internet time to customers in 324 S. Mooney Blvd. was just a retail business offering of phone cards, cell phone covers, snacks and other items.

Wonderland’s lawyer argued that based on the Visalia’s municipal code, the establishment’s activities with computers do not meet the definition of an arcade. The city officials, however, decide that the establishment was an arcade, therefore, it need a conditional-use permit to continue its operation.

In May 2013, law enforcement raid Wonderland and Dreamland owned by husband and wife Melham Farah and Silva Ghreir, both 39 from Woodlake.

Police also found about $88,000 cash stashed inside the couple’s house.

According to undercover agents who played casino-type games on Wonderland, although the owners advertised both businesses as internet cafes, nearby shop owners knew that was just a front.

“They were advised that for every cent spent, a point was loaded on the players’ cards, and with these points, one could bet on video games on the computer. The original money spent on the card could not be cashed out, but the player could cash out the winnings from playing the video game,” read the Tulare County District Attorney’s Office report.

Both Ghreir and Farah were charged with misdemeanor counts of possessing illegal gaming devices and possessing slot machines or devices. They were also scheduled for a re-arraignment on six counts of felony, money laundering, and conspiracy at the Tulare County Superior Court on July 24.



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Why casino mogul Sheldon Adelson hates internet gambling

Pre-Reveal-GoldOver a decade ago, Sheldon Adelson was only a B-lister in Las Vegas scrambling to finance his only hotel until he opened Sands Macao, Asia’s first and only American style casino in 2004. From that time on, Adelson transformed into a business magnate in the $150 billion global gaming industry. He founded and chaired Las Vegas Sands, known as the world’s largest gambling company by market value.

Adelson not only chair huge casinos, he also heads the Coalition To Stop Internet Gambling, a crusade to protect US citizens from internet gambling by campaigning to restore the longstanding ban on internet gambling.

“Targeting the young, the poor and the elderly where they live, Internet gambling takes gambling too far. Internet Gambling crosses the line of responsible gaming by bringing gambling into our living rooms and onto our smartphones, tablets and home computers 24 hours a day without necessary protections.  Congress must protect United States residents and citizens by restoring the longstanding federal ban on Internet gambling,” the coalition posted on their website.

“I am willing to spend whatever it takes. My moral standard compels me to speak out on this issue because I am the largest company by far in the industry and I am willing to speak out. I don’t see any compelling reason for the government to allow people to gamble on the Internet and nobody has ever explained except for the two companies whose special interest is going to be served if there is gaming on the Internet, Caesars and MGM,” Adelson stated.

In order to purchase opposition power against online poker, Adelson funded Republican politician’s coffers just to get their vote banning internet gambling in the US.

Recently, former Assembly Speaker Willie Brown announced his decision to join Adelson with the fight and turned his back on iPoker which he used to support.

But, how can a business magnate ban internet gambling after he strikes it rich with a casino business?

According to Adelson, he is concerned about the morality of US citizens. He views online gambling as a “societal train wreck waiting to happen.” However, some doubts his ethical concern.

The casino mogul is obviously unconcerned with citizen’s welfare and morality after he founded casinos which made him rich and power broke Iran’s nuclear programme.

Caesars Entertainment Corp, Las Vegas Sands biggest rival so far, has the grip on internet gambling, that’s why Adelson needs to kill online poker before it catches the lucrative Asian market.

Clearly, Adelson’s concern is purely business. He recognizes online gambling as a threat to his businesses. Therefore, the threat must be eliminated before it affects his casino business.



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Ca Sweepstakes Fight Begins with Capital

BAKERSFIELD, CA – On Friday morning, the district court ruled three internet cafes in the area as illegal, in violation of the state’s gambling law.
The Fifth Appellate District based in Fresno agreed with of the Kern County District Attorney’s Office which claimed that the Bakerfield internet cafes also known as sweepstakes cafes are illegal under California’s laws.cap
Kern County Deputy District Attorney Greg Pulskamp expressed that it was a good day and that they are proud of the work they have done.
Almost two years ago, the DA filed a lawsuit against three establishments in Bakerfield namely I-zone Internet Cafe, Oz Internet Cafe and Hub and the A to Z Café. The DA’s office argued that the sweepstakes offered in those internet cafes were illegal.
Kern County Superior Court Judge William Palmer released a ruling in favour of the DA’s office, however, the internet cafes filed for an appeal.
On Friday, the Fifth Appellate District ruled in agreement with Palmer’s ruling.
“Judge Palmer did an excellent job and he was correct in ordering all of these businesses to cease and desist any and all gaming activity,” Pulskamp stated.
moneyFurthermore, Pulskamp affirmed that all sweepstakes cafes must cease operation. He also announced that he will be meeting with some law enforcement officials later to discuss their game plan against illegal sweepstakes.
“We intend to go forward with enforcement very quickly. This opinion gives us a basis on which to move forward with the next phase of enforcement,” Pulskamp disclosed.
On the other hand, it is yet to be determined if the said internet cafes will appeal to the California Supreme Court.



