Richland County Council Split on Internet Sweepstakes Cafes

The Richland County Council on Tuesday night split on how to handle the sudden rise of "Internet sweepstakes cafes," and in the end decided to do nothing at all -- at least for now.

Law enforcement officials believe the cafes are gambling enterprises. Business owners contend they are legitimate businesses that simply offer prizes to paying customers.

After wrestling for nearly an hour on how it might handle the issue, the Council in a 6-5 vote shot down a proposed 30-day moratorium on licensing a handful of new operations with pending business-license applications, a move which would have given Council and staff some time to concoct a legal remedy to the issue. 

A moratorium proved worrisome to some Council members, who believed it would be unfair to pending licensees. In defeating the motion by Council member Valerie Hutchinson, many Council members also contended they simply did not have enough information yet to deny or postpone licenses for businesses that might otherwise operate within the law. 

Others also said that if such operations violate the law, then it was a matter for law enforcement to handle — not the Council.

In Richland County, two sweepstakes cafes are currently operational: A&C Business Center on Two Notch Road and Cafe 21 on Sparkleberry Lane Extension. County Administrator J. Milton Pope said six other businesses that might offer sweepstakes as a component of their main business are awaiting approval of their business licenses.

The operators insist their sweepstakes are legal, saying they are no different than prize contests offered by major companies such as McDonald’s, Gillette or Pepsi, according to a recent article in The State. 

Rather than running video casinos, which were banned in 2000, the operators argue they are merely selling a product -– such as phone cards, Internet usage, business services, or coffee –- and their customers get to reveal prizes by playing slots, poker or keno on a computer while in-store.

The state's Attorney General, SLED, and 5th Circuit Solicitor Dan Johnson have all stated they believe the establishments are illegal. But so far, no definitive ruling has been made, either by the courts or the state legislature.

Of the two current operations in Richland County, Pope said the county had licensed one primarily as a coffee shop, and the other under the heading of "business service center," though both have a sweepstakes component to their business. The pending licensees are largely looking to become licensed as a coffee shop, Internet cafe, or business service center, or some combination of the three, he said.

Pope noted that the county currently does not have a definition or designation for "Internet cafe" or "sweepstakes cafe" in its zoning code and there is no such designation under the widely used Standard Industrial Code.

"I think, at a minimum, we as a staff need to adopt language to define what an Internet cafe actually is," Pope said. "This is a new type of business."

Since no action was taken by Council, Pope said during a break in the meeting that county staff will look at potential remedies to bring back to Council.

"I think one of the things we're going to do from a staff perspective is look at creating a definition of what Internet cafes are, similar to what Charleston did, and then we'll get back to Council on that," Pope said. "As well as coming up with a staff position regarding the situation of the pending business licenses."