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Issue Date: Vol. 53, No. 11, November 2013, Posted On: 10/15/2013

In Ohio, The End Of Sweepstakes Cafés Is Near: NJ Firm Pleads Guilty, Referendum Campaign Fails And Prize-Limit Law Begins

Nick Montano

COLUMBUS, OH -- Ohio's top law enforcement officials reported that a New Jersey company supplying the technology to run Internet sweepstakes cafés in the state will cease operations in Ohio after pleading guilty to felony charges. The news broke on Oct. 11.

Five defendants agreed to the plea that includes charges related to money laundering and operating a gambling enterprise, according to Ohio Attorney General Mike DeWine and Cuyahoga County Prosecutor Timothy J. McGinty.

Four of the defendants named are VS2 Worldwide Communications LLC (Wall Township, NJ), P&E Technologies Inc. (Farmingdale, NJ), Philip Cornick (Ocean County, NJ) and Michael Koty (Bloomsbury, NJ). The defendants agreed to plead guilty as part of a gambling enterprise organized by VS2, which is terminating its operations in Ohio. | SEE WKYC-TV

Earlier this month, the Ohio attorney general announced that his office would begin enforcement of Ohio's new Internet sweepstakes café regulations. The new law became effective after a referendum effort was discontinued on Oct. 3. | SEE PRESS RELEASE

The referendum campaign to overturn Ohio's Internet sweepstakes law had failed to collect the required signatures of 231,148 registered voters in the state. The Committee to Protect Ohio Jobs, the group that was collecting the signatures, was hoping to put the sweepstakes issue to a public vote in the November 2014 general election. That would have delayed the ban until after that vote. The campaign fell short of 71,140 signatures.

The new law does not outright ban sweepstakes cafés, which operate casino-style games played on devices connected to the Internet, but it will make it difficult for them to stay in business. The law places a $10 limit on prize values, and bans awarding cash prizes, gift cards, lottery tickets, alcohol, tobacco, firearms and vouchers. It also requires cafés to obtain a certificate of registration from the attorney general, and to file monthly reports. SEE COLUMBUS DISPATCH

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