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County continues to grapple with ‘recent phenomenon’ of Internet-gambling cafes By Raheem F. Hosseini 12.13.12. News and Review

You are such a slot.

Such was the message Sacramento County supervisors delivered last week to a minimart hoping to separate itself from a raft of internet-cafe gambling fronts ka-chinging throughout the state.

Earlier this year, when the county rejected Town & Country Mini Mart’s bid for a business license, it was because owner Paul Avery neglected to mention his Fulton Avenue shop’s primary source of income: rows of computer terminals that allow customers to play “sweepstakes” games like keno and poker. All customers need to do to is purchase Internet time.

According to the county, this is enough to make the computer terminals de facto slot machines, which are prohibited under state law. (Unless they are on recognized American Indian lands, of course.)

Avery and his attorney, Kathleen Finnerty, argued that customers could use the purchased computer time to conduct other business, and that the games met the legal definition of electronic sweepstakes similar to ones offered by McDonald’s and Visa.

“Although these sweepstakes games can resemble gambling, so too do any sweepstakes games,” Finnerty contended. “The fact that they’re conducted electronically doesn’t change the nature of the lawful sweepstakes.”

Despite this being their first brush with this phenomenon, county supervisors didn’t spend much time parsing the legal differences between gambling devices and electronic sweepstakes. The latter are permitted under the county’s business and professions code, said deputy county counsel John E. Reed.

Following the board’s unanimous decision, Finnerty said Avery closed his business and laid off a handful of employees, rather than invite the possibility of fines and criminal charges.

But Avery’s wasn’t the only ambiguous gaming business around these parts.

According to law enforcement, Sacramento has experienced a “recent phenomenon” of so-called Internet-cafe businesses operating as fronts for gambling, especially in poorer neighborhoods.

Within the last month, the sheriff’s department’s Special Investigations Intelligence Bureau conducted an enforcement operation on a number of these businesses, said spokesman Deputy Jason Ramos.

But defining the scope of this “phenomenon” remains difficult. There are no firm numbers describing how many Internet cafes and copy shops may be running electronic gambling machines in Sacramento or elsewhere. That’s because law enforcement only really learned of the problem a few years ago, said Aaron Wong, acting special agent in charge of the Department of Justice’s Bureau of Gambling Control’s Northern California compliance and enforcement section. The DOJ’s first encounter with these kinds of businesses was in Stockton, roughly four years ago.

“It sounds legitimate,” he told SN&R of these pseudo Internet cafes. “But these things usually open up in poverty-stricken neighborhoods. They draw from folks who don’t have the means to get themselves to a casino. It’s a shame because these are the same folks who probably can’t afford to lose the 30, 40 bucks.”

These plain-sight gambling halls have been easier to spot since Internet cafes went the way of pagers and silk shirts. And once inside, the businesses’ true purpose is usually evident, Wong said. There are rows of computer terminals with video slot-style games pinging and ringing throughout the main entryway.

All of which should make them easier to shut down. But the argument that they’re offering sweepstakes games makes them harder to kill.

Finnerty told SN&R that supervisors ignored the legal nuances that distinguish gambling from sweepstakes.

“I believe an appeal is well-founded to obtain a proper legal view of these issues, but no decision has been made on that yet,” she said.

California’s SB1186, Sadly, Is Not the Panacea to ADA Litigation

By Kathleen E. Finnerty, Esq.

 

Kudos to Senators Dutton and Steinberg for working diligently with the business and disability communities to get SB1186 passed last week.  After countless attempts by many, present company included, to modify the laws and balance some of the iniquities that have allowed a very few to profit very greatly – this is progress, but it is far from a cure.   What every business in California needs to recognize is that SB1186 will only apply to cases filed in California state courts.  Less than 10% of all ADA claims are filed in State Court.   This new law, much like SB1608 passed in 2009, will not apply to cases filed in Federal Court.

With great respect to all involved, I suggest that perhaps it is time for Sen. Steinberg to return volley with a letter to Sen. Steinberg encouraging her to accomplish the same task as the Federal Level.

I have said countless times that not all ADA cases are made equal, equally bad that is.  Some are actually meritorious, some are weak, others are strong and some are completely lacking in merit.    Scott N. Johnson, the most prolific Plaintiff in all of California has filed over 200 cases against apartments that completely lacked merit.  Everyone knew it, but no one did any thing about it except complain – including the California Apartment Association – that is, until three of my clients refused to settle.  Instead, those clients split the cost of undertaking the discovery and litigation necessary to prove a point – and they did.

Thus far, Scott N. Johnson has paid one client $15,000 to settle, and paid $18,575.08 to another client in sanctions.  We are awaiting a third ruling from Judge Mueller now.

This is not to suggest that these results are typical or available in every case, but imagine how much could be accomplished if more than three of the over 200 apartment owners had taken a joint stand.   I am confident that would could have had Mr. Johnson declared a vexatious litigant as well.

Every ADA case must be evaluated on its merits, and it requires an attorney specializing in ADA defense to identify the technical and legal issues.  If you need assistance, please call us. We have nearly 12 years experience, and have defended more than 3,000 properties ranging from race tracks to wineries to shopping centers, and many more.    

~ Kathi E. Finnerty, Esq.

ADA Predatory Lawsuits Can Be Stopped

Scott Johnson has sued over 200 apartment complexes – and never completed a single rental application.  Why?  Because he never intended to move from his primary residence, nor did he ever have any intention of occupying any apartment anywhere.  Why then, did so many apartment complex owners cave in to the somewhat nominal (<$10,000) settlement demands?  Because the cost to prove their point (that Mr. Johnson didn’t and still doesn’t have legal standing to bring these claims) is more than the cost to settle.

GOOD NEWS – I have a few clients pushing back, and its working…

Stay tuned.  We are hoping for some very favorable rulings in the coming months.