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New California Law Needed To Make Internet Cafes Illegal

Bill 1438 Introduced Jan 6th, 2014.

BAKERSFIELD – A California lawmaker looking to shut down internet cafes in Bakersfield by defining “sweepstakes” as an illegal activity.

Assembly member Rudy Salas (D-Bakersfield) announced Wednesday that he has introduced Assembly Bill 1439 to fight the rising number of illegal sweepstakes gambling cafes.

The bill would close a loophole in the law that will clearly define the activity of playing games at internet cafes. The bill will also make these activities an unfair business practice that will permit cities, counties, and the DOJ to bring civil lawsuits against the individuals at the center of these activities.

“Illegal sweepstakes gambling cafes are a threat to both public safety and local business,” said Salas. “This legislation will stop these casino-style gambling cafes and give local governments and the Department of Justice the tools needed to shut them down permanently.”

Kern County business owners have voiced concern and support about the consequences of internet cafes, including many reports of increased crime such as prostitution, drug trafficking, and violence.



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Sweepstakes Cafes Argue That They Are ‘Promotional Sweepstakes’ – True..

..WJSR Conducts Independent Investigation and Concludes That Sweepstakes Cafes Are promoting a Product.. 

Bakesfield, CA – Supervisors in Kern County asked city attorney Tuesday to prepare a report on what it would take to draft or revise an  ordinance that would allow the county to close down Internet sweepstakes cafes.

Sweepstakes Cafes Promote a Product and Reveal the Prize Through Casino-Theme Games

The cafes are thought to be illegal gambling organizations. County Administrative Analyst Chase Nunneley says they have a history of suing cities and counties that try to close them down claiming they do not violate the law.

The Kern County District Attorney’s office closed down nine of the cafes, triggering a series of lawsuits.Those lawsuits are now under appeal by the 5th District Court of Appeal.

Kern County Counsel Theresa Goldner said that the easiet way to deal with the businesses might be to wait until the 5th District rules on the cases under appeal. Supervisor Leticia Perez wanted to proceed to draft a ban ordinance as soon as possible. The county could, she was told, draft an ordinance banning the businesses.

If supervisors wanted to pursue that path, Goldner said, “my advice would be to first craft a very narrow ordinance that would not expose the county to litigation or at least would minimally expose the county to litigation.”

Same formula as Micky D’s ?

But other supervisors were concerned about spending county time and money on an effort that could be resolved without further action.

Supervisor Zack Scrivner said he wanted to wait until the DA’s case clears the court. Perez agreed to file a report on a future ordinance.

Deputy District Attorney Greg Pulskamp said the 5th District Court of Appeal is expecting a decision on the five cases before the court within six months.

He said the only gambling allowed in California are the state lottery, gambling at Native American casinos, games of skills at establishments like Bakersfield’s Golden West Casino and marketing sweepstakes. They go on to provide examples that show that the product being purchased (like food, coffee or internet time) is a promoted product and identical to traditional sweepstakes.

Pulskamp said the Internet sweepstakes cafes argue that they, like fast food restaurants and grocery stores that hold sweepstakes, are simply using the opportunity to win money as a marketing tool to sell Internet time or pre-paid phone cards.

But the District Attorney’s office argues that, in reality, those businesses are actually selling the opportunity to win money or a prize.

The first action of a sweepstakes at a fast-food chain is the sale of a promoted product (french fries)..The first action of a sweepstakes at a sweepstakes parlor is the sale of a promoted product (internet time)

WJSR visited one of the sweepstakes parlors to conduct an investigation, in order to access the games, the player had to buy a promoted product. In this case, the promoted product was ‘internet time’, at that time, the customer could access the internet to surf the web or had the option to access the sweepstakes games. WJSR investigation concluded that “We had to make a legitimate purchase

of a product and only then were we allowed to access the games (if we wanted), whether we played the games or not, we still had the access to internet time we purchased, it has the same characteristics of fast-food sweepstakes”



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Sweepstakes Cafe In California Accused Of Offering Gambling Games

Cafe Owners and Patrons Charged For Gambling.

Gilroy, Ca – Gilroy police have cracked down on a suspected illegal gambling den located in an internet café during a raid in Northwest Gilroy on Thursday.

Sweepstakes Cafes Are Often Viewed As Gambling        

Last week, a man came forward to the authorities asking them to do something. The man told police officers that his father is a regular patron in Liberty PCS.

