Internet ´sweepstakes´ raises gambling questions - Tuesday 12th of April 2005
Every morning, D.R. "Doc" Carson makes his way to this city´s newest Internet cafe and pulls up a chair in front of a terminal. He skips the keyboard, choosing instead to use the touch-screen monitor. He usually stays until around 5 p.m., when his wife gets home.
That´s a long time on the Internet for a man who describes himself as computer illiterate. But Carson isn´t surfing _ he´s playing the sweepstakes.
Carson and a dozens of others here have bought long-distance phone cards that are loaded with sweepstakes points they can use to play casino-type games _ and win cash _ on the Internet cafe´s computers.
The state attorney general says it´s illegal gambling, and the local prosecutor is investigating. But the operators say it´s a legitimate business promotion plan, no different from instant-win twist-off caps on a soda pop bottle, aimed at boosting sales of their legitimate products: phone cards and Internet time.
Wyoming is one of eight states where these sweepstakes are played; the others are Alabama, California, Florida, Hawaii, Massachusetts, South Carolina and Texas. Arizona and Utah are on the list for expansion. The games are the latest frontier in the battle over what constitutes illegal gambling.
Carson says there is no question. These sweepstakes simply aren´t gambling.
"It´s more or less just a pastime," the 62-year-old Carson said. "You´re not going to get rich on it by any means."
Carson is almost an unofficial spokesman for the aptly named Internet Cafe. By his account, he´s been there every day since it opened March 24.
Customers can either buy Internet time by itself, or a combo deal _ $5 for a 100-minute phone card, one hour of Internet time and 100 sweepstakes points. Those points can only be used to play games on the cafe´s computers. Points won playing those games _ the games pay out on average 92 percent _ can be redeemed for cash or for more long-distance time.
That´s where things get fuzzy.
The games themselves mimic casino games. Keyboards don´t sit in front of the screen, but are stashed in a floor-level basket, as players seem to prefer the touch-screens. Close your eyes, and the dull smell of spent cigarettes and the constant electronic jangling from the games create the sense of a casino.
William Consterdine, vice president of Extreme Insured Products, which distributes the games, understands why at first glance people might see the Internet Cafe as a casino.
But, he said, there´s one key distinction.
"It´s a free game," he said. "When a person comes in and buys a phone card from us, if they want to sit down and use their sweepstakes points to log on to our games, they can. If they don´t want to, they don´t have to. They can take their phone card and leave."
What´s more, he said, the sweepstakes points cannot be traded for cash or merchandise, they can only be used to play the games. The points won playing the games cannot be used to continue playing, they can only be redeemed for cash or merchandise.
"A traditional slot machine, you walk in, you put $20 into it, you win, lose, win, lose _ you´re playing your money back and forth," Consterdine said. "Our system doesn´t work that way at all. The only way that you can, basically, continue to play our sweepstakes game is you have to buy more product from us."
And that, Consterdine said, is what it all comes down to. Internet Cafe and other similar businesses are selling legal products. The sweepstakes is just a promotion.
Wyoming Attorney General Pat Crank disagrees, saying the computers used in the sweepstakes appear to be thinly veiled gambling devices.
Of course, what constitutes a gambling device isn´t always easy to determine.
Bob Jarvis, who teaches gambling law at Nova Southeastern University in Fort Lauderdale, Fla., said the classic definition of gambling is that someone gives up something of value to take a chance at winning a prize.
"Certainly there´s a chance involved, because they only pay out 92 percent," Jarvis said. "You´re trying to win something of value, which are the credits, or the points, which you can then go and redeem at the cash register for money."
"The question is," Jarvis said, "are they risking anything?"
Carl Mahs, of Fort Worth, Texas-based Game Systems Inc., which designs the game software, insists there´s no risk involved. Sweepstakes points come free with the purchase of a phone card, and people can enter the sweepstakes either online or by mail without making a purchase. He compares his games to the Publishers Clearing House.
"A lot of the people I talk to, whether it´s reporters or local law enforcement, that´s the best comparison, because you´ll see commercials for Publishers Clearing House sweepstakes all over, and Ed McMahon or whoever showing up with the $5 million check," Mahs said. "They´re not actually pushing the magazines or selling the magazines on TV, but that´s what the whole Publishers Clearing House sweepstakes is built around _ they´re selling the magazines."
Crank, however, said it appeared as if the legitimate products at Internet Cafe were simply a cover for the sweepstakes games, comparing it to putting a pay phone on the side of a slot machine.
"What bothers me about this is inserting a computer into the middle of the transaction," Crank said. "It appears to be a gambling device, and that would be illegal."
That question might be decided by a jury. Natrona County District Attorney Michael Blonigen said he´s investigating whether the games are illegal.
If Blonigen brings charges, "Doc" Carson might no longer be the Internet Cafe´s best spokesman.
Carson said he´s never used his phone card, although his wife might use it. He also doesn´t surf the Internet here.
"I´m illiterate when it comes to computers and other stuff," Carson said. On this April day, about a dozen customers were in the cafe, but over the course of more than an hour, not one left the sweepstakes games to browse the Web or send an e-mail.
Then there´s the building´s history. The previous tenant was Rapid Bingo, which left only in January when a judge ruled that electronic bingo was illegal.
And in spite of Carson´s assertion that players aren´t getting rich, a cork board beside the front desk displays receipts with big payouts highlighted: $602.90 on March 27, $1,323.75 on April 2, $500.50 on April 4, $1,207.85 on April 6.
"If I were a prosecutor, I would simply make the argument that this is not a legitimate business promotion because the Internet Cafe is not being used primarily that way," said Jarvis, adding that how customers use the legitimate products, how the sweepstakes games appear and how they´re promoted _ even the building´s history as a bingo parlor _ could become relevant if the case goes to court.
Still Consterdine and Mahs aren´t concerned. They say there have been few challenges to their games in the eight states where they are played.
"Are we skirting the line? Probably, a little bit. We´re getting close," Consterdine said. "At the same time, we know that sweepstakes works. If McDonald´s didn´t have their Monopoly game, if it didn´t work to boost their sales, they wouldn´t keep doing it over and over and over."
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