Internet gaming cafes boom as legality debated

VIRGINIA BEACH

Dolores Snowden handed over $7, sat down in front of a computer monitor and chose a game to play.

She clicked a button, and slot machine-style icons - dollar signs, pictures of animals and the ubiquitous BAR symbol - scrolled down the screen. She was in a Virginia Beach strip mall at a place called Cyber Center.

After a few plays, she was up $3.65. Was she gambling?

"No, I'm playing the Internet," said Snowden, a retired Norfolk city worker. "It's just fun. Keeps me from getting Alzheimer's."

Internet gaming businesses are popping up across South Hampton Roads. About 15 have opened in Virginia Beach and Chesapeake, and business licenses for at least a dozen more have been issued, according to records from the cities' commissioners of revenue. The businesses are migrating north from North Carolina after that state's legislature this summer banned them, effective in December. About half of the local licensees are from North Carolina, records show.

The businesses, which fall in a legally murky area of Virginia law, are drawing the attention of law enforcement officials. Gambling is illegal in Virginia, and the debate over Internet gaming centers on what constitutes gambling.

"We're working it to see if there are any violations," incoming Beach Police Chief Jim Cervera said.

The games work like this: A player gives the business money to buy Internet time. That time also has a point or credit value for playing the games. For example, at two businesses visited this week, $5 bought 500 points. The points are used to play games such as "Lot-o-Cash," "Super Lucky Duck," and "Burnin' Hot."

Players can buy more points or cash out when the credit expires. Those who wind up with more points than they started with can make money.

Internet gaming cafes have found some supporters. Attorney General Ken Cuccinelli said in a recent advisory opinion that they're legal. Beach Sheriff Ken Stolle wants to accept donations from the businesses to his charity for disabled hunters, but said he's waiting for a clear legal ruling before working with Internet gamers.

"If I weren't the sheriff, I would accept these charitable donations and not think twice about it," he said, likening the businesses to bingo, which is legal in Virginia. "I don't want the public to feel I sanction the activity when it's not my call."

Ultimately, the final decision on Internet gaming will likely rest with local police, prosecutors and judges.

"I've been consulting with the police department for a couple weeks," Virginia Beach Commonwealth's Attorney Harvey Bryant said. "Just like anything else, we have to wait for them to bring us a case before we charge."

Owners of Internet cafes argue the games are legal because they are actually a sweepstakes, like those offered by fast food restaurants or grocery stores.

"Illusion is everything. The illusion of gambling - that's what makes them fun," said Doug Harris, owner of Cyber Center. "If this was a gambling den, I'd be full of people. Real gamblers know this isn't gambling."

He pointed across the smoky room. Five middle-age women and one man sat staring at computer monitors on Tuesday afternoon.

The main difference between sweepstakes and gambling is that the outcome of sweepstakes is predetermined, business owners said. Aside from entering more often, there's nothing a player can do to improve their odds of winning.

"It's just like the lottery is predetermined, or a sweepstakes at McDonald's or Hardee's," said Richard Chapman, who has business licenses to open five Internet gaming cafes in Virginia Beach and Chesapeake. Chapman helps run similar businesses in North Carolina. "It's a glorified adult Chuck E. Cheese, that's about what it is."

Some lawmakers and officials aren't so sure. And this is where the legal nuances get thick.

To show they're legal, business owners point to a law passed by the General Assembly this summer.

The bill, sponsored by Del. Clay Athey, R-Front Royal, was designed to crack down on slot-machine-style games that had gained popularity at truck stops in western Virginia, Athey said. The bill, HB1010, included a section explaining that the intent was not to ban sweepstakes programs, which the bill defines in detail.

It's this definition that Internet gamers are following to create their businesses.

"They're trying to fit whatever game they have into that criteria," Athey said. "Never underestimate creativity of individuals."

But he said another part of the law might prohibit Internet gaming. It's the section that expands the definition of illegal gambling to include games where a player has the "opportunity to win additional points or other measurable units that are redeemable by the purchaser for money at the location where the product was purchased."

Athey said his bill was meant to prohibit people from making wagers and having the chance to win money at the same location.

"At McDonald's, you pull off a tab and get a free drink. We weren't trying to get at that," he said. "We wanted to make sure you couldn't trade something for cash money. For laymen, what distinguishes gambling is you wager money and get money back."

Attorney General Cuccinelli's advisory opinion followed different legal reasoning. He said the games are legal because there is a way to enter them for free. In Virginia, illegal gambling requires "consideration" or something of value dependent on the result of a game.

"As long as you get an entry into a sweepstakes without a requirement of purchase, it is not gambling," wrote Brian Gottstein, Cuccinelli's spokesman, in an e-mail. "So, for example, you buy a cheeseburger from McDonald's and you get a "Monopoly" game piece - but you can also do the same without purchase by writing to McDonald's or going to their website."

Internet gaming owners said players can enter their sweepstakes for free by mail. Harris, the owner, of Cyber Center, has a different method.

"There you go," he said, throwing down a white plastic card. It came with 100 credits, the equivalent of $1. He offers it to first-time players who ask.

Bryant said the McDonald's analogy might not make sense because, unlike the Internet gaming cafes, the restaurant's primary purpose isn't to run a sweepstakes.

"I have yet to hear someone say, 'Give me 100 Cokes,' and then leave the Cokes on the counter to go play the game," he said.

He cautioned that laws on gambling can be hard to interpret.

"It'll be difficult to make a blanket statement that they're illegal or okay," he said. "Each operation will have to be individually evaluated."

Aaron Applegate, (757) 222-5122. aaron.applegate@pilotonline.com