Some say Internet Cafes hurting Ohio casinos

COLUMBUS, Ohio - Ohio's casinos are likely to pay off less tax money for cities and schools than expected, and some think that storefront gambling-style operations known as Internet cafes might be a big reason for the shortfall.

There are about 800 of the sweepstakes parlors around Ohio where customers pay for Internet time or phone cards and use them to bet points on computers loaded with games such as poker. The games operate like slot machines and offer cash prizes.

The estimated number of Internet cafe terminals in Ohio is more than the total number of slot machines approved for casinos in Columbus, Cleveland, Cincinnati and Toledo. The terminals, though, don't bring in tax revenue and aren't regulated like casino games.

Matthew Schuler, executive director of the Ohio Casino Control Commission, told The Columbus Dispatch ( http://bit.ly/Y1Kwcn ) that he is concerned about "ensuring the integrity" of casino operations and finances built into state law.

A study by casino commission found that Ohio casino customers play slots far less than those who visit casinos in Indiana, Illinois, Kansas, Missouri and Pennsylvania. Slots provide about 85 percent of casino revenue in those states compared with 70 percent in Ohio.

Gross casino-tax revenue in Ohio is likely to be $904 million short in 2014-2015.

If that happens, schools would get $101.4 million less and counties $152.2 million less than predicted when casinos were approved by Ohio voters, The Dispatch reported..

A lobbyist who represents a company that provides phone cards and computer software for the businesses says the sweepstakes operators are being used a scapegoat for the casinos' lower-than-expected revenue.

"We don't feel the folks that are coming in and buying telephone cards are the folks that are going to casinos and betting hundreds of dollars," said Chuck Blasdel, a former state lawmaker.

State officials have spent close to two years weighing what to do about these sweepstakes games that are largely unregulated. Some favor new regulations while others wanted a ban on the Internet cafes.

Late last year, the Ohio Senate put off a vote on Internet cafe regulations, saying there wasn't enough time to consider it.

Another proposal is on the table this year.