Stalled Sweepstakes Regulation Bill (HB-547) Would Clear All Confusion

..HB-547 Would Regulate and Tax Lucrative Sweepstakes Industry in North Carolina..

Rockingham County, N.C. – On the Rockingham County line there’s something that you don’t always see in North Carolina anymore:  Internet sweepstakes cafes.

NC547It’s hard to find a parking spot at Village Business Center on N.C. 87. Customers come from miles around to try their luck at online games that could pay a little, a lot, or nothing at all. The sweepstakes centers front door is a 2-mile drive from the Alamance County line.

A state law was thought to have put all Internet sweepstakes businesses out of business when the district attorneys were given the OK by N.C. Attorney General Roy Cooper to enforce it in early 2013. But the businesses are opening up again in various parts of the state where district attorneys and judges have found that new software called “pre reveal” apparently  makes the games legal.

At Village Business Center, the machines run on a “pre-reveal” system. With the click of a mouse, players can see their winnings before they play,  The argument that makes this game legal is that “it doesn’t violate the NC law the way it is written” says Casey Rooks, a spokesperson for Banbuster Games in Dallas, Texas.Pre-Reveal-Gold

Don Bullis, owner of Village Business Center, says he runs his business by the letter of the law. He previously ran the Village Marketplace Sweepstakes in Haw River before the law went into effect. Rockingham County officials checked Village Business Center out before it opened in August and gave him the go-ahead. Bullis paid for a privilege license and taxes on the machines.

Rockingham County District Attorney Phil Berger Jr. didn’t return calls this week seeking comment on his stance on the sweepstakes law and the legality of pre-reveal software.

Rockingham County Sheriff’s Office spokesman Kevin Southern said Berger’s office determined that pre-reveal software doesn’t violate the law, based on that determination the sheriff’s department is following that advice “What we’re told is, as long as it’s in compliance with pre-reveal, it doesn’t violate the law,” Southern said.chalk

But sweepstakes businesses remain illegal here, Alamance County District Attorney Pat Nadolski said Friday.

“Alamance County law enforcement and the DA’s office are united on this front,” Nadolski said. “At the end of the day, I have a constitutional requirement to enforce the law as it’s written by the legislature. I don’t get to pick and choose.”

Nadolski wouldn’t comment on what other district attorneys are doing.

What makes pre-reveal different ?

Casey Rooks explains “simply, the sweepstakes prize is shown before the game result or what the state would call the entertainment display (slots, cards or keno)”

 

Nadolski has been approached by sweepstakes gaming software companies who want him to take a look at their software and several have asked for an opinion.

“We don’t give advisory opinions,” Nadolski said. “I’ll meet with and talk to anybody, but I’m not going to look at their software.”

The N.C. Attorney General’s office considers the law and N.C. Supreme Court ruling definitive on Internet sweepstakes as video gambling. The office continues to “defend their enforcement vigorously” and argue against sweepstakes businesses in civil court actions, said Noelle Talley, public information officer for the N.C. Department of Justice.

In interviews with other news outlets, Attorney General Cooper has consistently said sweepstakes are illegal, regardless of software changes. He described the process of eliminating the businesses as “whack-a-mole” to the Associated Press last year.

It’s up to County and City law enforcement to enforce the text of the law.

“Law enforcement agencies and District Attorneys set their own enforcement priorities within their jurisdictions and have powers, duties and prosecutorial discretion, and they are always welcome to consult with our office as needed,” Talley wrote in an email.

She pointed out that some districts have successfully prosecuted the businesses under the law.

But within the last six months, the businesses and the new pre-reveal games seem to be making a comeback and have several district court victories.

An Onslow County judge granted a sweepstakes business an injunction against that county’s sheriff’s office. The judge found that a software change required skill and dexterity to play the games and that the machines were a “lawful promotional device” for selling gift certificates. So far, these ‘banbuster games’ have  found a way to be successful and more importantly compliant.

Village Business Center is open at 9am and closes when the last customer chooses to leave.

