Should Ohio’s Internet sweepstakes cafés be shut down?
An Ohio bill proposed in order to regulate places known as Internet cafés has met its end this past week – at least for now. Ohio Senate President Tom Niehaus has shelved House Bill 605, deciding not to bring it to a vote this session. (The House has already approved the bill 63-30, and some believe that the bill will make its rounds through the House and Senate again next year.) In essence, the regulatory intention of House Bill 605 was to put an end to the existing business model of Internet cafés by limiting prizes and outlawing cash rewards. Currently, a loophole in Ohio law allows Internet cafés to exist as they are. House Bill 605 was meant to close that loophole.
Now the term “Internet café” might bring to mind images of shops attended by customers lounging with their laptops and sipping coffee. Some of these cafés just might be like that, but an Internet café is a place where customers can walk in and purchase a long-distance telephone calling card that contains “sweepstakes points.” These points in turn can be converted to potential cash winnings by using computers that are much like the slot machines you would find in a casino. By last count, more than 800 of these cafés have set up business across Ohio.
The great dilemma is that these cafés have generated passionate opposition – thus House Bill 605. The problems cited by opponents of the cafés are that they encourage anything from immoral activity to fronting as money-laundering houses for organized crime. According to some, though, the real problem with these businesses is that they are not subject to the regulations, taxes and fees that casinos are required to follow and pay. As a spokesperson for Horseshoe Casino Cleveland frames it: “unlike other forms and venues of legal gambling in Ohio, Internet gambling cafés are skirting Ohio law and avoiding basic scrutiny.”
Defenders of these cafés, however, claim that these places create jobs and generate tax revenue just like any other business. As mentioned earlier, more than 800 of these places exist, and they employ about 4,000 workers who would most likely lose their jobs if a regulation-style bill passed. Maybe more significantly, some people have simply argued that Internet cafés are not casinos and the activities performed inside them are not gambling so, therefore, if what customers do in there is not gambling then the cafés have no obligation to follow regulations that are laid out for casinos.
Now, after years of Internet café growth, the state has attempted and probably will be attempting again to change the law and subsequently declare Internet cafés illegal despite their original legal status. So, questions arise: Are these cafés operating legally? Should the state have the power to suddenly declare a legally established business to be illegal? Should the state declare the existing Internet cafés as being “grandfathered-in” to do their business “as is” where future licenses will simply not be offered?
Debate Forum Question of the Week:
“Should the Ohio General Assembly take up a new initiative to place possible business-killing regulations on Ohio’s Internet sweepstakes cafés?”
Debate Left: The greatest idea I have ever heard. Ever.
I have been writing these articles for the Dayton City Paper for quite a few years now, and I have to say that this is the single best debate in which I have ever been involved. I am absolutely giddy that someone has created sweepstakes cafés, because it takes all of the fascinatingly crazy, luck-perception nonsense in which human beings engage when gambling to a degree that it actually transcends the gambling devices themselves.
I have read a tremendous amount about sweepstakes cafés in the last 72 hours, and I have seen the word “loophole” printed more times than the word “sweepstakes.” It’s all propaganda. Churches are just pissed they aren’t making the cash they used to off of bingo and they want Ohio to put a stop to it. Sweepstakes cafés, however, are not gambling any more than McDonald’s Monopoly and here’s why:
The result is pre-determined and the medium of gameplay has intrinsic value in-and-of itself.
That’s it. That’s all there is to the discussion. The closest gambling equivalent would be a lotto scratch card, except whereas the scratch card becomes worthless the second you lose, the phone card you purchased to “play” is redeemable for exactly what you paid.
Now why did I put “play” in quotations? Because that’s the secret. Sweepstakes cafés don’t offer gambling. They only offer the illusion of gambling. The trick is that the patron doesn’t know the difference.
Take your average white lab rat. Put him in a cage with a button and a little trap door. The rat presses the button and a treat comes out. Yay. The rat presses the button again. Another treat comes out. The rat quickly learns this is a tasty game and continues to play over and over.
Then something unexpected happens. The rat presses the button and no treat comes out. Hmm. That’s not the pattern my brain has been welding into its synapses. Perhaps it just didn’t do it right. The rat presses the button again. Nothing happens. It sniffs once, presses the button and all of a sudden a treat falls out.
Ah, that’s what I was doing. I didn’t realize I sniffed first. Now I get it. Sniff, press … nothing. Wait, was it my tail angle? Was it whether or not I was standing on three legs or four? Should I do the tail thing and then sniff?
Pretty soon the rat becomes indistinguishable from a schizophrenic because it thinks that its bizarre behavior somehow relates to reality. It doesn’t. The treat is only dependent upon how often the lab technician remembers to drop one in while texting his girlfriend about where they are going for drinks after he gets off work.
This logic fallacy causes humans to do all sorts of silly things and it’s so prevalent in gambling it actually has its own name. It’s called the Monte Carlo Fallacy, and I’m sure you can guess why. It is the condition of our rudimentary reasoning physiology that draws a conclusion of cause and effect between closely related events. Oh my god, the stuff people do to find a magical escape from the tyrannical objectivity of chance.
They put crystals in their tea, they eat diatomaceous earth to eliminate toxins (true …), they get on their knees in an empty room and beg an invisible man to fix their muffler so they won’t miss the bingo game that night and they will sit in front of a slot machine with a rabbit’s foot dangling off their left ear and press the bet button with a Criss Angel bobble head doll because it creates the right conditions for Merlin’s Nickel Castle to pay off.
