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Sweepstakes growth debated in Winston-Salem

by Daniel Schere

Sweepstakes debate continues in Winston-Salem

daniel@yesweekly.com @Daniel_Schere

Since October 6, one issue has continued to appear on the agenda of Winston-Salem City Council meetings. At the Oct. 6 meeting, two zoning requests were considered that would change shopping centers where electronic sweepstakes cafes are located to Highway Business zones, which would allow additional sweepstakes businesses to develop.

At its December 1 meeting, the council voted once again to move the discussion of a sweepstakes location at the corner of New Walkertown and Waterworks Roads to a later date, citing the need to take a look at the issues more closely. This marks the third time the item has been moved to a later meeting. It will next be discussed at the council’s March 2 meeting.

The second petition, which would rezone an area off of West Clemmonsville Road to HB, has also been moved to the spring. There was some discussion at the council’s meeting on November 3 from surrounding neighbors.

Both Winston-Salem and Greensboro have clauses in their city codes which specifically allow “electronic sweepstakes operations.” Both cities impose a $2,500 fee as well as a privilege license tax of $500 per machine onsite. One year ago the city passed a law that limited sweepstakes businesses to HB zones and set a date of June 30, 2015 of when businesses located outside of that zone must close or relocate.

The proposed zoning change was brought by John Raymond Oliver Jr. and was brought to council after planning board discussions this summer.

The board approved the petition 6-2, with members Barry Lyons and Melynda Dunigan voting against it. Dunigan said she saw the petition as an attempt to expand locations of sweepstakes beyond what council already approved.

“There are several other sweepstakes operations in the vicinity, and there had been a request made from the community for the council to look into some kind of anti-clustering ordinance,” she said. “They’re now considering that and I think that’s why it was pushed until March.”

Dunigan said sweepstakes are outlawed in Forsyth County despite the fact that the city allows them to a degree. She added that the shopping center in question is already zoned HB, but it needs to be zoned for general use in order for more sweepstakes businesses to be allowed in.

“The way I look at it is that, when the council adopted the ordinance, they wanted to limit these operations to HB. HB already had the use of sweepstakes,” she said. “They specifically grandfathered existing HB in.”

Dunigan said she did not approve of sweepstakes being located near the area designated for the Jetway Neighborhood Activity Center.

“There were several issues,” she said. “The one that I publicly raised was that the shopping center they wanted to have zoned HB is in the neighborhood activity center. And according to the area plan, the neighborhood activity center should be in an area where you have retail that caters to the surrounding neighborhood.”

George Bryan Jr. has voiced his opposition to the plan on behalf of the Winston-Salem Neighborhood Alliance, arguing that sweepstakes businesses could spread to all of the city’s neighborhoods.

“Most of these places that are asking for a rezoning so far have been neighborhood business,” he said.

“The reason the city has neighborhood business zoning over highway business zoning is that neighborhood businesses serve the neighborhood.”

Bryan said he is not against the sweepstakes operations themselves, but wants the city’s zoning rules to be applied consistently. Yet he said neighbors feel that sweepstakes are more predatory than helpful.

“That isn’t exactly where I was coming from,” Bryan said. “I wasn’t coming from a moralistic place, I was coming from more of a zoning and neighborhood services type direction.”

Sweepstakes businesses have been a hotly debated subject in North Carolina for several years. A number of illegal sweepstakes operations have been shut down in other parts of the state. A broad ban on gambling was passed in 2007, and one specifically tailored to video game sweepstakes was passed in 2010. The latter decision was appealed but upheld by the state supreme court two years later. Attorney Jason Hicks of the firm Womble Carlyle said there are loopholes in the law that allow certain types of gaming software to be used.

“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.

Bryan said this uncertain nature of where Winston-Salem stands on Internet gaming compared with the rest of the state made him uneasy.

“When we looked at the request for a zoning change, it didn’t seem to make much sense in light of the fact that the city was unsure about the legal status of the sweepstakes, and that many of these sweepstakes locations, particularly the one near waterworks, had been changed with zoning,” he said. “And here they were coming back into the city, asking for a change in zoning to be included there when they’ve just been excluded by a zoning change a while back. And it didn’t make any sense to accommodate a business that was in legal limbo.”

One concern surrounding sweepstakes often cited by neighbors is an increase in crime and a subsequent lack of other businesses that want to settle somewhere. An October 2010 report prepared by the Governor’s Crime Commission looked at sweepstakes businesses in 63 North Carolina counties and found that about 37 percent of law enforcement agencies reported criminal activity associated with them. Charges included illegal gambling, money laundering, fraud and drug and alcohol offenses.

Dunigan said she is aware of the link between sweepstakes and crime but has not seen enough evidence to know for sure if it is accurate.

“It’s hard to get statistics that say if crime was related to the business of the sweepstakes or not,” she said. “They’re cash-rich operations, and for that reason they could attract armed robbery. So there’s a lot of issues, but not any that are so clear cut that you could have hard evidence for it.” !

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