Game over, law tells sweepstakes parlors

Staff WritersNovember 30, 2010 

  • Video sweepstakes parlors typically include computer terminals. Customers buy phone or Internet time. That purchase gives a buyer several credits or entries in the sweepstakes games.

    Customers choose what "game" to play, though most select a digital slot machine or video poker. The game is actually a flashy way of revealing whether the entries are winners. The outcome was determined before the customer started to play.

    Winning hands or spins can be cashed out for money.

  • 1937: North Carolina banned slot machines but did not anticipate the video poker machines that would crop up across the state as technology advanced.

    1999: South Carolina banned video poker machines.

    2000: North Carolina legislators, worried that machines from south of the border would be moved across state lines, enacted a law prohibiting new "video gaming machines." The law allowed those already in operation to remain.

    2006: The General Assembly banned all gaming machines, prompting litigation from several machine manufacturers that successfully argued that their products were neither slot machines nor video gaming machines.

    2008 : Legislators tried again, and the General Assembly enacted a law that banned certain "server-based electronic game promotions."

    2010: After gaming companies again were successful in several court challenges, the General Assembly addressed the issue again in July with a new law that makes it illegal for "any person to operate ... an electronic machine or device to ... [c]onduct a sweepstakes through the use of an entertaining display."

— State lawmakers promise that a law taking effect Wednesday will once and for all shut down the Internet sweepstakes parlors that have sprouted across North Carolina in recent years.

But some video gaming parlors say they plan to keep operating, with owners altering the games to comply with the law.

"The software companies are making adjustments right now," said Chase Brooks, a parlor owner and spokesman for the N.C. Internet Sweepstakes Organization. "We will do due diligence to make sure we meet the letter of the law."

Even law enforcement officials don't seem clear on whether the sweepstakes ban will take effect as scheduled.

The law, passed in July, was intended to end the years-long cat-and-mouse game between game operators and law enforcement. State legislators narrowly wrote the sweepstakes ban so that it would outlaw video poker and slot machines but continue to permit other marketing sweepstakes, such as scratch-off game pieces offered by fast-food restaurants and grocery stores.

"The North Carolina legislature has been clear as a bell that we don't want these casinos," said state Sen. Josh Stein, a Wake County Democrat who helped lead the fight for the bill's passage. "Sweepstakes casinos are a real blight in North Carolina. They take money from people when they are at their most desperate."

Stein said the law allows no wiggle room for sweepstakes parlors to operate. But Brooks disagreed, saying he is confident that new software can quickly be installed in machines to make them legal again.

"The industry may be down for a few days," he conceded, adding that an outright ban would put an estimated 5,800 people across the state out of work.

The latest plays in court

In recent weeks, gaming companies and their lawyers have made challenges in local courts, and state Attorney General Roy Cooper has fought their efforts.

On Monday in Wake County Superior Court, Judge Paul Ridgeway ruled for the state and dismissed a complaint brought in March 2009 by Sandhills Amusements and nine other companies. The companies argued that an earlier version of the law blocked their right to engage in business in North Carolina and that the machines are not illegal gambling, lottery or gaming products.

In June 2009, Ridgeway granted a preliminary injunction that favored the gaming companies. But then in July 2010, both houses of the General Assembly overwhelmingly approved the new ban.

This month, as the 2009 complaint wound its way through Wake Superior Court again, the attorney general filed court documents asking for the case to be dismissed, citing the new law as grounds for the request.

Ridgeway's dismissal of that case Monday came on the heels of a hearing earlier this month in Guilford County Superior Court on a challenge brought by Hest Technologies and Internet International Technologies.

In an ambiguous ruling in that case, Judge John Craig III said video-game sweepstakes are protected free speech, but that the state has the right to limit games that mimic gambling.

The Guilford ruling has added to the uncertainty about whether the machines will be unplugged Wednesday.

"Attorney General Roy Cooper has long pushed for a ban on video poker and sweepstakes, and attorneys with his office have argued in court for years to allow local law officers to enforce the ban," spokeswoman Noelle Talley said in a prepared statement Monday. "Attorneys will carefully review the most recent court rulings to determine what the next step will be."

Wake County Sheriff Donnie Harrison said he is awaiting word from Cooper's office on how to proceed. If the ban does go into effect Wednesday, Harrison said his deputies will not be out patrolling for scofflaws.

"We don't have enough people to do that," the sheriff said. "I expect we'll get calls about places."

Switching them off

Not all machine operators are fighting the ban.

"There's no reward in trying to leave these things on," said Joe Hatch, who owns Woody's Taverns in Raleigh and Cary. Today will be the machines' last day in operation in his businesses.

Hatch, who has three sweepstakes machines, compared them to pinball andvideogames. "It's another form of entertainment for the customer to use."

Erica DeGusipe, a player and an employee of B&G Sweepstakes on New Bern Avenue in Raleigh, agreed. She equated the $20 she plays each week - she emphasized that she never wins - to the money she might spend in a tanning salon.

"It's relaxing," DeGusipe said. "People can spend their money however they want to."

Even so, B&G's owner, Dale Batise, planned to close the business tonight.

But he left open the possibility that new, legal software could convince him to reopen.

matt.ehlers@newsobserver.com or 919-829-4889

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