DeWine’s office surveyed Ohio municipalities and found 285 sweepstakes locations, up from 200 sites counted by the Ohio Lottery four months ago.
DeWine and others believe these cafes are a form of unregulated gambling where the odds are not clear. A loophole in the law allows them to operate, DeWine said.
“We don’t know who owns them,” DeWine said. “We don’t know if they are convicted felons.”
But Toledo Municipal court Judge Francis Gorman in 2009 ruled that these sweepstakes cafes have no element of risk and are not gambling enterprises. The ruling cleared the way for such businesses.
Most of the cafes in the state appear to be located above Interstate 70 in the northern part of the state, according to information included in the survey, but Dayton-area officials are working to fight an influx locally by either limiting their locations or enacting stiff licensing fees for the businesses, which DeWine calls “consumer rip-offs.”
West Carrollton City Manager Bradley J. Townsend said communities have a vested interest in keeping these sweepstakes cafes out.
“We are concerned that these things are just fronts for illegal gambling and there is a lot of evidence to suggest that they are,” he said. “Since the state doesn’t seem to be moving too fast on House Bill 195, we may act out of our own interest.”
West Carrollton City Council has a temporary moratorium that prohibits issuing permits for sweepstakes cafes. Townsend said the Council will soon consider legislation that would regulate them.
If regulations are approved in West Carrollton, the city would follow a growing list of municipalities with rules on their books regulating these gaming facilities.
Springfield in December approved a ban of sweepstakes cafes that takes effect in October.
Kettering, Xenia, Miamisburg, Springboro and Beavercreek have adopted various restrictions and regulations including criminal background checks, and in some cases, fees and location restrictions.
And Centerville is among those for now continuing moratoriums that suspend these cafe applications.
City Manager Gregory B. Horn said his community has received inquiries from people who want to open sweepstakes cafes in town.
“There are questions in our minds regarding the legitimacy of these operations,” he added.
There are five locations in Montgomery County and one in Greene County, according to the state survey. The survey did not provide a breakdown by city.
The city of Dayton, which is believed to have at least two sweepstakes businesses, is awaiting guidance from state lawmakers before acting, city officials said.
Meanwhile officials in Beavercreek, home to at least one operating cafe, approved regulations on March 26 requiring a $7,500 operator’s license fee, as well as a $600 fee for each computer.
The law, which takes effect in less than 30 days, came as a surprise to cafe owner Johny Costandinidis. He would have to pay at least $13,500 in annual licensing fees to continue to operate his sweepstakes cafe inside of his business, Factory Drive Thru, 2508 Richmar Drive in Beavercreek.
The carryout has a bank of about 10 computer stations for sweepstakes play.
Costandinidis said he added the sweepstakes machines about two years ago to provide something unique to customers.
He said he is doing nothing wrong.
Beavercreek Planning Director Jeffrey M. McGrath said the regulations were designed so that “everyone understands the ground rules before they come in the door.”
“It wasn’t designed with the intention to eliminate the possibility (of these businesses) in the whole city, McGrath said. “It is a response to some of these things popping up across the state, us reading about it and being proactive.”
‘No skin in the game’
Owners say the sweepstakes are safe and offer customers incentive to buy phone cards.
Sweepstakes cafe owner Roy F. Smith of Englewood said it is not gambling because the sweepstakes have a predetermined outcome and the phone cards maintain their value after the game is played.
“You don’t have any skin in the game,” said Smith, the owner of Belle Phone Internet cafe in Bellefontaine and Erie Sweepstakes and Phone cards in Hamilton. What’s the rip-off?” he asked. Smith also has a location in Marysville and Sidney under the name Internet Cafe. He is planning a fifth location.
The owners of five hotels, Smith is considering legal action against the city of Xenia for Council’s unanimous rejection in February of his request to rezone 605 West Second St., the former Blockbuster location he rented for a sweepstakes business on the edge of downtown.
“You can not zone a business out of a community,” he said. “Because of their action, there are five people in Xenia who don’t have a job.”
Smith has about 40 machines at his Bellefontaine store.
Brian Forschner, a Xenia city planner, said the city’s rules do not amount to a ban.
“We are permitting them. We are just restricting where they are located and we are sort of keeping an eye on their conduct,” he said.
Cheers without the beer
Smith said he operates a legitimate business and employs about 50 people.
Calling these cafes “Cheers without the beer,” he said they are misunderstood by officials.
Patrons at his Bellefontaine store sit in comfortable chairs in front of touch-screen computers that display colorful games and are offered free coffee, chips, hot dogs and other refreshments.
Huber Heights resident Derrick Moore sometimes plays at Cyber Cafe Sweepstakes near Third and Keowee streets in Dayton.
The most he’s lost is $12 and the most he’s won is $700, he said.
He called the sweepstakes fun, social and relaxing — a far cry from casino gambling.
You can’t go to the casino with $3,” the warehouse worker said. “People leave Dayton and go to casinos and lose a lot more.”
Contact this reporter at (937) 225-2384 or arobinson@DaytonDailyNews.com.
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