Illegal Sweepstake Cafes Targeted By US States

As US states debate the merits of permitting igaming within their borders, residents continue to gamble on unlicensed offshore websites from the comfort of their own homes or alternatively at illegal gambling operations known as ‘sweepstakes’ cafes. These cybercafes have sprung up all across America offering not just access to the internet but also offering customers the opportunity to play online gambling games such as roulette, slot machines and black jack.
Often located near to local shopping malls or service station, these ‘sweepstakes’ cafes are easily accessible by gamblers who, after buying time on a PC terminal, are then given free entry into online slots or video poker competitions where they can see if they have won a prize. The customers can subsequently gamble online and earn credits based on their wagers and winnings with the option to cash out later.
Currently, thousands of these ‘sweepstakes’ cafes have sprung up across the US raking in more than $10 billion each year in revenues, and not surprisingly they have drawn the attention of state authorities, who view them as nothing more than illegal gambling fronts. Nevertheless, despite their best efforts to shut them down these unlicensed, untaxed operations continue to grow and once closed down often reopen rebranded as ‘office service venues’ or ‘skill game venues.’ As North Carolina Attorney General Roy Cooper explains, these sweepstake cafes are “lawyered up pretty well” and”are very good at adapting to whatever law that you write.”
One recent example of these operations circumventing state laws include a North Carolina cafe introducing “pre-reveal software” where a customer buys either internet time or a telephone card and the prize is disclosed even before the game is actually played.
However, while states such as Ohio, Florida and Mississippi have introduced laws banning sweepstakes cafes, other states are looking into the prospect of making online gambling legal, thus following in the footsteps of the regulated markets of Delaware, Nevada and New Jersey. US igamers each year spend in excess of $3 billion on unlicensed offshore gambling sites, and so regulated online gambling is seen as a way of funneling much needed tax dollars into depleted states coffers.