Internet cafe operators get a pass in the Senate

The death of a bill in the Ohio Sen- ate to regulate gambling establishments known as Internet cafes should erase any doubts about the political power of the owners of such establishments.

Even Attorney General Mike DeWine, a vocal critic of the 819 unlicensed, unregulated outlets operating in Ohio, was surprised by Senate President Tom Niehaus’ decision not to bring up the measure for a vote. The Senate completed its legislative work for the year on Thursday.

Niehaus, who will not be returning to the General Assembly in 2013 because of term limits, said there wasn’t enough time to fully consider the Internet cafe bill.

The House passed the legislation earlier this month by a 2-to-1 margin.

“While I am disappointed that the Ohio Senate will not consider House Bill 605 this session, the hearings that were held in the past few weeks have been helpful in bringing the issues associated with Internet cafes to the forefront,” DeWine said in a statement after Niehaus’ decision was announced Tuesday. “I’m optimistic that the momentum on this issue will continue and the new General Assembly will act early next year.”

We hope the state’s top lawyer was being diplomatic in issuing such an opaque statement, and that he was, in fact, steaming when he discussed what had taken place with his staff. After all, he has suffered a major defeat.

There’s no guarantee that the General Assembly will take up the issue next year. Indeed, given the expertise with which they played the Republican controlled Senate, the operators of the cafes can be expected to spend the next several weeks solidifying opposition to an attempt to resurrect the legislation.

Internet cafe computer games operate like slot machines with cash prizes. Customers pay for Internet time or phone cards and use them to bet points on computers loaded with games such as poker.

The attorney general has long argued that these are gambling establishments and, therefore, are operating illegally in Ohio. He told a Senate hearing that he would have preferred an outright ban, but was willing to go along with the House bill that contained a narrow definition of sweepstakes. As a result, most of the 800-plus sites would have been forced to shut down had the Senate passed the bill and the governor signed it into law.

For the past two years, DeWine has looked to the Legislature to pull the plug on these gambling parlors, but the best lawmakers could come up with was a moratorium on such places until June 30, 2013. In so doing, they gave de facto recognition to the cafes that have been operating outside the regulations that apply to gambling in Ohio.

The 819 businesses which generate about $1 billion a year do not have a constitutional right to exist. The creation of the Ohio Lottery Commission, gambling that benefits charities and Vegas-style gambling through the construction of four full-service casinos in specific cities in Ohio were made possible through amendments to the Ohio Constitution.

No oversight

But with the death of regulatory legislation in the Senate, the cafes are free to operate without any state oversight and in competition with legal gambling.

As the attorney general told a Senate committee, the amount of cash flowing through the operations make them ripe places for money laundering, organized crime and drug dealings.

In addition, DeWine said, the absence of any state oversight and regulations means that customers can easily be scammed.

“We don’t know what the payout is to the people who go to these Internet cafes,” he told the senators.

But his comments failed move the bill along.

The owners of the casinos in Ohio, Penn National Gaming and Rock Gaming/Caesars Entertainment got rolled in the Senate.

What will they do to protect their investments of hundreds of millions of dollars?