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HIGH STAKES

by Daniel Schere

Two more sweepstakes cafes in the works for Winston-Salem

daniel@yesweekly.com | @Daniel_Schere

In North Carolina, the only place you can gamble legally is at Harrah’s casino on the Cherokee reservation. But the city of Winston-Salem is considering the addition of two new electronic sweepstakes operations that would be able to operate without being in conflict with state law.

Electronic sweepstakes operations are small stores that sell phone cards and internet access to customers who use the store’s computers to participate in sweepstakes contests. There are currently about 20 in Winston-Salem, according to Assistant City Attorney Jerry Kontos.

The city council currently has two outstanding zoning requests from petitioners who want to build sweepstakes cafes. One would be located on the northeast corner of New Walkertown Road and Waterworks Road. The other would be located near the interchange of Peters Creek Parkway and West Clemmonsville Road. The council was scheduled to discuss the petitions at it’s meeting on October 6, but the items were moved to the October 27 and November 3 meetings.

Although the planning board approved the petitions, the concept of adding two sweepstakes cafes has prompted concern from some residents.

“Can you explain to me why we continue to put nothing but business around that are a nuisance,” resident Tanya Swaim wrote to in an email to Chris Frye. “I thought that ‘these’ business were suppose to be shut down. They are illegal and troublesome.”

Those who have spoken out against the petitions reflect a mixture of feelings that range from frustration over the increase in sweepstakes businesses to surprise that they are permitted to operate here. Although there is no official law on the books banning these types of establishments, a number of cafes have been shut down around the state, including one at a truck stop off of I-95 in Kenly that was seized by the FBI on May 7.

The questionable legality of operating sweepstakes cafes is a national issue that has come to light in the past few years, particularly in North Carolina. According to the American Gaming Association’s website, café operators claim that their business constitutes free speech “” an idea that was upheld by the state court of appeals in 2012. But this ruling was reversed later that year by the state supreme court in the case Sandhills Amusements v. State of North Carolina. Eight other states have taken a position on the operation of sweepstakes cafes, Another contradiction lies in the difference between state law and the Winston-Salem city code. According to the North Carolina Department of Public Safety, internet gaming became illegal in 2007 with a definition that included “video poker games, video playing card games, video bingo games, video craps games, video keno games, video lotto games, eight liner games, Pot-Of-Gold games, and any video game based on or involving the random or chance matching of different pictures, words, numbers, or symbols not dependent on the skill or dexterity of the player.” The city of Winston-Salem allows gaming machines but charges a $2500 business license fee as well as $500 per machine.

Attorney Jason Hicks of the firm Womble Carlyle specializes in gaming and antitrust law. He said court rulings of the past that have been favorable to the sweepstakes gaming industry have been based on the concept that the games are skill-based and not purely for entertainment.

“One of the key criteria is whether the results of the game are viewed in an interesting, entertaining display, or whether the results are because of chance or because of skill,” he said.

Hicks added that game operators in North Carolina have designed systems that comply with these past rulings. Hicks said right now individual municipalities are able to set their own laws as to what kind of internet gaming may take place.”Some localities have attempted to ban them, some localities have attempted to place zoning restrictions on where they could be located, and some localities have decided to regulate them by issuing licenses just like a special type of business license.” !

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