EXCLUSIVE | gambling crackdown

2 Midlands Internet cafes raided (+ video)

SLED, sheriff’s departments turn up the heat on sweepstakes machines, promise more raids

nophillips@thestate.comJuly 12, 2012 

Authorities raided two Midlands Internet sweepstakes businesses Wednesday afternoon to confiscate their machines and close the doors.

The raids signal that state and local officials are turning up the heat against the sweepstakes businesses, which offer customers chances to play online games such as poker, slots and keno after they purchase phone cards or Internet usage.

One business was in Lexington County; the other, in Richland.

“This is a warning to all the others in Richland County,” Richland County Sheriff Leon Lott said. “We got one today, and if the others stay open, we’ll get them.”

Richland County sheriff’s deputies and State Law Enforcement Division agents raided Cafe 21 on Sparkleberry Extension in Northeast Richland, where they confiscated 21 computers on which customers could play the games.

At the same time, SLED agents and Lexington County sheriff’s deputies raided Shatters, an Internet cafe on St. Andrews Road, where they seized 18 computers, SLED Chief Mark Keel said. The raid is not expected to be the last.

“We’re starting to make the rounds now,” Keel said.

Lott said his department opened an investigation into Cafe 21 as soon as he learned it had opened. The department worked with SLED because it has agents who are experienced in investigating illegal gambling, Lott said.

Internet sweepstakes businesses began opening in Richland and Lexington counties earlier this year, setting off debates among local governments on how to license the businesses and how to control where they are located.

At the same time, similar machines have been popping up in convenience stores, bars and even bowling alleys. The businesses allow people to play video poker and slots after purchasing phone cards from them.

S.C. Attorney General Alan Wilson has determined that the machines violate state law. Two of the three staff attorneys who focus on illegal gambling went on Wednesday’s raids. Keel said he has sent agents to schools to gain expertise in building cases and has brought in a gambling expert to advise his staff.

“It’s a cash business,” Keel said. “It is a business that is ripe for corruption because of the money involved in it. We’re going to continue to work them and we’re going to continue to make cases.”

Keel said he has served notice to convenience store owners and others across the state that his agency will be enforcing the law. SLED has raided Internet sweepstakes cafes in other counties, including Horry and York. It also has seized machines from stores and bars, including seven machines taken last week from two convenience stores in Irmo, Keel said.

Wednesday’s raid at Cafe 21 was the first at a Richland County sweepstakes business.

About 1:15 p.m., an undercover agent went inside the business to purchase the phone card that allows customers to play the games. Weeks before, undercover officers had been inside to play the games and to build up evidence so they could obtain a search warrant.

After the undercover agent received his phone card Wednesday, more than a dozen sheriff’s deputies and SLED agents followed him, their search warrant in hand. They detained one customer who was playing the games and the cafe manager.

The customer was charged with gambling, a misdemeanor, and allowed to leave after cooperating with police.

In a unique turn, Richland County Magistrate Judge Michael Davis came to the sweepstakes cafe to hold a hearing where he determined the machines violated state law and then ordered them to be seized.

“Because of how many machines are in here, their primary function is illegal gambling,” he said after the hearing.

It is unusual for judges to go to a business to hold a hearing, Davis said. But this trip was necessary because the computer games are run on a server at another location, so there is no evidence of gambling on the machines themselves after they are turned off, he said.

“As soon as they unplug them, it’s gone,” Davis said. “They’re just regular computers when they bring them to me.”

Cafe 21 owner Brent Ferrell was called to the scene. He declined comment and referred all questions to his attorney, Reggie Lloyd. Lloyd, who is the state’s former SLED director, could not be reached for comment.

Ferrell and Lloyd have 15 days to appeal the magistrate’s ruling in an attempt to get their machines back and reopen the business, Davis said.

Previously, owners of Internet sweepstakes cafes and the individual machines that sell phone cards have argued that their games do not violate state law because they have discovered a legal loophole that allows them. They have said their games are no different than McDonald’s Monopoly sweepstakes, which gives customers a chance to win a prize after they purchase food and drinks.

But Jared Libet, the prosecutor for the state attorney general, disputed that comparison.

“They always compare themselves to McDonald’s, but when you walk up to McDonald’s, it’s pretty clear what they are selling,” Libet said. “If you want to sell coffee or phone cards, where are the signs advertising those products?”

He pointed out that the most visible sign outside Cafe 21 was a red and white banner that read “Internet Sweepstakes Cafe” and had six dollar signs on it.

Reach Phillips at (803) 771-8307.

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