Lucky’s luck might finally have run out in Richmond.
After about eight months in business, Lucky’s Sweepstakes, one of the first Internet sweepstakes cafes to open in the city, appears to be closing after being locked out by its landlord. The odds were also not in Lucky’s favor thanks to a new state law aimed at putting it and its peers out of business, set to go into effect July 1.
Several men were in Lucky’s on Wednesday breaking down the dozens of computer stations. A few days ago, several Internet sweepstakes businesses were raided by law enforcement in Henrico County and Hanover County.
Although it was operating in a controversial industry, by all accounts Lucky’s was booming.
Soon after opening in a small shopping center storefront at Hull Street Road and Belt Boulevard, Lucky’s went to its landlord looking for more space.
Demand was even strong enough to warrant staying open 24 hours some days of the week.
Internet sweepstakes businesses, which some say are little more than gambling parlors, operated thanks to the complicated semantics of Virginia gambling law.
Customers add money to swipe cards for Internet time and then sit down at computers loaded with casino-style games such as slot machines and poker. Credits can be accrued and exchanged for cash. The purchase of the swipe card also buys them into a sweepstakes. Virginia law differentiates between a sweepstakes with predetermined odds and games that rely on the operator’s skill and luck.
But that loophole was closed this year when the General Assembly passed a measure that amended the definition of illegal gambling to include the practices on which most Internet sweepstakes cafes operate.
Lucky’s wasn’t the only game in town trying to fill the demand. Countless other sweepstakes cafes had popped up across town since September, with such names as Diamond Sweepstakes, Hi-Life Internet Sweepstakes Cafe and VSF Sweepstakes Redemption Center.
The businesses were well aware of the shaky legal ground on which their industry was built. Commercial real estate brokers have told BizSense that the sweepstakes owners often asked landlords for leases that allow them to get out if the law changed.
With the change in law looming, Lucky’s then ran into some other problems.
Its landlord locked Lucky’s out of its space because of complaints about excessive cigarette smoke in the space.
“The complaint was really about smoking and what Lucky’s has to do to remediate it,” said Frederick Gerson, an attorney with Robinson & Gerson who represented the landlord, Circle Realty LLC.
The landlord claimed that the lease contained provisions about properly managing and ventilating cigarette smoke and that Lucky’s violated that provision.
In its injunction filing in Richmond Circuit Court, Lucky’s argued that it spent $30,000 to alleviate smoking issues, saying that its clientele are primarily smokers.
The judge eventually ruled that Lucky’s could reenter its shop and not be locked out for the next 45 days as long as it paid an injunction bond, equal to about one month’s rent.
But Michael Champlin, an attorney with Bowen, Champlin, Foreman & Rockecharlie, who represented Lucky’s in the dispute with the landlord, said that 45-day period ran past July 1, which would likely mean closing time at the hands of the new law anyway.
“The state has passed a law that forbids this particular type of operation,” said Champlin. “Unless somebody finds a loophole, all of these places will not be allowed to survive in Virginia.”
Two days after Lucky’s court hearing there were local reports of several sweepstakes cafes being raided and shut down in Henrico and Hanover. One was called Lucky’s Sweepstakes, according to a Richmond Times-Dispatch report, although it was unclear whether there is a connection to the Lucky’s on Belt Boulevard.
Ultimately, the bond payment was never made, and now it appears Lucky’s is moving on.
Gerson said the suit had nothing to do with trying to get Lucky’s out before the new law shut it down.
“The lawsuit is about that issue and that issue only,” Gerson said.
Lucky’s is owned by an entity out of Pinehurst, N.C. North Carolina had previously changed its gambling laws to outlaw sweepstakes businesses.
Michael Schwartz is a BizSense reporter. Please send news tips to Michael@richmondbizsense.com.
Can’t say that I’m surprised. Or sorry. Businesses aimed at taking advantage of the desperate, the gambling-addicted, or the desperate-and-gambling-addicted are always on the bubble with cops and regulators. Just ask Damon Runyon.
So, I guess we shut down all the bars and restaurants b/c there are alcoholics that would go those places. Why don’t you let us police our own morals!
Casey and JB are on opposite sides of an issue that touches most if not all of us whether directly or indirectly. Drinking, gambling, drug use, smoking, prostitution, you name it, if its a “sin” there is always going to be a segment of the population that will engage in it *whether it is legal or not*.
The lines are always going to be (very) blurry and each “sin” should be examined individually. I think the question ultimately becomes what the unintended consequences are when an activity is legal or illegal. No one will argue the merits of prostitution but one can arguably point out that keeping the worlds oldest profession illegal not only does not work, it promotes crime and further exploitation of those selling their services. This is exactly the argument that has been made in Nevada. Just as one can effectively argue the obvious merits of not having Richmond attempt to be the next Las Vegas.
Same for marijuana use. Would marijuana use and all the problems associated with that go up if it were legal? Certainly. But would crime and the tax burden associated with policing and housing drug dealers also come down if marijuana were legalized? Of course it would. There’s the tradeoff.
As a reference, we as a nation tried a grand experiment with legislating morality by banning alcohol in the 1920s and the unintended result was a surge in organized crime, not a society of teetotalers as envisioned. Alcohol firmly remains a very popular part of our national culture in spite of all its glaringly obvious downsides. That was the reality both then and now that no law can overcome.
We’ve seen what has happened with these sweepstakes cafes and in a broader sense with the lottery. They both find large if not their largest markets in the segment of the population that can least afford to lose money gambling. This ultimately burdens the individual directly and the greater community indirectly (currently one in seven Americans use food stamps).
My two cents? People will ultimately do what they will do, as the constant ads for the new casino in Charles Town demonstrate. No sane person expects to beat the house over time and yet gambling thrives. That does not mean our state should cash in on irrational impulses as they have with the lottery. There are far more ethical ways to raise revenue than selling scratchers and one in a zillion lottery chances to the desperate and mathematically challenged. Leave gambling to the private sector. And if gambling ultimately burdens the taxpayers of Virginia indirectly, tax the industry to make up the difference or keep it out of the state entirely.
Chris, I’m on the legalize-it side of most sin-related law enforcement issues, including legalizing marijuana. People will indeed do what they do, and I think letting them do it – within some boundaries, like “no shooting” and “no children” – in defined adult-entertainment areas is a workable approach. It works in many European cities, why not here?
I agree with your position on the lottery, since that money seems to wind up in the general fund in the states with lotteries, NOT in education, which is where it’s allegedly destined.
I find it funny that people are saying internetsweepstakes centers target low income and cause people to be addicted! As an employee at a sweepstakes center i cater to a wide variety of people with all types of income! I have docotrs and lawyers that come in to unwide and enjoy the safe, fun and friendly enetrtainment of the sweepstakes. If the New Law does stand I hope to see Va Lottery and Bingo banned as well. I can’t tell you how many people I’ve seen in the Lottery line after they’ve cashed their SSI checks hoping to become rich off of their Lotto tickets or how many people I’ve seen spend their last dime to play Bingo at a church! As far as addictions um let’s ban Alcohol as well! I hope somone reads this and actually thinks about this New Law, In this country we are suppose to free! Where is our freedom? I see us losing it more and more everyday. As anyone thought about what this will do to the unemployeement rate? I thought we are suppose to be working on getting that rate down? So to sum this all up…… Please think about this how is internetsweepsakes any different than Va Lotto scratch tickets? Both are PREDETERMINED!