Senate committee passes plan to ban Internet cafes

A Florida Senate committee followed the House lead on Monday and passed legislation to clarify state law to ban on Internet cafes that are operating electronic sweepstakes in strip malls across the state.

The move comes less than a week after a federal and state investigation led to the arrest of 55 individuals in Florida and five other states on racketeering and corruptions charges linked to gaming centers run by the Allied Veterans, a purported charity that gave only 2 percent of their proceeds to veterans.

The fallout also prompted the resignation of Lt. Gov. Jennifer Carroll who previously represented the Allied Veterans in her consulting company and has led to one of the fastest legislative responses to a gambling probe in decades.

The Senate Select Committee on Gaming voted unanimously to pass the bill, even amid concerns that there may be unintended consquences that could affect penny arcades for children and seniors.

But the committee spent most of the meeting laying the foundation for why the bill is needed this year, when they had planned to wait until next year to clarify the law, when they will attempt a sweeping rewrite of the state’s gambling laws. “The events last week made two things very clear,” said Sen. Garrett Richter, R-Naples, chairman of the committee. “One, that we could not wait another year to address Internet cafes. Two, instead of a moratorium we need an outright ban.”

He said that the bill clarifies that “gambling is illegal in Florida unless it’s legal” and there is nothing that makes the electronic sweepstakes games and online slot machine software used by the Internet cafes, adult arcades and maquinitas legal.

Owners of adult arcade operators urged the committee to reconsider the attempt to tighten the rules on them. Under the bill, the so-called adult arcade may only offer games of skill and may not give patrons rewards valued at more than 75 cents.

Jason Fischer of “Play it Again Arcade”  in Davie told the committee the bill will discriminate against older people who see their amusement centers as their “home away from home.”

He and his brother run two arcades and serve more than 5,000 elderly customers a year. The requirement that people will have to cash in a win and no longer accummulate credits will hurt their customers. “A 90-year-old woman will not understand this concept,” he said.

“Their families live out of state. They look forward to escaping the mentally draining effects of aging,” he said. “They use their cards to buy their groceries to buy their medicines.”

Several members of the American Legion and Veteran’s of Foreign Wars, whose organizations have benefitted from the charitable donations from the for-profit gaming operators, urged the committee to leave the loophole that allows the games to escape regulation if they operate on behalf of a charity.

But senators were clear they saw abuses. “We are not attempting to close down any of these legitimate business models,” Richter said. “We are attempting to close down illegitmate businesses that operate and sound like a gambling operation. If it’s a duck, we’re calling it a duck. They are illegal.”

Several owners of Internet cafes pleaded with the committee to regulate, not ban them, warning that an estimated 13,000 people employed by the industry could lose their jobs.

Sen. Maria Sachs, D-Delray Beach, said she will attempt to refine the bill when it comes up before another committee to avoid unintended consequences. The House measure is expected to come to a floor vote on Wednesday but the Senate plans to review it for at least another week.

Law enforcement said the crackdown on Allied Veterans of the World is the “first wave” of Operation Reveal the Deal, which targets illicit slot machine operators who exploited a loophole in the state’s sweepstakes laws.

Targeted in the crackdown were owners and operators of 49 gambling centers affiliated with Allied Veterans of the World, an organization registered as a charity but which gave only 2 percent of its profits over three years to charitable causes. None were in Broward or Miami-Dade counties; three were in Monroe.

Carroll’s consulting company had represented Allied Veterans until she became lieutenant governor in 2011.