Internet Cafes

Internet Cafes

Attorney General Mike DeWine reiterated his concern with the proliferation of Internet cafes throughout the state. Last month he had staffers conduct a statewide ‘count’ and discovered there were at least 280 such establishments. Last November, the lottery commission had estimated there were 200 establishments.

Legislation to regulate these cafes has been pending for nearly a year, stuck in a House committee with no vote scheduled. Last week, Senator Joe Schiavoni introduced S.B. 317, which is the Senate version of the regulation and licensure of Internet cafes. Among the provisions:

  • Require each owner to obtain an operator’s license;
  • Require gaming equipment be purchased from a specially licensed vendor;
  • Require each machine be tested and licensed;
  • Require owners to post the odds of winning each game;
  • Prohibit the cafes from being within 500 feet of a casino or racino, 1,000 feet of a school, or within an area zoned residential;
  • Ban the sale and consumption of alcohol on the premises;
  • Give local governments the authority to ban such cafes from their municipality.

There would also be no cap on cash prizes or the number of licenses available.

Ohio townships are particularly interested in any guidance from the state. Currently, cities have home-rule authority and have banned or imposed moratoriums on Internet cafes. For the most part, townships have no such authority, thereby unable to stop such cafes from opening. One option that at least one township is considering is for the township to ask its voters to ban Internet cafes. They could adopt the language of the state proposal and reword it to be township specific.

Last year, Summit County began regulating Internet cafes in nine townships. These regulations require:

  • Each establishment to release the names of its owners and employees;
  • Machines must be independently tested and be compliant with state law;
  • The names of people winning jackpots of $600 or more must be released.

Since the regulations have gone into effect:

  • The number of establishments has dropped from 17 to 11;
  • Businesses have paid $80,050 in fees. This includes an annual license fee of $1000 and $250 per machine every 6 months;
  • There are a total of 64 employees in the 11 establishments;
  • There have been 285 jackpots of $600 or more, but 258 of them come from just two of the establishments;
  • The greatest number of machines at a single establishment is 54, but two others have 51 and 50 machines respectively.
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