Judge Favors with Cyber Cafe and Clouds Legality of Sweepstakes Rooms

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 ..The AG says Illegal; Another Judge Says No..

Pre-Reveal-GoldThe number of Ector County gaming facilities providing opportunities to play sweepstakes that simulate video slots has more than doubled in six months — and the owners say they believe they’re providing legal entertainment that doesn’t violate Texas’ gambling statutes despite allowing the players to win cash.

As law enforcement familiarizes itself with the new facilities and as county and district attorneys debate the enterprises’ legality, different companies are bringing in the game facilities under sweepstakes laws that allow companies to run charity promotions that award prizes similar to what McDonald’s does each year with its Monopoly game.Bakersfield Sweepstakes Court Case

New facilities have opened up at 46th Street and Andrews Highway, on 61st Street, on University Boulevard and Grandview Avenue, and on West County Road among other locations.

“We were so busy and all of the sudden it died,” said Karen Watkins, who works at Vegas Lights on Andrews Highway, an established eight-liner game facility that legally cannot give out cash but awards more playing time to successful players. “I can’t believe how they just popped up.”

While it appears similar to the entertainment eight-liners provide, the owners and operators said it’s com-pletely different. They’re not eight-liners, which have countless times been proven to be illegal in Texas if used for gambling purposes. Sweepstakes machines provide an entertaining way to reveal the sweepstakes entry.

“It may look like a duck and walk like a duck, (but) nope, it’s just a fun way of doing things,” Leo Nathan, district manager for Texas E-Store, a sweepstakes com-pany, said.

Texas E-Stores provides the online charity sweepstakes fund-raising to the local Veterans of Foreign Wars.

A person can donate money to the VFW by entering a sweepstakes for various prizes, Billy Boone, attorney for Texas E Stores, said. Much like McDonald’s Monopoly game, no purchase is necessary for a free entry and all entries, if purchased through a donation to the VFW or not, have an equal chance of winning.

The sweepstakes entries assigns a number that is predetermined as a winner or not, Boone said. The online game merely simulates if the entry won or not through noise and graphics much like a video slot machine or even video poker. If the participant does win, they can walk out of the “donation station” gaming facility with cash.

The VFW sweepstakes complies with all state and federal sweepstakes laws, and the software has been certified by Nick Farley, an Ohio-based gaming expert, Boone said. The sweepstakes are no different than what the American Association of State Troopers Scholarship Foundation, the American Breast Cancer Foundation and U.S. Municipal Police Association conduct, Boone assured.

Boone wouldn’t disclose the percentage of the proceeds that are donated to the VFW, though Nathan said it’s about $3,000 to $5,000 a week.

At Reno Lights, another company that provides a sweepstakes game, owner Robert Babcock said he gives 5 percent of his proceeds to the Crisis Center, a local abuse counseling nonprofit organization.

Babcock’s Reno Lights provides Internet service, he said, and the people who use it can play for the sweepstakes prizes if they choose to.

They, too, are al-lowed limited free entry into the sweepstakes through a website called hello-money.com.

For now, the companies appear to be providing a legal service that isn’t gambling, Ector County Attorney Cathy Linch said. Because a person is allowed to enter the sweepstakes for free and the person with a free entry has an equal chance of winning as someone who donates, then it’s not gambling because the participant doesn’t have to pay to be considered for the prize.

“You don’t want to go after somebody if you’re not convinced it’s illegal,” Linch said.

County and district attorneys across the state have been receiving information packets from Texas E-Stores lawyers that contain sweepstakes expert’s opinion, a federal lawsuit that shows the sweepstakes legitimacy and other information sheets that explain the difference between eight-liners and sweepstakes run through computer software. Boone said the counties receiving the information packets are prospective locations for more Texas E-Store sweepstakes facilities associated with the VFW.

“We want to be a long-term player,” Boone said. “I think district attorneys and county attorneys would agree that they never had eight-liner people send them packets and expert reports like that before and send it ahead of time,” Boone said.

Andrews County Attorney John Pool received the packet about a month ago. He continues to investigate the new sweepstakes method, he said — and hasn’t come to a conclusion

“I’m a veteran,” he said. “We want (the VFW) to be successful, but it needs to be legal what they’re doing. As long as it’s legal, I don’t have a problem.”

The Odessa Police Department’s narcotics and vice department conducts about two sweeps a year of gaming facilities, Odessa police detective Cpl. Jesse Garcia said.

