Florida Keys News - Key West Citizen
Saturday, March 16, 2013
Local cafes claim legality

Gulf Internet Services locales in Tavernier, Marathon and Key West were among 51 Internet sweepstakes cafes around Florida shuttered by state and federal officials this week as part of a massive probe.

But State Attorney Catherine Vogel said she doesn't plan to take action against other Florida Keys sweepstakes cafes right now.

"At this point I would like to see what happens with these prosecutions," Vogel said.

The Gulf Internet storefronts, like the others targeted by officials, were part of the network run by the purported charity nonprofit Allied Veterans of America.

Authorities arrested nearly 60 people in connection with Allied Veterans, accusing them of racketeering and conspiracy in what they called a $300 million fraud scheme.

But while the most serious charges made against the defendants relate to their alleged misrepresentation that most profits from the cafes were being donated to charities, the defendants were also accused of operating illegal slot machines and gambling houses.

For other Keys Internet sweepstakes venues, it was those gambling-related charges that caused concern.

Steve DeGraves of Stick Stein in Key West and Robert Kofler of Lucky Duck in Marathon both said the raids last Wednesday led them to make phone calls; DeGraves to his attorney and Kofler to the South Carolina-based company that operates the slot machine sweepstakes software his customers play.

Both said they were reassured that their operations are legal.

"We've always been very diligent," DeGraves said.

Meanwhile, the raids came just one day after Arnie Diaz opened his own sweepstakes venue, called The Place, in Key Largo. The raids led Diaz to call various state agencies and visit the State Attorney's Office seeking information on his new business's legal standing.

"The only reason I'm worried is because I'm a decent person," Diaz said. "I did this because I thought it was legal."

Internet sweepstakes cafes operate under Florida promotional game statutes rather than under gambling laws. Customers at the locales use prepaid debit cards to place wagers on the virtual slot machine games, which are housed on computers. Operators of the businesses say they don't sell slot machine credits, but rather time on the Internet. The sweepstakes entries, they say, are just a giveaway, much like sweepstakes cards handed out by fast-food restaurants to their customers.

Though prosecutors filed gambling charges against the Allied Veterans defendants, and Seminole County Sheriff Donald Eslinger promised last week to go after other Internet cafes, many, including Vogel, say the cafes operate in a legal gray area.

"I would be so happy if the Florida Legislature would give us some reasonable guidelines on this," she said.

There's a possibility Vogel will get her way. In the aftermath of the raids Wednesday, House and Senate committees were scheduled to contemplate a bill that would ban all new Internet sweepstakes cafes.

Existing cafes, if legal, would be allowed to remain in operation.

Kofler of Lucky Duck said that it was business as usual right now for his Marathon cafe.

"This is a legit business," he said.

rsilk@keysnews.com

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