N.C. lawmakers consider ban of online sweepstakes parlors

By Mark Binker  | (Greensboro) News & Record

RALEIGH, N.C. 

Wilson Mayor Bruce Rose has seen video sweepstakes machines popping up in the center of his town and isn’t pleased.

“We’ve had a lot of people complain about them,” he said. “It’s a form of gambling.”

Depending on which judge, sheriff, mayor or lawmaker you ask, Rose may get an argument on that last point. Video sweepstakes have thrived under their neither-fish-nor-fowl status under state law.

The General Assembly has twice in the past decade voted to outlaw video poker in North Carolina, responding to complaints from law enforcement and a scandal that toppled a top legislative leader. However, a new breed of games that looks and feels much like video slot machines skirts the ban by using a sweepstakes system that connects to a remote server.

Over the past two years, legislators’ efforts to write a law banning the games — without doing away with contests offered by soda bottlers and fast food restaurants — have been stymied. Sheriffs who try to crack down on what they see as unlicensed gambling have been told by the courts to stop arresting operators.

About the only clear things about the status of video gaming in North Carolina are that it occupies a legal gray area and it is spreading.

In the absence of clear action by the General Assembly, towns such as Wilson are taking matters into their own hands.

Rose said his town of 50,000 is following the lead of other small cities and considering zoning regulations that could restrict sweepstakes machines to certain areas of town.

Other local governments are looking at potential revenue from the games. Officials with the city of Greensboro said last week they are examining imposing a business license on operators of the games as a way to raise revenue.

“We want to pay taxes and be upfront,” said William Thevaos, owner of Owl Music Co. in Charlotte and president of the Entertainment Group of North Carolina, an organization pushing lawmakers to legalize and tax what they call video lottery terminals.

Thevaos said he has stayed out of the sweepstakes business, which is not true for all of his association’s members who have to compete with out-of-state operators. Companies like his that sell or rent amusements such as jukeboxes and pool tables lose customers when they can’t also offer the quasi-gambling machines, he said.

The amusement association says North Carolina could reap $480 million in tax revenue by sanctioning and taxing a video lottery system while also clearing up legal questions. Thevaos said he hopes the potential revenue will entice lawmakers to take a second look at the machines.

“Some of the counties are looking at taxing it,” said Rep. Earl Jones, a Greensboro Democrat who has pushed for full legalization and taxation of the industry.

He said it’s no surprise towns and counties are stepping in to regulate and maybe tax the businesses if the state won’t.

“That means they’re more wise and practical than the state leadership,” Jones said.

Although he has picked up support for his bill from SEANC, the state employees union, and the N.C. Legislative Black Caucus, a group of African American lawmakers, others at the General Assembly have steadfastly opposed bringing the machines back.

“There may or may not be a court decision between now and the legislative session,” said House Speaker Joe Hackney, a Chatham County Democrat.

One Wake County case deals with whether the state can ban video poker while simultaneously allowing the Cherokees to operate a casino on their reservation. A case in Guilford County court deals more specifically with the nature of sweepstakes machines.

Hackney said in the absence of court action, there are members working on changes to state law that would clarify and expand the state’s ban.

Hackney said he doesn’t “detect much enthusiasm” for legalizing the games.

On the Senate side, leaders have been more reticent than House Democrats to take up the issue. Senate Majority Leader Martin Nesbitt of Asheville said that Senate Democrats had not come to a consensus on the issue but that he opposes the machines.

“I would like to take another swing at prohibiting them,” Nesbitt said.

He bases that in part on feedback from sheriffs in western North Carolina, who have told him the games are creating disturbances and siphoning money from those who can least afford it.

Guilford County Sheriff BJ Barnes said he’s not received such reports.

“It’s not a big problem here,” he said.

Although other sheriffs have tried to arrest video sweepstakes operators, Barnes said he hasn’t because he believes they’re operating legally.

“If the law’s unclear, it needs to be straightened out,” he said. “That’s what the General Assembly and the courts are for.”

Other state leaders also say they are opposed.

“I don’t like video poker; I think it’s bad for North Carolina,” said Gov. Bev Perdue, a Democrat.

“I hope we don’t restart this troubled thing that caused so much pain.”

A spokeswoman for Attorney General Roy Cooper said he supports the video poker ban and is fighting in court to back law enforcement where cases have been brought across the state.