AG COAKLEY ISSUES REGULATIONS BANNING ILLEGAL GAMBLING AT SO-CALLED "CYBER CAFES" AND "PHONE CARD" VIDEO TERMINALS.

BOSTON, MA -- The following information was released by the office of the Massachusetts Attorney General:

Citing evidence of illegal gambling and the lack of consumer protections, Attorney General Martha Coakley's Office today unveiled emergency regulations that will ban illegal gambling at alleged "Cyber Cafes" and "Phone Card" video gaming terminals across the Commonwealth.

The emergency regulations were filed today with the Secretary of State's Office. Attorney General Coakley also is conducting both civil and criminal investigations of possible illegal gambling at facilities that claim to be "Cyber Cafes."

Over the past few months, the Attorney General's Office received a number of questions and complaints regarding alleged unlawful gambling operations that have opened for business across the Commonwealth. Though the businesses purport to sell goods or services, such as internet access or phone cards, the civil investigation found those sales are a pretext for unlawful online slot parlors and similar gambling. The emergency regulations make clear that these practices are against the law.

"The goal of these regulations is to protect consumers," AG Coakley said. "These cyber cafes are really cyber scams with no posted odds, minimum odds, or guarantee of payouts for patrons. With these regulations, we are making clear that such gambling operations at 'cyber cafes' and 'phone card video gaming terminals' are illegal."

In addition to today's emergency regulations, Attorney General Coakley is working with Speaker DeLeo and other legislators on legislation to specifically ban the machines being used in these facilities.

The regulations address two activities in particular, namely:

"Cyber Cafes" :

The so called "cyber cafes" feature dozens of computer screens at which patrons play video slot machines or similar games where the winning numbers are revealed each time the player uses game credits--or money--to play the game. These establishments purport to sell internet time, coupled with the opportunity to win prizes through video slots. But, the Attorney General Office's civil investigation found that sale of internet time is a ruse, as virtually all customers pay money to gamble, and that is how the establishments are promoted. Gamblers typically pay for a swipe card--for example, 1000 points for $10--and use their points to play the video slots. If they win, they can redeem the points accrued on their swipe card for cash. More often, they play until their money is exhausted, and then stop or pay more money to keep playing.

"Phone Card Gaming Terminals" :

Certain convenience stores around Massachusetts house "phone card" video gaming machines that offer the chance to win a prize by playing games like slots or poker. To have a chance to win at the gambling, the player buys a phone card, offering some number of minutes of phone calling, which is generated in the form of a receipt or stub. While the purchase of a phone card allows a customer to gamble, winnings typically are redeemed in cash.

The emergency regulations announced today are designed to clarify the laws around illegal gambling at these locations and end the practice of de facto gambling operations posing as sellers of goods or services. The regulation provides:

" . . . . [I]t is unfair or deceptive in violation of [c. 93A] for any person to engage in a business or engage in a transaction where a gambling purpose predominates over the bona fide sale of bona fide goods or services."

The Massachusetts Consumer Protection Act (chapter 93A) authorizes the Attorney General to promulgate regulations to identify "unfair or deceptive acts or practices" in trade or commerce.

Copies of the emergency regulations are available on the Attorney General's website at www.mass.gov/ago/940CMR30.