Along with Linch, Odessa detectives are trying to determine the legality of facilities despite what the gaming operators ensure is legal. No one has complained about the recent boom in gaming centers, he said.

While no criminal prosecution has been taken against the local facilities, Boone will pursue a civil lawsuit soon on Texas E-Store’s behalf, against competitors who’ve opened up using different software that’s not certified and what their experts believe is eight-liner style games operating under sweepstakes laws — which is deceptive and unfair competition, he said.

Regardless, owners maintain their businesses are legal, said Carolyn Hendrick, who enjoys the eight-liner style games and plays them for playbacks at Vegas Lights. She won’t use the sweepstakes facilities, fearing law enforcement raids reminiscent of the eight-liner facility busts the Texas Department of Public Safety started in the late 1990s.

Plus, she questions where the money goes and how much is actually for charity and how much is actually profit for the facility providers.

Hendrick experienced a raid while playing in an An-drews County store, and she doesn’t want to feel the fear again. They took her picture and kept her hours after the facility was shut down. She wasn’t charged with a crime, she said, but it was enough for Hendrick to hold out on the new style machines.

“Better safe than sorry,” she said.

http://www.oaoa.com/news/sweepstakes…ies-boone.html

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Sweepstakes Cafe Raid In Yucca Valley Will Highlight Misunderstood Business Model

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Cyber Cafes Winning Court Battles Across State

Yucca Valley, Ca — Authorities have seized several machines and cash in Yucca’s remaining internet cafe at Yucca Valley on Tuesday morning.

Deputies from Morongo Basin Sheriffs have served Vons Shopping Center a search warrantPre-Reveal-Gold after reports from California Department of Justice cued them patrons are engaged in illegal gambling inside the establishment.

As per Detective Daniel Helmick’s report, a total of 31 networked computers and $3,800 of cash were confiscated from the shop.

The California Statutes states that whoever acts as servant, clerk, agent, or employee related to illegal gambling or whoever plays at any game of chance by lot or with dice, cards, numbers, hazards or any other gambling device whatever for, or for the disposal of money or other thing of value or under the pretext of a sale, gift or delivery thereof, or for any right, is punishable by law.

On the other hand, all those employees and gamblers present during the search warrant were all released after they were interviewed by authorities.

Helmick said the final report will be sent to the District Attorney’s office for further investigation and proceedings.

According to authorities, Boomtown Sweepstakes is the only remaining internet shop in town.

Yucca Deputy Town Manager Shane Stueckle has mentioned before that they have been probing on illegal gambling across town and reasoned out that the only reason why Boomtown is still active is because it is registered as Boomtown Internet Center, a disguise for illegal gambling.

Boomtown Sweepstakes cannot be reached out for a comment.

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Lawsuit Involving Internet Sweepstakes Cafes In Bakersfield May Keep Doors Open

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 BAKERSFIELD – Officials tagged internet sweepstakes cafés as “nuisance” as they blame it in the rise of crime rate in the city. Proponents claim the numbers presented by Bakersfield are a sign that the Indian Tribes are forcing their will upon city leaders in what they consider a new threat to their bottom line.Bakersfield Sweepstakes Court Case
In a committee meeting held Thursday afternoon, Bakersfield police laid out the crime statistics within the last three weeks which involved the ten known internet cafes within the city limit. From a total of 146 calls for service, 92 led to arrest. Most of the calls were from I-Sweeps Internet and Cyber Hot Spot with 37 arrests from 98 calls for service.
The city council would like to shut down these internet cafes although they declined to comment when asked why.
According to Bakersfield City Council Member Russell Johnson, these places must have closed signs, not open signs. While waiting for a ruling from the court to decide whether the cafes are illegal, they have sent out nuisance letters asking the cafes to curb criminal activity.
I-Sweeps legal adviser Neil Newson released a statement saying that I-Sweeps has worked hard to curb illegal activity. They put in professional security that patrols the entire shopping center.
On the other hand, Cyber Hot Spot declined to comment.
Council Member Johnson added that the more cities there are with internet cafes, the more public concern there will be.
 Meanwhile, Net Collection Kayward LLC joined the lawsuit and filed amicus curiae, hoping for a precedent in the judge’s ruling on the case.

