Macon Sheriff, District Attorney investigating cash payouts
Staff Writer
A new game of chance has rolled into Macon County. Cyber sweepstakes machines are a recent statewide phenomenon that has cropped up in several area stores. While the games are currently legal, that may not remain the case for long.
Video gaming was outlawed by the state of North Carolina in July of 2007 when General Statute 14- 306.1A required video gaming machines to be removed from the state.
But by the time the ban became effective, the industry had already begun to modify and reprogram the machines as a form of “sweepstakes” in order to avoid the law.
“Their argument is there is a set number of winners like getting and playing a coupon,” said Macon County Sheriff’s Office Attorney Brian Welch of the sweepstakes manufacturers.
As a result of these ongoing cases, the state has placed a temporary order limiting the enforcement of the sweepstakes statute.
“There is an order for a preliminary or temporary injunction,” said Welch of the sweepstakes machines. “The order prohibits the state of North Carolina from enforcing the statute temporarily.”
Welch went on to explain that it is still illegal to gamble in North Carolina, but the one statute about video sweepstakes machines cannot currently be enforced.
The Sheriff’s Office already received one complaint about the machines and launched an investigation. “We are a complaint driven agency,” said Welch. “Any complaint we get, we will investigate.”
The Town of Franklin Board of Aldermen passed a privilege license fee schedule for establishments with internet sweepstakes machines at their last meeting. Each establishment within town limits must pay an annual fee of $2,600 to the town.
“There has been a proliferation of sweepstakes machines in the area,” said Town Land Use Administrator Michael Grubermann.
While video gambling is outlawed in North Carolina, the sweepstakes machines use a method that has created a legal loophole. By using phone cards to play online, the machines are not considered applicable under the same video gambling regulations.
“They are not vending a product,” said Grubermann of the machines. “They use a method to skirt the gaming statutes.”
A person simply purchases a $10 or $200 phone card at the establishment. Amounts are deducted from the card as the person plays the game. If the player wins, that amount is credited back to the card. The cards can also be “cashed in” at the establishment for payment.
The fee schedule is in no way meant to keep the sweepstakes establishments out of town, said Grubermann.
Macon County Sheriff Robbie Holland said the new machines are basically the same as what was previously outlawed, but with a new method to circumvent the law.
The legality of the machines is still gray however, said Town Manager Sam Greenwood.
Sheriff Holland said, “These businesses are circumventing the old law that was put into effect last year by calling the games a sweepstakes. But while steps are being taken in Raleigh to correct the problem, our hands are tied until then.”
Holland said there is an effort to continue to monitor the industry, however. “We know one of the businesses in the county paid cash. We received a complaint. We initiated an investigation and are continuing to investigate.”
Greenwood explained that, currently, the state has no legal means to prosecute in this matter. “It is in the General Assembly’s hands,” he said.
Welch simply said, “We’ve tried to figure out a way to do something about it, but right now there doesn’t seem to be a way.”
“The General Assembly will come up with ways to deal with it,” said Horton of the sweepstakes machines. “It is technically not illegal right now.” He said the county is not currently considering imposing a privilege license fee for the establishments.
“As for the town’s position,” said Greenwood, “business establishments can be taxed, but we can’t stop them.”
Greenwood went on to say that the machines are not the kind of thing one would typically want to see in town. “The board is trying to make running such establishments less appealing,” he said.
Alderman Billy Mashburn said it is up to a judge to choose a position on the matter. “We’re just trying to locate the establishments and show some disfavor,” he said of the nature of gambling devices.
Vice-mayor Verlin Curtis said he has heard the sweepstakes establishment industry is a profitable one. He said several of the owners within town limits have not at all been opposed to paying the $2,600 fee.
Alderman Bob Scott said the town’s vote on the fee schedule was unanimous. “Legally, there is nothing we can do to stop it,” he said of the sweepstakes machines, “although we can tax the establishments.”
Such businesses have sprung up quickly, said Scott, catching some off-guard. “It caught me cold,” he said. “I didn’t know it was going on.”
Scott said if he had more time to contemplate the matter, he would have suggested a fee five to ten times what was voted upon. “I would have suggested more severe taxation,” he said. “I hate to see it in the community. I would have voted for a much stiffer fee.”
Scott said the machines are legal strictly on a technicality and that the operators of such establishments are often on firm ground for corruption or organized crime. He said the sweepstakes industry is not serving the public purpose in the least.
“I hate to see it anywhere in town,” said Scott. “There are a lot of unknowns. We can’t outlaw it, but I don’t think the legislature will let it stay legal for too long.”
Holland said there are reasons to be concerned about the new games. “Gambling in general, whether on video poker machines or ‘video sweepstakes’ machines, leads to gambling addictions for some individuals. It can also lead to corruption as evidenced by recent prosecutions of law enforcement officers and other elected leaders in North Carolina. The addiction problems affect spouses, children and other family members and friends of the addicted gambler and can also lead to other criminal activities.”