Video sweepstakes parlors will look for a way to stay open

A ban on Internet gaming parlors has companies finding alternative ways to still operate December 28, 2012 

Business Center Sweepstakes opened earlier this year in a strip mall on Rock Quarry Road in Southeast Raleigh.


— Two rows of 10 computer monitors line the walls of a sweepstakes parlor that shares strip mall space with a grocery store in this small eastern Wake town.

About 10 patrons sat at the monitors on a recent afternoon after they handed a clerk money, in multiples of $20, to play the electronic game.

Click, Purchase More Internet Time. Click, Reveal. Pears, doughnuts, strawberries and grapes twirled across the screens, slot-machine style.

An onscreen tally tracks how many points the players use or win, and the points translate into money.

This is one of the latest versions of electronic sweepstakes games that legislators have been trying to get rid of for more than six years. The video sweepstakes industry repeatedly restructured the games after laws in 2006 and 2008 tried to ban them. Hundreds of sweepstakes outlets operate throughout the state and pay business license fees to cities and towns.

A recent state Supreme Court decision upholding a 2010 ban on video sweepstakes may present the industry’s highest hurdle to staying legitimate. Barring a decision by the U.S. Supreme Court that puts the ban on hold, sweepstakes outlets soon will be hearing from law enforcement officials that the games are no longer allowed. But an attorney for one of the sweepstakes software companies that fought the ban said there’s still life in the sweepstakes business. Outlets that uncouple the electronic games from the sweepstakes will be able to stay open, said Michael Grace, an attorney representing the sweepstakes software company International Internet Technologies.

“We can continue to operate our businesses,” Grace said. “We can sell the Internet time. We can sell access to our computers. We can continue to offer promotional sweepstakes. We cannot use the fun and entertaining games in conjunction with the sweepstakes.”

IIT has more than 100 licensees in the state who employ about 1,100 people, Grace said. Rather than put those people out of work, the company wants to find a way to operate within the guidelines set out in the court decision, he said.

“What we’ve told people all along, the fun and entertaining games have nothing to do with the sweepstakes,” he said. “The sweepstakes can operate without it.”

If the companies keep trying to find ways around the law, Eddie Caldwell, executive director of the N.C. Sheriffs’ Associations, said he hopes that the legislature continues to pass laws banning new versions of the games.

But Caldwell interprets the industry lawyers’ request for a court stay as an indication that they can’t work around the ban to operate legally.

The Supreme Court “pretty much said, ‘What part of ‘no’ don’t you understand?’ ” Caldwell said. The association sent a notice to its members saying they may begin enforcing the ban on Jan. 3.

After years of operation, the sweepstakes businesses built loyal customers who don’t want to see them close.

Terry Belk of Charlotte said a ban on sweepstakes isn’t going to stop recreational gambling.

State resources would be better spent figuring out how to tax the sweepstakes parlors than shutting them down, he said.

Belk, 57, plays the sweepstakes occasionally and sees it as harmless diversion.

“It’s something fun to do,” he said. “I just think it should be people’s own choice if they want to go into a video parlor.”

Sweepstakes opponents see something different: people gambling away money they cannot afford to lose.

Rep. Frank McGuirt, a former Union County sheriff, made a name for himself by taking a sledgehammer to video poker machines in 2000.

McGuirt, a Democrat ending a term in the legislature, argued against legalizing and taxing sweepstakes when a legislative committee debated it this year.

McGuirt said that when he was sheriff, he saw children left in locked cars while their parents gambled away rent and grocery money.

Video sweepstakes are programmed to take money, he said.

“With the computer, you’re at the mercy of the program in the machine,” McGuirt said. “That’s why I call it video larceny.”

Bonner: 919-829-4821

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