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Injunction Request Will Stop Illegal Seizures Of Sweepstakes Machines

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A team of video gaming operators arrested previously this year has actually filed for a broad injunction against the State Police Department and the S.C. Attorney General’s Office in an effort to stop the seizure of their internet

Union Street Internet Cafe

sweepstakes machines.
7 plaintiffs apprehended from April through August, featuring one in Richland County, took the action to prevent the additional seizure of machines in addition to non-gaming products.
4 of the plaintiffs have been apprehended and charged in the past for owning and running the sweepstakes machines in their companies while the others fear similar activity will be taken.

The 7 are being represented by previous SLED director Reginald Lloyd, who filed documents Oct. 15 mentioning that police officers do not have the legal right to confiscate the machines under state law.
Richland County Sheriff Leon Lott states he will certainly continue functioning according to the law as he understands it despite a request from Lloyd asking the sheriff to cease the search and seizures.
“We’re not consenting anytime to not enforce the law,” he stated. “As long as there is a transgression of the law, we will definitely implement it.”
In Richland County, internet sweepstakes machines can be discovered in convenience stores and in some other small businesses.
Lott said no sweepstakes cafes have opened in the county, since his department confiscated machines and shut many cafes this summer.
“And if one does open up again, we’ll take steps once more to shut it down,” he pointed out.
In addition, the injunction looks to stop the seizure of non-gaming items such as ATMs, televisions, protection cameras, rugs, chairs, signage and autos. Lloyd sustains the state Supreme Court has actually ruled that video gaming is not dealt with by any sort of statutes that enable products not associated with video gambling to be confiscated and held.

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Internet Cafe Sweepstakes Owners File For Appeal After Controversial Ruling

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The District Attorney’s office in Bakersfield, California has pioneered a significant suppression on gambling by means of internet cafes, providing 9 regional businesses with cease and desist orders this week.

Deputy District Attorney Greg Pulskamp told neighborhood media reporters that the sensation has actually been a complication across the country for several years, however in Bakerfield it had actually come to be an epidemic in the last few months.

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“We have these services opening all over and it’s a worry for us,” he pointed out.

Pulskamp divulged that detectives had gone to several premises in their examinations.

“In all of the areas and out of all the times the detectives have actually gone there, out of all the consumers, every one of them were gambling except for one. And that one person was talked to and he said the only reason he was surfing the Internet was due to the fact that he had previously lost all his cash that day,” the DA pointed out.

Prompted by enforcement authorities a County Superior Court judge has ordered Internet cafes throughout the county to end any type of sweepstakes factors of their business.

Some businesses have shut down as a result, while others continue to be open until the judge signs an injunction order.

Cyber cafes running gambling-disguised-as-sweepstakes can experience civil charges of $ 2,500 every violation.

“If you take the number of terminals increased by the number of days that the cafes have actually been open multiplied by $ 2,500, we’re looking at tens of thousands or hundreds of thousands of bucks,” said Pulskamp, who mentioned that players can also be put on trial for forbidden gambling, although the businesses entailed were the main target of enforcement affairs.

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Internet Sweepstakes Success Due Partly To Understanding Legal Argument

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Internet Sweepstakes Changes The Landscape Of Traditional Sweepstakes

Web based Internet sweepstakes are one highly economical and highly effective way that a company can generate interest in their products and services.  With a well-marketed web-based sweepstakes promotion a company can drive more customers to their website and can generate buzz regarding the launch of a new product.  In addition, web-based sweepstakes are a great way to collect information about current customers and potential customers.  Sweepstakes that are conducted via direct mail, print media or broadcast media have much higher costs; thus the number of businesses that use the Internet for cost-effective marketing continues to grow.  This has led to a significant increase in the amount of sweepstakes that are currently promoted via commercial websites.

Lottery, contest or sweepstakes?

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For in-house counsel, structuring a sweepstakes game requires careful drafting of sweepstakes rules.  In addition, statutes mandate certain disclosures.  The goal is to prevent the sweepstake from being classified as a private lottery, because such lotteries are illegal in all of the 50 states.  Simply defined, sweepstakes games are no more than marketing promotions that award winners with a prize which can be monetary or nonmonetary in nature, based on chance.  In contrast, lotteries require both chance and an awarded prize, with the additional requirement of ‘consideration.’  Thus, in-house counsel have to avoid the consideration component, as may be the only thing separating an illegal lottery and a legal sweepstakes game.

