HOW GAMBLING BECAME LEGAL IN THE TRIAD
Last month, a new business calling itself Pots O’ Gold applied for 17 privilege licenses with the city of Greensboro, all listed under the same address: 3806-B High Point Road. This was unusual in that each license was for the same kind of business, a 5141, described as “internet services/ communication” on the document. Also unusual was that two other businesses had applied for the same type of license that same month.
To the naked eye it might have seemed that Greensboro was experiencing a resurgence of internet cafes, those remnants from the days before smart phones and laptops where the uninitiated could log on for a couple hours with a nice, hot latte.
But something else was going on here. Because as of Dec. 22, 2009, a business license with the designation 5141 essentially allows the holder to own and operate a casino — right here in North Carolina. With some restrictions, of course.
Perhaps you’ve picked up on it — the sudden appearance of “sweepstakes” signs hanging outside gas stations and strip malls, the clicks and dings of video gaming emanating from the corner of your favorite convenience store. It’s all happening because a December NC Court of Appeals decision made an interpretation of existing federal law.
Believe it or not, North Carolina has had a casino since 1997, when Harrah’s Cherokee opened on Indian land in the western mountains, and it was the very same legislation that helped create Cherokee that greased the skids for the current gaming explosion.
US Code 25,2710, the law that legalized gaming on Native American land, clearly stipulates that Indian casinos may operate “within a State that permits such gaming for any purpose by any person, organization or entity.”
Pot O’ Gold has more than 60 machines, all of which pay out — sometimes. (photo by Devender Sellars)
By granting the Cherokee permission to open their casino, state lawmakers have inadvertently legalized many kinds of gambling in the Old North State. And the Court of Appeals ruling says they can’t take it away without also shuttering the massive complex out west.
These are exciting times, to be sure.
Within days of the court decision, gaming machines began proliferating in Guilford county — unregulated, untaxed and unmonitored. As of right now, they exist in a gray area of the law. And Guilford County’s top lawman, Sheriff BJ Barnes, says there’s not a lot that can be done about it.
In 2002, before the NC Education Lottery came into being, all 100 NC sheriffs came out against video poker, saying laws against it were unenforceable.
“We don’t make the law,” Barnes said. “And the law as it stands now is very confusing. It is not very conclusive as far as what we should and should not be doing.
“From my perspective, you do not have the law as clear-cut as it should be. The other aspect is that we don’t have the resources for this. This is a misdemeanor, and I’ve got cars out there that need to answer calls. We had 27,000 of them last year.”
And this is where Rep. Earl Jones of District 60 comes in.
Government watchers know Jones as a populist who oversees one of the most gerrymandered districts in the country, and he’s been known to espouse some caustic positions. It was Jones who helped make illegal the sending of text messages while driving in the state, he who suggested that supermarkets should be required to offer sanitary wipes for shopping carts. He has championed the paydaylending industry for the economically distressed, and he’s always supported embryonic stem cell research. Lately he’s been making noise about medical marijuana and the prospect of establishing a Starfleet Academy at NC A&T University, named for the organization from the fictitious “Star Trek” franchise in honor of alumni Astronaut Ron McNair.
He took up the video gaming cause in 2006, when he called the banning of it “hypocritical” in light of the recently adopted lottery. In 2008 he was the lone vote against a bill that would have banned video gaming statewide.
People have called Jones crazy before. But today he’s starting to look downright prescient.
“Here’s the point,” Jones said. “It doesn’t matter whether you like video lottery or not. That’s not the issue. The issue is that North Carolina is in the gaming-activity business with the Education Lottery, and that’s no different [from the machines].
“The second point is that the courts have ruled North Carolina Law restricting video lottery unconstitutional. That’s the bottom line.”
Because of that, Jones said, the “video lottery industry” has established hundreds of beachfronts throughout Greensboro and the state. And then he got to point No. 3.
“They’re making money,” he says, “and they’re not being taxed.”
To remedy this Jones introduced HB 1537, which imposes taxation and regulation on this burgeoning industry.
“My bill is somewhat of a combination,” he said. “We didn’t reinvent the wheel; we took the best of two or three states.