“He is losing all of his money and paychecks there,” he states. “The sweepstakes parlor has gambling hotline numbers up just like a casino but that doesnt stop him from loosing all his money but he does win ever once and a while” After the investigation was concluded it was determined that kidnapping charges were not to be brought forward since the man walked in the cafe and played the game under his own power.

According to police reports, of the 15 minutes the undercover officers were inside the business, none of the clients in the business were ever seen accessing the internet, a fax machine or other services during their visits.Although company records do show that the internet was used and faxes and copies were sent from the location hundreds of times.

Internet sweepstakes are games played after the patron purchases a product with predetermined prizes after the game. It rose to fame and spread throughout the state. Business operators compare it to the chance of getting a prize for buying at fast-food chain. An independent dissection of the games show that the games are identical to other traditional types of sweepstakes with the exception of the way the games are revealed. In traditional types of sweepstakes the winners are revealed by a piece of paper (on a side of a cup or sandwich wrapper, or even on a bottle cap) , in contrast, a internet sweepstakes game are revealed by the use of a computer screen that mimic casino style games. There is no purchase necessary and also no chance involved since the winners and losers are predetermined.
Authorities have forwarded the case to Santa Clara County District Office for review.




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Neighboring Towns Take Two Different Perspectives On Sweepstakes Cafes

Geographically, Statesville and Troutman are about as close as two areas can be. Having said that, when it involves the manner where they handle internet sweepstakes electronic gaming operations, they could not be any further apart.

Shopton Rd Internet Cafe

Statesville not only enables them yet depends on thousands of dollars in profits from them; Troutman bans them completely,

Internet sweepstakes, where individuals can easily acquire products such as phone cards and then play video game of chance, have emerged throughout the state, with a minimum of 5 now in Statesville. Challengers of the establishments have actually condemned these activities as types of prohibited gambling that caters to those that can easily pay to participate and that attract several other kinds of vice.

A statewide criminal ban of these parlors, achieved in 2010, has actually been struck down by the courts, leaving regional towns in the meantime to take their own position. At a conference on Sept. 13, the Troutman Town Board maintained their sturdy opposition to these facilities.

“Legislation is being composed on the state degree which would definitely look at a ban on sweepstakes parlors to additionally be a ban on free speech,” pointed out Planning Director Erika Martin. “Consequently, it was our professional point of view to supply the board members an option to allow them in at the very least one town zoning district.”

The board stated no

. “These sorts of buildings are inconsistent with our town’s objectives and incompatible with the personality of our town.” said Alderman Curt Rogers. His motion to refute the modification was accepted unanimously by the town board.

More north in Statesville, it’s a completely various story. The city not only allows the parlors yet likewise boosted the fees these buildings pay to the city annually.

“The City Council approved a new privilege license charge schedule for electronic gaming tasks in conjunction with the 2013 budget,” pointed out city spokeswoman Nancy Davis. “The cost changed from one based on gross receipts to $ 2,000 each business plus $ 1,000 every machine.”

As a result, the city pumped an added $ 233,000 in to its existing budget, and Davis says the true income can review $ 400,000 with a 100 percent collection cost.

So, who is right and legal in their manner of dealing with the sweepstakes parlors, Troutman or Statesville?

“It may be years prior to we know if internet parlors are here to stay,” stated Chris McLaughlin, assistant lecturer of public law and government at College of North Carolina Institution of Federal government. “In the meantime, cities can continuously tax these businesses yet need to be careful not to levy so heavy a tax as to effectively forbid them from working beneficially.”



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Ruling Finds Sweepstakes Machines Legal

Attorney General’s Commercial pointed out game breaches explain video gambling laws
A magistrate’s order that a sweepstakes machine in Greenville County was legal has in fact generated fears that video poker is having a new toehold in South Carolina, and rivals pledged to proceed their argument from simply what they regard as a kind of gambling that is as detested as any sort of kind of soccer competitor.
Magistrate Charles Garrett explained in his order, gotten by, that the package operated on a machine at a Taylors convenience store was reputable and was an exemption to other state stipulations on gambling and games of chance.
“This matter involves complicated issues of statutory construction and presents the limited question of whether, as a matter of law, Sweepstakes Terminal No. 0399 is legal, not as a video poker machine, but as a means of conducting a promotional sweepstakes,” Garrett said in his 14-page ruling.



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The Online Casino Boom, How Vegas Got Back On Top.

Raised gambling competition is requiring the biggest casino in the Western Hemisphere to alter its company to feature more non-gambling business such as retail and conferences, said the chief executive of Foxwoods Resort Casino Thursday.

Scott Butera, CEO of the Indian-operated casino, pointed out in an interview with The Associated Press that Foxwoods expected the success of New York’s Aqueduct Racetrack “racino.”

