Businesses taking chance with law

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"Internet sweepstakes" cafes proliferate in Carroll, but police crack down on similar establishments in Virginia, North Carolina for illegal gambling

By Christopher Brooke, Reporter

While Twin County authorities wait for clearer legislation from the General Assembly on Internet sweepstakes cafes, at least one prosecutor in Tidewater has moved ahead with legal action against business proprietors.
Vague language from a previous Virginia General Assembly action inadvertently created a loophole for Internet sweepstakes businesses after they fled a crackdown in North Carolina, legislators and local officials agree.
Del. Ward Armstrong (D-Henry County) and Del. Bill Carrico (R-Fries) both believe the General Assembly will address this matter in short order when it meets in January.

But a Virginia Beach prosecutor, Commonwealth's Attorney Harvey Bryant, decided not to wait until the new year, alleging that 10 sweepstakes cafes have been engaged in illegal gambling activities.
The prosecutor convened a special grand jury that issued indictments after an investigation and police raids in september, according to The Virginian-Pilot.
The question of legality of sweepstakes cafes has taken on more significance to Carroll County, as it has experienced five-fold growth over 2010.
The previous bill that caused the loophole arose from a Fauquier County legislator attempting to clarify language in the state code that certain business giveaways were legal, Armstrong told The Gazette. He gave the example of a well-known fast food chain handing out prize tickets, where a customer might win a Coke, a car or nothing.
Legislators considered that a housekeeping bill and passed it unanimously — after which sweepstakes cafes started using that law as an argument that what they do is allowed.
A slot machine is true gambling, Armstrong said. People put a dollar in, spin the tumblers and the outcome is random.
Selling bingo cards is different, by comparison, because the outcome is pre-determined, he said. The organizers selling 1,000 cards know there are five winners that will pay out a total of $900 and $100 will go to the organization.
Sweepstakes business owners have claimed that the outcome of their games is pre-determined and legal.
The Virginia Attorney General office has issued two opinions saying some activities are illegal and some are not, and a Pittsylvania court ruled that sweepstakes constituted illegal gambling.
Then there was the Virginia Beach raid.
"There is considerable disagreement between lawyers and scholars whether it is illegal or not," Armstrong said. "What's going to happen is the General Assembly will come back in and have a deliberative debate on the topic and this loophole will be closed."
He doesn't want to see the expansion of gambling in Virginia.
"I have a strong suspicion that this type of practice, no one had a clue we were creating this loophole," Armstrong said. "I think there's a good chance it'll be closed — and rather quickly."
From his discussion with law enforcement personnel, some sweepstakes businesses host all-out Internet gambling, like Texas Hold 'Em, Carrico told The Gazette. "I think they're operating outside the scope of the law."
Internet-related crimes have required the scope of law enforcement to expand to embrace these kinds of technology, he said. This is another example where the criminal element has crept in.
"Of course, all these Internet crimes are growing at a rapid rate," Carrico said.
For some, the Internet is a way of life, he noted. And then there are those who have a gambling addiction. He called such illegal practices predatory.
Carroll County authorities have not taken any actions yet, waiting on the outcome of the General Assembly measure.
"We are continuing to monitor the situation and, if we determine action needs to be taken, we will do so," said Carroll Commonwealth's Attorney Greg Goad.