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One News Now

Bill to Legalize Sweepstakes Filed – Here We Go Again

By L.A. Williams, Correspondent
Christian Action League
April 4, 2013

SweepstakesRALEIGH — Less than four months after the North Carolina Supreme Court upheld the state’s ban of video sweepstakes, a pair of lawmakers has filed a bill that would welcome back the highly addictive form of gambling with a plan to tax and regulate the games.

“Everyone knows the term ‘safe bet’ is an oxymoron, but were I a gambler, I’d probably put my money on the premise that not a legislative session will go by without some kind of push to expand gambling,” said the Rev. Mark Creech, executive director of the Christian Action League. “Even when North Carolina’s High Court validated the sweepstakes ban and law enforcement began shutting down these gambling parlors, we warned the industry wouldn’t admit it was ‘game over’ and that some lawmakers would be ready to help them crank up all over again. And here we go again!”

House Bill 547- Tax and Regulate Video Sweepstakes, was filed by Rep. Michael Wray (D-Halifax) and Rep. Jeff Collins (R-Franklin).

Wray represents Halifax County where Roanoke Rapids already receives more than $200,000 per year in licensing fees from the sweepstakes industry, according to the Coalition of Electronic Sweepstakes. The ailing textiles town near the Virginia border had cast its lot with Dolly Parton’s brother, Randy, in 2005, opening a $22 million theater two years later that quickly failed when the entertainer didn’t draw the crowds that were expected. By 2008, Parton was fired and Roanoke Rapids left with a debt of more than $17 million. Looking for revenue wherever they could find it, city leaders OK’d electronic sweepstakes machines last year — machines that Wray now wants to keep operating.

The proposed bill would impose annual taxes of $2,000 per sweepstakes establishment and $1,000 per device, and a 4 percent tax on gross receipts from the gambling. Cities or counties could impose their own fees of $1,000 per location and $500 per machine.

“This was a bad idea when it was proposed by former Rep. Bill Owens (D-Currituck) last year, and it’s still a bad idea,” Dr. Creech added, “Like we said then, validating this form of gambling by setting it up as a revenue stream is wrong for North Carolina, and believing the industry could be effectively regulated is wishful thinking at best.”

Now with a new owner, the Royal Palace Theatre game parlor in Roanoke Rapids revamped its software in January after the N.C. Supreme Court’s ruling. The business claims its games don’t violate the state’s ban because they use a “pre-reveal” system by which customers are informed of their winnings or losses before they spin. State law prohibits the “entertaining display” of prizes on the games. The new system is the industry’s latest effort to circumvent it.

“But I don’t think this effort for circumventing by those like the Royal Palace Theatre ultimately has any strength. This fight has already been won via the legislation to ban and the courts, said Rev. Creech. “Legislation to legalize is just a last ditch effort – an act of desperation for the industry to survive. So any argument made by lawmakers that say, “Well, if we’re going to have to have this mess, let’s regulate and tax it, just doesn’t make any sense at this stage in the game.”

Unlike last year’s bill, which would have put the games under the Lottery Commission, this year’s version would assign responsibility to the Department of Commerce with the Alcohol Law Enforcement (ALE) agency charged with performing in-depth background investigations of criminal convictions of applicants and licensees.

Businesses or individuals wishing to run video sweepstakes operations would have to pay $250 to apply for a license and have a state-approved independent test lab examine each device to make sure it met a list of four criteria. Software suppliers would also have to be licensed.

The bill would limit prizes to $10,000, prohibit players younger than 18 and not allow the gambling in establishments that sell alcohol. Rules would govern signage and parlors would have to report winners of $1,000 or more to the Department of Revenue. Anyone convicted of operating without a license could be subject to a fine of $25,000 to $100,000 with other violations involving fines of $500 to $10,000.

“Lawmakers could pass all the rules and the fines in the world, but there is truly no way to regulate this industry,” said Dr. Creech. “Anyone who doubts it need only look at the state’s history with video poker, which bred corruption from the mountains to the coast and led all 100 sheriffs to ask the Legislature to do away with it.

He said the fact that some sweepstakes parlors are still open today despite the ban, its repeated tightening, and last fall’s court ruling upholding it show that their owners are more than willing to flout the law.

“We urge lawmakers, once again, to do the right thing and allow this latest effort to legitimize illegal gambling to die,” Dr. Creech said.

In addition to Representatives Wray and Collins, the bill is also sponsored by Rep. Marvin Lucas (D- Cumberland) .

In other gambling news, Representatives Darren Jackson (D-Wake) and Chuck McGrady (R-Henderson) filed House Bill 516, which would keep the names and addresses of lottery winners confidential unless the prize winner consented to having his or her name released.