Law Enforcement Raids Target Non-Compliant Games


Pre-Reveal Games Not The Target of Law Enforcement

Greenville, NC – Multiple law enforcement agencies in Pitt County serve over 25 search warrants to convenience stores operating sweepstakes machines. Officers began their operation at 9AM. They seized 95 sweepstakes machines and over $33,000 in cash.uncle sam

The raids and seizures started at the City Gas store on North Greene Street. Sheriff deputies executed a warrant to seize their sweepstakes machines.

At about the same time, teams from across the county were executing other search warrants. In total, the Pitt County Sheriff’s Office and Greenville Police Department targeted 29 stores.

Chief Hassan Aden, a major player in the operation says this will reduce the amount of crime in Pitt County. He says criminals target these businesses because of the amount of cash they carry.

Officers went under cover and have been monitoring complaints since last year. They say they did so to cover their bases. So if they didn’t find anything on Tuesday, they’d still have enough to file charges.

“We gave them a warning, told them that if they were using that particular type of machine with that software we’re going to enforce it.,” District Attorney Kimberly Robb said. The new Pre-Reveal Games are the only known games to have won court cases regarding their legality against NC sweepstakes ban bill HB-80 that went into effect December of 2010.

The business is quite lucrative. Sheriff Elks says the owner of City Gas pulled out $2,000 and said he made that in one night.

Police haven’t arrested anyone in connection to this operation yet, but says arrests are pending. Pre-Reveal-GoldAt this time officers are holding onto the machines and cash they collected to later prosecute the owners in court.



Powered by Facebook Comments

Law Enforcement in NC Demand the Removal of the Illegal Games


..Issue May Be in Mix of Legal and Non-Legal Games..

CHARLOTTE, N.C. — Armed with multiple wins across the state, handfuls of video sweepstakes parlors are still open, but after years of legal maneuvering a letter from the district attorney could start the a new round of long and costly court battles.

Some say issue is that most parlors are running compliant and non-compliant games.

“You are hereby directed to cease and desist operation of your illegal video gaming machines not later than December 1, 2013,” or, the letter states, they could face criminal charges.

One owner of a gaming parlor told WJSA he plans run what he considers to be “compliant and legal games, these games are different from what the general assembly banned back in 2010, these games are pre-reveal

The people who were  inside playing on Thursday afternoon said that they’ve became use to the fight between gaming providers and the state.

“It’s the same old fight”, Johnny Conner said, because he’s retired, and comes here almost every day because he doesn’t have much else to do.

Donita Sanchez has been working at WIN-CAFÉ sweepstakesWIN-CAFE SWEEPS 250x250 for over 2 years and supporting her mother with the money she makes at the café.

“If they close us down then I’ll have to find another job or file for unemployment, the government just doesn’t make sense sometimes”

According to Sanchez, the parlors that chose not to upgrade their games to “Pre Reveal”  had already locked their doors.

With millions of dollars at stake some may still try to spin the legal wheel and find a way around the order.

An injunction has been issued in some counties in NC

In some counties, some parlor owners have been granted injunctions to prevent law enforcement from shuttering their businesses and it is expected that the same will happen in this case.



Powered by Facebook Comments

Florida Sweepstakes Cafe Trial Should Go To Jury Today


State’s Case is Weak As The Nation Waits for the Outcome.

SANFORD – Jurors could get the Kelly Mathis trial today, Mathis, a Jacksonville lawyer or a criminal mastermind who helped a group of military veterans build a $300 million empire that only looked like a chain of Internet cafés.

Jury May Get The Mathis Trial Today

The six-member jury could return a verdict today on 100 charges Mathis faces, including racketeering, conspiracy and possessing slot machines because of his work at Allied Veterans of the World.

If Mathis is acquitted, it would be a monumental embarrassment for the state, particularly Attorney General Pam Bondi, who held a confident news conference March 13, the day Mathis and more than 50 co-defendants were arrested statewide, and described Allied Veterans as a major criminal enterprise that used internet cafes as a ‘front’.

