HAYWARD -- A legal battle to shut down three Internet sweepstakes cafes operating downtown could go on for months, even after the City Council's approval this week of an ordinance to close them.
"I expect the three businesses will resist enforcement," City Attorney Michael Lawson said Wednesday.
Hayward has been trying for almost a year to shutter the cafes, which promote casino-style Internet gambling. In February, the council issued a moratorium against the cafes, which countered by taking the city to court. After a federal judge ruled that the city's ban was worded too broadly and could restrict access to the Internet, Hayward narrowed its prohibition to only cover online sweepstakes gambling.
Council members said Tuesday they were troubled by what they called deceit when the businesses applied for licenses from the city. In their applications, the cafes described themselves as business centers that rented computer time to patrons and provided facsimile and copy services, according to the staff report.
"To me, this is about the issue of misrepresentation, and the deliberate misleading of the city," said Councilman Greg Jones.
Councilman Francisco Zermeno agreed, saying, "There was no integrity on the part of the people who made the application."
The council approved the ban, 6-0, with Mayor Michael Sweeney absent. The revised ordinance is based on a similar one in Florida that has been upheld in a federal appeals court, Lawson told the council.
The three sweepstakes cafes are I-Biz, 22466 Maple Court; Net Connections, 778 B St.; and Chances Are, 22632 Main St. Another sweepstakes cafe, Worldnet, closed after the city issued the moratorium.
Police have received numerous complaints about loitering, noise, illegal smoking and other problems outside the cafes, and police have made arrests for outstanding warrants, illegal possession of a concealed weapon, drug possession, battery, theft and possession of stolen property, according to the staff report.
Two employees of Net Connections asked the council to reject the ban, saying that problems such as loitering exist throughout downtown, not just at the sweepstakes cafe.
Chamber of Commerce President Kim Huggett, who spoke in favor of the ban, told the council he found himself in the unusual position of opposing businesses. He said he visited the cafes and saw patrons playing video slot machines.
"That's not a business center," he said. The problems at the cafes detract from the city's ability to rejuvenate downtown, he said.
Sweepstakes cafes sell Internet time, plus access to online sweepstakes games. Customers can win money by playing the games, which include slot machines, poker, roulette and blackjack.
The state Bureau of Gambling Control has declared the sweepstakes cafes illegal gambling operations, and cities throughout the Bay Area have fought to close the cafes, which often open under the radar in strip malls. In March, the cafes were banned in unincorporated Alameda County.
The American Gaming Association maintains the sweepstakes centers are designed to avoid state antigambling laws and gambling licensing restrictions.
The city is expecting more legal action from the cafes, possibly as early as January when the ordinance goes into effect. If either side appeals any court ruling, it could take another 12 to 18 months.
"Whether a business remains open during an appeal will likely depend on who prevails in the next round of litigation," Lawson said.