By L.A. Williams, Correspondent
Christian Action League
RALEIGH — Despite lawmakers’ efforts to improve proposed legislation to regulate and tax video sweepstakes games, the bill appears to have died in committee as the General Assembly wraps up its 2012 spring session.
“We are thankful lawmakers resisted this temptation to team with the gambling industry to prey on the people of our state,” said the Rev. Mark Creech, executive director of the Christian Action League. “Even though many of the changes in the bill were designed to make it more attractive, it would have set the stage for a wholesale video poker comeback.
The proposed committee substitute for House Bill 1180, promoted by Rep. Bill Owens (D-Currituck), would put the highly addictive games that the state has repeatedly tried to ban under the sphere of the Lottery Commission and impose a variety of fees and taxes to generate funds primarily for education.
“This bill does not legalize video sweepstakes. Six or seven years ago, I ran the first bill to outlaw them and we still can’t get rid of them,” Rep. Owens told the Christian Action League on Wednesday. “So the intent of HB 1180 is to regulate them and slow them down; and, to gain revenue from them for law enforcement and education.”
Owens’ bill, discussed but not voted on Tuesday in the House Finance Committee, would impose three taxes: an annual tax of $2,000 per establishment, an annual tax per machine or device of $1,000, and a 4 percent tax on the net receipts from the games. It would also allow counties to join cities in levying privilege taxes of $1,000 per establishment and $500 per machine as long as they shared half the revenue from devices inside city and town limits with those municipalities. Operators of businesses containing video sweepstakes would be required to pay $250 to apply for a license which could be denied based on a Lottery Commission screening.
The bill could bring in an estimated $98 million to $329 million per year, of which three percent would go to sheriffs’ offices, three percent to police departments, three percent to Alcohol Law Enforcement. The Lottery Commission would take 4 percent and the Department of Revenue 2 percent, leaving 85 percent to go to education, with the first $189 million earmarked to replace some federal jobs funding no longer in the state budget. The measure would also limit prizes to $10,000, require players to be at least 18 and restrict the games to locations that do not serve alcohol.
While Rep. Joe Hackney (D-Orange) said the bill, with its additional criteria for the games, was much improved from earlier versions, he pointed out that its effective date of Jan. 1, 2013 for the tax collecting would not offer any immediate help for education.
Rep. Jeff Collins (R-Nash) told fellow committee members that he would be more apt to support the bill if at least half of the proceeds would go toward tax abatement. And Rep. Paul Stam (R-Wake) questioned revenue estimates in light of other gambling offered in the state.
“Since you promoted the lottery for education and the Cherokee gambling for education, has it occurred to you that if we have 100,000 terminals … that that might reduce the take for the Lottery and the Cherokees? You haven’t offset that a bit. Do you just think there is an insatiable desire to gamble all the time for everybody?” he challenged Owens.
While the bill sponsor insisted that Harrah’s Casino, the Lottery and video sweepstakes all seem to be doing well now, he also said that in his opinion, H 1180 could actually reduce the number of video sweepstakes terminals in the state because some businesses would close their doors rather than pay multiple state and local taxes. But according to the bill’s fiscal note from legislative staff, some 60,000 to 70,000 sweepstakes terminals currently operate in North Carolina and “that number could grow if HB 1180 were enacted.”
“At best, this is a very mixed message. On the one hand, the pitch is that this bill would raise millions of dollars because the state would be taxing up to an estimated 169,000 machines — one for every 57 people in the state. Then, on the other hand, there is the claim that the high taxes will effectively shut down some sweepstakes parlors, so we’ll actually have fewer devices to tax,” said Dr. Creech. “It can’t be both ways.”
Either way, he said, validating this form of gambling by setting it up as a legitimate revenue stream is wrong, and believing that the industry can be effectively regulated is wishful thinking at best.
“Just like the lottery, this would put North Carolina in the position of betting against her own people, balancing the budget on the backs of those who can least afford it,” he said. “We are happy to see the session end before this bill could be voted on and we hope the North Carolina Supreme Court rules against video sweepstakes before long so that the state’s ban of the games can be fully enforced.”