Mass. AG, Internet cafes reach agreement

Bryan Cohen Jul. 25, 2012, 3:19pm


BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced a $750,000 agreement on Wednesday with two Internet cafes that allegedly facilitated illegal gambling by using sweepstakes software.

Under the terms of the agreement, New England Internet Cafe LLC, doing business as NEIC, and Internet Marketing Group LLC, doing business as The Ship, agreed to pay $750,000 to the state. In addition, Teradyne Systems Massachusetts LLC, the distributor of the sweepstakes software, agreed to refrain from entering into renewed or new licensing agreements for the software in the state and will end all existing agreements.

The $750,000 represents the return of profits made by the cafes and Teradyne in connection with the unlawful operation and use of sweepstakes software.

Teradyne acknowledged that the two cafes used the sweepstakes software in a way that violated consumer protection laws in the state.

"Through today's action, these cafes will return their illegal profits back to the commonwealth and cease operating in the state," Coakley said. "These so-called Internet cafes are illegal gambling operations with no protections for consumers, including no posted odds, minimum odds, or guarantee of payouts for patrons."

On April 7, 2011, Coakley issued an emergency regulation that was made permanent on June 24, 2011, that said taking money for games of chance or sweepstakes was in violation of Chapter 93A. The regulation states that it is a deceptive and unfair practice or act in violation of Chapter 93A for a person to accept or solicit payment for an opportunity to win a prize. Engaging in a business or transaction in which a gambling purpose predominates over the legitimate sale of a bona fide service or good is also a violation of Chapter 93A. The regulation clarifies existing laws around illegal gambling and is meant to stop the practice of de facto gambling operations that pose as sellers of services or goods.

Under the terms of the agreement, The Ship and NEIC acknowledge that using the sweepstakes software violated Chapter 93A and will refrain from operating any internet cafes or similar establishments in the state.

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