By Bill Cotterell
Tallahassee, Florida (Reuters) - The resignation of Florida's lieutenant governor, Jennifer Carroll, and the arrests of 57 people charged with money laundering and racketeering has sparked a stampede in the state legislature to shut down hundreds of "internet cafes," whose online gambling operations have been allowed to skirt the law for several years.
While they try to distance themselves from the storefront sweepstakes, political leaders are also trying to scrub their campaign-finance reports of any contributions from companies associated with Allied Veterans of the World, the non-profit operation at the center of a massive fraud investigation.
Carroll's public relations company worked with Allied Veterans when she was a House member in 2009-10. She resigned Tuesday after being questioned by the Florida Department of Law Enforcement, though she has not been charged.
Internet cafes sell phone cards or internet access that customers can use on-premises, often to gamble online, playing electronic slot machines or poker, among other games. Winnings and losses are recorded on an access card, which can be cashed out when a player leaves an establishment.
Many city and county governments, including sheriffs, have called them "storefront casinos," but pleas for statewide regulation have gone unheeded.
That changed on Wednesday when Republican leaders, including Senate President Don Gaetz and House Speaker Will Weatherford, rushed to add internet cafe bills to the top of committee agendas.
Law enforcement officials alleged that Allied Veterans earned about $300 million over a four-year period while it served as a front for illegal gambling. The Oklahoma-based organization spent around $2 million on political donations over the same period.
Police shuttered 49 cafes in the sweep of arrests on Tuesday.
Republican Senator John Thrasher has already proposed a bill that would have stopped licensing of any more internet cafes. It is set for a hearing on Monday in the Senate Gaming Committee and is expected to be amended before then to outlaw the cafes.
"Even the internet cafes that are operating with the best of intentions are operating within a gray area of the law," said Adam Putnam, commissioner of agriculture and consumer services. "That should be resolved and, given the widespread nature of the corruption, I think it's best for the state of Florida to err on the side of a total elimination."
After announcing Carroll's resignation Wednesday, Governor Rick Scott ordered a thorough inspection of his own campaign-finance records to see if he has received any contributions from companies associated with Allied Veterans. Such funds will be donated to charity, he said.
On Thursday, Republican Party of Florida Chairman Lenny Curry of Jacksonville took the same action.
"In light of recent developments, RPOF is examining financial contributions that may be connected to any entities affiliated with the investigation and we are reviewing the most appropriate options," he said.
At least nine lobbyists and legislative advisers withdrew from representing International Internet Technologies, an internet cafe company investigators said provided technology to Allied Veterans to run the online games.
Tallahassee public relations woman Sarah Bascom said IIT was part of the Coalition of Florida's Internet Cafes, which her firm represented. She said the internet cafe lobbying "team" felt misled by the company.
"We had no knowledge of any of this until Tuesday, when the media reports started coming out (about arrests), and we terminated our representation of them immediately," she said.
(Editing by David Adams)