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Boardman trustees still mull fees for Internet cafes
BOARDMAN
In March, Ohio’s attorney general called for stricter regulations of Internet sweepstakes cafes.
Ten months later, those regulations still aren’t law, leaving one local township seeking to regulate the businesses on its own, as some of its neighbors have done.
Internet sweepstakes caf s are allowed to offer skill-based machines, such as Skee Ball or Whac-a-Mole, under state law, and prizes are supposed to be limited to merchandise with a wholesale value of less than $10.
Boardman trustees are discussing an annual fee and per-machine monthly fee that would be collected quarterly, said board chairman Brad Calhoun.
A possible fee proposed at the Jan. 9 trustee meeting was a $2,500-per-business and a $50-per-machine annual fee. Trustees asked township Administrator Jason Loree to research the matter further.
Calhoun said if any ordinance regulating the caf s is approved, it also would affect existing caf s, so none could be “grandfathered” in and avoid the fees. Like all ordinances, one regulating the caf s would need two readings before becoming law.
Calhoun said Thursday the trustees have not received a draft of an ordinance relating to Internet caf s.
Currently in Boardman, Internet caf s can operate in areas zoned for commercial use, and owners also must appear before the board of zoning appeals to receive a conditional-use permit, said Zoning Inspector Anna Mamone.
Since 2007, 18 people representing Internet caf s have appeared before zoning appeals. Of those 18 requests, four were denied, one was continued, and one has a hearing scheduled Wednesday. Of the 12 that have been approved, two are now out of business, and two haven’t opened, according to zoning records.
That leaves eight such caf s in Boardman — more than in Austintown (six), Youngstown (four), Liberty (four) or Salem (three).
The Vindicator contacted Internet caf s in Boardman last week about the possible fees coming their way. Some managers and owners did not return calls to comment, others declined.
One manager of an Internet sweepstakes caf on South Avenue who declined to give his name said he would prefer paying a township fee, rather than a state fee because “the money would stay local.”
Attorney General Mike DeWine, who has called the caf s “consumer rip-offs,” has said he supports a law that would require skill-based or sweepstakes gaming parlors be licensed by the state Casino Control Commission, which would include a licensing fee.
Felix Savon owns Surf the World Internet Caf , 960 Boardman-Canfield Road, and said he thinks township officials could use other means to regulate the caf s.
“My opinion is they could probably regulate it just by saying there can only be so many in certain areas,” Savon said.
Fees would add to operating costs, just like any business, making it more difficult to make a profit, he said.
“I know these things are coming. Whatever happens, happens. I either work really hard and increase business, or I have to say it isn’t worth the hassle,” Savon said.
Local laws
If Boardman trustees draft and approve an ordinance regulating Internet caf , they would join the ranks of other local municipalities that have done so.
Youngstown requires Internet sweepstakes caf s to pay annual licensing fees and a charge for each machine, said city zoning specialist Ray DeCarlo.
If a business contains fewer than four machines, it must apply for an annual permit at a cost of $250 per machine. If it has four or more, but less than 100, the business must apply for a $4,000 annual permit. For more than 100 machines, businesses must pay a $6,000 annual fee.
All caf s must pay a semi-annual tax of $25 per machine, DeCarlo said.
In Salem, Internet caf s must pay a $5,000 fee annually, said Patrick Morrissey, the city’s planning and zoning officer.
Morrissey said the original legislation, modeled after similar measures in Cleveland suburbs, included a per-machine-fee, but that was taken out in the final version approved by city council. The law also caps the number of Internet caf s in Salem at four.
Both Salem and Youngstown are cities. Boardman is a home-rule township and should be able to enact similar legislation, said Atty. Mark S. Finamore, Boardman’s legal counsel.
Finamore, who advises the township in civil cases, said when it comes to Internet caf s “the law in Ohio is really not settled.”
Liberty Township has about four Internet caf s, said township Administrator Patrick Ungaro.
Ungaro said the idea of charging fees on the businesses has come up, but never formally. He called state guidelines on the businesses “a gray area,” but added that Trumbull County Prosecutor Dennis Watkins has said any Internet caf that offers games or schemes based on chance, not skill, are illegal.
Boardman Police Chief Jack Nichols said he believes local regulation will be beneficial.
Boardman police receive few criminal complaints against the Internet caf s as a whole, but Nichols said he has concerns. Officers have gone into a couple of the caf s to investigate burglaries, where the business is the victim, and found surprising things.
“[Officers] find there actually is no Internet connection. They run off a server in the back room, so the question is who’s programming the server and controlling the payout,” Nichols said.
“The term ‘Internet caf ,’ at least the ones we’ve made it into, is a misnomer. At this point, there’s no control over any of this,” he continued.
Nichols said he and Mahoning County Prosecutor Paul Gains together have discussed Internet caf s with DeWine and former Attorney General Richard Cordray, both of whom said they were investigating the businesses’ legality.
DeWine has said many businesses offering online games do not meet the definition of skill-based amusements and, in his opinion, are illegal. But he also has said state law is not clear enough to enable law enforcement to crack down on Internet caf s, according to Vindicator files.
Nichols said as soon as state law reflects that “these are clearly illegal, we will be there the next day making arrests and holding evidence.”
Until then, the chief said he’s apprehensive about shutting down caf s and seizing property when the law is unclear and said he wouldn’t want the township to be liable if the Internet caf s are ruled to be legal.
“If the state hasn’t been able to put together a law that says these are illegal, then let’s try to do something as a community. Somebody has to do something, and I applaud the board of trustees for taking the lead and doing that,” Nichols said.