THE BLOG
10/27/2010 05:17 pm ET Updated May 25, 2011

States Struggle to Deal With New Gambling Loophole

A new form of gambling that combines online betting with brick-n-mortar casinos has been sweeping the nation, and states are struggling to keep up with the legal implications of this hybrid.

Known as "internet sweepstakes cafes," these establishments have found a loophole in anti-gambling laws by charging customers access fees (via pre-paid cards or by-the-minute) for internet access, which they use to play casino-style games online.

The cafes seem to be popping up in economically depressed communities beside strip-mall pawn shops and check-cashing locations. The customers aren't "technically" being charged to gamble, so the argument is that internet sweepstakes cafes aren't breaking any laws. However, that has not stopped law enforcement and government officials in several states -- including Florida, North Carolina, Ohio and Virginia -- from trying to shut them down.

Sweepstakes as a form of marketing have been around for as long as coupons and give-aways, but they have typically focused on getting your contact details so the company sponsoring it could put you on a mailing list. This new trend, however, is more similar to an online casino than Publisher's Clearninghouse.