Massachusetts Cracks Down on Gambling at Internet Cafes


Last month, citing evidence that illegal gambling was going on at “Internet cafés” throughout the state, Massachusetts Attorney General Martha Coakley issued a new permanent regulation banning gambling at such places.

The regulation bans the operation of establishments “where a gambling purpose predominates over the bona fide sale of bona fide goods or services” – in this case, cyber cafés and phone card video game terminals. The attorney general contends that many establishments that offer these services are actually fronts for illegal online gambling, including unlawful lotteries, online slot-machine games, sweepstakes, and other forms of gambling.

In April, the attorney general’s office had issued emergency regulations banning illegal gambling at such places after receiving complaints that this activity was going on across the state.

The emergency regulations had targeted two activities in particular—namely, “cyber cafés” and “phone card lotteries.” The so-called “cyber cafes” feature dozens of computer screens at which patrons play video slot machines, lotteries, or similar games where the winning numbers are revealed each time the player uses game credits — or money — to play the game. Establishments offering these types of games purport to sell only Internet time, coupled with the opportunity to win prizes in a lottery, sweepstakes, or video slots. The attorney general, however, saw it differently, finding that the sale of Internet time is often a ruse for illegal gambling.

Similarly, other establishments in Massachusetts, such as convenience stores and bars, house “phone card” lottery machines that offer the chance to win a prize by playing a lottery, sweepstakes, or a game like slots or poker. To participate, the player buys a phone card, offering some number of minutes of phone calling, which is generated in the form of a receipt or stub. While the purchase of a phone card allows a customer to gamble, winnings typically are redeemed in cash.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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