State to crack down on new online gambling machines

Indiana officials have decided to clamp down on new electronic gambling machines that let users connect to online games and are giving the state excise police authority to remove them and cite businesses that have them.

The so-called "sweepstakes machines" allow players to buy Internet time for video poker and slots and bet digital credit or time, with winners receiving a receipt that they can cash out at the businesses.

The machines recently began appearing in Indiana bars, restaurants, convenience stores and other businesses, The Journal Gazette of Fort Wayne reported. Unlike slot machines, prizes are paid to winners based on predetermined sweepstakes systems, not by chance.

The Indiana Alcohol and Tobacco Commission said Monday that it notified retail alcohol permit holders that the machines are illegal and must be removed. Violation notices, which can lead to fines or suspension of alcohol permits, can be issued starting Oct. 15.

The agency's notice said the only form of gambling allowed in these businesses includes pull tabs, punch boards or tip board games.

"Any other type of gaming, especially electronic gaming devices, are strictly and specifically prohibited," the notice said.

The website for Promo Games Sweepstakes, the company that distributed the machines in northeastern Indiana, includes a discussion of why it doesn't consider the machines illegal gambling, comparing them with the sweepstakes Monopoly game that McDonald's offers.

"When you play the McDonald's Monopoly game, which is a sweepstakes, you don't buy game pieces," the site says "You buy a Big Mac with fries or an order of chicken McNuggets. When you buy the food, you get a free entry. This is exactly how sweepstakes gaming works," the website says. "… The customers don't actually purchase entries into the sweepstakes. They purchase time on the computer."

Federal law, however, requires McDonald's and other retailers conducting similar promotional games to provide some way for players to receive game pieces at no charge.

Steve Carnes, a Promo Games official, said he expects the company will review the state agency's decision.

"I guess they did what they felt was necessary and we go from there," Carnes said. "I presume there is a possibility of challenging it."

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.