Tuesday, June 28, 2011

Sweepstakes Terms and Conditions...

Internet Cafe elsewhere in the Valley (Spfld Intruder)
The Internet Cafe phenomenon in Springfield (and the region) continues to intrigue and test the limits of state and local law.  The trouble started when Attorney General Martha Coakley ordered Internet Cafes that were alleged to engage in Internet Gambling to shut down, including the 777 Cyber Center cafe at Five Town Plaza on Cooley Street in Springfield.  To not go through all of the history behind the Internet, we refer you to an excellent round-up by the Springfield Intruder.

However, the entire situation continues to be full of questions.  As Bill Dusty aptly puts it, running an Internet Cafe "means big money for those who operate them."  It has required some advertising acrobatics and the term "sweepstakes" to survive as long as the facilities have.  However, Attorney General Martha Coakley, using her authority under M.G.L. 93A §2a, issued emergency regulations in April that prohibited these "Internet Cafes."  During this period, the cafe on Cooley Street, nonetheless continued to operate.  According to a press release from the Attorney General, a Springfield Cyber Cafe (probably 777) failed to convince a judge to halt the Attorney General's regulation in May.

Last week, however, the Attorney General Martha Coakley issued permanent regulations (CMR 30.00) that mirrored the earlier emergency regulations.  Those regulations went into effect last Friday.  However, as of today, Cyber Center 777 appears open for business.  Additionally, the special permit decision of the City Council notes that only five of the facility's 30 units can operate without a permit.  Whether this continues to be case given that the facility does not have a permit (we'll get to that in a minute), is not known at this time.

A.G. Martha Coakley (Wikipedia)
Based on the Attorney General's regulations, it would appear that most of these facilities are not legal or no longer are.  The regulations use a weighing test based on whether the legitimate good/service (in this case Internet access) is clearly being outweighed by the sweepstakes chance.  The regulations also target sweepstakes in such a way to not allow the use of that term alone as a fig leaf for any gambling/game of chance establishment.  There is also consideration of whether those who pay get more of an advantage over those who do not.  Other factors include how the instructions explain the good/service over the sweepstakes/lottery/gaming and how the facility is marketed and/or decorated.

Why is the facility still open?  A guess may be that its owners continue to believe they are acting legally.  In their special permit application, 777 Cyber Center's attorney (itself a bone of contention) submitted a copy of the case Commonwealth v. Webb, a Massachusetts Appeals Court case (upheld by the Supreme Judicial Court) as evidence of the facility's legality.  However, despite city documents that do not find much of a difference between 777 and Webb, they are, in fact different.

In Webb, the devices were located in "various establishments."  As a bartender was paid to activate the devices in at least one of the establishments visited by Fall River police, we can only assume that the establishments were bars.  Consequently, although the device in Webb may be similar to those at 777 and elsewhere, it was placed in a venue whose principal business involved neither the gaming nor the purported good or service.  In Webb's case this was the sale of phone cards.  Also unclear is whether or not 777's games actually fail the "price" aspect that doomed the Commonwealth's case in Webb.  

The Webb Court noted that the crux was not just whether or not it was possible to win without paying, but whether most patrons were there for the chance not "bona fide" goods and services mentioned in the new regulations.  In other words, if most people are at the cafe for the Internet access (as proponents testified before the City Council earlier this year) then the establishment may be legal under Webb.  That testimony may not actually prove it, however.  The final defect may be that Webb is a criminal case.  The Attorney General's regulations seem like a civil matter.

777 Cyber Center I-Net Cafe at Five Town Plaza (WMassP&I)
Sources familiar with the 777 Cyber Center matter believe that the Attorney General will be taking action against the cafes soon.

But what about the people behind 777 Cyber Center?  The official name of the company running the cafe is Four Seasons Cyber, LLC.  However, the officers listed for that company with the Secretary of State's office are yet another corporation, Secode Inc.  All the offices of that group are held by Jennifer Burritt, the petitioners for 777 Cyber Center's special permit.  Burritt, is however, Four Season's resident agent.  As noted in the Reminder, Burritt claims to have had nothing to do with any other gaming establishment except for a proposed facility in East Longmeadow.  Her business partner was mentioned as the wife of former head of Friends of the Homeless Frank Keough. 

However, Burritt appears to have been less than truthful to the Reminder as her name appears on Four Seasons' incorporation papers dated 12/13/2010.  From the context of the Reminder article (which noted an East Longmeadow official believed Burritt and Keough owned the Springfield facility on Cooley Street), Burritt made these comments after the December incorporation date.  Secode, Inc list an address on Longmeadow Street across from the town green, a seemingly nondescript private home.  Four Seasons Cyber, LLC listed that Longmeadow location as its address until this week, when it changed to 296 Cooley Street, 777 Cyber Center's location at Five Town Plaza.  Another filing places Secode at Cooley Street in Springfield as well, but Secode's own filing retains the Longmeadow address.  This despite the fact that Secode has had Longmeadow addresses for as long as records are available online.

Odder still is one New England Cyber Solutions, which in filings with the Secretary of State defines its business as "Sales and Consulting for Internet Centers."  Records show that New England Cyber Solutions resident agent and manager are Secode.  Another manager and agent for property matters regarding New England Cyber is Joseph Hudson who lists a downtown Springfield address.  However, New England Cyber's business address is, again, 296 Cooley Street in the same unit as 777.

As for the special permit for which Burritt or Four Seasons or whoever applied, it remains denied.  Despite efforts by at-large Councilor Tim Rooke to deliver the permit himself, sources at City Hall confirm that the special permit is not in effect.  The Law Department and the City Clerk have agreed that the council's earlier decision to not approve the permit (it required 9 votes and got 8) cannot be undone by reconsideration.  As  explained before, reconsideration is a parliamentary tactic that does not apply to the City Council when sitting as the city's permit granting authority.  The final decision of the council closed under M.G.L. 40A §16 the moment it voted the first time.

