> Raided and Closed!
- INTRODUCTION: TOP 6 SWEEPSTAKES DANGERS
- >> RAIDED and closed by law enforcement > YOU ARE HERE <
- Forced OUT OF BUSINESS due to low revenue
- Taken advantage of with BOGUS STARTUP COSTS
- Overwhelmed by TECHNICAL PROBLEMS, complex systems, & no support
- SWINDLED by smooth-talking sweepstakes salesmen
- Robbed by employees due to POOR REPORTING and control
- CONCLUSION: Thriving in a dangerous world
Let’s start with the most terrifying of all potential risks an Internet cafe owner could encounter: getting RAIDED BY LAW ENFORCEMENT because they believe the business is illegal gambling. Let’s start by pointing out that this scenario is the “shark attack” in the industry. It’s extremely rare but when it happens everyone from coast to coast hears about it. Like a shark attack, getting raided is truly frightening. It frequently involves a swat-team style group rushing into the business screaming and scaring everyone half to death. Visions of yellow “CRIME SCENE” tape sprawled across the front of the store, people in handcuffs, interrogation, computers getting seized “as evidence”… To a reporter this is great stuff–almost as good as getting a picture of a shark fin and a disembodied leg as it washes up on the shore.
What we generally don’t read about in the papers is the ongoing months (or years) of trials that follow and that sometimes the Internet cafes are allowed to reopen. In some cases there is a countersuit against the jurisdiction that closed the business, and sometimes that countersuit succeeds. Do we read articles about this happening? Of course not. Nobody cares when the fisherman catches a shark, but it’s front page news when the shark catches the fisherman!
So we’re all in agreement that getting raided is horrific. Nobody wants this to happen and everyone is rightfully afraid of it. Raids DO HAPPEN and nobody should ever ignore this very real threat. The notion is not to be taken lightly and should not be dismissed without due diligence. As a matter of fact, you can easily discern a slick willie salesman in the Internet cafe / sweepstakes industry because they’ll be the ones “personally guaranteeing” that you will never have any troubles or questions from law enforcement. We have even seen some websites or online advertisements that specify “LEGAL in California!” or “LEGAL in Florida!” … Only newcomers to the industry would swallow that line.
No sweepstakes software is beyond challenge in any and all jurisdictions. Some cities or counties will ALWAYS aggressively go after anything that looks like an Internet cafe. Nobody can ever guarantee otherwise and the more they do the less you should trust them. BEWARE the salesman who tries to get you to leap before you look, especially if “leaping” involves writing them a check! Keep in mind that MOST jurisdictions across the US are perfectly fine with sweepstakes. We’re not trying to scare you here any more than you should be afraid of a shark attack. We simply want to point out that it is a possibility that must be considered.
Another key point to help avoid raids and legal problems is to NEVER use a sweepstakes software that has not been lab tested and CERTIFIED to be a legitimate sweepstakes. It’s easy to make slot machine software which doesn’t adhere to many strict rules. But it’s very difficult and expensive to create sweepstakes software that adheres with strict rules and guidelines of sweepstakes. The only way to be sure that sweepstakes software is truly sweepstakes and not a slot machine is to insist on software that has been reviewed and certified by an independent, 3rd party testing lab.
Furthermore, experience has shown that in many jurisdictions donating to a charity instead of purchasing a product has proven to be a Pandora’s box. More than half of the sweepstakes software companies that have been forced to close nationally by law enforcement have come under attack for professing to donate to a charity–then botching it somehow. We’re all in favor of helping charitable organizations, but in our experience wrapping your sweepstakes into a charity is DANGEROUS.
Another product that has resulted in more than its fair share of problems is tying the sale of phone time to your sweepstakes. Selling phone cards and long-distance phone time has been a problem because it requires charging sales tax. On the other hand, selling Internet access and the use of a computer generally does not require charging sales tax. Jurisdictions may vary on this point; if you have questions feel free to contact us and we can go into more detail.
Finally, be cautious about who you choose as a sweepstakes software partner. Can you reach the company when you call, or does it seem like you’re only talking to one traveling sales guy who never has time for you? It is critical that you understand the “ins and outs” of sweepstakes promotions. If the person you call to talk about the business model isn’t professional and well educated about sweepstakes, it could be foolish to partner with that sweepstakes software. Pay attention, be alert, and stay out of trouble.
At SweepsCoach we never profess to give legal advice. We can tell you what we see in the industry and what we know about the area where you’re considering opening an Internet cafe. BEWARE of any salesmen who are not attorneys but start giving you legal advice. Often the reason raids occur is because people are foolish about where they open an Internet cafe, how they run the business, and how they promote it. Keep in mind that there is no such thing as a “sweepstakes business“. There are Internet cafes (and other businesses) that PROMOTE their products with sweepstakes. Selling sweepstakes entries is, by definition, GAMBLING. Misunderstanding this concept is one of the single biggest mistakes you can make. The second biggest mistake you can make is to listen to an overzealous sales rep who, hungry for a sale, encourages you to swim in shark-infested waters.