State News

Sweepstakes cafes look for way around state ban

Posted November 29, 2010 1:55 p.m. EST
Updated November 30, 2010 5:56 p.m. EST

— Although a state ban on sweepstakes cafes takes effect Wednesday, the owners of the gaming businesses are trying to figure out a way to remain in operation.

The sweepstakes cafes sell blocks of time that customers use to gamble online or via cell phone for cash and prizes. An estimated 1,000 such businesses have sprung up in strip shopping centers statewide in the past year.

Two trial court rulings have left a ban on video-based sweepstakes machines in North Carolina largely intact, meaning games that have the look and feel of video poker are supposed to be unplugged Dec. 1.

A Wake County judge on Monday dismissed a lawsuit filed by an amusement machine company challenging the state law. Meanwhile, a judge in Guilford County last week upheld most of the law approved by the General Assembly in July but left the door open for some games when he ruled a portion of the law as too broad.

Superior Court Judge John Craig III ruled that video-game sweepstakes are considered free speech under the First Amendment, but he said the state has the right to limit games that mimic gambling.

Chase Brooks, who heads the North Carolina Internet Based Sweepstakes Organization, said he believes Craig's ruling opens the door for software changes that will allow the sweepstakes cafes to continue operating.

"Just because a place is open the very next day doesn't mean it's illegal. It means it's readjusted itself, and now it's running under the new conditions of the law," Brooks said. "It's an extremely muddied situation at the moment."

Many state lawmakers said they intended to clear away the mud when they passed the ban on video gaming last summer.

"I'm tired of play Whack-a-Mole with this industry. The North Carolina General Assembly historically spoke and said it's illegal," said Rep. Ray Rapp, D-Madison.

The estimated 5,800 people who work in the hundreds of sweepstakes cafes across North Carolina say they hope they won't be unemployed by the end of the week.

"I just don't see how the state can afford to put that many more people out of work," said Todd Hunter, who works in a Triangle-area sweepstakes cafe. "There's got to be a way they can come to some kind of conclusion and keep us all working."

Players also are fuming about the ban.

"A lot of people just want to come in here to play when they have free time. It's their money. They should be able to spend it how they want to," Dawn McLean said.

Noelle Talley, a spokeswoman for the Attorney General's Office, said the rulings weren't in writing yet, so she couldn't say how the state would proceed enforcing the law.

Many local prosecutors are waiting for guidance from Attorney General Roy Cooper. Talley said Cooper remains committed to banning sweepstakes cafes but wants to review the court rulings.

Brooks said industry representatives hope a new Republican majority in the General Assembly and the state's desperate need for revenue will ultimately lead to regulation and taxation of sweepstakes cafes. A ban isn't enough to hold them back, he said.

"(State officials) need to wake up and move into the 21st century. The industry will survive," he said.