New Zoning Issues: Internet Cafés, Pain Management Clinics, And Hookah Bars

By

Brandon L. Bowen

JENKINS & BOWEN, P.C.

bbowen@ga-lawyers.pro

15 South Public Square
Cartersville, Georgia  30120
(770) 387-1373

I.         INTERNET CAFÉS.

“Our Constitution prohibits gambling, Art. I, Sec. II, Par. VIII(a), and our statutes outlaw illegal gambling devices. OCGA § 16-12-20 et seq. The Legislature, however, has chosen to exclude from these constitutional and statutory bans certain poorly-defined games and deem them ‘bona fide amusement’ games that are legal to play notwithstanding the questionable amusement value of the games, the low level of skill required to play them and the players’ potential to amass multiple ‘rewards’ each worth $5 for very little consideration. However, ‘the courts are not permitted to concern themselves with the wisdom of an act …’”1

What is an internet café?

The internet café is a business model that attempts to lure customers in to play casino-type games on banks of computers installed at the facility.  Customers buy certain types of products such as cell-phone minutes or computer access time, and when that purchase is made, the store gives the customer a certain amount of access or plays on the computer games.  The games themselves are generally no-skill computer programs that are programmed to pay out at a certain ratio.  The customer can then turn in winnings for cash, merchandise or more plays.

Isn’t that gambling?

Whether or not the internet café is a form of gambling that is prohibited by law is a matter of legal interpretation.  While it is true that Georgia law generally bans gambling, there are a number of loopholes that exist to make a certain activity lawful.  For example, there are statutory loopholes that allow for games like skee-ball and the stuffed-animal claw game.  The internet café seeks to claim the protection of a statutory loophole for promotional sweepstakes.  This exemption was notably used by McDonalds for its Monopoly sweepstakes.  The internet café operator’s position would be that he is selling legitimate products (copies, cell-phone minutes, etc.) and the game plays are just a promotional sweepstakes to drum up business and reward loyal customers.  Any award made pursuant to a successful sweepstakes play would therefore be lawful.  At this point, no Georgia appellate court has ruled as to whether internet cafés can legally operate within the sweepstakes exception, but courts in other states applying similar statutory language have found that the internet café may be lawful.

What problems do internet cafés cause?

Some believe that the ills normally associated with casinos and gambling are likely to result from internet cafés as well.  These negative effects may include as an immediate result increased crime and criminal elements within the community.  This is especially noteworthy because the internet café will typically locate in a general commercial area, commonly in a shopping center, rather than in a district that is dedicated to similar uses.  This means the internet café may bring a criminal element to an area that was not otherwise exposed to it.  Additionally, internet cafés may have a long-term effect through gambling addiction.

Why hasn’t the General Assembly addressed this?

Technically speaking, it has, in a 2011 bill, but the Governor vetoed the bill.  It was anticipated that a revised bill would be submitted at special session, but that did not happen.  It is not clear whether the matter will be addressed in the 2012 legislative session.  HB 462 seeks to address the related issues of coin-operated amusement devices, which are addressed below in the section:  What About Coin-Operated Devices?

What can the local government do?

1.         Moratorium.

Your first notice that an internet café wishes to open in your community may be a business license or occupational tax application for a copy center.  Only when the business opens up do you learn that rather than selling copies or cell-phone minutes, the principal business purpose is to allow the customer to play computer games for money.  Zoning ordinances commonly do not address internet cafés directly, so if they are legal at all, they may be permitted as a general commercial use.   Therefore, your jurisdiction may wish to adopt a moratorium that prevents the creation of internet cafés until such time as the zoning ordinance can be amended to regulate the internet café.

2.         To ban or to regulate?

The next issue for the local government to decide is whether to ban the internet café or to permit it as a matter of right or by special use permit.  Jurisdictions in other states have taken the position that internet cafés can be a profit center, but it is questionable whether that would be appropriate in Georgia because of Georgia’s prohibition on fees that aren’t closely related to the cost of providing the service.  Therefore, the decision of how to regulate the internet café should be guided by whether the local government believes the use is appropriate for the community and, if so, what limitations are reasonable to mitigate any negative effects of the business.

If the local government decides to allow the use, then it should consider which district the use would be appropriate in, and whether that should be by matter of right or through special use approval.  The latter may be particularly useful in keeping the use away from residential areas, churches and schools, in order to shield those areas from the potential negative effects.  Conversely, the local government may wish to make sure that the internet café is separated from bars and adult uses to prevent them from having cumulative negative effects.

In either case, if the internet café is going to be allowed, the local government may wish to regulate a variety of aspects of the operation in order to minimize negative effects, including:

- the hours of operation,

- the number of computers on site,

- whether alcohol sales or consumption is allowed on premises,

- age of customers, and

- criminal history of employees.

It is important to remember that while internet cafés are arguably legal as a result of loopholes in the State’s gaming laws, they still are a use that may be regulated and prohibited like almost any other under the zoning power.

What about coin-operated devices?

