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News Clean sweep for video sweepstakes? Not just yet

Video sweepstakes machines are back yet again–and with Governor Beverly Perdue now officially eyeing them as potential revenue outlets for North Carolina–they could be here to stay.

No decision has been made by the governor on whether the governor will support legalizing the industry, according to Perdue’s communications director Chrissy Pearson, who said with potential revenue streams for the state being scarce, all options are being considered.

“There’s no way to raise revenues to fill that kind of a deficit. Obviously we are going to have to do some significant cutting. But if there are new and creative revenue streams, the Governor feels like it’s time to talk about them,” said Pearson. “That’s where we are at right now. It all comes down to the idea that this is an industry that has been operating in the shadows,” she said. “The governor is very concerned about that.”

Last December, legislators in Raleigh passed a statewide ban on video sweepstakes machines, after manufacturers of the games reprogrammed their products so that they wouldn’t resemble video gambling games such as poker or keno.

But just before the ban, Guilford County Superior Court Judge John Craig ruled that a portion of the statewide ban violates free-speech protection, provided by the First Amendment. Craig’s ruling also advised that the gambling-like games should be covered by the ban, but that others should not be.

State attorneys appealed the ruling, and the appellate court later ruled on Jan. 7 that the businesses could stay open until the appeal is heard.

So with the flip of a switch, or the change of software, machines across the state were reprogrammed by manufacturers. This time the name of the game is skill and dexterity, instead of chance. The premise, manufacturers and operators insist, is that they simply provide entertainment.

“People come here and play for fun,” said Deuces Wild operator Tony Lunsford. “They never really spend that much and have a good time.” Lunsford’s parlor closed down promptly at the time of the ban, however opened up recently, after finding that his games were temporarily valid.

Though the machines are often found in what are called “cafes” or “parlors,” like Lunsford’s, they are also beeping and flashing away in convenience stores and gas stations. The parlors in which they are most commonly found are frequented by players who use telephone minutes and internet time to play the games, with the hopes of winning money.

The line between video gambling and video sweepstakes is thin, but does exist, according to Internet-Based Sweepstakes Organization [IBSO] president Chase Brooks. Brooks and the IBSO want state lawmakers to legalize and regulate the industry, rather than ban it.

“If the [state] legislature had regulated and taxed video gaming in North Carolina, rather than banning video sweepstakes, the state could be collecting more than $576 million a year in new revenue, without raising taxes on working families,” he said in a statement. “There is a lot of ambiguity still in the marketplace and that needs to be addressed.”

Though the parlors faced a ban at one time and the industry’s legality is often vague, Macon County Sheriff Robert Holland assured residents that the machines are legal at the moment.

“They are up and running and we are aware of that. But honestly, they are not in violation of any laws,” he said. “They’ll come up with new legislation to address this issue, and the poker machine industry, which has a lot of money in its pocket, will be able to come up with another program to circumvent that, too.”

The North Carolina Sheriff’s Association, as well as the North Carolina Association of Chief’s of Police have both publicly opposed the legalization of video sweepstakes.

“The chief’s association is opposed to video gambling,” said Forest City chief of police Jay Jackson. “We have seen that problems can come out of the machines.” At face value, Jackson described sweepstakes machines as a gambling outlet.

Perdue is mindful of the state’s law enforcement stance on the issue.

“The governor is certainly interested in working with advocates of the law enforcement community,” said Pearson. “It’s especially important to her to talk about what our options are. She’s far from a decision... It’s just something she’s looking at.”

Several communities in Western North Carolina have reportedly taken measures in the past to hinder the businesses.

In December 2009, the Franklin Town Board of Aldermen voted unanimously to establish a privilege licensing fee of $2,600 for electronic sweepstakes operators located within city limits. The total amount of revenue collected from the businesses in the 2010-11 fiscal year was $23,400, with nine total businesses within Franklin city limits.

The neighboring town of Sylva set an initial privilege licensing fee of $2,500 for video sweepstakes operators to run just four machines. For every additional machine a fee of $700 was tacked on.

For now, at least in Franklin, the machines will not cost their operators any additional fees.

Franklin Town Planner Michael Grubermann says that unlike measures taken in the past, he does not foresee the Town of Franklin imposing additional fees on the businesses. “The fee is the same.” He added that since the attempted ban, the amount of parlors in Franklin has actually decreased. Grubermann said that while the businesses hardly present problems to the town, they are “nothing the town can hang its hat on.”

Franklin Mayor Joe Collins echoed Grubermann’s statement, and indicated that at the moment, the issue has not been explored, so currently the businesses will not be facing any additional fees.

“I think that the modest revenue received is not worth the effort that’s involved with monitoring [sweepstakes parlors] and I don’t think it’s good for the town to have them,” said Collins. “It certainly is an issue that has to be decided from Raleigh, and I do know that revenue sources are very important with the budget problems that the General Assembly is having.”

Collins added that considering the potential revenue from the games is understandable. “From a major standpoint as a citizen, I think that there’s better ways to raise money, and I wish that the ban would remain in effect,” he concluded.

With unemployment still a haunting reality in Macon County, parlor operators and employees insist their industry is more of a haven for work, rather than gambling.

“If we let this [video gaming] stay in the state of North Carolina, it’s going to create revenue for the state, and let’s not forget jobs. That’s a fact,” said Lunsford, a resident of Lavonia, Ga. Lunsford’s business currently employs several part time workers, many of which would have no work if it weren’t for the parlor.

“I hate being unemployed. I’ve worked all my life,” said one employee, who recently filed for unemployment after a Clayton Homes business in Georgia had folded. “I am thankful for this place, because it provides a place to work.”

Game operators are having to rebuild, since enduring the last bit of legislation. Since the statewide ban on video sweepstakes last December, Lunsford indicated that his parlor has had to pick up the pieces, and makes only a few hundred dollars a week now. “Business is slow.”

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