Internet-Gambling Crackdown in Arizona Takes Out "Wi-Fi Cafes"

The strip-mall computer casino in Phoenix has no business name on its door. The most prominent sign on the glass storefront warns patrons not to loiter. Two heavy blankets hang from the ceiling just inside the front doors, blocking light and any view of the interior from the parking lot.

The business is similar to Internet gambling establishments that state gaming officials have busted lately in raids netting owners, managers, and sometimes even customers. But on Wednesday afternoon, more than 20 people sat at computers set up on folding tables, tapping their keyboards quietly, watching slot-machine-like numbers roll past and waiting impassively for a win. It's a dingy, almost gloomy place with bare furnishings and homemade signs on the wall such as "No sleeping."

A friendly middle-aged woman sits behind a glass window at a counter in the back of the small store running the place. No other manager is on duty. She signs up new customers, helps players sign on to the gambling sites, converts cash into electronic chips, and pays out winnings, if any. (New Times agreed to withhold the location of the business in order to chat with her and customers.)

The woman has heard of the recent raids but seems unconcerned as she signs up a patron for an account. "It's legal — or should be," she says.

Arizona gaming officials disagree: Last week, police and gaming officers stormed two Internet cafes in Phoenix, arresting 14 people as part of an ongoing enforcement effort.

Their mission: Stop people from doing what they could do legally at local Indian casinos, plus close neighborhood businesses they claim are magnets for other types of crime.

Various types of gambling have been part of the Arizona landscape since the days of Wyatt Earp and Tombstone's Oriental Saloon. But unlike in the 1800s, the state now has strict laws covering most games involving money. With a few exceptions, including social gambling and bingo for nonprofit organizations, no one can run gambling operations except for Native Americans at regulated casinos.

The latest crackdown follows state action against off-reservation poker rooms, which have some similarities to the Internet clubs.

In a 2012 article, New Times reported how many such businesses were thriving after enforcement actions by the state in the late 2000s. Mark Brnovich, then director of the Arizona Department of Gaming, launched a fresh crackdown after the article that resulted in most poker rooms getting shut down. He also went after illegal gaming operations at local Elks Clubs and American Legion halls.

Since Brnovich was elected state attorney general, Daniel Bergin, his successor, has continued to make unregulated gambling operations a priority. 

The most recent raids came after the January bust of three Phoenix businesses and the raid of the Netclix Internet Cafe in June.

In spite of those headline-making raids and recent, direct warnings from gaming officials, employees at two locations of the "Wi-Fi Cafe" continued to facilitate computer gambling for customers, court records state.

Phoenix police officers and ADG investigators served search warrants about noon on September 2 at the cafes' two locations, 4316 West Thomas Road and 3515 West Union Hills Drive. The businesses allegedly provided sweepstakes, slots, and casino-style games on computers used by patrons. Customers pay cash for credits to play the games, court records state. They're paid immediately if they win.

"The business benefits by receiving a percentage of the proceeds from the gaming portals provided, and profits from the customers' losses," records state. "The more customers spend and play, the more the business receives."

The raids netted three alleged operators of the alleged illegal businesses and 11 customers, including some who had outstanding arrest warrants. One was wanted in connection with an armed robbery, authorities said.

Among the average people busted on suspicion of "making bets or wagers" illegally was Yvonne Thomas,  51, playing slot-style games on a computer when cops barged in to the Thomas Road location. She told officers she'd been coming in a couple of times a week and had "won a couple dollars," records state. At the moment of the raid, she had $15 or $20 wagered. She also had pot in her purse. She said it wasn't hers, but authorities also submitted a felony marijuana-possession charge.

Signs around the cafes promoted gambling, authorities allege, stating: "Jackpots Daily."  

Two women, Brandi Meyers and Stormi Fuller, were accused of working for the Wi-Fi Cafe. Police said both stores have the same owners, but the owners weren't identified.

Fuller is a convicted identity thief just released from prison after serving seven months of a 10-month sentence. She was on duty August 7 "supervising and controlling the business" when gaming officers inspected the Union Hills location and  told her the Wi-Fi Cafe violated state gambling laws. When officers showed up at the Thomas Road location on August 20, Fuller was on-duty there, too, and was warned that she was breaking the law.

On August 27, an undercover officer at the Thomas Road Wi-Fi Cafe saw Fuller again acting as a manager. She took his cash and logged him into the system so he could gamble. Fuller was arrested at her house on September 2. Authorities are seeking numerous counts in connection with promoting and benefiting from gambling, possession of gambling devices, and possession of gambling records.

Meyers also was seen to be acting as a manager at the Thomas Road location when officers inspected it in August. On September 2, she was the only employee there, records state. She told the officers she'd just started the job and expected to be paid $8 an hour. Meyers had marijuana in her purse, and a background check revealed she was wanted on an outstanding felony warrant. She was arrested and accused of three felonies and three misdemeanors.

"The recent partnership between ADG and Phoenix police has led to seven different search warrants since July," the gaming department states. "Those operations have also led to the voluntary closure of at least eight other known illegal gambling locations and the eviction of two businesses by their landlords."

Typically, the state obtains a conviction in these types of cases and suspects usually end up sentenced to probation. But this doesn't mean the anti-gambling enforcement actions aren't controversial.

Poker activists Harold Lee and John Schnaubelt are among those who believe that Arizona law can be interpreted to allow poker rooms. Lee believes this even after he was convicted in 2012 for running poker rooms. 

Last year, accused poker room operator Mike Talerico complained in a New Times article that state officials were targeting businesses like his to protect Indian gaming. He was sentenced in January to one year of unsupervised probation, ordered to complete 50 hours of community service, and banned from owning another gambling-related business without written permission from the ADG. He claimed his business was more of a "hobby."

Internet cafe owner Scottsdale businessman Eric Stelljes, on the other hand, admits that he was trying to make money. But like Talerico, he claims he believed he'd discovered a niche to legally run a specific type of game.

He tells New Times this week that he "did a ton of research . . . to make sure I was well within the confines of the law" before opening up Internet cafes across Phoenix. But now he's facing a trial later this month on three felony counts related to the businesses, and a forfeiture proceeding by the state has him battling to keep money and property related to his ventures.

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Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.
Contact: Ray Stern