A Clayton town councilman says he wants proof a sweepstakes parlor will use legal software before he gives the would-be business his blessing.
On Tuesday, Councilman Michael Grannis and the rest of the Clayton Town Council will consider whether to allow RNC Entertainment to open on U.S. 70 Business West.
North Carolina bans sweepstakes games that use entertaining displays to reveal prizes. But Tony Ro, a Raleigh man helping to launch the Clayton parlor, says the store will use only “pre-reveal” software that he says is in “full compliance” with state law.
RNC Entertainment needs a special-use permit to open in the Walmart shopping center on Town Centre Boulevard. The council must decide if the business meets specific requirements in the town’s ordinances, which include making sure the sweepstakes parlor won’t harm or endanger citizens.
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At the Town Council’s work session earlier this month, Grannis said he wanted testimony from the applicant that the business will use legal software.
“The concern I have is a couple of things, and one is the nature of the business itself, with respect to the safety and well-being of our citizens,” Grannis said.
The General Assembly outlawed sweepstakes parlors four years ago, and the N.C. Supreme Court upheld that ban in 2012. But many parlors have continued to keep their doors open, arguing that they have tweaked their gaming software to comply with state law.
Multiple law enforcement agencies have criminally charged sweepstakes operators across the state. However, different court rulings have created an uncertain legal environment.
“The 2010 ban on sweepstakes operations has been upheld and validated, but the ‘on the ground’ enforcement of the law remains inconsistent,” according to a memo by Clayton’s town attorneys at Parker Poe in Raleigh. “As a result, local governments and law enforcement agencies will have to continue to make independent and individual determinations as to what enforcement actions to take, if any, and wait for further clarity from the courts and official guidance from the N.C. Attorney General’s Office.”
Attorney General Roy Cooper has said the state ban makes no exception for “pre-reveal” software, which parlor owners say reveals a player’s prize before he plays a game. In a legal brief filed in June, Cooper said “pre-reveal” is a made-up word that state statutes have not defined.
“However, defendants cleave to the term ‘pre-reveal’ at the trial court ... as if it were holy writ,” Cooper said in the brief, filed after an Edgecombe County court found two sweepstakes operators guilty of violating the state ban. “Defendants’ argument seems to state that the effect of a ‘pre-reveal’ can overturn statutes and trump language in statutes that actually does have both legal and plain meaning.”
When asked about RNC Entertainment’s claim that “pre-reveal” software was legal, Cooper’s spokeswoman, Noelle Talley, said, “We don’t know of any state entity that would approve such software.”
But one lower-level court, in Catawba County, found a sweepstakes operator not guilty of violating the state ban because the parlor was using pre-reveal software. In addition, other sweepstakes operators have sued local governments that seek to enforce the ban.
“Things are still sufficiently cloudy that if you do that, litigation will be brought against you,” Clayton Town Manager Steve Biggs said on Aug. 19.
The proposed sweepstakes parlor plans to have 80 gaming machines inside the 5,664-square-foot storefront. Based on Clayton’s privilege-license fee schedule – a flat $2,500, plus $350 per machine – the town would be able to collect about $30,500 from the parlor.
The Clayton Planning Board recently voted 8-1 to recommend that the Town Council approve the special-use permit. Dissenting board member Tim Lee said the business has nothing to offer the town.