SACRAMENTO – A $1.85 million judgement has come down on a sweepstakes software producer, banning it from operating in California.
The judgment by Sacramento County Superior Court Judge Raymond R. Cadel bans Figure 8 Technologies from doing any kind of sweepstakes-based business in California. This is in addition to the $1.85 million in civil penalties put on the company.
The Supreme Court ruling originated from five Kern County cases that found that inside several internet cafes in the county were illegal slot machines. Figure 8 licensed software to two of the five internet cafes involved in the case.
While internet cafes can be found around much of the U.S., in order for it to be considered gambling and found to be illegal it must incorporate several qualities.
“The basic rule is that all gambling has three elements and they have to have all three,” I. Nelson Rose, professor of law at Whittier Law School told the Northern California Record. “Consideration – it basically means you have to pay to play. Chance has to be predominate over skill. Prize – there has to be a prize of value. If you eliminate any one of the three elements it can be regulated, but it’s no longer gambling.”
The sweepstakes games that Figure 8 Technologies is banned from selling in California, can be legal if participants can enter for free and are given the same chance of winning as those that pay.
“The sweepstakes model has been very successful even though nobody, to be legal, is required to pay to enter for a chance to win,” said Rose. “A very small percentage of people do pay and they often will end up spending quite a bit. With sweepstakes there’s a secondary rule where people that enter for free must be treated with equal dignity. Basically, it means they have to be given the exact same chances at winning.”
The internet cafes in question through the lawsuit are becoming an epidemic throughout the U.S. In Kern County, they have almost all been eradicated with only four known to be open in the area: two in Bakersfield and two in unincorporated towns with the county.
“Internet cafes are a big national problem,” said Rose. “The usual problem is that the same players are not treated with equal dignity. You can walk in and get 100 coins, which are good for playing these machines, but if you buy time on the internet you can get tens of thousands of coins. Sometimes they don’t even make (it) possible to get more coins. You want to make it fairly easy for the same players to play the game. They don’t have to get any time on the internet, but they have to get equal chance of winning.”
California is not the only one banning sweepstakes machines. Florida has had problems with internet cafes and has had to pass emergency laws to deal with the situation. Ohio is another state that has taken action against illegal gambling. California has filed several criminal and civil suits against internet cafes.