Special agents with Alcohol Law Enforcement raided 115 businesses on Thursday, May 5, and eight of those businesses were located in Haywood and Jackson counties. ALE spokesperson Shannon O’Toole said agents seized nine machines in Haywood County and 11 machines in Jackson County. The undercover operation — dubbed “Cannonball” — has been ongoing since July 2015.
“This primarily stemmed from complaints from people in the community,” O’Toole said. “It’s part of our mission to increase the quality of life for everyone across the state.”
Though some of the gaming machines removed from Haywood and Jackson were located at larger, more visible stores, O’Toole said it’s more typical across the state for these machines to be tucked away at smaller, more remote businesses. According to ALE, these gambling machine locations can be a breeding ground for other illegal activity.
“People who like to rob businesses know where these machines are located so now you get secondary crime like potential robberies and drug transactions,” O’Toole said. “And that same place may be the closest place for people to get milk but they’re uncomfortable going there because of these activities.”
During the investigation, undercover ALE agents went into these convenience stores to interact with the illegal gaming machines and their patrons. Agents were able to observe patrons using the illegal gaming machines to see if the gaming software could be considered illegal. Most of the illegal video gaming machines seized were operating Gift Surplus software, which previously had an injunction placed against the Onslow County Sheriff’s Office. In July of 2015, the North Carolina Supreme Court overturned that injunction.
O’Toole said there are many factors in the law that could deem a gaming software illegal, but much of it is left up to legal interpretation in court. Another problem is that vendors try to circumvent the law by changing the software system if their old software was ruled illegal in court. Vendors have also tried to use the “skill and dexterity” loophole to get around the law. If the game requires some skill as opposed to luck of the draw, vendors think they are exempt from the gambling machine ban. O’Toole said neither is a reliable indicator because these software programs can easily be rigged.
“The state lottery is a game of chance designed to pay out in statistical intervals, but these machines are computer systems in a box that have the potential of being manipulated by the vendors,” O’Toole said.
The investigation alleges that the 115 establishments were operating illegal gaming machines by paying out cash winnings for patrons placing bets on the electronic gaming machines and winning money. Most of the identified locations held permits with both the ABC Commission and North Carolina Education Lottery. ALE agents will submit violation reports to both of those agencies for locations found to be in in violation of their permits.
North Carolina ABC Chairman Jim Gardner said in a press release that any permitted locations found in violation could result with a fine or suspension of their ABC permits. Gambling and illegal video gaming machines are prohibited under state law and are not allowed in locations holding ABC permits.
“You have people here circumventing taxation with cash payouts,” O’Toole said. “That tax money could be going to education or to help economic development in counties without industry.”
No arrests were made during the raid, but future arrests are anticipated as the investigation progresses, O’Toole said.
While local law enforcement was aware of the statewide raid, Waynesville Police Chief Bill Hollingsed said his agency had no other involvement in the investigation. Following a December 2012 North Carolina Supreme Court ruling that found video sweepstakes were an illegal form of gambling, local law enforcement was vigilant in removing the machines from local businesses. But a lack of convictions in the District Court system made Hollingsed rethink the agency’s priorities and resources.
“Judges in 30th District had their own interpretation of the statute, so we’ve not put a whole lot of effort into it lately,” he said.
The following businesses were raided last week in Jackson and Haywood counties by law enforcement looking for illegal sweepstakes gaming machines.
• Smokey Mountain Truck & Auto Center, 721 Champion Drive, Canton
• Time Out Market 3, 16 Old Balsam Road, Waynesville
• Sam’s Mart, 3360 Crabtree Road, Waynesville
• Catamount Pump & Go, 21 Steeple Road, Sylva
• PJ’s Food Mart, 237 Asheville Highway, Sylva
• How Convenient, 249 W. Main Street, Sylva
• Jimmy’s Mini Market, 10069 Highway 107 South, Tuckasegee
• JJ’s Eatery, 6188 N.C. 107, Glenville