This is exactly the nature of gambling, which means we have now come to my favorite part: the pure, unadulterated genius of the sweepstakes parlor. The part that makes me squeal with glee.
When a person sits in front of a slot machine, the fallacy is that the ritual works. When one participates in sweepstakes cafés, the fallacy …
… is that the slot machine is real.
I know I’ve already said it, but this is so freaking brilliant I can’t stand it. When you buy that phone card you swipe to start your slot machine game, you’ve already won or lost the same way your Big Mac box either has Boardwalk or it doesn’t. It’s built into the phone card. Of course, one could just set up a computer so you swipe the card and a loud Stephen Hawking voice calls you a loser, but that won’t keep bringing people back. It makes it too obvious that they don’t have any influence over the situation and phone cards don’t taste like special sauce so there’s no consolation for losing.
If they swipe their card and it allows them to pull a slot machine lever four times before it tells them what the prize is, you have now opened the sodium channels of every single neuron in their brains that is dedicated to the resolution of chance operations. And you get rich. And you deserve it. Because you are a genius.
When you take it all the way to the bottom of the well, a sweepstakes café is nothing more than selling phone cards to people with the enticement of playing perfectly legal, non-monetary, fake slot machines.
And that is 100 percent legal – and awesome – in Ohio.
Benjamin Tomkins is a violinist, teacher, journalist, and critically acclaimed composer currently living in Denver, Colo. He hates stupidity, and generally believes that the volume of one’s voice is inversely proportional to one’s knowledge of the issue. Reach Ben Tomkins at BenTomkins@DaytonCityPaper.com.
Debate Right: The Internet café and the American Way
By Dave Westbrock
The question as to whether to regulate or close down Internet sweepstakes cafés, brings to the fore more than just the question of the status of a particular business venture. It amounts to playing “small ball,” if one just looks at whether or not the operation of sweepstakes cafés constitutes gambling or not.
The larger question is more broadly defined by whether government has the right and if so the duty to decide whether a business is legitimate – that is, to exist at all – and if so whether it is appropriate to regulate it. This is a fundamental debate among those who consider themselves conservative and a growing generation of Ayn Rand libertarians. The progressivist take on this question is anyone’s guess, since most are suspicious of any private business and would just like to tax it to death to support more government.
Conservatives will assess any policy issue by how it is based on fundamental Constitutional principles, the basis of which are life, liberty and property. Underlying these foundational guides, however, assume the status of our culture and morality based on Judeo-Christian belief. The family is the basic unit of our culture. The incidence of gambling addiction ranges from two to five percent, and although it is not popular to talk about gateway drugs (marijuana to cocaine and heroin), evidence suggests that with drugs this is indeed the case. The difficulty in this instance is the impact it has on our culture and general economy. The impact of obsessive gambling on marriage and family can be substantial. Monetary issues are the most common reason for divorce. One must consider the impact on children and families caused by a father or mother who spends significant time away to hit the jackpot or recoup their winnings.
When gambling is the issue, there is first no question that the Internet café is a form of gambling: spending a dollar in order to achieve a hope for reward, without a guaranteed return. A typical monetary transaction involves putting down money or something of value in return for that of greater or equal value. In much of society today, the quick payoff is the attraction and the glitz of the environment, enticing. But the payout is the rule and the payoff is the exception.
From the libertarian viewpoint, the Internet café is simply a business transaction which hurts no one else and it should not be the government’s business if someone wants to spend their own cash for diversion. It is my body and my mind and I can use it any way I wish. But it is certainly not the view of a generation who pledged their fortunes and sacred honor in defense of the U.S. as did our ancestors in the Revolution and Civil War, or our fathers and grandfathers in World War II and more recently our brothers, sisters, sons and daughters in Iraq and Afghanistan. If there is an American Way, it is not the greed and avarice that seems the coin of the realm today, but the dignity of the individual, the family and broader community often requiring a degree of self-sacrifice. This is lost consideration in the selfish culture in which we are now immersed.
But in an age when the state government sanctions gambling for the good of our children and extends it to private business to collect revenue for ill-conceived expenditures, is it not unreasonable to expect a gambling parlor on every commercial street corner like gas stations in the 1950s? After all, this is good old traditional American entrepreneurism. According to Clotfelter, lotteries helped to capitalize the formation of Jamestown, Va. That is, until the London financiers shut them down for reasons they believed led to idleness and dependence. In fact, some of the earliest universities were funded by lotteries. Lotteries were sponsored by the Framers: Washington, Franklin and John Hancock. This was in an era when there was no income tax and citizens readily gave to support a school or public work, as most give to charities a donation which is just that, with little expectation of monetary reward. In the era of Obama phones and welfare spending for non-essentials, why is it inappropriate to spend your free phone card at an Internet café? The answer is that a purpose of government is to provide for the common good. Gambling is a diversion. According to Mr. Zeng, a café owner quoted in the Dayton Daily News article from Dec. 10, 2012, “It’s a game. People come in here to play and relax.” Well, to many in 2012 with unemployment over 10 percent in some groups and a general negative attitude of many toward their economic futures, such diversions become magnets much like pay day lenders.
The Ohio legislature is now considering HB 605 to limit winnings. Whether or not the payout should be limited to $10 or $1000 is really missing the point.
Reach DCP writer Dave Westbrock at Dave.Westbrock@DaytonCityPaper.com.