“We’re normally open 24 hours. Business is that good,” said Carissa Stanley, a manager there. “We have people come in from everywhere: Alamance County, Greensboro, Virginia.”

The customers at business center,  many of whom are seniors, chit-chatted. Several lined up at the  window for their free play $5 bonus, good on the first $20 with a swipe of their membership cards. A signed informed the patrons that Tuesday is Men’s Day, Thursday is Women’s Day.

“It’s generally an older clientele,” said Stanley. “They know they’re not going to win big. They come out to spend time with each other and socialize. It’s a place for them to come and see their friends.”

Bullis is weary of the controversy and opposition to Internet sweepstakes.

The majority of NC voters (along with Bullis) believe sweepstakes should be allowed, but fairly taxed and regulated. Before the sweepstakes law went in effect, cities and towns began charging thousands of dollars per computer and license fees. A state law that lost steam (HB-547) HB147would have mandated thousands of dollars in charges before sweepstakes could open.

Bullis takes offense when people accuse him and other sweepstakes operators  as preying on the poor or causing harm to communities.

“It’s absolutely not true,” he said. “I employ 10 people. I do all my business locally. When they shut us down in Haw River, it put 10 people on unemployment. … We put money back into the community. We’re never recognized for that.”

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Demand for North Carolina Pre Reveal Games Show Steady Increase

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Pre-Reveal Sweepstakes Games Under the Microscope Have Passed Multiple Steps

..As Charges Decrease, Games Spread to Old Market Base..

Raleigh, NC – The dismissal of multiple criminal charges against sweepstakes operators pave the way into bringing back electronic video machines in Western North Carolina. Back in December 2012, the state of North Carolina has banned electronic sweepstakes explaining that under the state’s ordinance, electronic gambling machines that use a entertaining device to enter or show winning entries are banned. Nonetheless, some business owners who are reluctant to shut down went on to their business operations.

According to authorities, they have charged more than half a dozen of business operators across the region which includes Canton, Franklin, Waynesville, Sylva, and Maggie Valley.

Recent Arrest Have Seen Charges Dropped

Unfortunately, most of the cases are already dropped before they even reach the local district court.

The criminal charges against the sweepstakes operators made in Sylva, Franklin, and Waynesville have either been disregarded or found not guilty by both prosecutors Judge Monica Leslie and Judge Donna Forga.

District Attorney Mike Bonfoey says the cases are dismissed because the judges found the evidence insufficient to proceed with.

The latest acquittal is the case of Angela Davis Nicholson, 43, staff of Winner’s Circle from Waynesville. Along with other defendants who were cleared of charges, Nicholson vied that the state’s ordinance on the game of chance does not apply to sweepstakes because it requires skill and dexterity. ( www.SkillGameKing.com)

skill game king 200x100Attorney George Hyler of Ashville comments that the whole point of the case is whether sweepstakes involves skill and dexterity. Likewise, he had a successful defense in Franklin and Sylva.

In addition, Hyler notes that Winner’s Circle business owner Tami Nicholson makes it a point to incorporate some skills and dexterity into her games. In fact, there are stickers on every machines implying that players must use skill and dexterity in order to win.

Meanwhile, Waynesville Mayor Gavin Brown announces their stand against sweepstakes. He claims that the sweepstakes industry is not legal; despite the Judge saying opposite, therefore, they are going to continue the battle. Unless the state declares the sweepstakes games legal, the Waynesville police department will continue to pursue offenders.

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Skill Games Make Their Way Into North Carolina Sweepstakes Market

The dismissal of multiple criminal charges against sweepstakes operators pave the way into bringing back electronic video machines in Western North Carolina. Back in December 2012,Pre-Reveal-Gold the state of North Carolina has banned electronic sweepstakes explaining that under the state’s ordinance, electronic gambling machines that use a entertaining device to enter or show winning entries are banned. Nonetheless, some business owners who are reluctant to shut down went on to their business operations.

