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Emily D. Swoboda

South Carolina Judge Says Sweepstakes Terminals Provide Gambling

28 June 2006

A magistrate judge in South Carolina has ruled that a company that sold prepaid Internet cards for low-income consumers was in fact providing an outlet for illegal video gambling.

Magistrate Robert Davenport Jr. denied Fort Worth-based Game Systems Inc.'s request to return its terminals, which officials seized in March. He also upheld his previous order for the destruction of the terminals.

On March 2, 2006 state and local officials raided 13 businesses and took 464 machines, most of which were for playing online sweepstakes. Police have since picked up a total of 544 machines, including 411 Internet sweepstakes terminals.

Game Systems said the prepaid Internet access cards were intended to be a marketing tool, but the state contends they were set up only for Internet video gambling.

Karl Maahs, Game Systems' operations manager, said his company promotes and sells prepaid Internet cards via a high-speed dial up service. The cards, priced at five cents per minute, expire within 90 days. He added that the product is designed for people with low income and poor credit.

When a customer buys an Internet card, they also receive a certain dividend of points to play online, according to the amount of the card. Participants can then redeem their points for other prizes and/or cash if the retailer is set up to do so.

In his decision, Davenport said the company failed to show that customers were using the cards for Internet time.

"When customers keep re-upping and re-upping their cards, it basically turns into gambling," he said.

Game Systems' attorney, Jim Griffin, has said the company is considering an appeal, but the deadline for appeal expires July 5. After that, the terminals will be destroyed.

South Carolina Judge Says Sweepstakes Terminals Provide Gambling is republished from
Emily D. Swoboda
Emily D. Swoboda