Like other Johnston towns that opened their doors to Internet sweepstakes parlor, Smithfield will lose money now that the parlors have closed under the threat of legal action.
But Smithfield long ago started low-balling revenue from the parlors, figuring they were destined to close their doors eventually.
“I hate to lose the revenue; don’t get me wrong,” said Town Manager Paul Sabiston. “But it wasn’t budgeted revenue.”
For fiscal 2012-2013, for example, Smithfield budgeted just $11,000 in privilege-license receipts. Instead, the town took in about $30,000, which came as a pleasant revenue surprise. Sabiston had done the same since the General Assembly banned sweepstakes parlors.
“We exceeded budget revenue over the last several years, which is a good thing,” the town manager said.
Now, revenue from sweepstakes parlors has dried up, done in by District Attorney Susan Doyle’s threat to pursue criminal charges against parlors that didn’t close their doors by Nov. 1. But even if parlor operators had defied the DA, the money was destined to go away next year; the General Assembly is doing away the privilege license that towns have long required businesses to obtain – and pay – annually.
State lawmakers banned sweepstakes parlors in 2010, but many stayed open, arguing that they had tweaked their machines’ software to comply with North Carolina’s gambling laws.
One of those parlors was 7Up Internet Cafe on Smithfield’s South Bright Leaf Boulevard, where owner Phillip Nguyen said his machines ran on a “pre-reveal” system, which allowed users to see their winnings before they played.
With this tweak, Nguyen thought his machines were within the letter of North Carolina law. But he wasn’t about to defy the DA’s order, so Nguyen made plans to close his parlor Oct. 31.
“Closing is the only thing that’s going to work,” he said.
When the General Assembly decided to do away with the privilege license, many larger cities and towns cried foul, noting that change would rob them of hundreds of thousand of dollars. Smithfield, in contrast, will lose about $75,000.
“Fortunately, the lost privilege-license tax is not a tremendous hit to the town,” finance director Greg Siler said in an email. “While the town may consider other revenue sources at our disposal, we have historically looked for ways to cut expenditures.”
Sabiston said he started looking for ways to wean Smithfield off the privilege license he heard it was going away.
“We’re going to look at our fees – planning, zoning, user fees,” he said. “We do that every year, but we will have to look at them really hard this year."