According to authorities, they have charged more than half a dozen of business operators across the region which includes Canton, Franklin, Waynesville, Sylva, and Maggie Valley. Unfortunately, most of the cases are already dropped before they even reach the local district court.

The criminal charges against the sweepstakes operators made in Sylva, Franklin, and Waynesville have either been disregarded or found not guilty by both prosecutors Judge Monica Leslie and Judge Donna Forga.

District Attorney Mike Bonfoey says the cases are dismissed because the judges found the evidence insufficient to proceed with.

The latest acquittal is the case of Angela Davis Nicholson, 43, staff of Winner’s Circle from Waynesville. Along with other defendants who were cleared of charges, Nicholson vied that the state’s ordinance on the game of chance does not apply to sweepstakes because it requires skill and dexterity. ( www.SkillGameKing.com)

Attorney George Hyler of Ashville comments that the whole point of the case is whether sweepstakes involves skill and dexterity. Likewise, he had a successful defense in Franklin and Sylva.

In addition, Hyler notes that Winner’s Circle business owner Tami Nicholson makes it a point to incorporate some skills and dexterity into her games. In fact, there are stickers on every machines implying that players must use skill and dexterity in order to win.

Meanwhile, Waynesville Mayor Gavin Brown announces their stand against sweepstakes. He claims that the sweepstakes industry is not legal; despite the Judge saying opposite, therefore, they are going to continue the battle. Unless the state declares the sweepstakes games legal, the Waynesville police department will continue to pursue offenders.

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Operators In Sweepstakes Bust May Have Been Running Non-Compliant Sweepstakes Games

High Point, NC – In High Point, two men were charged for operating an illegal sweepstakes business on Tuesday.

Both Konstanttonos G. Rizos, age 47, operator, resident of 3534 Woodview Drive and Patrick W. Tucker, age 39, manager, from 707 Westwood Avenue were facing criminal charges for illegal sweepstakes operation and for possession of alcoholic beverages for sale without first acquiring revenue license and ABC.Pre-Reveal-Gold
Deputies seized about $8,000 of cash, 17 sweepstakes machine, surveillance cameras, laptops, paperwork, 223 cans of malt beverages, and four boxes of wine.
As reported by High Point police, the bureau was tipped off a sweepstakes business located at 1411 Welborn Street. According to the tipster, the business was run like speakeasy in 1920. The windows were sealed and the only point of entry was to be buzzed in.
The pair was informed to appear in court through a written notice.
The sweepstakes location was not believed to be running the new Pre-Reveal Game that was introduced after the Supreme Court upheld the law banning sweepstakes games that used a entertaining device to enter of reveal the entry.

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City Denies License To Charitable Sweepstakes Business

THOMASVILLE – during the week, the city council disagreed over proposal to rezone land on Johnsotown Road banning the plan to start an internet café in Western Thomasville.

Sweepstakes Contest Have Been Around For Over 100 Years

In an attempt to operate an internet cafe or a sweepstakes business in the area, Johnsotown Station LLC who owned the plot situated at 1069 and 1071 Johnsotown Road requested for rezone.
According to resident Kelly Clinard who is also a member of Johnsotown Station LLC, they are trying to do things to help the property and the area.
“We found owners who want to open an Internet café, and they need the land re-zoned,” he explained.
He also added that the property was acquired several years ago from the owner who was indebted to them.
Barney W. Hill, a local government watchdog joined Clinard in justifying the rezone. Meanwhile, five resident and property owners nearby the area in question, allied against the request.
During the hearing, resident Roger Singletary told the council how his construction business was ruined because a family member was addicted to electronic gambling.
Councilwoman Pat Shelton clarified that their decision was not based on the fact that a sweepstakes business was involved, but because of zoning ordinance.
“We are charged to do our jobs as the zoning ordinance reads itself. This particular road is no longer a major arterial road through the city. I do not think this particular property qualifies for commercial zoning,” Shelton stated.
Furthermore, Councilman Scott Styers affirmed that zoning issues are not popularity contest. He also said that the neighbors do not have a say on the issue.
“I’m not much of a fan of sweepstakes businesses themselves, but I think that’s up to the state of North Carolina and our district attorneys to make that decision,” he declared.
Licensed gaming corporations continuously insist on their compliance with the law.