Coin-operated devices are a different way that the gaming industry seeks to use loopholes to allow for wagering money while avoiding being an unlawful gambling activity.  As discussed above, there are statutory loopholes that are created to allow for the traditional arcade-type game, such as skee-ball.  That particular statutory loophole for coin-operated amusement devices allows for the payout of tickets and vouchers, so long as it does not exceed $5.00 per game.  Gaming device makers have sought to take advantage of that loophole by providing that players can roll over their winnings, and pay out no more than $5.00 per game.  For example, suppose a game costs $1.00 to play, and the player wins $100.00 in the game.  He can choose to pay out tickets worth $5.00, and play again.  Thus, he now has $5.00 in hand and $94.00 on the computer.  If he loses the next game, it still pays out $5.00, and he can play again, now with $10.00 in hand and $88.00 on the computer.  Thus, over a period of time, the player can pay out far more than $5.00, even when losing some of the games.

The legislature is somewhat addressing this issue currently with HB 462; however, at this point, it appears that proposed amendment only limits the total number of such devices to 9, and does not apply that restriction to “amusement and recreation establishments,” which is an undefined term.

So far this appears to be an issue vexing local law enforcement more than local government planning staff.  However, if these devices are felt to be a problem, the local government could resolve the problem by banning or regulating these devices in a way that is more restrictive than, and without the loopholes provided by, state law.

II.       PAIN MANAGEMENT CLINICS.

“An analysis of autopsies performed by the GBI Medical Examiner’s Office in 152 counties which drug overdose was the cause of death or a significant contributing factor in the death found there was a 10% increase in the number of prescription overdose deaths in 2010 compared to 2009.  Of the 729 drug overdose deaths in 2010, there were 560 deaths which involved only prescription drugs.   The analysis also showed that 101 drug overdose deaths in 2010 involved only illicit drugs and sixty-eight (68) deaths were attributed to a combination of both prescription and illicit drugs”.2

The above-quoted language indicates that Georgia has seen a substantial increase in the amount of drug overdose fatalities related directly and solely to legal prescription drugs.  It is believed that a reason for this is that Georgia has become a pill mill island in the Southeast because it was slow to develop a prescription drug monitoring program (PMP).  Other states in our region developed programs that require prescriptions to be registered with the state electronically in order to avoid individuals filling multiple prescriptions without their doctor’s knowledge.  As a result, it is much easier for drug addicts to acquire drugs in Georgia, and for nefarious prescription drug dealers to operate in the guise of a legitimate pain management clinic.  Georgia has since adopted a PMP law (SB 36), but the monitoring program is not scheduled to go into effect until 2013 at the earliest.

This has created an incentive for drug dealers to operate in Georgia, and for drug addicts throughout the Southeast to come to Georgia to obtain prescription narcotics.  Investigations have found that the typical pill mill operator is a business that hides the identity of its owners and officers.  It hires a doctor to write prescriptions, sometimes after only a cursory meeting with the patient, and then fills the prescription in house.   These are frequently cash-only transactions.  Investigations have shown that patients are known to car-pool from out of state to the pill mill, with each patient paying cash for a short appointment and a filled prescription.

What can local governments do?

At first blush the pill mill would seem to be a difficult use to regulate, because they hold themselves out as legitimate medical care providers.  However, the local government can effectively regulate the pill mill by preventing the practices that allow the pill mill to thrive.  For example, the local government may subject pain management clinics to tighter regulations than regular doctor’s practices.  The pain management clinic can be defined to include only medical practices that devote a substantial amount of their business to treating pain issues through medication.  Then, pain management clinics can be subjected to regulation that would be unobtrusive to bona fide clinics, but which would be very unappealing to illegitimate enterprises.  Such restrictions should first and foremost require identification of the owners and operators of the facility, the doctor in charge of seeing patients and writing prescriptions, and the DEA registration.  Then, the local government may ban cash-only transactions and require that the prescription not be filled at the clinic, but instead at a bona fide pharmacy that is unrelated to the pain management clinic.  The local government can also restrict the hours of operation.  In these ways, the local government can eliminate the practices and conditions that make the operation of a pill mill attractive and feasible.

III.      HOOKAH BARS

Hook Bars

A hookah bar is similar to a traditional bar serving alcohol, with the fundamental difference that rather than selling alcohol, the hookah bar sells flavored tobacco that is then smoked in hookahs.  The hookah is a water pipe of Middle Eastern origin traditionally used to smoke opium, cannabis, tobacco and datura, or combinations thereof, particularly in the Middle East and India.  All but tobacco is now illegal of course, and so the current practice focuses on tobacco mixed with flavorings like fruit.  The main negative of hookah bars appears to be that of tobacco use in a bar setting:  exposure to nicotine with its recognized health effects.  Confronted with a hookah bar, the local government would likely treat it as any other bar, although it may or may not sell alcohol and so may not be subject to the regulations that are specific to alcohol sales licenses.  Obviously, the hookah bar would be subject to the state smoking law3 and any additional smoking ordinance that the local government might have.  Under state law, smoking is allowed in retail tobacco establishments and in bars and restaurants that do not allow admittance to anyone under the age of 18.


1 Ultra Telecom, Inc. v. State, 288 Ga. 65 (2010).

2 This quotation comes from a GBI press release dated July 21, 2011, and entitled, “Deaths related to Prescription Drug Overdoses Continue to Rise.”

3 O.C.G.A. §31-12A-1 et seq.