Archive for July, 2010

North Carolina Sweepstakes Internet Cafes Dealt a Heavy Blow

Friday, July 9th, 2010

The last few weeks have been tense for sweepstakes business proponents in North Carolina.  As some lawmakers rallied to ban sweepstakes gaming, those involved in the industry fought to defend their right to play the games and entertainment they love.  It is estimated that several hundred thousand people play sweepstakes games with some degree of regularity across the state, and at least ten thousand are employed in the industry.

Although it was believed that the primary purpose of this session of Congress was to balance the budget, a few representatives evidently had a bone to pick with sweepstakes gaming.  They made no secret of their intent to abolish this industry from the state.

At first the North Carolina Senate postponed discussing the bill several times due to its controversial nature.  However, when the bill (House Bill 80) finally made it to the table it was quickly and overwhelmingly approved.  Here’s an article that was written about the situation shortly after the Senate approved it: Gaming Bill not a Sure Bet

What, exactly, does the bill do?  Essentially it aims to prevent all electronic sweepstakes gaming.  For specifics on the bill, feel free to read the actual document here: North Carolina House Bill 80

After making its way through the Senate, the bill was again delayed in the House of Representatives.  Here it was postponed more than once as Congress pushed the discussion back.  It seemed nobody wanted to talk about it.  Apparently Congress realized that this was a delicate and politically charged topic.

Finally, yesterday (July 7), the bill was brought up again in the House.  Discussions were heated as both sides of the debate were heard.  On the “Pro” side (getting rid of sweepstakes) it was argued that sweepstakes games can become an addiction.  Horror stories were told of the poor and unfortunate who had become so addicted to the games that they spent all their rent money or grocery money, leaving their children hungry.  One proponent of the bill, with tears in his eyes, related a story involved a “church-going” woman who supposedly, as a result of her involvement in sweepstakes gaming, got so far in debt that she bought a gun and robbed a bank to “feed her addiction”.

I’m sure I’m not the only one who was rolling my eyes at this point in the debate.  Another congressman quickly interjected that it shouldn’t be the government’s role to regulate morals.  Just because someone can become addicted to something doesn’t mean we should outlaw it.  The vast majority of people who visit sweepstakes Internet cafes do so as a casual form of entertainment.  They view sweepstakes gaming as a social activity similar to going to the movies or a sporting event.  They plan to spend $20 or $30 in an evening and this is how they choose to spend it.

Unfortunately, since some people can become addicted to the activity, others feel a moral obligation to “protect us from ourselves”.  Are we three years old?  Perhaps the next law passed will involve keeping small objects away from us because we might put them in our mouths and choke on them.

Then there’s the issue of the the state-run lottery.  This topic was also brought up and discussed.  How are sweepstakes any different from a lottery–except that the government is running one of them?  Of course, sweepstakes machines compete with the lottery.  Hmm…  I smell hypocrisy.

Is it possible that some can become addicted to *any* highly entertaining activity?  YES.  Some people watch too much football.  Some people play too much Xbox (can’t the gov’t make THAT illegal and help me get my kids out from in front of the TV?)  Some people drink too much.  Some people read too many trashy novels.  Some are even addicted to working out.  And some people play sweepstakes games.  Which are morally okay and which are not?  Just ask the North Carolina government.  They’ll tell you.

But what are they going to tell Trina and Karen, two hard-working, entrepreneurial North Carolina women who have battled their city for months to get a permit to launch their new sweepstakes Internet cafe?  They’ve invested an incredible amount of time and money into their new business, and on Wednesday, the SAME DAY that the state passed the ban, they FINALLY got the approval from their city to open…   After careful consideration they’ve decided to continue as planned with their business to see if they can recoup their investment in the six months before the law takes affect. What does the government have to say to them? I’ll say this: good luck Trina and Karen.

And what about Najam, an ambitious NC man who just spent tens of thousands of dollars to get his sweepstakes business open?  He’s been working on this project for months, and finally, yesterday (the day after the ban was passed), his business was open to the public.  He has about six months to recoup his investment before the law takes effect.  What will they tell HIM?  What about his employees?

Consider the fact that many sweepstakes business owners have already paid thousands (or tens of thousands) of dollars to local government for special use permits.  Cities and counties have been collecting “special taxes” on sweepstakes businesses.  One of our clients called yesterday asking “I already paid a $20,000 yearly tax to my city for the right to run this business.  So do I get to stay in business for a year or will the ban shut me down in December?”  Good question.  Ask your congressman.

In spite of the new legislation, North Carolina sweepstakes business owners say “we’re not done yet”.  This is, by all accounts, a Pandora’s box.  There will undoubtedly be backlash as people fight to get this changed and seek loopholes.  However, there can be no argument about this fact; the North Carolina government doesn’t want sweepstakes cafes in their state.