To some people, sweepstakes is just like monopoly at McDonalds. You buy food and you get game pieces that can earn you a prize.

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Pre-Reveal Software Providers Re-open Market

The Maggie Valley Board of city council will vote this week whether to relax restrictions on sweepstakes machines for businesses that plan to make their money mostly from the controversial machines.

NC PREREVEAL SWEEPSTAKES

If the ordinance passes as is, sweepstake-specific businesses can have one machine per every 50 square feet. Video sweepstakes parlors will be required to be at least 1,500 feet away from each other and any established religious institution, school, daycare, library, museum and public park, and the gaming-specific business must also be housed in a building that is a minimum of 2,500 square feet.

Other businesses such as bars or gas stations that only have a few machines will still be limited to one machine per 1,000 square feet.

Fees for operating will remain the same– with a $ 2,500 fee for the first four machines and $ 750 for any additional machine.

The town doesn’t expect a proliferation of sweepstakes parlors under the laxer restrictions. Given the distances required from parks, churches and other existing uses, there in essence are only a few places that would accommodate sweepstakes parlors under the new ordinance, said Town Planner Nathan Clark.

The state legislature has battled the controversial machines for years. They outlaw specific video gambling machines, but new reincarnations pop up and are deemed legal by the courts. “Dealing with the cyber sweepstakes people is like playing ‘Whack a Mole.’ Every time something about the machines is banned, the sweepstake folks come up with a slightly different version of the game to get around the law,” said state Rep. Ray Rapp, who co-sponsored a bill banning such machines in 2010.

The courts have since overruled the bill; however, the state Supreme Court will take up the issue in September.

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Sweepstakes Parlor Patron And Employees Have Close Encounter With Robbers

Clients and employees inside a sweepstakes parlor came within feet of some armed robbers recently, but they had no idea until later on.

Authorities think the gunmen wished to burglarize the Cyber Cafe, which is off of the US 701 Bypass in Tabor City, and there is a security video to reveal the close call.

Supervisor Robert Bussa and his personnel were uninformed of the accident till investigators had them browse surveillance video the next day.

According to detectives, four guys, some of whom were carrying guns, walked up to the sweepstakes parlor intending to rob the business. However, thankfully, staff members at the Cyber Cafe lock their doorways at night and had correctly done so the evening of the supposed attempted robbery.

Tuesday, Bussa worked while he continued to consider the threat that his staff members and customers dealt with very early Saturday morning.

“If they would have entered here, they could possibly have eradicated us,” pointed out Bussa. “Or hurt someone.”

Police state that the entire time the suspects were in their automobile, they were positioned at a doctor’s office, located right behind the Cyber Cafe. Authorities state that after attempting to get in to the sweepstakes parlor, the men waited around scheming.

“They were most likely pondering how they would enter,” said Jerry Sarvis with the Tabor City Police. “They possibly figured they would stand by until someone leaves and they would blitz in.”

Detectives state that a police officer then identified the auto, and the indicted robbers led him on a chase till they wrecked their car. They even fired 2 shots at the officer.

“If those males could shoot at a police officer, they’ll shoot at anybody,” stated Jarvis. “We have to take these men off the streets.”

Bussa points out that his employees, who were every so often slack regarding maintaining the door secured at night, are right now more conscious, and he hopes others who burn the midnight oil will do the very same.

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Newton Takes A Bite Out Of Sweepstakes Market

Newton joined a prevalent trend when the City Council voted to establish license charges on online video sweepstakes businesses.

