Having taken up inconspicuous residences in strip malls around the city, Toledo is home to many internet cafes, each sporting an alluring name that entices passing drivers to come in and play.
Toledo Sweepstakes, Jackpot Palace, Super Arcade, Jo’s Play & Win.
Some are adorned with flashing neon lights, others “777” in bright letters, or red cartoon-like drawings of crowns and four-leaf clovers. Many seem hidden away next to nail salons and convenience stores — just a sign, a door, and covered windows that block prying eyes.
Most are dimly lit inside and filled with dozens of computers set up in front of comfortable chairs, mostly black leather and plush. Even though most locations offer outdoor designated smoking areas, the air inside smells of stale cigarette smoke.
Screens advertise games with names like “Northern Buffalo” and “Platinum Touch.”
By at least some measures they’re illegal — Ohio lawmakers passed legislation more than five years ago banning them — and public officials in Toledo readily admit many are operating here in plain sight without proper licenses. Now internet cafes, known also as sweepstakes terminal cafes, are at the center of the biggest political scandal in Toledo in years, with four members of city council accused of taking bribes in exchange for votes related to the mysterious businesses.
Still, such charges didn’t appear to affect daily operations at a dozen cafes visited by The Blade during a recent sweltering weekday afternoon. In the middle of the day, the internet cafes were largely empty. Most had around 10-20 masked patrons stationed at their own machines and an employee or two to keep watch.
But Tiffany Hale, an employee at Toledo Sweepstakes, said that the cafe gets very busy on weekends and at night. She said the internet cafe in the 5200 block of Hill Avenue serves mostly individuals in their 50s, 60s, and above – but that they get a mix of young people as well on the weekends.
Ruth Nice, a retired Toledoan playing Las Vegas slots at Toledo Sweepstakes, said that she comes in twice a week and has been going since they opened.
“It’s fun,” she said. “I just enjoy it.”
John Vartanian, a nine-decade long Toledo resident, was also playing a slot-like game at Toledo Sweepstakes on Wednesday. He’s said he’s been going to internet cafes over the past five years and recently won a few hundred dollars.
Among employees and patrons, the involvement of internet cafes in the Toledo City Council arrests was unexpected but not particularly impactful to cafe users. Ms. Nice said she was shocked that her elected representatives would be accused of accepting bribes.
The business model
While internet cafes as a broad concept first developed in the 1990s as a location to get online before in-home internet services and smartphones became the norm, today the internet cafes at the center of the Toledo corruption probe offer clientele a different service.
The American Gaming Association in a 2014 paper explained the broad principle behind these businesses as such:
Internet cafes advertise and sell a product — usually internet time or long-distance telephone minutes. Along with that product, customers receive what’s considered by the cafes to be a bonus of “entries” in an internet sweepstakes. With those entries, the customer can participate in internet-based games at the cafe’s specially-programmed personal computers. Among those who play on the computers, a set of customers are randomly chosen to win cash prizes — regardless of how they perform in the video-based games.
“The argument was, ‘It’s not a game of chance because you know going in whether you lost and you’re just playing for fun.’ You’re paying the $20 for the right to have internet time; you’re not paying for the chance to win a prize,’” said Michael Zatezalo, a gaming law attorney at Kegler, Brown, Hill, and Ritter in Columbus.
Experts said it’s generally difficult to say exactly how these cafes operate because each location seems a little different from the next. Lax oversight and regulations further muddle matters.
Internet cafes sprouted like mushrooms across Ohio in the first decade of the 2000s, and by 2013 there were nearly 800 registered with the state Attorney General’s Office. But that same year, former Gov. John Kasich signed House Bill 7 into law, which essentially shut down internet cafes by making it illegal for players to redeem a merchandise prize over $10.
The Ohio General Assembly gave the Ohio Casino Control Commission the authority in 2015 to license, regulate, investigate, and penalize entities that violate gaming laws. But oversight of rules and enforcement of regulations is complicated when it comes to these establishments.
