Sen. Thrasher Calls for Outright Shut-Down Of Internet Cafes in Wake of Scandal

Sen. John Thrasher, an influential senator who represents Flagler County, and who has sought to place a moratorium on new Internet cafes, said Wednesday that criminal allegations of racketeering and other wrongdoing in the industry should spur lawmakers to close the storefront businesses.

“My goal would be to get rid of them,” said Thrasher, a St. Augustine Republican who is chairman of the powerful Rules Committee. Last year Palm Coast had nearly a dozen such businesses operating, though it had also developed strict regulations that would apply on any new such business in town. There are seven so-called Internet cafes now operating in Palm Coast (six, after a shut-down this week), and no additional ones that have applied for a business license.

Thrasher made the comments shortly after Lt. Gov. Jennifer Carroll resigned because of past consulting work she did for Allied Veterans of the World, an organization that is at the center of an investigation that became public Tuesday and led to the arrest of at least five people. The investigation includes allegations of illegal gambling, money laundering and misrepresentation by Allied Veterans, which held itself out as a charity but, authorities contend, was used to enrich other people.

Sen. Garrett Richter, a Naples Republican who is chairman of the Senate Gaming Committee, said he plans to hold a meeting Monday to take up a Thrasher bill (SB 1030) that called for the moratorium. Richter said he expects discussion during the meeting about possibly going beyond a moratorium.

“Well, certainly I think we have to have the discussion,” Richter said. “We don’t want illegal businesses thriving in the state of Florida.”

Internet cafes have been a controversial issue in the Legislature, as hundreds of the businesses have popped up across the state in recent years. Critics have long contended they illegally operate electronic games that are akin to slot machines, but the industry has said they are legal sweepstakes games.

A 130-page search warrant application filed Monday in federal court in Oklahoma flatly rejects arguments that Internet cafes are not gambling operations — repeatedly referring to them as “Internet casinos.”

“(The games) do not constitute a drawing by chance or a game promotion under Florida law,” IRS Special Agent Michael Favors said in a sworn statement seeking a warrant to search an Oklahoma company, International Internet Technologies, that is a major player in the industry. “As a result, there is probable cause to believe that Allied Veterans and others were involved in conducting, financing, managing, directing and owning illegal gambling businesses in Florida involving slot machines that earned, after deducting prize pay-outs, over $290 million from 2007 to present.”

Thrasher said he was “terribly saddened” by Carroll’s resignation and called her a “dear friend.” He filed the bill to place a moratorium on new Internet cafes last month, though the measure has not been heard in a committee.

The senator said he filed the moratorium bill as a way to “push the pause button.” But he said he doesn’t think there is a need for the cafes and will go after the industry “as hard as I can — as hard as the (Senate) president will let me.”

The industry, particularly International Internet Technologies, has become a big-money political player in Florida, as it has fought past attempts to rein in the industry. Last year, International Internet Technologies, which licenses software to the cafes, spent $740,000 on lobbying the Legislature, according to a lobbyist-compensation report.

But the industry’s lobbying muscle could quickly vanish, as International Internet Technologies’ lobbying team terminated its representation after the announcement Tuesday of the arrests and law-enforcement searches of Internet cafes.

Sarah Bascom, who runs a prominent public-relations business in Tallahassee, served as a spokeswoman for a group called the Coalition of Florida’s Internet Cafes, which included International Internet Technologies. She said she quickly terminated representation because of “misrepresentation” by International Internet Technologies.

“We had no knowledge of any of this until yesterday when the media reports started coming out, and we terminated our representation of them immediately after,” Bascom said in email.

The seven “Internet cafes” operating in Palm Coast are at the following locations:

160 Cypress Point Parkway, Palm Coast Internet Café
300 Palm Coast Parkway, Triple Diamond Sweepstakes Café
1274 Palm Coast Parkway SW, Thunderbird Internet Café
15 Cypress Branch Way, Sunny Day Café
108 Flagler Plaza Drive, Lucky Day Internet Sweepstakes
1499 Palm Coast Parkway NW, Neptune’s
50 Plaza Drive, Hero’s Café (shut down this week)

–Jim Saunders, News Service of Florida, and FlaglerLive

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