Two Internet Cafés Agree to Pay $750,000 for Allegedly Facilitating Illegal Gambling
Cafés Acknowledge Use of Sweepstakes Software Violated MA Consumer Protection Laws; Software Licensor and Cafés Agree to Cease Operations in MA
BOSTON – After allegedly facilitating illegal gambling at locations throughout Massachusetts, two so-called Internet cafés have agreed to pay a total of $750,000 to the Commonwealth of Massachusetts, Attorney General Martha Coakley announced today.
Additionally, Teradyne Systems Massachusetts, LLC, acknowledges that the two cafés used the sweepstakes software in a manner that violated Massachusetts consumer protection laws. New England Internet Café, LLC (d/b/a “NEIC”) of Fall River and Internet Marketing Group, LLC (d/b/a/ “The Ship”) of Lynnfield licensed and used sweepstakes software distributed by Teradyne.
“Through today’s action, these cafés will return their illegal profits back to the Commonwealth and cease operating in the state,” AG Coakley said. “These so-called Internet cafés are illegal gambling operations with no protections for consumers, including no posted odds, minimum odds, or guarantee of payouts for patrons.”
Under the terms of the agreement, filed in Suffolk Superior Court on Tuesday, NEIC and The Ship will pay $750,000 to the Commonwealth. That sum includes the return of profits made by cafés and Teradyne Systems Massachusetts, LLC, (“Teradyne”) in connection with the cafés’ unlawful operation and use of sweepstakes software.
On April 7, 2011, AG Coakley issued an emergency regulation, made permanent on June 24, 2011, that expressly provided that taking money for sweepstakes or games of chance violated Chapter 93A. The regulation states that it is an unfair and deceptive act or practice in violation of Chapter 93A for a person to solicit or accept payment for a chance to win a prize. It also makes it a violation of 93A for any person to engage in a business or transaction in which a gambling purpose predominates over the legitimate sale of a bona fide good or service. The regulation clarifies the already existing laws around illegal gambling and aims to end the practice of de facto gambling operations posing as sellers of goods or services.
Under the terms of the agreement, Teradyne will refrain from entering into new or renewed licensing agreements for sweepstakes software in Massachusetts and will terminate any existing agreements. NEIC and The Ship acknowledge that their use of the sweepstakes software violated Chapter 93A, and will refrain from operating any so-called Internet cafés or similar establishments in the Commonwealth, whether independently or using the software distributed by Teradyne or any other licensor. NEIC and The Ship have already ceased doing business in Massachusetts. All other cafés that were unlawfully using Teradyne’s sweepstakes software in Massachusetts have ceased operation, including Boston Road Cyber Café in Springfield.
“Sweepstakes software” refers to software that advertises a scheme or other promotion that a person may enter to win or become eligible to receive a prize, the determination of which is based upon an element of chance.
The Attorney General’s investigation into various so-called Internet cafés throughout the Commonwealth remains active and ongoing.
Today’s agreement was handled by Assistant Attorneys General Thomas Ralph and Timothy Wyse of the AG’s Cyber Crime Division, and AAG Lee Hettinger, Chief of the Western Massachusetts Regional Office. Senior Financial Investigator Mark Pulli, Chief Investigator Thomas A. Nowicki of the Massachusetts Department of Revenue, State Police Assigned to the Attorney General’s Office, and the Attorney General’s Computer Forensic Laboratory assisted in the investigation.