Issues involving the sale of alcohol at internet cafes, for example, can fall under the state Division of Liquor Control, though the internet cafes visited by The Blade in Toledo appeared only to serve soft drinks, coffee, and snacks.
The attorney general’s office does not have direct jurisdiction to investigate illegal gambling operations, but could become involved in cases when assisting local law enforcement, as could the Ohio Bureau of Criminal Investigations.
The Ohio Casino Control Commission has received thousands of applications for licensure over the years, but only one of the cafes linked with the Toledo bribe scheme was located in the commission’s records. The application was never completed, commission spokesman Jessica Franks confirmed.
Internet cafe owners often seek loopholes in the law and claim their business doesn’t fall under the commission’s regulations. Ms. Franks said some further obfuscate regulators by periodically reframing their business models and switching up their operations.
Regulations unclear
As internet cafe owners deal with Ohio’s complex gambling laws, they often must navigate municipal requirements and ordinances, too.
“A lot of municipalities started to license them because they could get revenue from the licensing,” Mr. Zatezalo said. “The operators would say, ‘We’re licensed by whatever city and therefore it must be legal, so come on in because we’re licensed by the city.’”
In Toledo, city officials have largely maintained that the licensing of internet cafes is a home-rule issue, meaning city laws regarding the matter trump state laws.
Internet cafes are supposed to obtain licenses from the city’s Department of Finance for an annual fee of $5,000 plus $200 for each electronic device in the cafe. But a June, 2020 paper published by the city’s zoning and planning department found that at least three internet cafes were operating in the city without a license.
The report documents the locations of 10 internet cafes in the city, though in many cases city officials during site visits couldn’t tell whether a particular location — including a fourth unlicensed internet cafe storefront — were actually in operation, “due to intentionally obscured windows, and hours of operation not being posted clearly.”
Toledo Mayor Wade Kapszukiewicz acknowledged the cafes operate without much review.
“They absolutely deserve more scrutiny and oversight, even if it’s not clear just yet what that might look like. Internet cafes have been the scene for too many questionable activities for community leaders to simply ignore the problems,” he said in a written statement.
Operators and owners at both licensed and unlicensed sites visited by The Blade this week declined to comment for this story.
In some cases it wasn’t clear whether or not a cafe was in operation. In at least one case, The Blade found a cafe that was not included in the city planning commission report — Original Lucky Seven, located at 325 W. Alexis Rd.
Jeff Lingo, special units chief of the criminal division of the Lucas County Prosecutor’s Office, said he cannot remember a time where the office prosecuted a case involving an internet cafe. He said the prosecutor’s office “very seldom” receives complaints about them. When they do, they would enlist the help of the attorney general’s office, he said.
With 88 county prosecutors in the state, there’s also differing levels of priority based on resources to investigate such businesses, said Mr. Zatesalo. In 2016, five internet cafes in central Ohio were raided and closed following complaints about illegal gambling.
Illegal internet cafes affect consumers and the state, as these cafes often do not pay the appropriate taxes on winnings, Ms. Franks said. Additionally, there are usually no remedies available for customers who may have been cheated and there typically aren’t notices of assistance for potential gambling problems.
Of the locations visited by The Blade this week, Royal Skills, 2152 W. Laskey Rd, was one of the largest and busiest. Dim LED lights in various colors — yellow, green, red, blue — shined down from the ceiling, illuminating a clean and well-kept space.
In one corner, the location offered free coffee and soda to its patrons. Roughly 10 people sat at various computer stations, all wearing masks.
Security Guard Tyrone Walker said Royal Skills mostly serves “older crowds,” and often provides free food for patrons, sometimes even Marco’s Pizza on the weekends.
“It’s almost like a little boys and girls club, but for adults,” he said. “It’s like an arcade.”
He waved at patrons as they came and went, calling out to them by name. Royal Skills has a number of regulars and very few disturbances, Mr. Walker said.
“Our customers, they start to become family,” he said.
Staff writers Allison Dunn, Sarah Elms, and Brooks Sutherland contributed to this report.
First Published July 20, 2020, 11:46 a.m.