Pam Bondi Led A High Profile Case Against Allied Veterans

Seminole County Sheriff Don Eslinger, who launched the investigation, named “Reveal the Deal” was the law enforcement ringleader, made one of his captains its lead detective and re-assigned statewide prosecutors two of his county attorneys.

Lt. Gov. Jennifer Carroll, resigned under pressure the day Mathis and his co-defendants were arrested because of her ties to the group: Her Jacksonville public relations firm had done contract work for Allied Veterans.

The argument for the jurors will be whether the personal computers that customers used in the internet cafes across Florida storefronts were slot machines under Florida law or only looked and sounded like them. Numerous state officals across the state called Allied Veterans business model legal.ReelDeal

Mitch Stone, the defendants defense attorney,  argued they were not. Allied’s storefronts were Internet cafes, he said, in the business of selling Internet time at 20 cents a minute. If customers wanted to use Allied’s computers to enter a series of lawful “promotional” games, including those called “Money Bunny” and “Wheel of Riches,” they had that option, he said.

The games, he argued, were based on computer software that made them legal under Florida’s complex sweepstakes law, akin to McDonald’s Monopoly promotion.

The trial began Sept. 16, and several repeat customers testified early on that they went to Allied storefronts solely to gamble, although technically they didnt complete the action of gambling because of the lack of ‘consideration’

Mathis is the only defendant to come to trial, so far. Prosecutors characterized him as the ‘mastermind’ behind the operation, but as the case against him progressed, major weaknesses in the state’s case developed.

Purchase A Product, Like French Fries, and Get Free Sweepstakes Entries..Sound Familiar ?

Before the trial began, the state dropped more than 50 gambling charges against Mathis and during it, the judge threw out 50 money laundering counts.That left jurors with 100 counts to decide.

Roughly a dozen co-defendants earlier negotiated plea deals. Most have wound up with sentences that require no jail time, including Allied’s most senior company officials.

Several months after the arrests, Florida legislators voted to make Internet cafes illegal, and Gov. Rick Scott signed the bill into law



Powered by Facebook Comments

Mathis Trial Starts In Florida


SANFORD, Florida – The legal adviser of Allied Veterans of the World faces the court with 200 charges of money laundering and illegal gambling.

The prosecution has named Kelly Mathis, a Jacksonville lawyer, as the brain behind the veteran’s charity gambling scam. They say the fraudulent charity runs a chain of internet cafes with $290M worth of gambling operation and only commits 2% of its income to the charity.scales

Authorities report Mathis is the one who establish the internet cafes, where to operate and who will man it. They also declared Mathis has earned a total of $6 million from the gambling industry and has established 112 businesses.

However, Mathis argues that he simply acts as a legal counsellor to the veteran’s charity. He says the verdict will be in favour as he contemplates he committed no crime and no evidence will indict him.

Mathis legal advisor Mitch Stone told reporters that the prosecution cannot sue a lawyer simply for practicing the law.

Back in March, Mathis along with Jerry Bass, commander of the Allied Veterans of the World and a score of other people was arrested in Duval County as a result of a six –year cross county investigation.

The investigation which involves the US Secret Service and the IRS has cued the resignation of Florida’s Governor Jennifer Carroll. Though Carroll has also served as a consultant to Allied Veterans, she was not charged.

The prosecution has said the bogus charity uses internet service as a gimmick to hide its real motive. They offer internet service, but in reality, people only go there to gamble and play.

According to Stone, all the internet cafes are legal. In fact, the Department of Agriculture together with some politician like Attorney General Pam Bondi regulates it.

In their defense, both Mathis and Stone insist the sweepstakes in Allied Veterans is similar to Coca-Cola prize in a cap and McDonald’s scratch-off tickets.



Powered by Facebook Comments

Sweepstakes Software Companies Adjust To Comply With The Law


Local law enforcement agencies are taking a look at the Internet sweepstakes industry’s new software programming, to see what they’ll be up against when – or if – they start enforcing the ban on machines with “entertaining displays.”

