Sweepstakes parlors will be banned in North Carolina in December, thanks to a law signed last week, but new fronts are opening in the battle to keep people playing electronic poker and slots.
Even before the state House and Senate finished work on a bill to ban the games, the industry was threatening a wave of lawsuits and technical changes that they said would keep them legal. And the day after Gov. Bev Perdue signed the ban into law, she gave parlor owners and operators reason to think they could get back in the political fight.
"I think if you have video sweepstakes, whether it is video poker or video machines in general, we really do need to have some kind of concerted, organized, unified system of regulation where they are under a standard set of rules and regulations where we can be sure that nobody is profiteering from it," Perdue told reporters last week.
The industry sees hope and a new battleground in Perdue's words.
"We found the governor's comments to be encouraging," said Brad Crone, a consultant for the Entertainment Group of North Carolina, an association of amusement vendors who have pushed for legalization of video poker. "The Entertainment Group stands ready to sit down and look at how you can regulate the industry and provide a revenue stream."
The industry has argued that legalized poker could generate $500 million in tax revenue for the state.
Parlor owners have already started the technological race to beat the effective date of the ban, Dec.1, by reinventing the games to keep a form of them running without running afoul of the new law. Owners have proven adept at this strategy: Sweepstakes games themselves were created to keep the industry going despite a ban on video poker.
The current ban was narrowly written to avoid also outlawing other marketing sweepstakes such as those offered by fast food restaurants or soda companies. Crone said parlor owners are looking for ways to rewrite software or the business model so that some form of sweepstakes can continue.
Will the games stop?
The games are a marketing prize awarded to customers who are technically buying Internet access or phone cards. The outcome of each hand of poker or spin of the slots is predetermined, much in the same way fast-food marketing game pieces are either winners or losers when they're handed to a customer.
Legislators who supported the ban said the games were a thinly veiled version of illegal gambling and made a point of stressing that one way or another, the games would stop.
"The Senate vote was 47-1. The House vote was 86-27," said Rep. Ray Rapp, a Mars Hill Democrat. "If this industry insists on challenging the will of the General Assembly, my sense is as long as there are enough of us down there, we will continue to stand up to the challenge."
Chrissy Pearson, a spokeswoman for Perdue, stressed that the governor isn't leading a charge for legalization.
"The governor is very much aware of the concerns in the community about the unregulated video poker," Pearson said. "And she's also very aware that these dealers have at least twice before circumvented legal blocks, and she believes strongly that they will do so again and again.
"So her motivation for considering an alternate way of dealing with this industry and regulating it is that you can either face a state full of unregulated, black market, under-the-radar shady industries, or you can bring them out into the sunshine."
As poker operators have tried to make clear, the games could be gold for the state. Conservative estimates suggest the industry could generate $500 million a year in new tax revenue, even assuming that parlor owners are still allowed to take a piece of the profits.
Next year, North Carolina is pro jecting a budget shortfall of more than $3 billion, one of only four states bracing for a gap of more than $1 billion.
Legislative foes confident
Opponents of the poker industry say no amount of revenue would justify getting into the business.
"Do we want to live in a state where a child's education and our health-service programs are based on whether we can convince people to walk into a video poker parlor?" said Chris Fitzsimon, director of N.C. Public Policy Watch, a left-leaning think tank.
Fitzsimon, like other opponents of sweepstakes or poker, says the industry preys on the poor and those who are addicted to gambling. The industry says it is offering a fun way to relax and that most customers play $10 or $20 at a time and get an evening's worth of entertainment in return.
The ban's supporters say they see too many parlors popping up all over the state.
"We made it clear that we did not feel that in any way that we could see any benefit," said Senate Leader Marc Basnight, a Manteo Democrat.
State-run or private?
Parlor owners hope to persuade Perdue and lawmakers to legalize the games, but they also want to keep a slice of the profits for themselves rather than hand the operation over to the state.
"The lottery has been a model that has worked well with few incidents," Pearson said. "And it may be a model that is worth considering."
Crone said parlor operators already have the experience, expertise and infrastructure in place to run a legalized poker industry. And private owners could create more jobs than the private sector, he said.
The legislature isn't expected to return until January. Before then, every seat in the legislature will be on the ballot in the fall.
Perdue isn't up for re-election this year. But there's plenty of time for poker interests, who have previously put their money where their support is, to try to get her attention.
"There's no doubt that there have been owners and operators in the video gaming business that make political contributions," Crone said. "Whether or not there is interest in supporting Gov. Perdue, that's still a big question mark."
