The first rule posted on the window of an Internet sweepstakes cafe on Two Notch Road says, “You are not gambling!”

But the state’s top attorney and a senior law enforcement official disagree.

“They’re illegal,” said Mark Keel, chief of the State Law Enforcement Division.

At least three Internet sweepstakes cafes have popped up in the past few weeks in Richland County. Two are open for business. One appears ready to open but does not have a business license.

The Internet sweepstakes cafes are not new in South Carolina, nor are the business people who for years have searched for loopholes in state gambling laws since video poker became illegal in 2000.

However, the sweepstakes cafes now have moved from the coastal counties into the Midlands. And they are proliferating because SLED doesn’t have the manpower to investigate all of them, Keel said.

The recent openings caught some Richland County government officials off guard, setting the stage for a showdown between the business owners and county officials.

County Councilman Jim Manning said he was not aware the sweepstakes cafes had opened until a reporter called him. Now, Richland County Council is set to discuss the cafes at its June 5 meeting, said Stephany Snowden, the county’s spokeswoman.

Two weeks ago, 5th Circuit Solicitor Dan Johnson issued an opinion to Sheriff Leon Lott and Columbia Police Chief Randy Scott that declared the sweepstakes illegal. As a result, Lott said he will enforce the gambling laws.

In Columbia, the city business license office has had one inquiry from someone interested in opening an Internet sweepstakes cafe, said Brenda Kyzer, the city’s business license administrator. That person has not filed an application, but the inquiry prompted city officials to meet about it. They want to take steps to prevent such businesses from opening, she said.

The operators insist their sweepstakes cafes are legal, saying they are no different than prize contests offered by major companies such as McDonald’s, Gillette or Pepsi. Rather than running video casinos, the operators say they are selling a product – phone cards, Internet usage or coffee – and their customers get to reveal prizes by playing slots, poker or keno on a computer.

Phillip Caldwell, owner of Aurora Technologies, which distributes some of the phone cards, coffee and sweepstakes games, compares Internet sweepstakes to McDonald’s popular Monopoly game.

“When you pull off a game piece on your French fry box and get Boardwalk, you’re not playing Monopoly,” Caldwell said. “You’re revealing a prize.

“They’re using the theme of Monopoly. We use the theme of casino games.”

In Richland County, two sweepstakes cafes are operational: A&C Business Center on Two Notch Road and Cafe 21 on Sparkleberry Lane Extension.

A third, also on Two Notch, has not opened and does not have a business license. But it has posted signs on its doors and windows to advertise Get Connected prepaid phone cards and to explain the rules of its sweepstakes. Once disclaimer reads, “The Participant Access Terminals are only an entertaining way to reveal to you what prize or prizes you already have won.”

Inside the cafes, the store operators tell patrons that they will sell them a phone card or Internet time. Customers tell the operators how much time they want on the cards and then the operator informs them of the number of sweepstakes entries they will receive for purchasing that amount.

The customer then can play casino games on one of the many desktop computers in the store. The games have names such as “Fiery 7s,” “Lucky Larry Leprechaun” and “Carousel of Cash,” and their colorful graphics flash across the computer screens.

The games are played exactly like slot machines in Las Vegas. If a prize is won, the player can collect it before leaving or keep the points on the phone card for the next visit.

Aurora Technology’s website says the company is based out of Campobello, in the Upstate. But Caldwell said it recently moved its offices to Kings Mountain, N.C. Aurora’s products are used at Cafe 21 on Sparkleberry Lane Extension.

The outcomes of the sweepstakes are predetermined, just like the preprinted McDonald’s game pieces, Caldwell said. Customers do not have to play the games to win. Instead, they can ask the retailer to reveal the prize package without playing the games or choose to not play.

And customers leave the stores with the product they have paid for, he said.

Internet sweepstakes operators always use the McDonald’s comparison, said SLED’s Keel. But it’s not the same, he said.

“Nobody’s going in there to get free phone minutes or free Internet time,” he said. “They’re going in there to play games and win money.”

Jared Libet, an assistant in Attorney General Alan Wilson’s office who spends most of his time prosecuting illegal gambling operations, also said the McDonald’s Monopoly comparison is not valid.

“If you told McDonald’s tomorrow they could no longer play Monopoly, they’re not going to change anything,” he said. “They’d still be selling cheeseburgers.”

The Internet sweepstakes cafe operators are arguing technicalities and trying to find loopholes in the state’s gambling laws, he said.

“They’re completely trampling on the spirit of the law,” Libet said.

But the cases can be difficult to prosecute.

Wilson’s staff wrote an 11-page opinion for Beaufort County Sheriff P.J. Tanner in June 2011 that detailed the intricacies of the state’s gambling laws. In it, Wilson said his office could not determine the legality or illegality of a specific machine. But he said police who find probable cause of illegal gambling should confiscate the machines and appear before a county magistrate, who would rule on the matter.

However, county magistrates have disagreed in their decisions on whether the sweepstakes machines are illegal. Those cases have bounced around the courts, and no definitive ruling has been made.

The operators spend a lot of money on their legal defense, often hiring high-priced defense attorneys in Columbia and flying in out-of-state experts to testify on their behalf, Libet said.

Meanwhile, the S.C. General Assembly is considering legislation to close a loophole that operators use to argue their games’ legality.

Lott said he would prefer to focus his department’s attention on murders, robberies and property crimes. But now that the solicitor has determined the sweepstakes cafes are illegal, he will investigate them.

Until the county finds a way to shut them down or he organizes a sting, Lott said the Internet sweepstakes businesses will continue to operate.

Keel and Libet said the businesses are lucrative, so operators are willing to risk legal fights. One machine can earn several thousand dollars in a week – so even a few weeks of being in business can rake in huge profits, Keel said.

“There’s a lot of money in this business,” Keel said. “They continue to proliferate, and they will continue, until we get the personnel to hit them.”

S.C. LAW

The law requires machine-by-machine rulings on a game’s legality to keep hundreds of machines of the same type from being declared legal at once. Generally, the law says:

Police must seize a machine they think is illegal and take it to a magistrate’s court in the county where it was confiscated.

The judge must examine the machine and issue a ruling on its legality.

Decisions can be appealed to circuit courts and, ultimately, to the S.C. Supreme Court, which could take years.

Reach Phillips at (803) 771-8307.