There is some variation within states regarding how consideration is legally defined.  It usually requires that the participants buy a product or pay some type of fee in order to participate in said promotion.  Additionally, various state courts have held that consideration is present in some non-monetary.

While the legal definition of consideration can vary from state to state, consideration in this context generally requires entrants to pay a fee or purchase a product to participate in the promotion. In addition, state courts have found consideration to be present in certain nonmonetary expense, like those that require consumers to travel to a physical store or to complete a lengthy marketing questionnaire.

Some individuals have expressed their fears that the requirement of computer access or Internet access to enter sweepstakes games may be

There has also been some concern that requiring computer or Internet access to enter a sweepstakes could be regarded as consideration.  However, so long as the promotions do not require consumers to buy Internet access or a personal computer in order to participate in such a promotion, it is probably not likely that any court would hold that an Internet sweepstakes game is a lottery on that foundation alone.

Contests are another category of marketing promotions, and they are not considered lotteries or sweepstakes games because winners are chosen due to skill, knowledge, ability, judgment, creativity or expertise.  Writing, photography, cooking, athletics and video games are a few examples of contests.  Those who enter in a contest are evaluated using criteria that are objective and that is predetermined by qualified judges.

Rules of the ‘games’

All sweepstakes games of course are subject to the regulations set forth by the Federal Trade Commission, but it is essential to consider state laws in addition.  Those that are designed for the regulation of false advertising and deceptive advertising are particularly important.  Internet sweepstakes games are principally borderless, which means that they need to be in compliance with the relevant laws of all of the 50 states.  If the promotion is not limited only to residents of the U.S., it needs to be in compliance with international laws as well.  Some states are taking major steps for sweepstakes regulation.   In Colorado for example, sweepstakes laws require a disclosure of “No purchase necessary” that must appear bold-face type that is at least ten-point.

Additionally, a few states have taken steps recently to create legislation that is directed towards online sweepstakes games, or have made amendments to their existent sweepstakes games legislation.  This indicates that attorney generals in such states are taking a closer look at the way sweepstakes games are enforced.  The Court of Appeals in North Carolina ruled in March that the 2010 NC law that stated that online sweepstakes were illegal is an unconstitutional law and was thrown out of the statues govorning that state. The decision may be appealed to the NC Supreme Court.

In addition, any Internet sweepstakes game that allows children who are younger than the age of 13 to enter needs to comply with COPPA (the Children’s Online Privacy Protection Act).  Depending on how the sweepstakes game is structured, the ways that it is promoted and implemented and the various prizes or products that are involved, it may also be subject to consumer protection and disclosure requirements set forth by the federal Deceptive Mail Prevention and Enforcement act, requirements from the FDA, IRS, ATF and other regulations as well.

Companies are also required to create official rules and to make set disclosures necessary for promotion of an Internet sweepstakes game, and must make them available to any potential entrants.  The rules usually require the disclosure of eligibility, the name of the sponsor, the address of the sponsor, methods of entry, methods used to determine winners, odds of actually winning, the dates when the sweepstakes will end and begin and the location where the winner’s list will be posted.  Certain states like New York, Rhode Island and Florida require the sponsors of sweepstakes to register with their state if the total value of prizes to be awarded is above a specific monetary threshold that is set forth within statutes.  As such, it is imperative that sponsors of sweepstakes in those states retain their documents appropriately.

At the end of the day, any in-house counsel tasked with drafting official rules to define a sweepstake must be sure to take all state legislation and relevant case law into consideration.  That is the best way to prevent an argument that the sweepstakes promotion contains the illegal element of consideration or is not in accordance with the regulations regarding sweepstakes.

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http://internetsweepstakessoftware.net/

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Sweepstakes centers finally being understood as a legitimate business model yet often misunderstood

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The opinion of this author is just that, an opinion. This is a theory.

WHY ARE SWEEPSTAKES NOT CONSIDERED GAMBLING ?
This question has been around for hundreds of years and depending on your interpretation you may never quite grasp why the two words have completely and totally different meanings. In most municipalities the term “Gamble” or “Gambling” is referred to but nit limited to :

Gambling is the wagering of money or something of material value (referred to as “the stakes”) on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods. Typically, the outcome of the wager is evident within a short period.

