LIMA â€” By the end of May, the Ohio Senate plans to finish its work on a bill already passed by the House banning Internet cafĂ©s.
The Internet cafĂ© issue has been a wild one in Columbus, with money and lobbying flowing freely at the Statehouse with lots at stake for the Internet cafĂ© industry fighting for its existence and a multitude of industries opposed to them, including casinos losing business to the unregulated gaming.
Media coverage of behind-the-scenes politicking of the Internet cafĂ© issue, and also an unrelated issue about wholesale beer distribution, have left unsavory impressions of Republican leadership, including Senate President Keith Faber, R-Celina.
Faber and state Rep. Matt Huffman, R-Lima, say those reports are filled with inaccuracies and information out of context.
Internet cafĂ©s, also called sweepstakes parlors, sell phone and Internet time cards to patrons with chances to play computer games that operate like slot machines with cash prizes. CafĂ© owners call the businesses legal. Opponents say they are unregulated, unvoted on by the stateâ€™s residents, illegal in themselves and breeding other illegal activity.
Huffman, second in leadership in the Ohio House, has shepherded the two most recent attempts at banning the cafĂ©s.
Media characterizations that the Senate has been dragging its feet (an editorial in The Akron Beacon Journal called it â€śobstinate stallingâ€ť) on the Internet cafĂ© issue are not accurate, Huffman and Faber said.
The issue has been around for two to three years, Huffman said, with several attempts at legislation. In 2012, House Speaker William Batchelder made it a priority and told Huffman to guide the legislation. The House passed a version in December, with the clock running out in the session, and the Senate president at the time chose not to push a bill through in the waning session. At the beginning of this session, Huffman again picked up the bill, and the House passed it at the end of March.
At the billâ€™s first hearing in the Senate in early April, State Government Oversight and Reform Chairman Sen. Dave Burke, R-Marysville, said the Senate needed more time to study the issue and that a vote on the bill would be delayed, according to the Columbus Dispatch. That same night, Burke, Faber and other Republican lawmakers had dinner with lobbyists from the Internet cafĂ© industry.
Faber said the dinner was a routine meeting with a party interested in legislation. He also said Burke was not authorized to discuss the timeline of the legislation.
â€śIâ€™m pretty sure itâ€™s the Senate president who speaks about that. No one ever asked me to follow up on that,â€ť Faber said. â€śWeâ€™re having the rest of this discussion [on the bill] in the next two weeks.â€ť
Faber has opposed new gaming structures for various reasons in the past. That included in 2007, when he was part of a small minority opposed to a new type of betting at racetracks, that used machines with old footage of horse races that the user bet on. At the time, Faber said they acted like slot machines, which were illegal at the time in Ohio, and he offered this on the Senate floor: â€śIf it looks like a slot machine, rings like a slot machine, pays like a slot machine, it just may be a slot machine.â€ť
Speeding things up
The debate in the Legislature has moved from regulating to banning the industry, Faber said, as it has become clear itâ€™s not possible to determine the legal from the illegal operations. He also said Internet cafĂ©s have no financial benefit to the public, as other regulated forms of gambling in Ohio do. For example, the lottery benefits education, and bingo benefits charity.
Faber said the major factor that led him to speed up Internet cafĂ© legislation was the same thing that motivated him to give back campaign contributions from the industry: An 8th Ohio District Court of Appeals ruling that the cafĂ©s are illegal gambling.
Faber met privately with Ohio Attorney General Mike DeWine, Public Safety Director Tom Charles and Franklin County Prosecutor Ron Oâ€™Brien, who shared allegations about money laundering and tax evasion through the cafĂ©s.
â€śMy original fears about these being illegal were confirmed. Along with the appellate ruling, these were activities that we donâ€™t want to encourage, and people we donâ€™t want in Ohio,â€ť Faber said. â€śSome of these guys operating arenâ€™t bad guys. Some of them are small-business people, but that might be the exception.â€ť
Before the appellate court ruling, all the Legislature had were municipal court decisions, one calling the cafĂ©s legal and another calling them a nuisance. With the law enforcement information and the 8th District ruling, Faber and the Republican caucus moved on a bill that banned the cafĂ©s. Faber also gave back contributions and asked his members to do the same. He acknowledged it was in part a response to the situation not looking good, but also mainly because he didnâ€™t want contributions from an industry that had been deemed illegal.
â€śWe had this opinion that said they were operating illegally,â€ť Faber said. â€śThatâ€™s pretty simple.â€ť
Huffman said the sequence of events just looked bad.
Additional reporting by The Dispatch showed that DeWine-led raids on Cleveland-area cafĂ©s the week of April 15 turned up strategy memos detailing how much campaign contributions cafĂ© owners were to give to legislators and campaign committees, mostly Republicans. The Beacon Journal editorial referenced â€śembarrassing disclosures of campaign contributions and cozy dinners with lobbyists.â€ť
â€śIt looked terrible the way it came out,â€ť Huffman said. â€śI think that was part of it.â€ť
Beer wholesale flap
Another issue of alleged improper behavior last week at the Statehouse also has two sides of the story.
The General Assembly on April 17 passed legislation that it sent Tuesday to the governor for his signature. The bill lowers fees for craft brewers in Ohio, and on April 17 a House committee added an amendment that prohibits large breweries from acquiring wholesale distributorships. The House passed the bill the same day, and the Senate concurred.
On April 22, Anheuser-Busch InBev sent a scalding letter to Faber and Batchelder decrying the amendment, saying it was done in four hours, â€śintroduced and voted upon, totally without public notice or input, or the opportunity for my company and others to comment.â€ť
Later, the letter from Luiz Edmond, president of North America ABInBev, said the legislation was passed â€śin complete violation of normal legislative procedure, and outside the boundaries of basic fairness and respect for a corporate employer in your state.â€ť
The company wanted the Legislature to pull back the legislation and not send it to Gov. John Kasich. The Legislature did just that, the next day, but Faber has also since had meetings with Anheuser-Busch and other large brewery companies and said heâ€™s open to another bill.
Huffman and Faber said the company is tossing fireballs because it wasnâ€™t paying attention and doesnâ€™t like the outcome.
The amendment would mirror legislation in at least half of the countryâ€™s states, Faber said, that strengthens distinctions among beverage manufacturers, distributors and retailers. The legislation passed 97-0 in the House, unanimous and bipartisan, Faber said, which didnâ€™t exactly raise a red flag of controversy, and the Senate concurred.
â€śWe generally rely on people with interests to tell us what their concerns are,â€ť Faber said.
The bill, which was first introduced Feb. 20, did move quickly on April 17, but that isnâ€™t unusual, and it did go through a committee, Huffman and Faber said.
â€śTheyâ€™re suggesting itâ€™s this big, big change, and we should have talked about it more,â€ť Huffman said. â€śWe have committee meetings, and you always have lobbyists. If you chose to not come that day â€” so, itâ€™s a problem.â€ť