Los Angeles Business Journal

L.A. Sues Software Firm Over Alleged Illegal Gambling

By Alfred Lee Thursday, January 2, 2014

Los Angeles City Attorney Mike Feuer filed suit Thursday against a computer software developer, accusing it of supplying Internet cafes in Los Angeles with illegal gambling programs.

The company, Figure 8 Technologies Inc. in Greenville, N.C., is one of the major developers of software used by Internet “sweepstakes” cafes across the country. The increasingly popular cafes claim to offer promotional sweepstakes, but have been accused of violating gambling laws.

In addition to Figure 8, the City Attorney’s suit also names owners of five Internet cafes in Los Angeles. Though they are no longer operating, the suit seeks to enjoin the owners from opening similar businesses.

The businesses have exploded across Los Angeles County, provoking strong reaction from law enforcement in the last year. The L.A. County Sheriff’s Department raided at least nine cafes in Carson, Compton and Lancaster last year, saying the computers are acting as slot machines. South Gate officials also announced investigations into three similar businesses.

The businesses offer computer use and copying and fax services. Customers who make a purchase typically earn points they can use to enter a sweepstakes offering cash prizes ranging from a few cents to thousands of dollars. They can get the results using an in-store computer that runs simulations resembling games such as a slot machine or poker hands.

Owners have argued they are compliant with state laws.

Previous Coverage:

Sweepstakes Not Such Safe a Bet?