WRAL Investigates

Study: Sweepstakes cafés could net N.C. millions

Posted May 12, 2010

— As state lawmakers are weighing their options for closing a budget deficit of nearly $800 million, some are exploring taxing the wave of gaming parlors that have opened statewide in recent months.

The so-called sweepstakes cafés, which are sprouting up in strip shopping centers across North Carolina, sell players blocks of time to play games of chance on computers or cell phones. The odds are long, but players who win can get a cash payout.

Sweepstakes cafe Some want gaming parlors banned, others want them taxed

Although opponents have compared the computer terminals in the sweepstakes cafés to video poker, recent court rulings have determined the businesses are legal.

Sen. David Hoyle, D-Gaston, said Wednesday that the state should consider regulating and taxing the gaming parlors.

"If it's a revenue source of any significant consequence, maybe it's something we have to look at," Hoyle said.

The gaming industry wants state regulation and revenue sharing, but private business owners have said they don't want the lottery to run their operations.

Hoyle asked Tom Shaheen, director of the North Carolina Education Lottery, to analyze the impact of having the state regulate "video lottery terminals" in the sweepstakes cafés. WRAL Investigates obtained Shaheen's report, in which he estimates North Carolina could net $350 million the first year and $576 million by the fourth year.

In West Virginia, which has regulated such video terminals for years, they account for 88 percent of the state's nearly $1.5 billion in annual lottery proceeds. In that state, though, the video games are allowed only at race tracks and places with liquor licenses.

"To pay some of those games, you probably need to be drunk to do it, because you're not going to win," Hoyle said.

Sweepstakes café opponents in the General Assembly said they have enough votes to ban the businesses this legislative session.

"We need to make a statement once and for all, not provide anymore loopholes for folks to get around and simply stop it," said Rep. Ray Rapp, D-Madison.

Meanwhile, some communities are so riled up over what they consider legalized gambling that they've taken various steps to regulate it.

Apex and Holly Springs leaders recently approved zoning rules to classify sweepstakes cafés as "adult businesses," similar to strip clubs. The rules restrict the businesses to industrial zones and limit their hours of operation.

"We decided that wasn't appropriate for Apex," Mayor Keith Weatherly said. "We restricted them as much as we can. We can't outlaw them. We can't forbid them to be in Apex, but we tightened up as much as we could."

21 Comments

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  • ykm May 13, 4:27 p.m.

    Interesting how a politician will sell his or her sole for a buck. If you support this bunch ya might get the chance to meet them again.

  • ghimmy51 May 13, 4:18 p.m.

    I don't want it in my state. Tell your state representatives to put their greedy tongues back in their mouths and shut this stuff down now.

  • lhh67 May 13, 3:11 p.m.

    you cannot legislate morality!! People are going to do what they are going to do anyway. For those who wish to endulge in any legal form of gaming, it truely is their own business. I think the state could benefit from this if they are smart enough to keep overhead low and not do with this what they did with the liquor boards!!! I'm for anything that will not take my pay back to balance the state budget!!!!

  • cb100 May 13, 12:46 p.m.

    Suurrrre - Let the state take taxes from these and you know it won't have any effect on the taxpayer. Only those who profit from this are the same ones who overspend on stupid committees (someones pocket) and cut from schools. Who do they think they are fooling? Not I.

  • whatusay May 13, 12:16 p.m.

    Most seem to understand that the state will have to hire hundreds more state employees if this is approved. Government needs to get smaller, not larger. Eventually everyone will be working for the government. Who will pay their salaries?

  • tamiya_stars May 13, 10:08 a.m.

    I couldn't care less about this. The lottery is a way to get people who do not ordinarily pay any taxes to pay at least something, and I see this as no different. Nobody is ever forced to play the lottery or these silly things whatever they are (I have never even seen one).

  • 82ndAAHeel May 13, 9:58 a.m.

    I am an educated member of this county with advanced degrees from UNC and NCSU. I usually go to these parlors fives times a week and spend twenty five dollars. Each time I play I normally win at least my money back. Now of course if you keep putting the "entries" back into the machine you will eventually lose your money. Last night for example I was bored and dropped six dollars in and walked out with a hundred and sixty. Lol at everybody who against gambling and taxing it. I can not believe NC lawmakers don't have their hands out already. In the last few months I have won a few thousand and was given a 1099 form just like a big win on a scratch off ticket. I am making a contribution to the state coffer lol and at the same time enjoying myself in a relaxing atmosphere without drugs or alcohol. If you disapprove of smoking, drinking, gambling, promiscuity, then don't do it. But there will always be people that do, why not regulate it and make money by taxing it.

  • wayneboyd May 13, 9:18 a.m.

    In my county they are awaiting the states ruling on the legal issues, and are proposing a $2.000.00 privilege license to open the business and a $1,0000.00 per year tax on each machine.
    Somewhere I read where the courts declared that "you cannot determine something to be illegal, and then permit its use through the issuance of a license."
    What will ultimately happen is what always does with the government. It will require the hiring and equipping so many government employees to monitor and collect the revenue, that the state will never realize any real benefits from allowing them to exist.
    Then in two years or so when people realize that this is really a scam and these fly by night joints close their doors, the taxpayers will still have the government workers to support because the government refuses to do away with any agency they have ever created.

  • jon2four May 13, 9:07 a.m.

    Why not tax the collection plates at churches next?

    Churches are supposed to be embassies of the government of the kingdom of God, how could the state of North Carolina tax the Government of God ?

  • research9 May 13, 9:01 a.m.

    Leave no stone unturned! Or untaxed!! I could care less about this entire topic in general, but aren't the payouts on these games really small? Like $50 bucks here and $100 there? Who knows, never played one myself, but it seems to me if the payouts are small, the state gain will be small...and knowing our leaders they'll spend more trying to police the taxation than they'll actually make!

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