Under HB 1537, gaming revenue would be taxed 20 percent, with half of it going into the NC General Fund and the rest, he said, going to at-risk children and schools in the state. It spells out a licensing system, rules for operators, betting and payout limits, a fee structure and guidelines for the machines themselves. And it puts the onus of enforcement not on sheriffs’ departments, but on the NC Department of Revenue.
“First of all,” he said, “the video lottery activity should never have been a part of law enforcement. It’s a revenue collection issue. The NC Department of Revenue would regulate the industry just as they do in other states. With the technology right now… as soon as a person enters any video lottery venue, as soon as they put a dollar in that machine, as soon as they do that dollar goes to the department of revenue.”
Jones said it could mean an additional $500 million to the state’s beleaguered tax coffers, and it would put 6,000 North Carolinians to work.
And though video gambling has proven to be controversial in the past, Jones is bullish about HB 1537.
“Every time I get the opportunity to speak,” he said, “I change minds.”
The Pot O’ Gold on High Point Road operates in a strip mall near the Greensboro Coliseum, nestled among an excellent banh mi joint and a place called “Mo Money Taxes.”
Inside, 82-year-old Nora Barbee sits with her legs crossed in front of a video slot. She keeps the virtual reels spinning while she talks.
“Oh, I’m from Greensboro,” she says, her fingers dancing across the touch screen. “But my daddy died and we moved to Ohio.” She’s run up about $135 in credits on the machine after her initial investment of $100, but, she says, “I was up to about $200 before. I’m looking for those three sevens.”
She describes herself as an avid gambler. “I’ve been to Las Vegas and on cruise ships,” she says. “I won $800 at Cherokee.” And since the place opened two weeks ago, she says, she’s been here just about every day.
“I love this place,” she says. There’s much to love, if you have an affinity for this kind of action —more than 50 machines, blinking and dinging like crazy, with attendants whisking hot coffee, cold drinks and salted nuts to the gamers, provided, as they say, on the arm.
Me, I’ve always liked casinos ever since I first set foot in one — Casino Magic in Bay St. Louis, Miss. back in 1993, where I picked up the finer points of blackjack and experienced the unmitigated rush of doubling down on 11, catching a face card and then watching the dealer bust.
So yeah, I want to play. At the cashier’s desk, owner Matt Skinner explains the rules.
“We sell phone cards,” he says, and each one comes with $5 worth of credits on any machine in the house. I fork over a $20 and get four slips of paper with numerical codes on them, each good for 30 minutes of time on a pay phone.
My credits transfer over to a threeseat blackjack machine by the door, and I start playing $5 hands. I catch a blackjack right away, a $7 bump, and I continue playing my hybrid strategy that has served me so well for almost 20 years — hitting when necessary against the dealer’s up card, consistently doubling down on 11s (and, sometimes, 10s) and splitting cards whenever it’s not completely crazy to do so. After about 20 minutes, I’m up to $57. I am, in fact, beginning to lose my reporter’s objectivity. I’ve got
a hot cup of coffee in front of me, a cup of quality mixed nuts and an ashtray — yeah, you can smoke, though there’s no alcohol allowed on the premises. I’m having so much fun that if I forget myself for a minute, I can almost believe I’m in a Mississippi riverboat, or maybe a mom-and-pop casino off the Las Vegas strip.
“Our concept is very classy compared to other places,” Skinner says.
“This will be the only concept you see like this. We comp sodas and drinks. We have hot food. We’re really trying to reach out. We want people to feel warm here.”
Skinner’s from Columbia, SC, and he says he’s been busting it since he came to town to open up two weeks ago.
Greensboro resident Nora Barbee says she has visited the Pot O’ Gold just about every day since they opened more than two weeks ago. (photo by Brian Clarey).
“I love this town,” he says. “The fact that it’s right here in the middle of the Triad, the population. And also we found a great location,” right near the Four Seasons Convention Center and the area’s biggest arena. “We want to tackle that market,” he says.
And while Skinner is loath to give up what he calls “trade secrets,” he says that he will embrace the passage of HB 1537, even though it means forking over 20 percent of his profits to the state.