Councilor Rooke (Spfld Intruder)
Other questions, remain, though.  Why is Rooke so bloody insistent that this permit go through?  Originally, Four Seasons was represented by his brother, Atty. Thomas Rooke.  Atty. Rooke withdrew after the initial presentation by Four Seasons and was replaced by Richard Maggi, an Agawam lawyer.  Nevertheless,  Outer Belt Civic Association president Walter Gould told WMassP&I a few weeks ago that it was lodging a complaint with the Ethics Commission. Their complaint regarded Councilor Rooke's decision to participate in a matter before the council involving his brother.  According to the Intruder, Rooke responded by saying his brother had withdrawn from the case.  Atty. Rooke was replaced by Richard Maggi, who based on records searches, at least used to share office space with Atty. Rooke.  The OBCA president pointed out that connection during the interview, but the nameplates on 73 Chestnut Street, Thomas Rooke's business address, do not include Maggi now.

The issue may be bigger than Rooke as nine other councilors joined him in approving 777 Cyber Center's permit, however pointless an exercise that was.  Still, Rooke has been the driving force.  He, according to Gould, pushed for the May 20 special meeting at which the permit was initially denied as opposed to the regularly scheduled permits meeting the following Monday.  The City Calendar confirms that the first vote took place at a special meeting.  The next step appears to lay with the Attorney General or, failing that the City's Code Enforcement if more than 5 units remain in use at the Cooley Street location.  The OBCA may also initiate action if nothing is done by the city or the attorney general's office.


Bill Dusty said...

Hi Matt,

Nice post, man. I think the crux of the matter for cyber cafes is the so-called "sweepstakes" issue. They could all technically remain open so long as they don't engage in such activities. Problem for them is, as all grownups and people with brains know, the "sweepstakes" are the only real reason these places are open. Nobody in their right mind is going to pay $10 for 50 minutes to "surf the Web and check their email." The very notion is beyond ridiculous. In the 777 Cyber Center's case, there are at least two libraries within a couple miles (Sixteen Acres and East Longmeadow's branch) that provide the same service for free. (Sixteen Acres has limited operating hours, true, but the East Longmeadow branch is almost always open - I myself used that branch, as well as Spfld libraries, to study during my time at STCC.)

The special permit issue is an entirely different matter, of course. The 777 could conceivably get its special permit for 30 computer kiosks (let's say for the sake of argument) regardless of the sweepstakes issue, in which case they'd still have to eventually close for lack of business if nobody can gamble there - the real and only reason people go there.

Like you, I find the shadowy, slight-of-hand tactics of the owners and managers of these establishments particularly disturbing. Nobody seems to want to publicly fess up to actually owning these things until they're caught holding the (state registration) bag. I think it's troubling, too, how many of our city councilors were unperturbed by this. (Only three councilors out of 13 cast "no" votes in the disputed 2nd vote on the special permit.) I think this may very well be an issue where it's more about the particular owner requesting the permit rather than the nature of the business itself. (On another note, I found it irritating, too, when friends and family of the owner would post phony comments online in support of the cafes, as if they were some kind of "relaxing lounges" to rest in. That happened on my own site with my first post on this mess, and, not surprisingly, these anonymous supportive comments immediately stopped after I called them out for what they were.)
I also think some of these councilors are really sticking their necks out in an election year by giving the nod to a business that may well be under criminal investigation by the state come September. (Coakley's order specifically mentions "$10 for.. points," which is precisely what 777 Cyber Center reportedly charges.) If I was a challenger, this would be one of my silver bullets against the incumbent.

And for what reason did these councilors find it necessary vote so hastily? Why didn't they just hold off on the vote until after the AG-sweepstakes issue was settled? That's what I would have done. At the very least, it would have kept their names out of a messy engagement.

BTW: the council argument that the 777 was doing "legitimate business" and therefor they had no reason to deny the permit is, of course, incorrect. The 777, by offering "sweepstakes" games after April of this year, was in fact operating in direct violation of Coakley's original emergency order, and, as mentioned above, they may very well be named in Coakley's call for criminal investigations. The CC *knew* the 777 was operating its sweepstakes in violation of this state regulation before they voted. Whether they, or the owner, agreed with the AG's order or not is completely irrelevant. They voted in favor of a business that was operating - according to the AG's Office - illegally. Period.

Really a disappointing situation all the way around.

Matt S. said...

I'm sure the council did know or at least some councilors did. However, the paperwork from the clerks office suggested that code enforcement or whoever, clearly thought the whole things was sketchy, but was not in a position to call it illegal categorically. That's all I meant.

I do not think the council's decision necessarily had anything to do with looking business-friendly. Some may. Others may have thought it was harmless (you and I know better). However, according to my sources, others were getting some heavy pressure to support it because constituents enjoyed going to it. Maybe that was part and parcel to the connection of the Keoughs or whoever Jennifer Burritt is, but I suspect that there were self-important voters who really liked blowing their money like this--inexplicably.

That's so crummy about the comments. That's why I filter! lol.

As I have said before I find Rooke's behavior in all this the most odd. I think that his brother is involved is not the big issue (let's face it Tom Rooke represents all sorts of people w/ biz before the council). It's his insistence.

All in, it does not matter. 777 does not have the permit and they won't for another 2 years unless they convince a judge to overturn a bunch of precedent and declare Springfield's council rules supreme over the laws of the commonwealth. If that denial is not being enforced than I'm sure OBCA will get involved again.