November 27, 2014

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North Ridgeville may return sweepstake cafe fees

NORTH RIDGEVILLE — Future operators of Internet sweepstakes cafes will have an easier time getting the bulk of their licensing fee back should their venture fail to get off the ground or be denied by the city.

As it stands, the city agrees to return $4,000 of the $5,000 licensing fee on one condition, and that is when an application for an Internet sweepstakes cafe is denied.

“The dollar amount is not changing,” Assistant City Auditor Teresa Machovina said. “What are changing are the reasons under which a vendor would be able to get their money back.”

The amended ordinance also would enable gaming vendors to get money back upon written request by an applicant should a license be withdrawn or not acted upon within a 12-month period of its issuance.

“This change better defines the conditions under which a portion of licensing fees may or may not be refunded,” Machovina said.

Machovina and Law Director Andrew Crites said they were unaware of any problems the city has had with any of the city’s Internet sweepstakes parlors.

The city returned $4,000 to one vendor in 2011, but Machovina said she was not aware of the specific reasons for the refund or who had asked for their money back.

In addition to the annual $5,000 licensing fee, Internet sweepstakes cafe operators also agree to pay fees of $30 per computer terminal in a particular business.

As of Nov. 30, the city had collected $98,040 in licensing fees from 10 Internet cafes, according to Machovina, who said year-end figures were not yet compiled.

Most such businesses typically operate in vacant stand-alone or shopping strip storefronts and provide 20 to 40 computer outlets on which customers play online games that use pre-paid phone cards to tally points that can be traded for prizes and cash. State law deems such businesses are legal because customers are paying for time to play games rather than paying for the game itself.

North Ridgeville’s existing ordinance allows the city to keep the entire $5,000 licensing fee if a license is suspended or revoked. That provision will be expanded under the proposed amendment to permit the city to retain the entire licensing fee for cases in which a license is received but a vendor does not act upon it for more than a year.

Contact Steve Fogarty at 329-7146 or sfogarty@chroniclet.com.