On Monday, Burlington Police Chief Mike Williams gave city councilmen and staff a rundown on his

PreReveal Sweepstakes Games

interpretation of the six-year cat-and-mouse game between the video gambling industry and state legislature. The most recent episode came late last year, when the state Supreme Court upheld the state’s electronic sweepstakes ban on the machines.

In 2006, the legislature banned video poker machines, and the industry responded by substituting direct betting with a sweepstakes format, removing the “chance” or “bet” element, Williams said.

Over the years, the industry has tweaked the gaming machines in response to updated and amended statutes, and it’s happening again, this time hinging on the way a player is notified of his or her winnings.

In Oct. 2010, the General Assembly enacted NCGS 14-306.4, which made it illegal to “conduct a sweepstakes through the use of an entertaining display,” and defined “entertaining display” as “visual information, capable of being seen by a sweepstakes entrant, that takes the form of actual game play, or simulated game play.”

“A lot of debate now hinges on the definition of that “entertaining display,” said Williams.

He said, from what he understands, a sweepstakes entrant currently plays by paying for Internet time, and is automatically entered in a sweepstakes. The revealing of any won prizes is displayed on the entrant’s screen within the game.

“The industry is again revising what it’s doing,” Williams said, explaining many Internet sweepstakes businesses in Burlington have temporarily shut their doors while they’re converting to “non-entertaining reveal systems.”

Williams and Assistant Chief Chris Verdeck with Burlington police, and ALE’s Rodney Beckom, special agent in charge, met with one such business owner Tuesday to check out the new systems.

“It works the same way as it did before,” except there’s “just a blank screen that reveals the prize,” and it’s “not in an entertaining fashion,” Verdeck said Tuesday, after seeing the new system firsthand.

The question now, Williams said, is whether the “non-entertaining reveal systems” will comply with the statute that’s been recently upheld by the N.C. Supreme Court.

He said, “What’s interesting is that in its ruling, the (N.C.) Supreme Court … remanded the case back to the Court of Appeals for further proceedings consistent with this ruling,” leaving a lot of people wondering what those “further proceedings” are.

That’s why, as of now, Alamance County District Attorney Pat Nadolski is waiting for more certainty on the subject before he’s willing to prosecute, and local law enforcement waits in limbo.

In the meantime, Williams and Verdeck plan to take part in the University of North Carolina’s School of Government’s webinar on the Internet sweepstakes statute Wednesday, to learn more about legal challenges and the approaches other jurisdictions are taking.

On Thursday, Senter plans to meet with Kieran J. Shanahan, secretary of the N.C. Department of Public Safety, for guidance on enforcement, said Williams. Then Williams and other heads of local law enforcement will meet with Nadolski on Jan. 24 to further discuss enforcement options.

Williams said when the time comes to enforce the statute, his personal preference will be to work alongside ALE, so any equipment seizures would be done at the state level.

“We need to be consistent across the state,” he said.




Powered by Facebook Comments

Internet Sweepstakes Success Due Partly To Understanding Legal Argument


Internet Sweepstakes Changes The Landscape Of Traditional Sweepstakes

Web based Internet sweepstakes are one highly economical and highly effective way that a company can generate interest in their products and services.  With a well-marketed web-based sweepstakes promotion a company can drive more customers to their website and can generate buzz regarding the launch of a new product.  In addition, web-based sweepstakes are a great way to collect information about current customers and potential customers.  Sweepstakes that are conducted via direct mail, print media or broadcast media have much higher costs; thus the number of businesses that use the Internet for cost-effective marketing continues to grow.  This has led to a significant increase in the amount of sweepstakes that are currently promoted via commercial websites.

Lottery, contest or sweepstakes?


