Palm Coast Looking to Other Cities for Guidance on Storefront Gambling Regulations

The Palm Coast City Council is interested in regulating “internet cafes,” a form of electronic gambling that involves slot machines and games of chance that state law permits, but that an increasing number of sheriffs and local governments across the state consider similar to casinos. There are seven such storefront casinos in Palm Coast, with four more on the way. Next Tuesday, the city council will vote on a six-month moratorium on the businesses.

That doesn’t resolve the matter. What then? A moratorium “is easy, it’s a temporary measure,” City Manager Jim Landon told the council Tuesday. A permanent measure defining the future of the businesses is the more difficult matter, which the council appears for now unable to resolve.

The issue has proved somewhat divisive: There’s little clarity and plenty of contradictions across the state on the issue, along with a state Legislature that has proven incapable of resolving the matter through consistent regulation.

Florida legislative analysis estimates there are anywhere from 350 to 1,000 such gambling joints in the state. The New York Times reported earlier this month that the businesses in this state alone gross about $1 billion. Here’s where things stand in the state:

In Port Orange, Allied Veterans of the World, a corporation that runs close to 40 “internet cafés” in Florida, is suing the city over its refusal to grant the corporation a zoning exception that would have allowed it to open an Internet gambling hall. Port Orange enacted a 180-day moratorium on gambling joints last December, and just extended it for another six months.

Last year, the Jacksonville City Council attempted to ban the storefront casinos only to face a six-month onslaught of lawyers and lobbyists led by Allied Veterans, who successfully watered down the resulting ordinance passed in November. New gambling halls were banned. Existing ones were allowed to keep operating—but also required to pay surtaxes. In essence, the Allied Veterans onslaught resulted in a protectionist measure for storefront gambling halls, which thenceforth were assured that they’d no longer face additional competition. Gambling concerns couldn’t ask for a better outcome.

Baker and Leon counties have considered bans, but not enacted them. Altamonte Springs will vote on July 5 either to impose a moratorium or to ban the joints altogether. Leesburg passed a 180-day moratorium last month. Casselberry, Deltona and Orange City have done so previously.

Last January, Seminole County passed an ordinance that prohibits virtual slot machines or devices with games “ordinarily played at casinos.” But Allied Veterans is suing there, too. The ban is suspended pending that legal resolution. In effect, there is no ban in place on storefront casinos anywhere in Florida, and Sallied Veterans is ready to pounce on any local government that enacts one.

Rep. Scott Plakon, the Longwood Republican, introduced a bill (HB217) during the last session of the Legislature that would have banned storefront gambling or any electronic device connected to game promotion, sweepstakes, drawings, raffles or games of chance. The bill passed the Business and Consumer Affairs Subcommittee, 10-5, suggesting strong support. It went nowhere after that. A companion bill in the Senate never moved. Several legislators get donations from the gambling industry. At least two Florida legislators—Rep. Peter Nehr, the Palm Harbor Republican, and Sen. Mike Bennett, the Bradenton Republican and one of the Senate’s most powerful members (he’s the one who was looking at nudie pictures during a Senate floor debate on abortion)—own internet cafés.

Locally, on May 17, the city’s planning board split, 3-3, over the proposed moratorium ordinance, with one of its members—Bob Cuff, a lawyer—abstaining, because he represents one of the businesses. The split vote reflected the hair-splitting discussion that preceded it as members wondered: if Starbucks offers free wi-fi, how could that not be an internet café? Landon ridiculed the notion (“Absolutely not, and it’s not intended to be such,” he said on Tuesday). But a 3-3 vote is the equivalent of a rejection of the proposal.

Nevertheless, the Palm Coast city administration is pushing forward with the proposal and recommending its approval next week, along with options for the future.

One of them is to take the Seminole County route: declare internet gambling illegal, and make no exceptions. That means no grandfather clause for existing businesses. Those in place would have to be shut down. Landon is not advising the council to do that—at least not until the issue is resolved in Seminole County, which is now bearing the legal costs of the battle on its own.

Another option: regulating them through land development code. They can be restricted to certain areas, but they cannot be limited in numbers. If Palm Coast allowed them along Palm Coast Parkway, for example, it could not say that there would be a limit of five or 10 on Palm Coast Parkway. Council member Frank Meeker doesn’t like that idea. He opposes “clusters” of cafés, namely because if it’s established that the cafes bring trouble, then they should not be allowed. But there’s no documented evidence that the businesses have brought criminal trouble in Palm Coast.

The comparison was made with sex joints. Mayor Jon Netts took exception to the comparison on a couple of counts. “I think for your adult entertainment establishments—and I still don’t like the word adult entertainment; I think of them as juvenile entertainment—there is a tremendous body of evidence suggesting the need to regulate them. There clearly is crime and so on associated with them. Other than that one recent incident in the newspaper,” Netts continued, referring to storefront gambling, “I don’t see that same body of evidence suggesting that these things are, well, inherently evil.”

Meeker cited a study that did link the gambling joints to crime. “The bottom line is, law enforcement seems to be pretty much stacked up with the idea that says, it’s not that the people that are in them are bad, it’s that they attract the wrong element.”

“But if that were the case Frank,” Netts countered, “then we should be pursuing banning convenience stores, because locally there’s a lot more crime associated with convenience stores and drugstores than internet cafes.”

Council member Bill Lewis put it this way: “It’s not today. It’s tomorrow. That’s what’s going to happen. Today Palm Coast is 10 years old, it is ripe, it is brand new, there’s not much crime here, but it doesn’t take long, you know, once the little doggy sniffs something, all the other dogs come in. So are we going to be waiting for the dogs to come in?”

The route council members and the mayor favor most is for the state to resolve the matter uniformly, although current law—or absence of law—is, in fact, the state’s position: Florida does not consider the cafes to be gambling. So it doesn’t regulate them. It doesn’t tax them differently than other businesses. That, however, is Netts’ preferred approach: he doesn’t want the businesses eliminated. He wants them regulated.

The state failed to act on the matter last month. There’ll be no further action until next year. So looking to the state is not, in fact, an option. Palm Coast will have to decide for itself whether and how to regulate the businesses. The moratorium will buy it six months.