Sweepstakes cafes feel heat, but some claim unfairness

Apr. 15, 2013 @ 08:36 AM

In the wake of last week’s raid of an internet sweepstakes café by authorities, some owners worry they’re next in line to be shut down for allegedly running an illegal gambling operation.

But at least one café operator said that he’s updated his computer software to assure he’s within the law, and believes he shouldn’t have to fear being closed and having his property seized.

“If they close us down today – whether we’re found innocent or guilty – we’re losing business,” said Paul Mann, who manages Sweepstakes Internet Business Center at 3115 Guess Road. “We’re losing income until we’re able to prove our innocence. That’s part of the punishment, and it’s not fair.”

On April 5, Durham County sheriff’s investigators raided H&S Internet Café at 3709 Wake Forest Highway for allegedly violating North Carolina law regulating electronic gambling. They seized 108 computers and about $2,500, and cited the owner with operating machines and devices for sweepstakes, a misdemeanor.

No other sweepstakes cafes in Durham have been raided since then, but Maj. Paul Martin of the Durham County Sheriff’s Office warned that more raids are possible.

“We will continue to pursue internet cafes operating in violation of North Carolina state law,” Martin said. “Customers who play these games should also realize that they may also be committing a crime. Operators should know that a second conviction for operating illegally is a felony.”

Under federal law, Martin said, money generated by the cafes “could lead to investigations related to racketeering as well as various federal criminal charges related to taxes.”

After last week’s raid, Martin said, some cafes closed for several days and reopened.

Kristi Mann, who runs the Guess Road café with her husband, said they closed last weekend to update their computers with so-called “pre-reveal” software that lets players know in advance how much they’ve won. She said that removes gambling from the games, and makes them legal.

The software, called Blue Diamond, is now used exclusively in the business’ 20 computers, she said.

The Manns cited a recent ruling by a Catawba County judge that a sweepstakes worker charged with operating an illegal business was not guilty. The woman was arrested in January with the two owners of a café in Hickory.

The arrests came a month after the N.C. Supreme Court upheld legislation making it illegal to possess a game terminal that simulates slot machines or is used to display electronic sweepstakes.

The employees’ attorney said a recent change by the sweepstakes software provider put the machines in compliance with state law because it showed the winners in advance.

Kristi Mann compared the new software to scratch-off cards at some fast-food restaurants that offer prizes such as french fries.

“We feel that our software is following the letter of the law,” she said. “Our attorneys have all said they are.”

Since last week’s raid, she said, business has dropped off sharply.

“People are afraid to come,” she said.

“If we aren’t doing what we’re supposed to do, then we want to close down and get it right,” she said. “We paid a lot of money for this.”

Mann said she has invited representatives from the Durham County District Attorney’s Office and the Sheriff’s Office to visit the business and examine the software. Then, she said, they’d have official approval to operate.

But Maj. Martin had a different take on that.

“A criminal committing burglary might say, ‘I didn’t break into that house; I simply entered through the rear unlocked door,’ ” he said. “But you know that criminal would be incorrect in his assessment. I would not go watch him enter the rear door and then provide a legal opinion of whether or not he is committing a crime. I would arrest him for breaking and entering.”