Lawmakers close loophole in video poker ban

Owners of video sweepstakes parlors in North Carolina are out of luck for now.

Governor Bev Perdue is expected to sign a bill passed by the legislature that will ban cyber sweepstakes starting Dec. 1 this year.

Sweepstakes operators in Canton, Maggie Valley, Franklin and other towns who have paid $2,500 or more for a business license fee won’t receive a refund — even though the ban goes into effect midway through the fiscal year.

“A business license is annual,” said Canton Town Manager Al Matthews. “If a business closes after operating for a few months, there is no refund.”

Gas stations, laundromats and other businesses with sweepstakes terminals often house them in exchange for a cut of revenue from the machine owners.

Internet sweepstakes is a form of computer gambling that took advantage of a loophole in the General Assembly’s 2006 and 2008 bans on video poker.

The video gaming industry has adamantly fought against the two bans, filing challenges against the state in court and conjuring up new ways to get around the law.

Rep. Ray Rapp, D-Mars Hill, has long been a strong advocate against video gambling. Rapp said while he hopes this round will be the last against the gaming industry, he’s not overly optimistic.

“I’m not naïve enough to know this will be the end,” said Rapp.

The N.C. Council on Problem Gambling reported that every Gamblers Anonymous Group in the state has increased in size by 75 to 100 percent in the first half of 2009 when sweepstakes games emerged. About 88 percent of new calls to the nonprofit indicated that Internet sweepstakes was the source of addiction.

Ira Dove, director of Haywood County’s Department of Social Services, confirmed that more residents are suffering from gambling addiction than before.

“The cost for them, their families and U.S. taxpayers is severe,” said Dove.

In the N.C. House, the statewide ban passed 86-27 following three hours of back and forth on July 8. State senators had put their foot down more decisively with a 47-1 vote against sweepstakes earlier.

The chief argument centered on whether sweepstakes should be banned outright or whether the state should begin regulating and taxing the industry during a severe revenue shortfall. According to one estimate, regulating video gaming could bring $500 million a year to the state.

The economic argument failed to win Sen. Joe Sam Queen, D-Waynesville, who called the ban the single most important legislative action taken by the Senate this year.

“This industry is predatory,” said Queen. “We’re strong in our resolution to stop this scourge on North Carolina.”

Rapp emphasized that the industry was highly exploitative of citizens who could least afford to lose their paychecks.

Police Chief Bill Hollingsed of Waynesville said he has come across gambling addicts who have spent entire paychecks on gambling and those who have opened up fraudulent bank accounts in order to keep playing.

Hollingsed said ever since sweepstakes arrived on the scene, it’s been a confusing issue to tackle for officers who are charged with enforcing the video gambling ban.

“This provides the clear direction we’ve been looking for for several years,” Hollingsed said

Business owners that attempt to secretly house the machines face a misdemeanor on the first offense and a felony on the second.

“We’re serious about it,” said Rapp.

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