Sweepstakes halls face a catch-22

By Corey Friedman

Video sweepstakes halls operating in the city of Wilson have the worst of both worlds. VideoSweepstakes

On one hand, city officials will charge the businesses $1,000 for each computer monitor, a nuisance fee of sorts for the high volume of police calls they say the gaming parlors generate.

On the other hand, there’s the ever-present threat that police will storm the front doors, seize the games and arrest employees, enforcing a state law that bans certain types of video sweepstakes machines.

Sweepstakes operators say their games successfully skirt the law’s specific prohibitions, but even after they’ve paid the city large sums of money to operate legally, police are reluctant to offer any guidance — or say whether the businesses are in jeopardy of an imminent raid.

“They’re not telling you anything,” said Al Head, who operates Wilson’s Choice Internet with his wife, Sandy. “Some cities and law enforcement aren’t enforcing anything.”

The Heads said they spent close to $75,000 on their sweepstakes business and asked Wilson police whether they were at risk of being shut down. They said police wouldn’t give them a clear answer.

In North Carolina, video sweepstakes exists in a legal gray area, a statutory purgatory where interpretation and enforcement of the law varies widely from jurisdiction to jurisdiction. Some counties have shuttered sweepstakes parlors in dramatic police raids, while others have largely left them alone.

The N.C. Supreme Court last December upheld the 2010 law banning video sweepstakes games, but since the statute specifies how prohibited games operate, many business owners have installed new software that they say makes their machines exempt.

Caught between lawyers and software companies who assure them the games are legal and police tasked with enforcing a murky state law that’s largely open to interpretation, sweepstakes operators are in an unenviable catch-22.

While we don’t fault the city of Wilson for statutory shortcomings and narrowly tailored court rulings that keep the sweepstakes controversy alive, city leaders are reaping a handsome harvest of cash from these beleaguered businesses.

We’re not comfortable with cities charging exponentially higher licensing fees to members of an entire industry because some such businesses have had an above-average amount of police calls. That’s an all-too-eager plunge down a slippery slope.

The Cook-Out restaurant, which had 83 police calls in the past year, doesn’t have to pay a $1,000 fee for each cash register. Punishing all sweepstakes parlors for a high volume of police calls at a few would be like charging all fast-food restaurants an extra fee because of past problems at Cook-Out.

City leaders may also want to consider the message they send by suggesting those more likely to need police ought to pay. We’re sure they wouldn’t saddle residents of high-crime neighborhoods with higher taxes, so why is it OK for businesses?

Wilson’s approach to the sweepstakes industry — tax, regulate and license the parlors, then maybe shut them down anyway — reminds us of the legal lunacy that is North Carolina’s unauthorized substances tax.

State law requires that residents pay an excise tax for illegal substances like cocaine, marijuana and moonshine. They receive a tax stamp to affix to the contraband, but paying the tax doesn’t make it legal to possess the items.

“Purchasing stamps only fulfills your civil unauthorized substance tax obligation,” the N.C. Department of Revenue states on its website. “You will still be in violation of the criminal statutes of North Carolina for possessing the drugs.”

Sweepstakes halls should either be legitimate, regulated businesses or illegal gambling centers. Charge owners for a business license or charge them with a crime — not both.

[NOTE: This appeared as an editorial in the Wilson Times.]



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