Gambling has primarily 3 components :

1) PRIZE -
What you can win
2) CHANCE -
A chance of winning a prize
3) CONSIDERATION -
Consideration is the term you’re likely to be unfamiliar with (unless you’re a lawyer).
Generally the term is used to mean “money that a player needs to put up in order to make it into the pool of people from which there will be a winner from a prize pool. In other words, when you pay a dollar for a lottery ticket, that dollar is “consideration.”

Now that we may have a better understanding of gambling and its components, let’s look in contrast as to what constitutes a sweepstakes and how they differ from gambling.

The easiest way to profile a sweepstakes is by using the McDonald’s restaurant analogy.

A customer entering McDonalds decides to buy a cheeseburger, fries and drink. After the transaction is completed there may be a peel tab (usually on the cup) that allows the customers that bought the product to enter a sweepstakes. Once the customer pulls the peel tab on the side of the cup he enters the sweepstakes. Just like any sweepstakes no purchase is required.

Note that the customer did not buy the entry to the sweepstakes he bought the product (in this case it’s a hamburger, fries and a drink) and the entry to the sweepstakes was given to the customer for appreciation for buying the product itself.

This analogy is important because it showcases a fine example of “consideration”.
Remember that “consideration is money that a player needs to put up in order to make it into the pool of people from which the winner will be drawn.” The money “put up” in this case was not for the sweepstakes entry, on the contrary, the money was for the product.

In conclusion, the act or components of a sweepstakes lack consideration.

I will now show you why internet or phone time sweepstakes are no different than McDonald’s sweepstakes.
Action # 1
A customer enters an “internet cafe” and buys internet time on a computer.
(A customer enters a McDonalds and buys a hamburger, fries and drink)
Action # 2
In appreciation for the customer buying internet time the store owner allows the customer to have access to games that are installed on the computer (like the game piece on the cup)

(In appreciation for the customer buying the hamburger, fries and drink) McDonalds allows the customer to have access to peel tab on the side of the cup that the customer may choose to “peel and reveal” aka “play”

In both scenarios, there are 2 components of gambling present but neither have consideration because the money did not activate the game, the activation of the game was given to the player in appreciation for buying the product.

THERE ARE EXACT RULES FOR AN OFFICIAL SWEEPSTAKES THAT MUST BE FOLLOWED OR THE EVENT AT QUESTION WILL NOT BE A SWEEPSTAKES AND CAN BE INTERPRETED AS GAMBLING.

Almost every sweepstakes in the United States offering prizes valued above $600 or greater will typically follow the following structure outlining the lifetime of a sweepstakes:

Sponsor promotion

Creating the sweepstakes promotion for a sponsor or sponsors;
Who is conducting the sweepstakes
Advertising the sweepstakes, prize structure, and the official rules;
(Advertising the sweepstakes to your demographic
Opening date for receiving entries;
When the sweepstakes begins
Closing date for receiving entries;
When the sweepstakes ends
Drawing date to judge winning entries.
In electronic sweepstakes this is done instantly

Winner notification

Sweepstakes promotion judges contacting prize winner;
Prizes are won in accordance with federal or state guidelines
Winner filing publicity release with sponsor’s sweepstakes promotion agency;
Each entry is automatically filed within the database
Winner filing affidavit of eligibility (compliance with official rules) with sponsor’s sweepstakes promotion agency;
Winners are prequalified before their allowed to enter the sweepstakes.
Winner filling any required federal or state tax forms with sponsor’s sweepstakes promotion agency;
Any winners above $600 are given a W-4

Winner receives prize.

By law, the sponsors of sweepstakes must not require the prize winners to pay any shipping or handing charges in order to win or receive their prizes.
Sweepers frequently send out SASE (self addressed, stamped envelopes) to receive free game pieces, official entry forms, and copies of the official rules that are unique and pertaining to individual sweepstakes promotions.

SUMMARY :

The difference between gambling and sweepstakes should be very clear now. Sweepstakes are set apart from gambling simply because of the lack of consideration. The ONLY difference between internet sweepstakes and a McDonald’s sweepstakes is simply the way the predetermined prizes are revealed. Remember, sweepstakes have been around for at least hundreds of years and it should be expected with the advent and popularity explosion of the internet, Smartphone and smart devices that sweepstakes promoters implemented traditional sweepstakes promotions into the tools that reach the mass Of participants.

http://internetsweepstakesforum.com/showthread.php?2038-What-is-the-difference-between-GAMBLING-and-INTERNET-SWEEPSTAKES

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