By Mansfield Frazier
A few years ago when Internet cafés were just taking off, a guy I partnered with to build houses in Hough asked me to look into the phenomenon since he was considering opening a couple of locations. He had the financial wherewithal, and figured I had the savvy to navigate the political waters of getting such operations approved and off the ground.
But first I needed to do my due diligence, so I spoke with a number of people who had already opened cafés in Greater Cleveland, in other parts of Ohio, and in other states. Also, we had a couple of meetings with a representative of one of the largest and most successful providers of the requisite equipment, a company called VS2 out of New Jersey.
While the dude painted a salesman’s rosy picture of huge, easy profits, I, nonetheless, was — to say the very least — more than a bit apprehensive.
I knew that when Ohio voters gave the OK to open casinos other forms of gaming would naturally follow and once the gambling genie was out of the bottle in the state there would be no way to force it back in. Indeed, racinos (race tracks that also have slot machines) are now opening up in various parts of the state. But these cafés were something else; totally unregulated, and claimed to not even be gambling at all. Nonetheless, that old saying came to mind: “If it walks and quacks like a duck …”
My feeling was … the folks who spent millions of dollars convincing voters to allow them to operate gaming in Ohio were not going to sit idly by and allow mom and pop storefront operations like Internet cafés to pop up all over the state and siphon off money with impunity … and it appears as if my assessment was right as state legislators are now clamping down hard on the 800 or so operators around the state, and in other states as well.
Still, I felt at the time there was a way — perhaps, just maybe — to forestall lawmakers from shutting such operations down. I made the suggestion to the representatives of the equipment suppliers, as well as some café owners, but no one was willing to listen: Philanthropy. I suggested that owners voluntarily set up a fund whereby a large portion of the profits generated would go into a pool that would be professionally managed and distributed to qualified non-profits located within the communities where the monies were being taken out of. To a person, everyone’s eyes glazed over; they were not the least bit interested in even exploring such a scenario.
Perhaps the reason they were afraid to get involved with charities was because of what just happened in Florida, where it was done all wrong. Fifty-seven individuals were recently indicted on gambling charges stemming from the operation of Internet cafés, and the next day Lt. Gov. Jennifer Carroll announced her resignation. She had recently been interviewed by Florida Department of Law Enforcement officers regarding her work with Allied Veterans of the World, a non-profit group that operated Internet cafés in the state. The outfit is currently under the microscope and is being accused of operating as a scam.
Allied Veterans purchased software from International Internet Technologies of Anadarko, Okla. The owner of the company, Chase Egan Burns, 37, and his wife, 38-year-old Kristin Burns, both face extradition to Florida to face racketeering charges. It’s alleged that Allied Veterans actually received only 1 percent of the $290 million profits generated by the Internet cafés it operated. The rest, investigators allege, went to Burns.
While serving as a state lawmaker, Carroll’s ties to the company were also questioned when she proposed a bill that would benefit the Internet café industry in the state. What she should have known is that, in America, whenever the overhead of fundraising organizations exceed one-third of the revenues they take in, eyebrows begin to rise.
Indeed, in Canada, by law, fundraisers can only hold onto 20 percent of the monies they raise, 80 percent must go to directly benefit the individuals the charities claim to help. We need such a law in this country, but the yahoos who always yell “states’ rights!” would do everything within their power to block such legislation on the federal level.
My feeling at the time was, a third of a loaf would have been better than none, and if Internet café operators would have designated two-thirds of their profits to go to already established non-profits (not some startup front organizations), they stood a chance of making themselves bullet-proof from lawmakers.
One-third of hundreds of millions of dollars is still millions of dollars … at least by my calculation.
At the very least the Internet café operators would have had allies (in the form of the legitimate charities) going to bat for them … which would have meant a lot to legislators who now are deciding their fate. Legitimate charities serve folks who are voters, and lawmakers, while they might listen to casino owners, they listen to voters even more attentively.
But no, just like in Florida, the Internet café operators and those who supply them with the sophisticated software were greedy little bastards, and now they’ll wind up with nothing but empty storefronts they have signed long-term leases on … and if they’re not careful some of them are going to be doing the perp walk, just like the folks in Florida.
Did these slick operators really think the state was going to allow them to pick the pockets and purses of elderly citizens forever … without giving anything back? Lawmakers had already approved licenses for casinos to legally steal, but at least they are paying taxes which support schools and other worthwhile causes.
Yeah, I know the Vegas guys got off light in Columbus and don’t pay nearly what they should in taxes, but, really, what part of this didn’t these Internet sharpies understand? Ya gotta give to get.
From Cool Cleveland correspondent Mansfield B. Frazier mansfieldfATgmail.com. Frazier’s From Behind The Wall: Commentary on Crime, Punishment, Race and the Underclass by a Prison Inmate is available again in hardback. Snag your copy and have it signed by the author by visiting http://NeighborhoodSolutionsInc.com.