Thousands could lose jobs as sweepstakes parlors close

Posted December 17, 2012

— Around 6,000 workers could lose their jobs as the result of a state Supreme Court ruling upholding North Carolina's ban on video sweepstakes, according to one estimate.

Julius C. (JC) Poindexter, a former professor of economics and finance at N.C. State, wrote a paper in 2011 that estimated that between 4,800 to 6,000 jobs could be directly tied to the sweepstakes industry in North Carolina. That paper, Poindexter said, was financed by those who manufacture software for the industry. 

Poindexter's paper points out that the economic impact of the cafes goes beyond the workers themselves. It includes the services, such as electricity and phone lines, and rent that the cafes use. From the white paper: 

An adding up of all the categories of expenditures believed to be typical of a representative Internet cafe results in total monthly payments (on all of the varied inputs discussed above) totaling $21,230 monthly, or $254,760 yearly. These payments (which do not include payouts back to customers) largely go to state of North Carolina citizens and businesses. Local income for an area with a typical Internet cafe, then, sees a direct spending boost from the cafe of more than a quarter of a million dollars, with direct employment (employees plus contracted service labor) of a likely 8 to 10 North Carolina citizens. With 600 cafes operating in the state, each, on average, like the representative cafe described above, yearly direct spending benefits generated within the state are at least $152,856,000.

The industry has survived legal challenges before. The state Supreme Court ruling actually upheld the legislature's third attempt to outlaw video poker and its kin since 2006. 

And it's unclear when enforcement may begin. Some cafe owners say they expect to have to shut down Jan. 3, but spokesmen for the Attorney General's office and other law enforcement agencies did not confirm that date. Update: The N.C. Sheriffs Association says the Attorney General's Office has just confirmed enforcement may start on Jan. 3.  If a shutdown does happen, Poindexter said Monday it would mean many people will be looking for work. 

"It's troublesome because the class of worker that the Internet cafes employ is a class of worker that's been most impacted by the effects of the Great Recession," Poindexter said. Low-skilled workers, he said, have found themselves hardest hit by the economic downturn. "It's a little hard to see where those replacement jobs are coming from." 

The owners of strip malls and other retail spaces may find it difficult to replace the monthly rents they received from the cafes as well, Poindexter said. 


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  • admyank Dec 18, 2012

    Oh, well! I know a great auctioneer who can sell the stuff!

  • Absurd Dec 17, 2012

    These employees gambled on a future court ruling and lost - seems appropriate.

  • Rebelyell55 Dec 17, 2012

    There is a sucker born every minute. Ya just got to know what they're likely to want nexts.

  • Steven Dec 17, 2012

    Have to laugh at the folks that are so excited about the ruling. If you didn't patronize them, what does it matter to you. These people can spend their money as they wish. Presuming to know anything about these people or that the people that run them are in organized crime, etc is just foolish. I know several church going folks that actually own them that would be surprised to know that they are in organized crime.

  • disgusted2010 Dec 17, 2012

    "I know the owners of two of these places. Please tell me how these church going folks in Frnaklinton and Youngsville are involved in organized crime? LOL what in the world!!!"

    The "sweepstakes" is just another incarnation of video poker which has been proven to be organized crime. How many video poker operators have been convicted and sent to prison for gambling, money laundering, tax evasion, wire fraud, etc.? Not organized crime, what about the sheriff in Buncombe County that went to prison for taking bribes from gambling operators to look the other way. In our history when has the legislature passed a law making an act, here "sweepstakes," a crime and those who are violating the law band together and hire lawyers to sue the state and pay millions of dollars to legislators in so called campaign contributions? If that is not organized, what is?

    There is just too much money to be made bleeding gullible poor people of their rent/grocery money to let it go.

  • big_mikes Dec 17, 2012

    I just don't like this. This reeks of corruption on the Supreme Court. Someone was lobbying them and dishing out money. I mean, NC opened a can worms when they decided to operate a Lottery, which is gambling . So to tell business owners that they can do as you do and that is make a profit on sweepstakes machine, is just blatantly wrong and corrupt. This needs to be investigated or taken to the Supreme Court of the USA.

  • ncpilot2 Dec 17, 2012

    I have yet to see one of these "businesses" that looks like a business we would be proud to have in our neighborhood.

  • ncpilot2 Dec 17, 2012

    The most important part to this story is the IMPORTANT point that this "paper" was financed by a part of the gaming industry. So, naturally, it questions its totally accuracy.

  • DurhamDevil Dec 17, 2012

    Well, NO - because their patrons brought us business too.

    We have a grocery store next to one of them, and their patrons would swing by our store for snacks before going in, and would stop by again for breakfast and lunch foods to take home when they left.

    Esser Huma

    Yep - I bet. After having spent all their "cash" in the gambling joint, they come in and use their "get-food-free" card at MY expense.

    I don't give a hoot about their business or yours, if you support them.

  • Lovemy2kids Dec 17, 2012

    I love all the comments from those who call the players "Fools, Poor, etc" I play at the Sweepstakes Cafe and I an no FOOL nor am I poor or live off the system. I work hard for my money and pay my own bills. If I choose to spend $20, $50 or $1,000 a week it is my choice. I want to know how many of the people who made a comment between 8am & 5pm today actually have a real job??? I am willing to bet that over 1/2 of the people ranting below do not even work and are living off of the system. So judge all you want but those of us who work our tail off and can afford to blow money are laughing at all your judgemental comments over being jelious!!! I hope they do not close them down just to tick you off even more!!!