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The General Assembly strove to ban the businesses, even known as Internet sweepstakes cafes or parlors, however the ban was reserved by the courts. Lawmakers say they still would like to produce a law that restricts what doubters call thinly masqueraded gambling, and the state hasn’t already quit on the appeals method.
In the meantime, cities as well as towns throughout North Carolina are not permitting sweepstakes parlors multiply unrestrained. Cities are producing profits off these legitimate companies.
Newton’s City Council followed a statute that charges $ 2,500 for every website and $ 1,000 for each machine every year. Hickory has a quite similar licensing timetable as well as stipulates the business sectors where sweepstakes may run. Raleigh charges $ 3,500 for the initial machine as well as $ 1,000 for each extra machine up to a max of $ 20,000.
Lots of towns such as Hickory passed their regulations months back, even prior to the legal ban was thought to be too extensive as well as an abuse of the First Amendment by the state Appellate Court in a 2-1 decision. Attorney General Roy Cooper is interesting the NC Supreme Court.
In Hickory’s situation, had the ban been upheld, the regulation will not have actually gone into consequence. Council members stated the city must have regulations in place in case a reduced court ruling from the state law was supported.
The state is additionally considering charging for operating licenses. Local governments currently have the authority to govern commerce within their boundaries. Thus far, municipal ordinances do not require excessively high costs that could be taken as punitive measures produced to stop the businesses and hence trigger even more suits.
In many of the sweepstakes companies, customers are given Internet accessibility and may surf virtually anywhere they please. Nevertheless, web-based sweepstakes obtain the most attention without a doubt. According to The Associated Press, the Internet Based Sweepstakes Company exemplifies lots of such companies and also reports profits in North Carolina at in between $ 500 million and $ 1 billion per year.
So, in spite of the effort to remove the internet sites challengers call gaming establishments, state as well as town governments understand they constitute a resource of badly required revenue.
Undoubtedly, there will be one more effort at making Internet sweepstakes prohibited. Yet, a bill in the General Assembly would allow the state to establish licensing fees and also grab tons in income. The legislation seems to be a little more than an aggressive action to regulate sweepstakes parlors if the Supreme Court confirms the appellate decision.

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If the high court locates in favor of the plaintiffs– the sweepstakes entrepreneurs– it stays to be seen which passes initially: One more attempt at restriction or a bill that offers the state a cut of the activity.
In the meantime, cities such as Newton are taking lawful actions to govern a lawful business activity.

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Sweepstakes no fix for school funding

Last week a bill was introduced in the N.C. General Assembly that would tax video sweepstakes operations. House Bill 1180 — Video Sweepstakes Entertainment Tax — would reserve approximately 83 percent of the tax revenue to support public education.

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Haven’t we learned our lesson with the “Education” Lottery?  Almost weekly I am asked, “Where does all that lottery money go?”
Last year, the lottery took in $1.46 billion and close to $420 million went to education.  That is a large sum of money and Iredell-Statesville Schools has used its share of lottery money wisely and effectively. However, that is well below the 35 percent of revenue required by law  to fund education.
Research has shown that gambling funds reserved for educational purposes provided an initial payout, but in a few years, gambling dollars simply displaced other funding, leaving a net neutral effect in most cases and a net negative in others.
Most of us can agree on the importance of public education, but we must not forget that quality schools need a strong moral and ethical foundation.  The use of gambling revenue to support education sends the message that you don’t have to work hard to improve yourself. All you have to do is take a roll of the dice or push a button on a video screen.

You can’t get something for nothing, virtue should never be held hostage to vice, and schools should never be dependent on gambling revenues.  Increasing revenue for education on the backs of the elderly and the poor, the two demographic groups targeted by sweepstakes gambling, is insincere at best.
The Lottery was sold  to the citizens of North Carolina as the savior to public education. When the carrot of education funding is dangled in front of our noses to justify public endorsement for gambling expansion, lets not be fooled again.
Bryan Shoemaker
Statesville

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http://www2.statesville.com/news/2012/jul/01/july-2-community-forum-sweepstakes-gambling-ar-2399901/

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Bill would allow the state to tax sweepstakes but not the city

RALEIGH - Proposed legislation would allow Cumberland County and the state to charge fees to sweepstakes cafes but would cut the tax revenue that Fayetteville now collects from the gambling businesses.

