Forget the rough economy, if you believe reports, Illegal Internet cafes are Michigan’s current scourge. According to Michigan officials, many seemingly innocent WiFi-friendly “tech-eries” offer illegal services – and as of May 3, 2012, eight Internet cafes in Grand Rapids, Saginaw, Lansing and Flint were shut down indefinitely after receiving state-issued cease and desist orders.
You Ain’t No Stinking Internet Café, You’re An Illegal Gambling “Pop Up” Casino
According to authorities, the targeted establishments are not ordinary Internet cafes that only offered basic web surfing. Oh no, the naughty establishments allegedly lured customers with a chance to win cash or a free sweepstakes entry. Michigan’s Attorney General, Bill Schuette, says the cafes are unregulated “pop-up” casinos. The state’s main issue (and legal stance) is that these Internet cafes are offering customers a chance to win cash rewards without the requisite gambling licenses.
Tucked in between tanning shops, restaurants and other strip mall staples, these cafes display brightly colored full-length signs that entice customers to surf the web and win cash. One Internet cafe even uses the business name “Monte Carlo.”
Operators Insist Customers Are Only “Buying Internet Time” Not Gambling at Internet Cafes
Despite state officials’ insistence on the illegal nature of the cafes (which use casino-style gaming software), proponents say customers are only buying Internet time.
Investigations revealed that an arguably elusive Michigan-based company known as Innovative Entertainment is responsible for licensing this software. The cafe’s computer systems feature Internet access with added games of chance. Customers can earn points while playing games, which can be redeemed for cash rewards. Other locations give customers free sweepstakes entries when they purchase Internet time.
Illegal Gambling Is Frowned Upon In Michigan But Some Think There Aren’t Actually Any Regulations Against It
Like many states, Michigan has strict illegal gambling laws. In fact, the Michigan Gaming Control Board published an explicit statement regarding Internet sweepstakes cafes. According to the organization, there is no exception in the penal code regulating illegal lotteries and gambling.
Furthermore, criminal misdemeanor punishments for individuals who maintain gaming rooms, casino tables and games of chance or skill include a $1,000 fine or up to two years in prison. While the attorney general found a statewide crackdown to be the most effective way to target these establishments, local officials are less enthusiastic. Davison Police Chief Bill Brandon said that the businesses seemed to conform to commercial zoning regulations, but his organization would assist with any enforcement efforts.
Until recently, even the prosecutor in Genesee County was unaware of the issue or the presence of such establishments. The prosecutor said that these businesses are taking advantage of a legal gray area and engaging in activities that state laws don’t permit but don’t explicitly prohibit.
Currently, business owners have voluntarily ceased operations, and Innovative Entertainment agreed to remotely disable the software. This issue brings up a double legal standard where companies like McDonald’s are permitted to run contests that encourage customers to buy more.
While the Internet cafes are not de facto casinos, state officials may need to enact new laws to combat these increasingly popular businesses.