“We planned for the effects of Aqueduct,” Butera said.

A record $ 1.13 billion was gambled in July at the Resorts World Casino in New York’s Queens community. The sums wagered and net income of $ 59.8 million for July were at an unsurpassed monthly high after its opening in October.

Butera said Foxwoods, belonging to the Mashantucket Pequot Tribal Nation in eastern Connecticut, has kicked off a strategy to redevelop its meal and refreshment business and is examining strengthening group sales and commercial events at its MGM Grand hotel.

“We are absolutely planning to improve additional companies that have been less prominent in the past,” he stated.

The effectiveness of Aqueduct is increasing worries in the field of casino crowding in the Northeast. Massachusetts approved casino gambling last year, though the initial casinos won’t open in the Bay State for years.

“It will mean our business will change.” Butera stated.

Profits will likely move from a solid focus on table games and slots to a mix of business linked to Foxwoods’ resort, meals and beverage and entertainment businesses, he pointed out.

Butera, a former leader of Las Vegas-based Tropicana Entertainment Inc., said he does not view Foxwoods’ business split 50-50 between gambling and non-gambling enterprises like casinos in Las Vegas. But it’s “approaching that,” he said.

“Any good business is constantly adjusting to their environment,” he pointed out. “We’re focusing on making sure we’re very much a premium destination with multiple attractions, multiple offerings so visitors have other reasons to come besides gaming.”

However gambling will definitely continue to be Foxwoods’ elite enterprise.

“It will still be gaming,” Butera said.

Mohegan Sun, which is a neighbor of Foxwoods, is aiming to increase revenue in an endeavor seeking management contracts and consulting contracts for casino and entertainment businesses. It revealed on Tuesday a deal with Casinos Resorts, taking over the operations of the Atlantic City, N.J., casino.

Foxwoods declared last Thursday it has actually reorganized over $ 2.2 billion of arrearage, resolving a long economic stalemate.

“It’s a great first step and I feel we’re on our way,” Butera stated. “It was a very concerted effort over a long period of time.”

He stated Foxwoods will not reveal when the special deal will close.

The parent company of the Mohegan Sun casinos announced in March it has remortgaged debt of around to $ 1 billion.

Numerous Indian-operated casinos have strained to refinance debt after being caught short when the economy entered recession in December 2007. Investors have been fearful about the financial debt due to the fact that the casinos can not file for bankruptcy and creditors can not foreclose on their properties because tribal governments are paramount.



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Sweepstakes Ruling May Be Precedent

The North Carolina Court of Appeals ruled Tuesday that the 2010 law that tried to rid the state of online sweepstakes games is illegitimate.

The Attorney General’s Office said it aims to intrigue the 2-1 decision to the North Carolina Supreme Court.


Business owners maintain that enabling individuals to press on video-style games to find out about prospective prizes is an advertising strategy to encourage them to get Internet or phone time.

Need sweepstakes games? 1-877-WIN-CAFE (946-2233)

A Guilford County judge struck down part of the law in November 2010 as an abuse of the First Amendment, however appellate Judges Ann Marie Calabria and Linda McGee stated the whole entire law must be annulled since it was composed too extensively.

“Banning the dispersion of sweepstakes results via enjoyable shows can not be defined as merely a law of conduct. Instead, that piece of (the law) which forbids ‘the reveal of a jackpot’ by means of an entertaining display directly governs protected speech under the First Amendment,” the appellate judges composed.

Judge Robert C. Hunter disagreed with the judgment, stating that the law governs conduct, not speech.

” (The law) does not prohibit video games nor forbid plaintiffs from permitting a customer to play their video games,” Hunter produced. “Instead, the statute forbids plaintiffs, or any person, from performing or promoting a sweepstakes through the usage of a video game. Plaintiffs possess the freedom to enable anybody to play their video games so long as the video games are not used to conduct or market sweepstakes.”

The Internet sweepstakes ban took effect in December 2010 as well as followed an earlier state ban on conventional video poker machines.

Need sweepstakes games? 1-877-WIN-CAFE (946-2233)

Police and sheriff’s deputies statewide have actually been imposing only parts of the law that were maintained by trial judges and closed down only casino-style games and those “not dependent on the ability or dexterity of the player.” Sweepstakes outlets and also stores have continued to manage by replacing slots and Pot-o-Gold with cartoon-style games.

The Internet Based Sweepstake Organization, which exemplifies game operators, praised the court judgment and restored their call that North Carolina regulate and tax the machines instead of attempting to ban them.

“The Internet Based Sweepstake Company continues to promote for state oversight and also law of the video sweepstakes field. We feel that having state oversight will definitely offer a regulated market with enforcement actions to defend customers and operators,” the team said in a statement.




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