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The bill’s prospects appear dim in light of the state’s long-running battle to outlaw the gambling businesses. Plus the anti-tax sentiment among many lawmakers is a roadblock.

But the bill’s sponsor, Rep. Bill Owens of Pasquotank County, suggested Thursday that he has political leverage that could pressure the Republican-controlled General Assembly into passing it.

Owens is one of five Democrat lawmakers who have given Republicans just enough votes to override Democrat Gov. Bev Perdue’s vetoes since last year.

Owens said legislative approval of the gambling house tax could stave off a Perdue veto of the Republican-drawn state budget. Perdue has called for taxing the sweepstakes cafes to raise money for education.

Under Owens’ bill, North Carolina would charge the gambling houses $2,000 per year per location, plus $1,000 per gambling terminal, plus 4 percent of receipts after prizes are awarded.

The tax is intended to generate at least $300 million for the state government. Of that, 85 percent would be used to pay salaries of 3,400 teachers and teaching assistants that House Democrats predict will lose their jobs under the Republican-drafted budget.

“We’re talking about a huge amount of money that we desperately need for education,” Owens said.

The rest of the money would be spent on law enforcement, alcohol control and administration, Owens said.

His bill would give county governments the authority to levy local taxes on the cafes – $1,000 per year per location, plus $500 per terminal.

Cities already have this authority, but their taxes would be capped at the same level as counties. Fayetteville now charges the gambling houses $2,000 per location, plus $2,500 per sweepstakes machine installed.

Cumberland County leaders want to tax the sweepstakes cafes because they fear that Fayetteville’s higher tax is pushing them into the county.

Sweepstakes businesses have become widespread over the past 10 years. Patrons pay to play computer games in which they could win money.

North Carolina lawmakers have repeatedly tried to ban the cafes on the premise that such gambling is bad for society and fosters gambling addiction. But through lawsuits and by carefully tailoring their games to stay on the legal side of state gambling regulations, the industry has stayed in business.

Operators say they offer sweepstakes games associated with the purchase of a product, such as long-distance phone service or Internet access, and these are similar in the eyes of the law to the promotional sweepstakes that fast food restaurants and other businesses use to draw customers.

Litigation over their legality is pending before the state Supreme Court.

Owens predicted that regardless of what the court decides, the businesses will continue to find ways to stay open.

Chilly reception

Members of the state House Finance Committee gave the gambling house tax a chilly reception Thursday. Republican Rep. Paul Stam of Wake County, the House majority leader, said the businesses already pay income and property taxes and other taxes, plus the winners pay taxes on their prizes.

He also said he was told of a young woman who lost $46,000 at the gambling houses.

“Lost her home, stole from parents, all to play the sweepstakes,” he said.

But Democratic Rep. Dewey Hill of Columbus County is considering the bill. He is one of the five Democrats who have voted with Republicans.

“I believe that these people are making money right now, through these several locations,” he said. “I believe the tax will maybe slow them down a little bit. Right now they’re getting a free ride.”

Owens, too, said the tax would help slow the proliferation of the gambling houses.

The Finance Committee took no vote on the bill.

Owens and Hill’s votes have been critical to helping Republicans turn back Perdue’s vetoes, most importantly on the state budget last year.

Now Perdue is considering whether to approve or veto the next state budget, which the Republicans passed Thursday with less spending on education and other matters than she wanted.

Republicans will need at least four Democrats to side with them to override a veto.

Owens said the sweepstakes cafe tax is critical in his decision on whether to help Republicans override Perdue again.

“Absolutely,” he said, but he wouldn’t say definitively which way he would if Perdue issues a veto.

Owens also suggested that Perdue’s decision on the state budget might hinge on whether the legislature approves the gambling tax. “If the sweepstakes comes through, there may not be a veto,” Owens said.

A spokesman for Perdue said she is reviewing all budget matters and offered no further comment.

Owens and Hill voted with the Republicans on the state budget on Thursday.

http://www.fayobserver.com/articles/2012/06/21/1186078?sac=fo.local

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