California sweepstakes cafes reimagined as alt-currency pachinko parlors

shsmrock-social-gaming-mining-californiaCalifornia’s internet sweepstakes cafés are proving harder to kill than Freddy Kruger and/or Dan Bilzerian’s (alleged) sexually transmitted diseases.

Last year, the California legislature passed a law explicitly banning so-called sweepstakes cafés – essentially internet cafés in which users pay for time on computers offering games that mimic slot machines – which have proliferated in strip malls across the US. The American Gaming Association estimates that these cafés take in around $10b annually.

Sweepstakes owners challenged California’s law, claiming the outcomes of their games were predetermined and thus they were no different from lottery scratch tickets. In June, the California Supreme Court disagreed, ruling that since a sweepstakes user “causes the machine to operate, and then plays a game to learn the outcome, which is governed by chance, the user is playing a slot machine.”

Despite this ruling, California café owners aren’t going quietly. This week, Bakersfield’s CBS affiliate KBAK reported on one café operator that had reinvented itself as a ‘social gaming’ facility using its own proprietary ‘alt coin’ currency.

Customers wishing to use the computers at the Shamrock Social Gaming and Mining chain must first purchase so-called ‘Shamrock Coin’ from one of two ‘exchanges’ located off-premise. With these coins, customers purchase ‘cores’ which can be used to ‘mine’ on the computers for a designated amount of time.

This mining is used to release ‘blocks’ that contain varying values of Shamrock Coin, which are transferred into a player’s ‘paper wallet,’ the contents of which can be redeemed for fiat currency back at the exchange. This is basically the same system at play in Japan’s pachinko parlors, where the little silver balls won as prizes for playing the games can be exchanged for cold hard cash at the building next door.

While this ‘mining’ sounds like the most boring form of gambling ever invented, Shamrock players can choose to play social casino games on the computers while they’re mining, although these games have no effect on the speed with which mining occurs.

Shamrock attorneys insist that because players can see the value of each block before choosing whether to start mining it, the element of chance is eliminated. The Shamrock’s owners also point out that the computers aren’t connected to the internet, so technically, it’s no longer illegal online gambling, just, you know, illegal land-based gambling.

California law enforcement officials aren’t buying the legality of this pseudo-pachinko meets pseudo-Bitcoin hybrid. Kern County Deputy District Attorney Greg Pulskamp said sweeptsakes owners “can change the business model, but you’re not changing the underlying nature of what’s happening.”

Shamrock’s backers posted the video below in March, back when they apparently had grander, global plans for their ‘alt’ currency, or at least, that’s the mindset they wanted to project. The following month, Bakersfield police raided two Shamrock venues and seized a number of computers, but the operators refurbished the venues with fresh machines and reopened.

Shamrock’s owners may choose to play this game a little while longer, but they’ll eventually realize – just like Bryan Micon did – that the virtues of one’s technology don’t matter when one’s non-virtual ass resides within US borders and thus within the reach of US law enforcement.