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State cracking down on cybercafe gambling

Businesses are legal, owners say

In Net Play Cafe, customers can swipe cards to play casino-style games. In Net Play Cafe, customers can swipe cards to play casino-style games. (John Tlumacki/Globe Staff)
By Michael Levenson
Globe Staff / July 22, 2011

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WORCESTER - At the end of a worn strip mall, next to a vacant furniture store, a post office, and a tanning salon, Net Play Cafe looks like an Internet cafe from the 1990s. A sign in the window invites customers to surf the Web, check e-mail, or send a fax.

Inside, however, about 30 computer terminals blink with brightly colored poker- and slot-like games. A few patrons swipe their fingers across the computers’ touch screens, whiling away the afternoon and hoping to win a few bucks.

“We have nothing great local, unless it’s a bar, so this is nice,’’ said one regular, Rose Gleason, 51. “We sit and laugh and joke about things. . . . It’s relaxing.’’

It is also illegal, according to authorities, who have begun cracking down on these so-called cybercafes, calling them little more than thinly veiled gambling operations that exploit patrons and run the risk of laundering money.

The State Police have raided three cybercafes this year and are conducting criminal investigations into their owners, one of whom is a longtime Fall River city councilor.

The cafes - which have proliferated in Florida, Virginia, and other states - began cropping up in Massachusetts about two years ago. At least a dozen have opened in the state, often in strip malls in blue-collar communities. Since the raids in March, several have closed down on their own. At least four are still operating.

Attorney General Martha Coakley says they violate the state’s existing ban on gambling, and issued regulations in June, saying she needed to make that prohibition explicit.

Last week, House Speaker Robert A. DeLeo, the state’s foremost proponent of expanded gambling, introduced legislation that would subject anyone running a cybercafe to a fine of $250,000 per computer terminal or a prison term of 15 years.

“This kind of activity, gambling, is not allowed under Massachusetts law,’’ Coakley said Wednesday. “They are totally unregulated, there’s no oversight, and there is no protection for the consumer.’’

The cafes sell patrons Internet time on cards, which they can swipe to gain access to the Web. Most, however, use the cards to play casino-style games with names such as “Trick or Treat’’ and “Irish Luck.’’ Patrons win points on the cards and then redeem them for cash, up to $5,000, according to one cafe owner.

The owners insist that the businesses are legal, but they are under mounting pressure from law enforcement officials in this and other states. Many say their days in business may be numbered.

“I feel it’s a legal, legitimate business, and we’ll see what shakes out,’’ said Matthew Durand, who owns Worcester’s Net Play Cafe.

Durand was interviewed from a phone in the cafe, while watching this reporter on a closed-circuit security camera. He said he was in Florida and that he owns several cybercafes around the country. This one is not profitable, he said, blaming the raids.

“I figured Massachusetts would be more open to our business,’’ he said. “We’re kicking around the notion of closing ourselves because it’s not worth the headache.’’

Lawyers for the cafes argue the games are legal because they allow patrons to play a few rounds for free, no purchase necessary. They say that makes the games a legal sweepstakes, much like those offered by fast-food chains and retail outlets.

“This was not a casino,’’ said Leo O. Pelletier, a retired jailhouse chef and 27-year veteran of the Fall River City Council, whose cybercafes in Fall River and Fairhaven were raided by the State Police and shut down.

“It was an Internet sweepstakes,’’ Pelletier said.

“People came here, they had two hours to spend, and they just loved it,’’ he added, sitting among the darkened computers and boxes of old potato chips inside his defunct Fall River location, Leo’s Place. “We had three nuns that came in. They loved it. Almost every Friday night they’d come in.’’

Called “convenience casinos’’ by critics, the cafes have taken advantage of demand for casino-like action close to home. They found a niche in Massachusetts, as the Legislature failed several times to legalize full-scale casinos in recent years.

“Once that is addressed, I imagine these cybercafes will dry up,’’ said Timothy J. Rooke, a Springfield city councilor who has been trying to license one in his city. “But up unto the point where they do take some action, they’re going to be popping up.’’

Earlier this year, another type of questionably legal gambling took hold when several poker rooms opened across the state. They tried to operate under a law that allows charities to hold casino nights up to three times a year. But they shut down in April, after Coakley said they were pushing legal boundaries.

DeLeo said he is concerned that cybercafes may threaten his attempts to attract full-scale casinos and slot parlors to the state’s race tracks, two of which are in his district. The Legislature plans to debate casino legislation in September.

“If we’re asking people to invest millions of dollars [on casinos],’’ DeLeo said, “and you’ve got 10 or 20 of these rogue gambling places out there, they’re going to say, ‘Why are we going to invest that much money if they’re going to be taking money away from us?’ ’’

The State Police raided Pelletier’s cafes and another cybercafe, Cafeno’s in Chicopee, in March. The troopers seized hard drives from Pelletier’s computers and his business records and froze bank accounts worth about $109,000. But no charges have been filed.

Insisting that his cafes were legal, Pelletier is suing Coakley in Suffolk Superior Court, hoping to force her to reveal more about the case against him. Coakley declined to discuss it because a criminal investigation is ongoing.

The longest-serving councilor in Fall River history and often the top vote-getter in city elections, Pelletier was charged in 1983 with operating illegal poker machines in the restaurant he was running, the Rockland Diner. He said he resolved that case by paying a fine and completing a year of unsupervised probation.

He said he is not worried about the possibility of being charged again. Chatting about his cafes during a tour of Fall River this week, he enthusiastically greeted workmen on the street and stopped into a bar for a shot of Canadian Club whiskey and a beer chaser.

“We ran a good, clean place,’’ he said. “We didn’t rip anybody off.’’

Michael Levenson can be reached at mlevenson@globe.com. Follow him on Twitter @mlevenson.