Gambling banned at Internet cafes in Massachusetts

Bryan Cohen Jun. 27, 2011, 2:34pm


BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced Friday that her office has issued a permanent regulation under the Consumer Protection Act that will ban illegal gambling at so-called "Internet Cafes" and other establishments.

Coakley's office had issued an emergency regulation in April after receiving questions and complaints about alleged unlawful gambling operations that had opened for business throughout the state. The businesses allegedly purport to sell services or goods like Internet access or phone cards, but actually take part on unlawful lotteries, sweepstakes, online slot parlors, and similar gambling.

"This regulation will enforce long-standing gambling laws and protect consumers," Coakley said. "The regulation makes clear that companies cannot skirt our laws by disguising gambling as something else, such as the sale of internet access. These establishments were illegal when they started, and they are illegal now."

The emergency regulation was challenged in Superior Court by the operator of a Springfield, Mass., cyber cafe but the request for a preliminary injunction was denied on May 13. The regulation makes it clear that these alleged gambling practices are against the law and that those in violation of them may be subject to injunctions, civil penalties and other relief under the Consumer Protection Act.

In these "cyber cafes" the owners allegedly provide dozens of computer screens at which patrons can play video slot machines, lotteries, or other similar games where winning numbers are revealed each time a player uses game credits - or money - to play the game.

The gamblers allegedly pay with a swipe card and use their points to play the lottery, sweepstakes, or video slots. Those that win can redeem the points accrued on their swipe card for cash, or they play until their money is exhausted, and then stop or pay more money to keep playing. The establishments purport to sell Internet time, coupled with an opportunity to win prizes, but Coakley alleges that the sale of internet time is a ruse as virtually all the customers pay money to gamble.

Some convenience stores and bars around the state have "phone card" lottery machines giving people the chance to win a prize by playing a lottery, sweepstakes, or a different game like slots or poker. The player buys a phone card, offering some number of minutes of phone calling, which then allegedly allows the customer to gamble with winnings typically redeemed in cash.

The regulation is designed to end the practice of de facto gambling operations that are posing as sellers of goods or services.

The regulation states: "...[I]t is unfair or deceptive in violation of [c. 93A] for any person to engage in a business or engage in a transaction where a gambling purpose predominates over the bona fide sale of bona fide goods or services."

The state's Consumer Protection Act authorizes Coakley to promulgate regulations to identify "unfair or deceptive acts or practices" in commerce or trade.

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