For in-house counsel, structuring a sweepstakes game requires careful drafting of sweepstakes rules.  In addition, statutes mandate certain disclosures.  The goal is to prevent the sweepstake from being classified as a private lottery, because such lotteries are illegal in all of the 50 states.  Simply defined, sweepstakes games are no more than marketing promotions that award winners with a prize which can be monetary or nonmonetary in nature, based on chance.  In contrast, lotteries require both chance and an awarded prize, with the additional requirement of ‘consideration.’  Thus, in-house counsel have to avoid the consideration component, as may be the only thing separating an illegal lottery and a legal sweepstakes game.

There is some variation within states regarding how consideration is legally defined.  It usually requires that the participants buy a product or pay some type of fee in order to participate in said promotion.  Additionally, various state courts have held that consideration is present in some non-monetary.

While the legal definition of consideration can vary from state to state, consideration in this context generally requires entrants to pay a fee or purchase a product to participate in the promotion. In addition, state courts have found consideration to be present in certain nonmonetary expense, like those that require consumers to travel to a physical store or to complete a lengthy marketing questionnaire.

Some individuals have expressed their fears that the requirement of computer access or Internet access to enter sweepstakes games may be

There has also been some concern that requiring computer or Internet access to enter a sweepstakes could be regarded as consideration.  However, so long as the promotions do not require consumers to buy Internet access or a personal computer in order to participate in such a promotion, it is probably not likely that any court would hold that an Internet sweepstakes game is a lottery on that foundation alone.

Contests are another category of marketing promotions, and they are not considered lotteries or sweepstakes games because winners are chosen due to skill, knowledge, ability, judgment, creativity or expertise.  Writing, photography, cooking, athletics and video games are a few examples of contests.  Those who enter in a contest are evaluated using criteria that are objective and that is predetermined by qualified judges.

Rules of the ‘games’

All sweepstakes games of course are subject to the regulations set forth by the Federal Trade Commission, but it is essential to consider state laws in addition.  Those that are designed for the regulation of false advertising and deceptive advertising are particularly important.  Internet sweepstakes games are principally borderless, which means that they need to be in compliance with the relevant laws of all of the 50 states.  If the promotion is not limited only to residents of the U.S., it needs to be in compliance with international laws as well.  Some states are taking major steps for sweepstakes regulation.   In Colorado for example, sweepstakes laws require a disclosure of “No purchase necessary” that must appear bold-face type that is at least ten-point.

Additionally, a few states have taken steps recently to create legislation that is directed towards online sweepstakes games, or have made amendments to their existent sweepstakes games legislation.  This indicates that attorney generals in such states are taking a closer look at the way sweepstakes games are enforced.  The Court of Appeals in North Carolina ruled in March that the 2010 NC law that stated that online sweepstakes were illegal is an unconstitutional law and was thrown out of the statues govorning that state. The decision may be appealed to the NC Supreme Court.

In addition, any Internet sweepstakes game that allows children who are younger than the age of 13 to enter needs to comply with COPPA (the Children’s Online Privacy Protection Act).  Depending on how the sweepstakes game is structured, the ways that it is promoted and implemented and the various prizes or products that are involved, it may also be subject to consumer protection and disclosure requirements set forth by the federal Deceptive Mail Prevention and Enforcement act, requirements from the FDA, IRS, ATF and other regulations as well.

Companies are also required to create official rules and to make set disclosures necessary for promotion of an Internet sweepstakes game, and must make them available to any potential entrants.  The rules usually require the disclosure of eligibility, the name of the sponsor, the address of the sponsor, methods of entry, methods used to determine winners, odds of actually winning, the dates when the sweepstakes will end and begin and the location where the winner’s list will be posted.  Certain states like New York, Rhode Island and Florida require the sponsors of sweepstakes to register with their state if the total value of prizes to be awarded is above a specific monetary threshold that is set forth within statutes.  As such, it is imperative that sponsors of sweepstakes in those states retain their documents appropriately.

At the end of the day, any in-house counsel tasked with drafting official rules to define a sweepstake must be sure to take all state legislation and relevant case law into consideration.  That is the best way to prevent an argument that the sweepstakes promotion contains the illegal element of consideration or is not in accordance with the regulations regarding sweepstakes.




Powered by Facebook Comments