Thanks to Seminole County Sheriff Donald Eslinger, the IRS and the Secret Service, a proposal to close Internet cafes throughout the state may be headed to the governor’s desk within two weeks after languishing in the Legislature for at least five years.
A multi-state sting resulted in nearly 60 arrests and the resignation of Lt. Gov Jennifer Carroll and has dwarfed the money, clout and inter-party disagreements that put the brakes on a ban on the casinos, an estimated $1 billion industry that netted the state virtually nothing.
“Sometimes it takes an event to spur things to action. I think the moon and the stars aligned and that’s a good thing,” said Sen. John Thrasher, R-St. Augustine, whose attempt to put a moratorium on new Internet cafes morphed into an all-out ban overnight.
Sheriffs and prosecutors have complained about the Internet cafes, saying the sites were illegal casinos that operated with little or no regulation and were virtually the same as slot machines.
Pari-mutuels that operate legitimate slot machines and the Seminole Tribe, with its casinos, also wanted to put the cafes out of business, objecting that they were unfairly offering games that looked the same to customers but did not have to pay the same taxes or licensing fees as the legitimate gambling operations.
But millions of dollars in campaign contributions and some of the Capitol’s most influential lobbyists helped keep the wheels spinning at more than 1,000 of the “casinos on the corner” popping up in strip malls throughout Florida. Until this week — when multiple agencies took down Allied Veterans of the World and International Internet Technologies in what officials allege was an illegal gambling ring that generated almost $300 million under the guise of donating proceeds to veterans’ groups but that actually gave very little to charity.
Authorities allege that the “sweepstakes” Allied Veterans and its affiliates ran were illegal slot machine games, and the charges include racketeering, money laundering, illegal possession of slot machines, gaming violations and keeping a gambling house.
Carroll, who had consulted for Allied Veterans while she was a state legislator, abruptly resigned this week after being questioned by investigators. She was not charged with wrongdoing.
An Associated Press review of Allied Veterans of the World and its affiliates’ contributions showed more than $1 million went into Florida campaign accounts from 2009-2012.
A large chunk went into the coffers of the two political parties: The Republican Party of Florida received nearly $300,000, while the Florida Democratic Party received more than $100,000. Both parties are reviewing the contributions and the Democrats said they have identified $72,000 that they intend to donate to a veterans’ charity.
Money was also given to many top Republican politicians as well as legislators who have been deeply involved with the future of gaming in the state.
But the campaign cash and the lobbying clout weren’t the only roadblocks to a ban by the Legislature.
The chambers have been split on a moratorium, regulation or ban for the past four years. The industry is estimated to employ 15,000 workers.
The Florida House passed a ban last year but the Senate refused to act on the measure.
Instead, lawmakers last year authorized $500,000 for a study to evaluate the status of current gambling operations in the state and consider the impact of full-fledged casinos after an effort to allow “destination resorts” in South Florida failed last year.
The Legislature’s failure to act was due in part to “an industry that was basically buying influence,” said Dan Adkins, vice president of Hartman & Tyner, the owner of Mardi Gras Casino in Hallandale Beach.
But Florida pari-mutuels, the Seminoles and casinos pushing for a more comprehensive gambling package contributed to a lack of action, Adkins said. And, behind the scenes, strip mall owners lobbied to keep the cafes open.
“Diverted focus and lobbying effort is why nothing really happened. But we all understand why something’s happening now,” he said.
Marc Dunbar, a lawyer who helped craft some of Florida’s pari-mutuel laws, believes prosecutors will have a hard time making the gambling charges stick.
Florida law is “very, very, very gray” regarding the sweepstakes, he said. “The software designers are incredibly sophisticated and from what they have said, they have created a system that follows our statute.”
The Allied Veterans arrests deal with how the company used campaign contributions, its status as a charitable organization, as well as alleged gambling violations.
“So it’s a much more complicated web. But from a criminal standpoint, I think they feel they have stronger criminal components other than the gambling,” Dunbar said of the prosecution.
And going after for-profit businesses that make up the bulk of the cafes in Florida will be an even tougher task, Dunbar said.
“Frankly, I’m shocked that it’s taken this long. It’s unfortunate that it had to take losing the lieutenant governor for us to get here. I’ve been trying for years to say ‘guys there’s a real problem,’” he said.
The House Select Committee on Gaming will vote on a proposal to ban the cafes this morning. But the measure goes too far, said David Ramba, a lobbyist representing Frontier Florida, a company that provides software for cafes. Frontier Florida is not affiliated with Allied Veterans, Ramba said.
“They are taking a meat cleaver approach to this. It’s going to hurt legitimate charities,” he said.
The House proposal would put a halt to charities that use any electronic technology to raise money, Ramba said.
“They’re supposed to have a reasoned approach to look at all of gaming…. But with all of these allegations now they’ve thrown that out the window,” he said.
And it’s unclear how long – or if – the Legislature’s attempt to shut down the cafes will work.
“That’s the tricky part about this whole business. There are so many technical aspects,” said Sen. Bill Galvano, R-Bradenton, who headed a House committee that helped craft the state’s gambling agreement with the Seminoles and is working on the ban. “I think gaming in the State of Florida is always going to be a work in progress.”
The Associated Press contributed to this story.