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Wednesday, 21 December 2011 14:31

Barely legal: reincarnation of video gambling continues on borrowed time pending court challenge

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It’s early on a workday, and there’s a single player seated at one of the 18 machines in the two-room M&J’s sweepstakes café, located in a small strip mall on Highlands Road in Franklin.

Louise Dills, who works at the nearby manufacturing plant Whitley Products, has casually dressed for the time she’ll spend here. The Macon County native was wearing a sweat suit, T-shirt and tennis shoes, her typical sweepstakes attire. She was playing her favorite sweepstakes game: “Candy Money.”

M&J’s is one of more than 1,000 sweepstakes cafes that have sprung up statewide, despite a ban by the General Assembly on video gambling. Dozens are here in Western North Carolina.

Sweepstakes cafes such as this one sell “time” to customers to gamble online or by cell phone. Customers, in return for whatever amount of money they care to risk, log on to their machine of choice and play for the allotted time they purchased.

Sweepstakes café owners and managers argue that letting customers “find” cash and prizes via computers is simply buying and selling Internet or phone time — not real gambling, in other words.

Dills has defied the odds, in her accounting at least. She said she’s won more money at the games than waved goodbye to. Dills won $5,800 playing Candy Money a few weeks ago. It isn’t a hard game to master, she said, putting down a cigarette into an ashtray to free her hands and visually explain the game. You simply match identical items on the screen. They match; you win, she said, pointing at the screen.

“I’ll probably never win that much again,” Dills said of that blue ribbon day. “But I really play just to take a break.”

That break could end for gamblers such as Dills if the state of North Carolina has its way. Sweepstakes cafes such as this one are in the crosshairs.

The General Assembly first banned video gambling in 2007. It didn’t take long before so-called “sweepstakes” cropped up as an alternative. Lawmakers viewed the sweepstakes as a reincarnation of video gambling under a different name, designed to circumvent the previous ban. So the General Assembly went back to the drawing board and passed another ban in 2010 aimed at putting sweepstakes cafes out of business as well — the third attempt in an ongoing game of cat and mouse between the state and video gambling industry.

But the situation didn’t turn out as black and white as lawmakers had anticipated. Lawsuits challenging the ban have allowed the games to continue, leaving local law enforcement officers confused about whether sweepstakes machines operating in their counties are illegal or not.

And, meanwhile, owners of sweepstakes cafes are arguing that any attempt to close them down is a violation of free speech rights under the First Amendment — the basis of the pending lawsuit.

“There are some people who have gambling problems,” said Melissa Hurst, the owner of M&J’s in Franklin. “But what is the difference between us doing it here, and the casino being right over the mountain?”

Or, for that matter, sweepstake proponents argue, what’s the difference from sweepstakes machines in parlors and the state-endorsed, state-managed education lottery?

The sweepstakes cafes are a helpful, if not always fully embraced, revenue source in towns such as Franklin. The municipality charges a $50 business licensing fee and a $2,600 sweepstakes fee. The towns of Canton and Maggie Valley levy comparable fees on businesses operating sweepstakes machines.

In Franklin, it adds up to about $10,000 a year in revenue for the town, according to Franklin Finance Officer Janet Anderson.

And that’s just for four sweepstakes cafes located in the town limits; there’s many more operating outside those boundaries in greater Macon County. The county, however, doesn’t levy specific fees for these types of businesses.

 

‘Confusing law’

Law enforcement officers in Macon County, and in most of the state, have taken a hands-off approach to the sweepstakes cafes.

“We’ve been advised by the state Attorney General’s office not to enforce the law,” Macon County Sheriff Robbie Holland said. “It’s a very confusing law. We know there are people potentially abusing it, but the AG did not want us to prosecute any cases until they have a ruling.”

The state Court of Appeals held oral arguments last month on two lawsuits challenging the state’s sweepstakes ban but has not issued a ruling. The cases were first heard by lower-level courts, with those judges issuing mixed reviews on the 2010 law.

One judge upheld the entire law to ban the machines. Another judge struck down part of the law and allowed that certain machines could operate legally but also agreeing to the Free Speech argument in certain other cases.

“We have to keep watching the law, because it keeps changing,” M&J’s Hurst said.

Christy Wilson, who works in a nearby sweepstakes café owned by the same family, agreed with Hurst.

“You’ve got to make sure you’re up to date,” Wilson said.

The Buncombe County sheriff was one of the few in the state who was enforcing the state law banning sweepstakes machines. Buncombe, perhaps, has a lower tolerance for the offshoot of video gambling. Its former sheriff went to jail for his involvement in an organized crime ring centered around video poker.

After charges against those operating the sweepstakes machines were dismissed in Buncombe County court because of the pending lawsuit, the sheriff announced this month that he would suspend action against sweepstake operators.

Running sweepstakes cafes come at potential costs in the community to these business owners and workers included.

“There’s a lot of people who look down on it,” Hurst said.

Leaving possible moral implications aside, Sheriff Holland’s deputies in actuality respond to very few calls at or from the local sweepstakes cafes.

“There are few to zero problems at the establishments where these machines are set up,” Holland said.

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