The state lottery isn’t the only game in town for gamblers. At least until local police departments find a justification to shut down the increasingly controversial industry of Internet sweepstakes cafes.
Lucky’s Sweepstakes opened two weeks ago in a storefront on Hull Street and Belt Boulevard. And judging by the brisk flow of customers playing computer-based slot machine and poker games yesterday, business is booming.
However, authorities are cracking down on these sorts of businesses around Virginia. And they were banned in North Carolina.
It’s difficult to discern how the businesses differ from legal gambling (Bingo) or illegal gambling (a cash poker game) but in previous news stories, operators have said that their customers are buying cards with Internet time that also enter them into sweepstakes. And that Virginia law differentiates between a sweepstakes with pre-determined odds and games that rely on the operator’s skill and luck.
RBS checked Lucky’s out yesterday and played a few rounds of slots and poker to get a feel for how the system works.
The first thing that’s noticeable – it smells like a casino. That’s because smoking is allowed.
It sounds like a casino. The electronic sounds of slot machines echo from the computers’ speakers and people complain about burning through their money.
There are free drinks like a casino. But only soda and water.
Money evaporates as fast as it does in a casino. Customers buy time on one of about 15 computers to play different types of games, mostly consisting of slot machine games, poker and keno. That time is also labeled sweepstakes points that are used to play a hand of electronic poker or pull the electronic wheel of the slot machine. It can also be used to surf the Internet or make copies.
Wagers can be as low 20 cents on some games and up to $2. The 1,000 “sweepstakes points” or $10 on RBS’s Lucky’s swipe card disappeared into the electronic void within about 30 minutes. RBS built up 625 points worth of winnings, equal to $6.25. That money could either be cashed out or put back into the sweepstakes point stack to play with.
Getting a swipe card also puts your name in a weekly $125 sweepstakes.
At around 5:00 p.m. Thursday, the place was busy with about 10 people playing. The store managers, who didn’t want to be officially interviewed, said the place is open from 10:00 a.m. to 2:00 a.m. Some of the busier hours begin around 4:30 weekdays when people starting getting off of work.
And the market is apparently ripe. One of Luckly’s managers said the owner has plans to open several locations around Richmond.
Lucky’s is operated under Internet Sweeps Café LLC. The business license is in the name of a Pinehurst, N.C.-based entity of the same name.
Local commercial brokers say they’ve seen an increase lately in inquiries for retail space.
Brian Glass, a senior vice president with Grubb & Ellis|Harrison & Bates, said he has come across several such gaming cafes looking to lease space in local shopping centers, but was unaware of any that were open yet.
But the commercial real estate community isn’t quite sure what to make of them.
Glass said there is, “A lot of skepticism inside the brokerage community about this type of business…Landlords should be very cautious…”
Peter Bunin, a vice president at S.L. Nusbaum who leases shopping centers, said he has had inquiries from Internet gaming cafes for center space. But he says he has turned them all down, partly because of the uncertain legal environment developing around the enterprises.
So the big question is – is it gambling? Are these more or less storefront casinos?
Virginia Attorney General Ken Cuccinelli responded in July to state Del . Bill Janis of Glen Allen’s request for an advisory opinion.
“You ask whether prizes offered by a retail provider of internet and computer services are permissible or whether they constitute illegal gambling under the laws of Virginia when entries to win prizes are available to persons who purchase computer time as well as to those who do not.”
“It is my opinion that the element of consideration is missing, and therefore no illegal gambling occurs, when the opportunity to win a prize is offered both with a purchase and without the requirement of a purchase.”
That didn’t keep Virginia Beach police from raiding about a dozen such businesses this week, as was reported by The Virginian-Pilot.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected]