By M.H. Cavanuagh
Christian Action League
May 8, 2015
RALEIGH – Sweepstakes Gambling was dealt a devastating blow on Wednesday.
Six companies that provide the software for sweepstakes parlors, in order to avoid prosecution, made an agreement with federal prosecutors to cease operations in North Carolina.
A statement from the United States Attorney’s Office for the Eastern District, Thomas G. Walker, says that White Sand Technology LLC., Sierra Software LLC., TNT Software LLC., Digital Reveal LLC., Figure 8 Technologies Inc., and HSV Entertainment LLC., will end their presence in the state by July 1.
The announcement comes a little more than two weeks after the North Carolina Supreme Court declined to take up appeals in two video gaming cases.
US Attorney Walker stated, “We hope this action will be a big step forward in ensuring compliance with North Carolina’s gambling laws. Our office is prepared to assist the state in enforcing large scale violations of the law.”
Cumberland County Sheriff Earl “Moose” Butler said, “This announcement marks a major milestone in the long and ongoing fight against illegal gambling. In this case, for several years, video poker machines have been masquerading as sweepstakes. We hope these agreements will stop and deter evasion of North Carolina’s gambling laws. We have long been involved in this fight and we will not stop until the laws passed by the legislature and the North Carolinians they represent are fully enforced.”
Dr. Mark Creech, executive director of the Christian Action League said that Butler was right. “The fight against illegal gambling in the form of video poker goes all the way back to when I first started with the Christian Action League, nearly 15 years ago. Fighting this form of gaming, which is so addictive and manipulative, like the crack-cocaine of gambling, appears to be coming to an end now. This looks and smells like victory,” he said.
Dr. Creech said the state legislature banned video poker in 2006, but it morphed into sweepstakes which would later be banned in 2010. A state appellate court ruled that the ban on sweepstakes gaming was unconstitutional. Nevertheless, the North Carolina Supreme Court reinstated the ban in 2012.
Since then, companies that provided the games for internet cafes and sweepstakes parlors across the state claimed they had developed new games with “pre-reveal” software that did not fall under the state’s ban. Because there was conflicting opinions on the legality of the new software in the lower courts, law enforcement and District Attorneys were reluctant to enforce the law, which left more than 600 video sweepstakes establishments in operation.
Although North Carolina State Attorney General, Roy Cooper, insisted the state’s ban made no exception for “pre-reveal” software and urged both law enforcement and D.A.s to do their jobs, he also acknowledged that eradicating sweepstakes establishments was a lot like playing “whack-a-mole.” Cooper told the Associated Press in 2014 that the industry was constantly coming up with a “different kind of nuance…to invent ways to try to blur the lines and make it more difficult to enforce the law…I think the bottom line is that there is a lot of money to be made in video poker, and they are continuing their history of doing what they can to get around the law.”
But Mark J. Senter, branch head of North Carolina Alcohol Law Enforcement, indicated that the history of video sweepstakes skirting the law had now come to an end. Senter said, “Sweepstakes machines have been a source of problems for local law enforcement and the community for years. It is our hope this action eliminates this illegal activity.”
According to the non-prosecution agreements signed by the six companies, the agreements would only terminate if (1) the North Carolina General Assembly passed legislation that legalized internet sweepstakes; (2) there was a change in the law that made it clear that their software is legal; (3) the parties provide written notice to the United States Attorney and Chief of the Criminal Division of USAO-EDNC of the change in law and their intent to resume business…at least 14 days before they resume any activities covered by the agreements.
Violations by any of the parties to the agreements will result in federal prosecution.
“Although I believe we have just heard the death gurgle of this insidious industry in our state, I think it would be unwise for us to let our guard down,” said Dr. Creech. “These people rarely every give up. There may possibly be high-powered lobbyists, as well as some lawmakers who will say we need to legalize the industry in order to save the jobs that will be lost because of this federal action. There are already two bills to legalize sweepstakes gaming waiting to be heard during this session of the General Assembly. But I suggest legislators consider the corrupt nature of this form of gambling. We don’t need jobs like this in our state. Moreover, our state is experiencing a fiscal comeback with more than $400 million in surplus. We don’t need sweepstakes money either. I think I speak for most North Carolinians when I say to these operations, ‘Goodbye and good riddance.’”
The investigation on sweepstakes gaming in North Carolina was conducted by North Carolina Alcohol Law Enforcement, the Internal Revenue Service, and the Cumberland County Sheriff’s Department in coordination with Assistant United States Attorneys David Bragdon and Joshua Royster.