PALM BAY — The future of an Internet cafe is on the line in Palm Bay.



In January, the city issued a zoning-related denial of a business permit sought by Allied Veterans of the World to open on Malabar Road. The business, which opened before receiving word of the denial, allows patrons to receive free sweepstakes entries by purchasing Internet access, or by requesting entries without using the Internet.

After learning they'd been denied, Allied appealed the decision. Tonight, the council will decide whether the operation is conducting business in a use permitted by zoning ordinances, said Lee Feldman, city manager.

"Our director of growth management says his reading of the code -- and he's the one charged with interpreting the code -- is that it's not," Feldman said. "Allied believes it is. The city council will hear Allied's appeal of the growth management director's determination that it's not appropriate. If the answer is yes, they will get their receipt and continue to operate. If not, they will have to cease operation."

At present, there is nothing in the Palm Bay city code that specifically references an Internet center or cafe, he said.

While cities around the state and nation have wrangled over the legality of such businesses, attorneys for Allied Veterans of the World, based in St. Augustine, say their businesses are legal under Florida's sweepstakes laws.

Allied has five Brevard locations -- two in Melbourne and one each on Merritt Island, in Rockledge and Palm Bay -- and 36 statewide. At each, patrons pay for Internet time and are given sweepstakes entries on a card. They can find out if they've won by asking a cafe worker to swipe the card through a card reader on a computer, by doing that themselves at a computer terminal without watching the slot-machinelike games on the computer screen reveal winnings, or by sitting and watching as the games unveil pre-determined winnings.

In Seminole County, officials voted to prohibit the operation of such cafes in January by banning simulated gambling devices. They based the decision on a 1997 county charter amendment that said, "We don't want any gambling here," banning "anything that might remotely appear to look like gambling," said Kelly Mathis, senior partner for Mathis Law of Jacksonville, Allied's attorneys. Earlier this month, a federal court issued a restraining order against that prohibition.

Palm Bay was to discuss an ordinance similar to the one in Seminole but tabled the discussion until Feb. 17. Feldman said the city's proposed look at the simulated gambling machines and consideration of an ordinance stemmed from "concern about the proliferation of establishments that simulate gambling and the negative effects of such establishments on the community."



Wayne Holmes of the local State Attorney's Office questions why cities are having to deal with the problem at all.

Florida has laws related to gambling, and "basically, Allied Veterans and others have attempted to open and operate, trying to work what they perceive are exceptions to those laws," said Holmes, chief of operations in Brevard County for the Brevard-Seminole State Attorney's Office.

As a result, businesses such as Internet cafes have been allowed to open, with communities, such as Seminole County, following along behind with ordinances addressing them, he said.

"Why should this wind up being a local issue when it's an issue of statewide proportions?" he said. "That's where the Legislature needs to step up to the plate and either regulate it or not, and right now, they're not. There's no standards . . . and the state is missing out on millions of dollars, not regulating it in the way they should if they're going to allow them to continue to do business."

No court case or prosecutor "has been able to show anything that Allied does is illegal in any way, and there's a specific statute that allows us to do it -- sweepstakes, allowed by the Department of Agriculture," Mathis said.

"The sweepstakes they do is no different than any other sweepstakes conducted by any other company . . . these days, practically every business does a sweepstakes, a prize giveaway to promote the product or service."

Those entering Allied locations are required to sign paperwork that states how the operation works. That information is also available on the computer screen, and "we tell people verbally when they come in, exactly what it is," Mathis said.

Prizes range from a few cents to $13,500 and people "absolutely" have won the largest prize and "everything in between," Mathis said.

Contact Kennerly at 321-409-1423 or mkennerly@floridatoday.com.

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