New Law to Affect Ohio Internet Sweepstakes Establishments

June 28, 2012
Legal Updates

In recent years, Ohio has experienced a proliferation of retail businesses that are commonly known as "internet sweepstakes establishments."  Although to many they look and feel like gambling, the operators of these establishments claim they are simply utilizing a sweepstakes to facilitate sales.  These establishments utilize computer terminals or stand alone machines, which currently are not consistently or uniformly regulated statewide.  Additionally, judges across the state have issued conflicting rulings regarding the legality of these sweepstakes establishments. While some judges have deemed the establishments violate laws against gambling, others have found that they are permissible under existing legislation.  These factors have created a window of opportunity for rogue operators to open establishments in cities across Ohio.

Recognizing the need to address this issue, on Monday, June 11th, Governor John Kasich signed House Bill 386 into law.  The bill defines important terms and regulations related to currently operating internet sweepstakes establishments, and prohibits the creation of new establishments through June 30th, 2013. The General Assembly has determined that this moratorium on new establishments is necessary while further legislation is considered.

Current establishment operators will have to complete and file an affidavit with the Ohio Attorney General by July 11th, 2012.  The affidavit must certify that the establishment was in existence and operating prior to the bill's passage.  A public listing will be compiled from submitted affidavits after July 11th, 2012.  The list will be available at the Ohio Attorney General's website for use by consumers and law enforcement to ensure that new establishments do not open after the moratorium date.

House Bill 386 is not intended to supersede any local ordinances or procedures that have already been put into place regarding sweepstakes establishments by counties, townships, or municipal corporations.  Any sweepstakes establishments that were open and operating prior to the bill's passage will be subject to more stringent regulations.  Those establishments with permits that expire prior to June 30th, 2013, will be allowed to renew their permits and continue operating pursuant to local ordinances and procedures.

House Bill 386 provides new guidance regarding the regulation of sweepstakes establishments.  However, it does not clarify how the law affects local ordinances or procedures explicitly permitting the creation of new establishments.  Nor does it state clearly what will happen to establishments that fail to file an affidavit by the required deadline.

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