Pinellas Sheriff Jim Coats targets Internet sweepstakes cafes

Internet sweepstakes cafes are opening at such a pace in Florida that the New York Times even took note in a story Friday, referring to these businesses that offer slot-style games in strip-center storefronts as "convenience casinos."

There are now more than 1,000 of the cafes throughout the state, the St. Petersburg Times has reported, and the number is growing exponentially.

But not, apparently, in Pinellas County, where Sheriff Jim Coats is determined to keep them out.

While many law enforcement agencies seem uncertain about whether sweepstakes cafes are illegal, Coats is resolute: They are nothing more than gambling houses, he says. He ran them out of the county once before, and he's about to do it again.

"I just can't ignore it. Then there would be one on every street corner," he said.

Coats had hoped the Florida Legislature would settle the debate about whether Internet sweepstakes cafes are illegal by clarifying the state's gambling laws. But the Legislature adjourned its 2011 session Friday without doing that, so Coats is preparing to move against four Pinellas sweepstakes cafes, including one owned by state Rep. Peter Nehr in Palm Harbor.

His agency will send letters to the four cafes and any others he receives complaints about, ordering them to close unless they can convince him they are not illegal.

The four cafes, all in north Pinellas, are Nehr's Fun City Sweepstakes, Reel Fun in Palm Harbor, Fun City Sweepstakes in Largo and the Fraternal Order of Eagles cafe in Palm Harbor.

As convenient and friendly as the corner bar, Internet sweepstakes cafes sell Internet time or phone cards to customers, who then sit at desktop computers in the darkened cafes and access casino-style sweepstakes games.

On the computer monitors are the spinning images familiar to anyone who has seen slot machines in operation. The cafes often provide free snacks or meals so there is no need for players to leave when they get hungry.

Lucky players walk out with a wad of cash. The cash rolls in for the cafe owners, too. The New York Times reported that the Florida cafes are grossing an estimated $1 billion a year.

To bolster his argument that the cafes are illegal gambling operations, Coats cites Florida gambling statute 849.16. It states in part that any machine or device is a slot machine — illegal in Florida except where specifically allowed — if it operates "as a result of the insertion of any piece of money, coin or other object" and the user, because of "any element of chance," receives anything of value.

Sweepstakes cafe proponents say the cafes are merely using access to sweepstakes games to promote their businesses, and the proponents also use a Florida gambling statute to argue that the cafes are legal. Statute 849.094 regulates "game promotions" conducted "in connection with the sale of consumer products or services and in which the elements of chance and prize are present."

Nehr's cafe, for example, sells phone cards to its customers. For every $1 spent for phone cards, customers get 100 sweepstakes points. To access an online sweepstakes game and the possibility of winning cash, they must first have a certain number of sweepstakes points. With enough points, they can swipe the phone card at the computer and start playing.

Nehr has argued that his sale of a consumer product — the phone cards, which can also be used to make long distance phone calls — makes his sweepstakes cafe legal.

If someone asks to play without buying a phone card, the cafe will give them some free sweepstakes points.

"Games of chance become legal — whether it's a slot machine or a roulette wheel, it doesn't matter — if used for promoting a consumer product or service and when there is no purchase necessary to enter," said Lawrence G. Walters, an Altamonte Springs lawyer who writes and presents on gaming issues.

"It's shocking to me that law enforcement has such a difficult time understanding that it's legal and that they would be out arresting people when the statute protects them," he said.

Cafe proponents contend that no cafe owner has been successfully prosecuted in Florida. However, cafe owners in Pinellas County have suffered serious consequences for operating cafes the sheriff considered illegal.

In 2009 and again last December, Coats wrote letters to local sweepstakes cafes ordering them to shut down within 30 days or be subject to investigation and possible prosecution.

Six cafe owners have been charged with operating gambling facilities in Pinellas County in the last several years. They all either pleaded guilty, entered no-contest pleas or received pretrial interventions. They were all fined and their computers and equipment were confiscated.

In 2009, Nancee Laursen owned three cafes in Pinellas County. In June of that year, her stores were raided by the Sheriff's Office and she was charged with multiple felony counts of gambling/games of chance. Laursen said the Sheriff's Office destroyed nearly $70,000 worth of computer equipment she owned.

"I was ordered to shut them all down or be charged with racketeering," said Laursen, 49.

Laursen entered a no-contest plea and her 45 felony charges were dropped to a single second-degree misdemeanor. She spent nearly $30,000 on attorney and court costs before it was all over.

It gripes Laursen that Nehr is now operating a sweepstakes cafe in one of her locations that was shut down.

She had built out the cafe space and equipped it before the sheriff's raid.

"With Peter opening in my spot, it's like opening old wounds," Laursen said. "He either knows something I don't know and had some insider information or he is not a very smart man. He knows full well what I went through."

Laursen currently owns a cafe in Hillsborough County, where law enforcement authorities have taken a hands-off approach to sweepstakes cafes and at least 20 are now operating.

Pinellas isn't the only county trying to stand tough against the cafes. In January, the Seminole County Commission passed a law that banned them. The next month, a federal judge issued a temporary order that prevented the county from implementing the law.

Coats said that because the Legislature did nothing to clarify the situation, he will now "pick up where we left off" with enforcement efforts last December. He said the letters he plans to send to the cafe operators will give them plenty of time to make a case for why they should be allowed to continue to operate.

For now, he's convinced his agency's interpretation of the law is the right one.

"As we become aware of these operations in Pinellas County, we are going to take enforcement action," he said. "And if they want to legally challenge us, then we will be up to the challenge."

Contact Demorris A. Lee at dalee@sptimes.com and (727) 445-4174

Pinellas Sheriff Jim Coats targets Internet sweepstakes cafes 05/06/11 [Last modified: Saturday, May 7, 2011 12:15am]

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