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Jax Daily Record Tuesday, Sep. 5, 2017 2 weeks ago

Internet cafés: They're back

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Shut down in 2013, the businesses offering cash prizes have returned, upsetting some city leaders.
by: David Cawton Staff Writer

Internet cafés are making a comeback in Jacksonville.

With names such as Lucky Strike, Sweeps Royale and Big Chances, the cafés offer prizes for playing games of skill or for entering a sweepstakes in exchange for buying prepaid internet time.

They’re also known as “adult arcade amusement centers,” according to city code, and often are found in low-income neighborhoods and aging strip malls.

The internet cafés are returning after the Florida Legislature in 2013 adopted new regulations in the wake of the shutdown of 49 Allied Veterans of the World internet cafés. Also fueling their comeback is an unresolved 2015 lawsuit in which the Florida Department Business and Professional Regulation is challenging a computer game system licensed to Jacksonville-based Gator Coin II Inc.

Since March 2016, at least 118 internet café businesses have applied to the city for a Certificate of Use. The city has approved 38 certificates and denied 80 for noncompliance with the building code or fire code.

Council members say ‘go away’

City Council members are taking note. At least three City Council members don’t want them.

Katrina Brown, District 8, Reginald Brown, District 10, and Scott Wilson, District 4, have questioned the legality of the businesses.

“I’d prefer to have them out of our city,” said Wilson. “They’re not a positive thing, that’s for sure.”  

The Daily Record attempted to interview a dozen Jacksonville internet café operators by phone, email or in person. None would comment.

“I’m sick of seeing all these internet cafés in my district,” Katrina Brown said to Sheriff Mike Williams at an Aug. 10 council Finance Committee hearing.

“I heard you were the man to make it happen, to make those internet cafés go away,” she said.

Williams was presenting his department’s annual budget when questioned. He told the council members that he is reviewing the situation.

Unclear is whether the cafés are violating any laws that would warrant JSO enforcement.

“We need some clarity on the law to make sure that there are elements there that we can enforce before going into a situation like that,” Williams said in a subsequent interview.

Williams said he will meet with the State Attorney’s Office and area sheriffs to determine what law enforcement can do.  

“Because right now it comes down to my expert versus your expert,” he said. “Is it gambling or not?”

Williams said in the interview last week the sheriff’s office investigates tips and complaints, but unless there’s proof that cafés are straying into gambling, “there’s not much we can do.”

He said the complaints typically reference other suspected criminal activities, not gambling.

According to Williams, regulation begins with the zoning division of the city Planning and Development Department to ensure the cafés are compliant with city zoning and building codes.

Reggie Brown suggested Williams meet with the Planning and Development Department about using changes in the zoning ordinance to control the proliferation.

Brown did not elaborate on what those changes could be.

The Certificate of Use application states that “game promotions, sweepstakes, drawings by chance, adult arcade amusement centers or similar activities” as described in Florida statutes are prohibited and that that those referenced in the city ordinance code are pre-empted by state law.

According to the city’s ordinance code, traditional internet cafés, where people pay for time just to browse the web, are not illegal.

Applicants acknowledge and confirm that their proposed use is not any prohibited by state law.

“They come in under this front of being an internet café to get their zoning approval to open up,” said city Deputy General Counsel Jason Teal. “We give it to them because we have to take it at face value.”

Teal said the city can’t assume a business will operate outside of the law “even if we’re suspicious.”

“I understand where the sheriff’s coming from in wanting to look for a kind of regulatory solution,” Teal said.

“If we find that they’re not running a legitimate business, they would be subject to criminal enforcement,” he said. “We don’t do criminal enforcement at the city.”

No changes envisioned for now

The cloudy enforcement rules stem from the 2013 law signed by Gov. Rick Scott aimed at regulating the industry, according to Teal.

That law came after 57 people were arrested during a March 2013 investigation into St. Augustine-based Allied Veterans of the World, a charity.

Charges for gambling and money laundering offenses were tied to the operation of internet cafés.

Prosecutors named the charity’s attorney, Jacksonville lawyer Kelly Mathis, as the mastermind behind a $300 million gambling ring that used the charity as a front.  

In October 2013, a jury found him guilty on 103 gambling-related counts, sentencing him to six years in prison.

Three years later, an appellate court tossed the convictions because the defense wasn’t allowed to present key evidence to help prove his case.

The Florida Supreme Court decided Feb. 1 not to hear an appeal from prosecutors, and the state dismissed the charges.

Mathis also was reinstated as a member of The Florida Bar this year.

Of the other 56, one received a year of house arrest; the others received no jail time.

Also, Lt. Gov. Jennifer Carroll resigned because of her connections to Allied Veterans.

Some cafés also offer “pre-reveal games,” or “sweepstakes.” A customer purchases a prepaid card or some form of credit that provides a limited amount of internet access time.  

The card or credit comes with an entry into the sweepstakes.

Through playing a game on touchscreen terminals or individual computers, customers find out if they’ve won or lost, which already was determined when they purchased the credit.

Teal said the 2013 law makes it difficult for the city to determine if those pre-reveal games or sweepstakes are operating within the law.

“We’ve been hamstrung by what the state law says in terms of the legality of some of these things,” he said.

“When the state took it all over and specifically pre-empted local government enforcement, it took a lot of that power away from us,” he said.

Teal said the law doesn’t necessarily preclude the city from coming up with “some kind of creative solution,” but for now there is no change planned for the Ordinance Code.

 

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