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By L.A. Williams, Correspondent
Christian Action League
RALEIGH – A quick stop on the way home from work: gas up the car, buy a loaf of bread, try your luck at video sweepstakes and be on your way. Sounds simple enough until the occasional stop becomes a frequent habit, the money for gas and food are spent on the game and a “harmless” pastime has become a devastating gambling addiction.
It happened all too often when video poker was legal in North Carolina and it’s happening again with so-called “sweepstakes” games that mimic it in every way but are — at least for now — technically not in violation of the video poker ban lawmakers passed in 2006, nor the broader law against server-based gaming approved two years later.
But Rep. Ray Rapp (D-Haywood) and Rep. Melanie Goodwin (D-Richmond) hope to change that this session with what Rapp describes as a “comprehensive piece of legislation with broad-based bipartisan support” to ban video gambling and make a clear public policy statement against all of the forms the game may take.
“We are committed to stopping this contagion, this spreading across North Carolina of video sweepstakes as well as the pot of gold games,” Rapp said Thursday. “We feel as if we’ve been playing “Whac-A-Mole” with the video gambling industry for years now. Just when we get one game banned they come up with another game, a new twist.”
Goodwin said the Sweepstakes games have been detrimental for the people in her district, especially those on a limited budget.
“I’m very concerned that the wish, the hope of a big pay-off is going to end up destroying families that have very little to support themselves to begin with,” she said. “I worry about the children. I worry about people losing their homes. I worry about children ending up in DSS custody because their parents can’t take care of them because they’ve gambled away all of their money.” According to Gary Gray, executive director of the N.C. Council on Problem Gambling, those worries are well founded.
“Since January we’ve seen about a 40 percent increase in people coming in to get help with a gambling problem,” he said. “And almost every one of them is addicted to playing sweepstakes at an Internet cafe.”
What’s worse is that, according to Gray, for every gambler who finally faces up to the problem and seeks help there are an estimated 20 more who are caught up in the games, believing the lie that they can eventually make up their losses.
“I had a lady I worked with in February who got addicted, got three months behind in her rent and lost everything. She is looking for a place to live,” Gray said. “Unlike some addictions, with gambling, until they hit rock bottom people can usually hide it, so they don’t get help until they are deep in debt.”
Exacerbating the problem in North Carolina is the fact that new sweepstakes businesses are opening virtually every day. Sheriff Moose Butler told the Fayetteville Observer that Cumberland County has close to 100. Greensboro is also a hot spot with locations across the city including five in a two-block area of High Point Road. Billing themselves as “internet cafes” the operators set up in shop in large cities as well as small towns and skirt the video poker ban by selling computer time during which buyers log on and access the games. They claim it isn’t gambling because nothing of value is wagered. Instead the customer is allegedly buying another product and the game tickets are given free of charge.
Because the cyber sweepstake parlors have been multiplying so quickly, unfortunately a few lawmakers are starting to think that the only answer is to once again embrace the “crack cocaine of gambling,” try to find ways to regulate it and demand a part of the profits.
Sen. David Hoyle (D-Gaston), chairman of the Senate Finance Committee says that the Legislature may want to consider legalizing video sweepstakes, an idea floated in a bill last year by Rep. Earl Jones (D-Guilford) and endorsed by the Black Legislative Caucus and the State Employees Association of North Carolina.
Jones, who became the industry’s mouthpiece with his claims that video poker was no different than the state lottery, lost his primary election earlier this month. But that doesn’t mean his bill, which calls for 20 percent of proceeds to go to state coffers, won’t make headway. In fact, even Senate leader Marc Basnight (D-Dare) has said if lawmakers can’t find a way to close the legal loophole they should “collect a very, very aggressive tax” to help discourage use of the machines.
Fortunately, most lawmakers remain opposed to welcoming back any form of video poker especially considering the crime that accompanied the industry’s 13-year stint between 1993 and 2006 — bribes and illegal payouts that sent a sheriff to prison and prompted an investigation into then House Speaker Jim Black. Crime and gambling addiction were so prevalent that all 100 sheriffs asked the Legislature for the ban.
“This is why the news of a forthcoming bill from Rep. Rapp and Rep. Goodwin is so welcome. Most lawmakers want rid of video gaming once and for all and this will give them the vehicle to make it happen,” said the Rev. Mark Creech, executive director of the Christian Action League.
Meanwhile, until lawmakers can close the loophole, some county and municipal governments have modified their own zoning laws or business license fees to help limit the number and location of the sweepstakes cafes to try to mitigate their negative effects.
Hendersonville and Franklin set fees of $2,600 for sweepstakes machines and Canton passed a new ordinance forcing business owners to purchase a $2,500 privilege license for four machines and pay an extra $700 for additional terminals. The Canton ordinance requires that the business make no more than 15 percent of its revenue from sweepstakes. Graham increased the cost for permits from $25 to $1,000 for the sweepstakes promoters and Wilson’s zoning rules relegate the businesses to industrial areas to keep them away from churches, schools and neighborhoods. Clinton, Elizabethtown and other cities have passed moratoriums on the businesses to keep any more from opening until they can develop a plan.
“Some ordinances today treat cyber-sweepstakes operations as legal, but less than desirable, uses that need to be separated from residences, schools, churches, day-care centers, and other protected land uses,” wrote Richard Drucker, an associate professor of Public Law and Government at the UNC School of Government, comparing the additional requirements to those applied to sexually oriented businesses to prevent their undue concentration.
Christopher B. McLaughlin, also a School of Government professor, said municipalities can use their privilege license taxes to raise revenue and indirectly discourage the proliferation of sweepstakes operations, but that they should keep such taxes reasonable.
“Would a tax of $1,000 per machine be legal? Probably,” he said. “Would a tax of $1 million per machine be legal? Probably not. But nobody can pinpoint exactly when a tax becomes unreasonable and therefore illegal.”
Creech warned municipalities not to get attached to the sweepstakes revenues.
“While we urge them to use fees, zoning or whatever stop-gap measures they can to fight this blight on our communities, they should understand that these fees are not a viable budget funding source,” he said. “Hopefully, the games will be banned very soon. But even if it doesn’t happen quickly, any revenue from gambling will always be overshadowed by the social costs – welfare, addiction, increased crime – that it brings with it.”
To see what you and your community can do to fight the spread of Video Sweepstakes gambling, click here