Oregon OK's moratorium on sweepstake terminal cafes

Kelly J. Kaczala

        Oregon City Council recently approved a resolution imposing a 180 day moratorium on the development of new sweepstake terminal cafes in the city.
        Internet sweepstakes cafes are establishments where patrons can play computer games that are similar to casino-style slot machines. Patrons activate online accounts using phone cards and play the games with the chance to win cash prizes.
        The cafes, which have proliferated across the country since they were established in 2005, has stirred controversies. Café owners insist their businesses operate legally under state sweepstakes laws. Opponents consider them gambling houses that are avoiding state gaming regulations.
        Over the last several years, a number of sweepstakes terminal cafes has opened in Oregon. This was a use that was not anticipated in the city’s zoning code. In order for the city to properly consider appropriate zoning or other regulatory options for this use, the resolution provides a six month moratorium.
More cafes
        “We actually discovered we have four of these internet sweepstakes cafes in Oregon,” said Councilman Tim Zale, who introduced the resolution. “I was told they are not regulated in any way. We don’t even know they’re here. I did receive a call from an owner of two of them in Oregon who told me that there is an organization in Florida that plans to come to Oregon and open three to four in the city and six in Toledo. I would like to have this period of time of six months so that we can do a moratorium of not allowing any of them in the city right now so we can do a little more investigation into what the legal ramifications are of these places being here, or look at the regulation options that are available to us. There is a lot of case law out there right now. There’s a lot to digest.”
        Zale said he recently discussed the issue with members of the Ohio Casino Control Commission, a gaming control board in Ohio that provides oversight of the state’s casinos.
        “I would just like to take this period to reflect on what kind of development we want to see in Oregon. Do we want to see four more of these in Oregon? Would we be putting our best foot forward? We don’t regulate them in any way. We don’t regulate whether they are close to a church or school or anything else you might think they shouldn’t be near. These are the kinds of things in which I would like to take some time to look at.”
        Councilman James Seaman agreed.
        “We’ve seen this happen in Toledo where there was an overabundance of them,” said Seaman.
        Councilwoman Sandy Bihn asked where the four sweepstake terminal cafes are located in the city. Zale said there are two on Woodville Road, and two on Navarre Avenue.
Case law
        Bihn also asked City Law Director Melissa Purpura whether the six month moratorium was legal.
        “We can absolutely do this legally,” said Purpura. The six months period of time is reasonable, she added.
        “It has been upheld by case law for us to look at the appropriate zoning and the impact of internet cafes,” she said.
        “Are there any prevalent issues or challenges as they operate today, or basically are the six months allowing us to look into that currently?” asked Councilman Steve Hornyak.
        “We didn’t anticipate this in our code,” said City Administrator Mike Beazley. “We’ve had some questions raised about them. We want to examine the law. Council may choose to do nothing after six months. That’s up to council to not provide a different zoning or regulatory approach. In the meantime, is this a business? They’ve been allowed to operate in the region so far. We can use this time to develop some responses and arrange some options.”


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