TALLAHASSEE — A proposed crackdown on storefront gaming centers easily cleared a House committee Friday, paving the way for the full Legislature to take up the issue in the coming weeks.
The House Select Committee on Gaming voted 15-1 Friday on a measure that clarifies the definition of slot machines and other gaming machines often used at these establishments, commonly known as Internet cafes.
The legislation — House Bill 155 — closes a loophole in state law that says the games are contests of skill, not chance, and are similar to regulated sweepstakes offered by places like churches or McDonald’s. The legislation also overrules any local laws regulating the businesses.
“They have skirted across state law,” said Rep. Carlos Trujillo, R-Miami. “What experts have to decide (is) are these games of chance or are these games of skill. If these are games of chance … they should be prosecuted to the fullest extent of the law.”
The committee’s action comes just a few days after an investigation into the Allied Veterans of the World charity revealed the organization was suspected of running illegal gaming out of similar centers across the state.
The probe led to dozens of arrests and the resignation of Lt. Gov. Jennifer Carroll, who did public relations work for the company before her election.
The swift action this week had one committee member concerned. Rep Jim Waldman, D-Coconut Creek, the lone dissenter on the bill, said while he understands the urge to take action on an unregulated industry, he is concerned with the pace the proposal is moving forward.
“While well-intentioned, it seems like this is nothing but what we consistently do around the Florida House — a knee-jerk reaction to something that took place,” he said. “I’ve made it a habit here (to speak up) when I think things aren’t ready for the floor. I don’t think what you’re doing is the proper way to do it.”
Waldman said the committee also should have taken time to study the issue, before passing legislation to ban something.
“What I do think we should do is consistent with what I’ve been saying all along. We have to have proper regulation,” he said. “If we regulated them, it’s quite possible the arrests that took place wouldn’t have taken place.”
But the bill’s supporters said this issue has been studied, and considered, in the past, and the decision to move forward with a ban is far from a quick response to the arrests that rocked the state.
“The decision before this committee seem to be threefold. We can ban Internet cafes as this bill does, we can put a moratorium on them or we can take no action,” said Rep. Matt Gaetz, R-Fort Walton Beach. “I’m … in favor of this bill to ban. Those who want to get rid of Internet cafes have supported a ban. Those carrying the water for Internet cafes have supported a moratorium.”
While the legislation is on the fast track to the House floor, it still needs to clear the Rules Committee. The Senate companion bill — Senate Bill 1030 — will likely need to go through a similar process.
The Senate Gaming Committee on Monday is expected to get its first look at a bill. Sen. Garrett Richter, R-Naples, the committee chairman, said he thinks the bill before his committee will be similar to the one passed by the House committee.
Richter said while he understands the concerns some have expressed about the quick pace of the legislation, he said it’s been a long time coming.
“I think by measurement of time, it’s easy to consider it a knee-jerk response,” he said. “But the examination did not just start three days ago. The reason we’re able to react quickly … is we’ve already traveled the learning curve.”
Richter said he thinks the House committee’s action is “good news for Florida.”
With an expanding statewide law enforcement crackdown into racketeering at strip center gaming parlors and Florida out a lieutenant governor, the House took the first step on Friday to shutter the adult arcade industry by further prohibiting the electronic machines and devices they use.
The House Select Committee on Gaming voted to proceed with a measure (HB 155) that clarifies the definition of slot machines and other gaming machines used at so-called "Internet cafes" and adult arcades that backers of the bill note are actually already illegal under state law.
The new law would end a gray area in state statutes used by operators of storefront gaming centers that the games are contests of skill and that the contests are similar to regulated sweepstakes offerings by places like McDonald's, Coca-Cola, Chuck E. Cheese and churches. The legislation also would overrule any county and municipal laws that have been enacted in recent years attempting to regulate the businesses.
"These machines have always been illegal," said Rep. Carlos Trujillo, R-Miami. "They’re considered games of chance. They’re illegal."
Rep. Jim Waldman, D-Coconut Creek, cast the lone vote against the bill. He said the Legislature might be moving too fast and casting too broad a net in reacting to the arrests earlier this week of people connected to gaming centers run by Allied Veterans of the World.
The organization and the industry as a whole came under intense scrutiny this week as the subject of a large multi-state investigation into illegal gaming, that has already led to 57 arrests. Allied Veterans of the World also paid former Lt. Gov. Jennifer Carroll for consulting work – and after she was interviewed by law enforcement, she resigned on Tuesday.
The bill appears on an extremely fast track to legislative passage. Leaders in the both the House and Senate support the idea and said this week that a measure could be brought up on the House floor as early as next week.
Waldman said that because of the speed with which lawmakers are moving, there may be unintended consequences, and noted that some industries affected by the bill – which was only made public Thursday evening - may not even realize it. No representatives for the industry were in attendance at the committee meeting.
"Many of the people who would be impacted by this bill weren’t even aware that they were in this this morning because I’ve made some calls to find out what the effect would be on these establishments," Waldman said. "While well-intentioned, this seems like nothing but what we consistently seem to do around the House and that is a knee jerk reaction to something that took place."
The House bill’s next stop is the Rules Committee and without a set fiscal impact could quickly land on the House floor.
The Senate companion (SB 1030) is set to go before the Senate Gaming Committee on Monday.
The centers have been able to proliferate because they have claimed to be charities and businesses that only offer “sweepstake” prizes, despite numerous critics who contend they are gambling halls that prey on the elderly and poor and have been able to skirt the state’s regulations and the 35 percent tax rate that licensed pari-mutuels are charged by Florida.
Critics for ranging from Florida Chamber of Commerce and Dave & Buster's Restaurant to Hollywood's Mardi Gras Gaming and the Florida Baptist Convention contend customers are drawn to the arcades by the promise of payouts in cash, merchandise and alcohol and not regulated.
Before the arrests, lawmakers had already been contemplating a moratorium that would have prohibited new Internet cafes as they continued on a two-year review of gaming in Florida.
But that changed this past week as the statewide crackdown was announced that led to the arrests of 57 people and the closing of at least 49 Internet cafes, amid allegations of crimes such as racketeering and money laundering.
Trujillo said moratorium would have simply allowed the estimated more than 1,000 gaming centers to continue to operate without changes.
The House backed similar legislation last year to ban the electronic machines but the proposal failed to reach the Senate floor.
Agriculture Commissioner Adam Putnam backed the latest proposal.
“Internet casinos are a front for gambling and a breeding ground for other illegal activity,” Putnam said in a release. "We must close the loophole in the law that has enabled them to invade our communities. The House Committee's vote today brings us one step closer to shutting down Internet casinos and improving the safety of Florida's communities."