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Wednesday, 16 December 2009 12:59

Towns use fees, restrictions to push back against video gambling look alike

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Local governments have begun the process of regulating cyber sweepstakes machines, which are multiplying rapidly across Western North Carolina.

The responsibility for regulating cyber sweepstakes has largely been left in local governments’ hands until a consensus is reached at a state level on whether these machines akin to video gambling should be legal.

The Town of Franklin passed a measure last week that would require businesses with sweepstakes machines to fork over $2,600 each year for a business license.

Franklin Town Manager Sam Greenwood said one of the town’s main goals is to locate all businesses that operate cyber sweepstakes machines. For now, each business can have up to 4 cyber sweepstakes machines.

Greenwood said cyber sweepstakes are so profitable that a $2,600 annual fee is not excessive.

“Looking at the profit ratio return, it doesn’t seem to be that much after all,” said Greenwood.

Greenwood said the town wanted to stay away from regulating the machines and treat the issue from a licensing standpoint. But the fees do serve another purpose.

“It’s an expression of the town’s displeasure with having them,” said Greenwood.

Meanwhile, Maggie Valley’s planning board unanimously recommended restrictions on cyber sweepstakes be inserted into the town’s zoning ordinance. The town board of aldermen must approve the amendment before it can be put in place.

As the planning board’s amendment stands, the machines must be at least 500 feet away from dwellings, 1,000 feet away from any other business with cyber sweepstakes, and 1,000 feet away from schools, religious institutions, libraries, daycare centers and public parks.

The ordinance also states that there must be at least 1,000 square feet of indoor space per machine. The requirement prevents a small storefront from housing nothing but a series of video gaming machines, since each machine would require floor space equivalent to a typical one-bedroom apartment.

A 90-day moratorium on new cyber sweepstakes machines is still in effect in Maggie until the board passes the new regulations.

Maggie Planning Director Nathan Clark said he’s not ruling out the possibility of charging a fee in the future, but amending the zoning ordinance is the bigger priority for now.

“It’s more to the heart of what the moratorium was about,” said Clark.

If passed by the town board, the amendment would not apply to businesses that already operated cyber sweepstakes machines before the moratorium was passed.

However, these businesses would be affected if they expand operations.

The Town of Canton also has a 90-day moratorium on sweepstakes machines in place, but it has yet to approve any regulations.

 

How we got here

A loophole in the video poker ban has allowed cyber sweepstakes to proliferate across the state. The gaming industry’s new formula has so far been successful in bypassing every restriction that has originated in the state legislature.

A Superior Court judge in Guilford County issued a preliminary injunction, prohibiting law enforcement officers from taking any action against the machines until state law is clarified.

The judge even banned law enforcement officers from stating publicly that the machines are illegal.

Earlier this year, a Wake County Superior Court judge ruled that prohibiting electronic gaming statewide while allowing the Eastern Band of Cherokee Indians to operate the games was unconstitutional. That ruling has been stayed pending appeal.

While cyber sweepstakes are similar to video poker, they do not directly involve cash. Customers buy a phone or Internet card, or enter a contest for the chance to play at the sweepstakes terminal for free.

They have the option of swiping that card on the sweepstakes machine to play games of chance. Playing those games will allow them to see how much phone or Internet time they’ve won by buying the card. Customers have the option of then cashing in the phone or Internet time they’ve won for money.

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