HAYWARD -- The City Council has extended a moratorium banning new and existing Internet sweepstakes cafes in the city, yet two remain open after a judge issued a temporary restraining order in a lawsuit filed by one of the businesses.
Hayward shut down three sweepstakes cafes earlier this year after city staff members found that they violated zoning laws. The council passed the moratorium in February and extended it Tuesday.
One of the cafes, Net Connection at 778 B St., filed a lawsuit after the moratorium was first passed, and a judge granted it a temporary restraining order allowing it to reopen, at least until a court hearing on the suit.
Hayward granted a request by a second cafe, I Biz at 22466 Maple Court, to reopen under the same terms as Net Connection, assistant city attorney Michael Vigilia said Wednesday. "It's my understanding that I Biz will be filing its own lawsuit soon," he said. The city is working with the federal court to schedule a hearing on both businesses, probably at the end of April or beginning of May, Vigilia said.
A third Internet cafe, Worldnet Business Center at 22620 Vermont St., closed and has moved out of the space it was leasing, he said.
At the sweepstakes cafes, patrons purchase time on computers, which they use for sweepstakes games that resemble casino-type gambling, according to a staff report.
The moratorium was extended until February to give Hayward city staff members time to look at what other cities and states are doing to regulate the cafes, Vigilia said.
At Tuesday's council meeting, attorneys representing I Biz gave a sweepstakes software demonstration. "It is our strong belief that our client was not engaged in an illegal activity," said Kevin Morse of Figure Eight Technologies of North Carolina. His company provides I Biz's software.
The sweepstakes games are prohibited in unincorporated Alameda County. Last week, supervisors upheld the county's ban, rejecting an appeal by owners of the Internet cafes. Supervisors said the sweepstakes centers are unlawful based on the county's zoning ordinances.
In December, the California Bureau of Gambling Control issued an advisory that the sweepstakes games offered at the Internet cafes are illegal under state law.
Contact Rebecca Parr at 510-293-2473 or follow her at Twitter.com/rdparr1.