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Are Internet gaming cafes illegal? Maybe, maybe not, Cuccinelli says

Rosalind Helderman

Virginia Attorney General Ken Cuccinelli (R) has issued an opinion declaring so-called "free spin" gambling machines illegal under some circumstances. The opinion is especially interesting because Cuccinelli over the summer issued an opinion declaring that in some circumstances, they are legal.

At issue are small shops that include computerized machines--they often resemble slot machines--where the user gets a chance to win cash prizes. But, unlike traditional gaming devices, users also get something of value. Some Internet cafes gives users computer services like Internet time. Other shops offer DVD rental coupons or phone cards.

The shops have been cropping up across Virginia. Police in Virginia Beach recently raided 12 Internet cafes that offered users of the machines Internet time in exchange for their wager. Authorities in Spotsylvania shut down two tobacco stores with DVD rental machines.

Supporters of the establishments say the machines aren't gambling. Instead, they give people the chance to win prizes when they buy something of value.

But some local authorities say most customers never use the coupons. Instead, people are paying to gamble, they contend, running afoul of Virginia' law.

"It's nothing but a ruse," said Spotsylvania County Commonwealth's Attorney William Neely. "The evidence here was that customers just threw them on the floor."

Neely was sued by a Spotsylvania tobacco shop that he shut down as an illegal gambling site. A circuit court judge supported Neely and found that the shop was, indeed, engaged in illegal gambling. The case is now before the Virginia Supreme Court on appeal.

In a July opinion written in response to a legal question posed by Del. Bill Janis (R-Henrico), Cuccinelli ruled the Internet cafes were not engaged in illegal gaming, provided they gave equal opportunity to win prizes to people even if they did not purchase Internet time.

"It is my opinion that the element of consideration is missing, and therefore no illegal gambling occurs, when the opportunity to win a prize is offered both with a purchase and without the requirement of a purchase," he wrote.

But in response to a question posed by Sen. R. Edward Houck (D-Spotsylvania), Cuccinelli this week issued a new opinion, finding that when establishments offer patrons the ability to participate in games of chance in exchange for the purchase of items that are generally not consumed, that's gambling.

"Some will constitute legitimate marketing exercises or entertainment, others will cross the line into illegal gambling," he wrote.

Cuccinelli attached an "important note" as a cover sheet to the new opinion. In it, he explains that he has not issued a blanket ruling about the free-spin parlors, one way or the other. Instead, he explains his differing opinions by indicating that Janis and Houck presented different hypothetical scenarios about the parlors.

"The conclusions reached in these opinions are consistent, in that each opinion analyzes and discusses different sets of hypothetical scenarios," he writes. "This opinion does not change or supersede opinion [the previous opinion.] The opinions rendered are specific to the unique facts as presented. Nothing in either opinion should be interpreted as a blanket statement concerning the legality or illegality of 'internet cafes' that conduct sweepstakes 'promotions.'"

By Rosalind Helderman  | October 21, 2010; 3:53 PM ET
Categories:  Ken Cuccinelli, Rosalind Helderman  
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