Sweepstakes loophole in SC gambling law targeted

Senate judiciary will consider sweepstakes bill next week

nophillips@thestate.comJanuary 4, 2013 

SLED agents take photographs as evidence before breaking down and packing up the cafe. Due to an increasing presence of internet sweepstakes games in Richland County, the Richland County Sheriff's Department and the South Carolina Law Enforcement Division (SLED) worked together, Wednesday afternoon, during a raid on Cafe 21, an Internet Sweepstakes Cafe in the Northeast.

KIM KIM FOSTER-TOBIN — kkfoster@thestate.com Buy Photo

— After the state’s top law enforcement officer reminded lawmakers that the huge amounts of cash generated in video poker once before bred massive government corruption, a senate subcommittee gave unanimous approval to a bill that could close a perceived loophole in the state’s gambling laws.

Internet sweepstakes are not regulated, and one machine can bring in $1,000 to $5,000 per day, said State Law Enforcement Division Chief Mark Keel.

“We believe this has a very corrupt effect on government,” Keel said.

The senate’s full judiciary committee will consider the bill during its Tuesday meeting. A similar bill has been filed in the House.

Keel and S.C. Attorney General Alan Wilson already have determined the sweepstakes games violate state gambling laws. But as long as operators believe the loophole exists, they will continue to push the law, Keel said. He told lawmakers they could put an end to that argument by approving the bill.

Internet sweepstakes parlors began opening across the state in 2011, and they arrived in the Midlands over the summer. Keel’s agents began raiding sweepstakes parlors in January 2012 after he made the enforcement of gambling laws a priority. Since then, 1,064 machines have been seized, and SLED has not lost a case it has taken before a magistrate, he said.

Internet sweepstakes game often advertise themselves as business centers that sell copying and fax services or Internet time, and customers are given a chance to play video poker, keno or blackjack on a computer for a chance to win prizes. And, sometimes the games are offered through stand-alone kiosks in convenience stores that sell phone minutes and then allow people to play the games.

“They claim they have Internet service or copier services,” Keel said. “But everyone we’ve interviewed who is caught in one of these places says they have come for one purpose — to gamble. They’re all games of chance. They’re not games of skill.”

But sweepstakes operators compare their games to other promotional contests, such as McDonald’s Monopoly game, in which customers receive a game piece when they buy a hamburger, fries or soft drink.

“It has a defined, finite pool of winners ,” said Reggie Lloyd, an attorney who represents sweepstakes operators. “You can’t go to the machine and change whether you’re going to be a winner.”

The operators point to a state law that allows those corporate contests as their opening for the sweepstakes games. The pending bills would clarify that that is not the case.

The gambling industry historically has had a strong lobbying presence in these legislative battles. This latest round over gambling laws is expected to be no different. During Thursday’s subcommittee meeting, however, those who support Internet sweepstakes were largely silent.

Steve Fooshe, who represents the S.C. Entertainment Law Consortium, said his group wanted comprehensive reform to the state’s gambling laws. However, he did not elaborate on what that meant. And, he said the consortium had not adopted an opinion on the senate bill that addresses the loophole.

Reach Phillips at (803) 771-8307.

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