“Absolutely,” he says. “I think it’s only going to benefit the economy right now. We want to bring more revenue to the state of North Carolina.”
Meanwhile, my $57 has been whittled down to nothing. Just like in live blackjack, the dealer made an impossible set of draws for like six hands in a row. I guess I should have cashed out when I had the chance.
Compulsive gambling is, of course, a concern when gaming goes mainstream. But both the congressman and the sheriff take a philosophical stance on the issue.
“It’s a personal choice,” Sheriff Barnes said. “In some cases people end up losing money — big money. They lose rent, food, daycare money, and those are the times we get involved…. But there’s the other aspect of it. We can’t legislate morality, and if they don’t do it here, they’re gonna do it somewhere else. We need to let people know that there’s prices to pay for this kind of entertainment, just like when you go to Vegas you know probably at the outset how much you can afford to lose. That’s the same way with drinking, with drugs, with any kind of addiction.”
“You can’t base public policy on a few people who have addiction issues,” Rep. Jones said. “But what you are required to do is make sure you have methods in place to make sure those people can get counseling or provide some kind of help.”
But a couple factors compromise Jones’ position somewhat. For one, he has reported $1,700 from video gaming companies in his most recent campaign finance report. He addressed the concern with typical brio.
“That’s the part where you have misinformation,” he said. “I knew nothing about the industry, knew nothing about any association or PACs, and if you look at my campaign finance reports, I filed my legislation in March. The [group] that represented the industry contacted me just before I filed my legislation. You got some folks, elected officials, who specifically pursue legislation to get money, and anytime you see somebody with $50,000, $80,000 in campaign contributions, that’s what you got. I took a stand based on principle. Then, you see, like the Sierra Club, they see a person is interested in environmental issues, [they say], ‘We should get behind this person. He’s gonna support that legislation so we’re gonna support him.’” The other issue is a bit stickier. As the African-American representative of a carefully crafted black district, as a man who says he gave up his dream of pursuing science to obtain a law degree to help his people, as a guy who is supposed to be helping the African-American community, there is a perception that he has betrayed his mission because of the stereotype that blacks are the most avid gamers and as a demographic can least afford to wager their income.
This, too, he parries deftly. “That’s another myth,” he said. “I know people from all different walks of life [who gamble]. One lady in Greensboro is a millionaire and she loves to play for entertainment. White collar, middle class, working people. Everybody has their own form of entertainment. Some people like to play golf, and some people like to play the lottery. Hundreds of thousands of people play scratch-off lottery and Powerball and other ones I’m not familiar with.”
Video gaming is a racial issue, he said, “but on the other end. If you got revenue being generated right now to the tune of half a million we’re not capturing — who do you think the people who would benefit from that money is? That’s why on the bill I put half the money — $250 million, come on — to disadvantaged school kids. Who’s gonna be impacted the most? Who can least afford medical care and living facility care? Some of the people in my district. And when you have an economic crisis and we cut the budget and it impacts people’s ability to provide…. I have a vested interest in looking out for my constituents, to mitigate the harm in the face of this economic crisis.”
Jones said the controversy over video gaming will be laid to rest after HB 1537 passes the NC General Assembly this year.
“I have the votes right now to pass the video lottery,” he said. “You know how they say knowledge is power? No one is going to out-information me.”
Barnes agreed that the bill would provide a clear path to enforcement.
“I would say that unless the state just comes out and makes the law that you’re not gonna have any of it anywhere, anytime,” he said, “that’s the only way we’ll come close [to banning it] and then it will become underground, bootleg stuff, a violation, and we’re gonna have to go and find them.”
Meanwhile, over at Pot O’ Gold, the virtual tumblers continue to roll.
“It’s such a touchy subject right now,” Skinner said. “We just prepare for what we have today. Somebody told me yesterday that they’re doing a 50-machine place right down the road.”
Pot O’ Gold owner Matt Skinner says he welcomes the passage of HB 1537. “We want to bring more revenue to the state of North Carolina,” he says. (photo by Brian Clarey).