It wasn’t long ago in our area it seemed as if new real estate and construction offices were popping up on a regular basis, blooming from the warmth of an overheated housing market. Today, it appears we have more new vacant commercial spaces than actual new businesses. One of the few exceptions is the increase of sweepstakes establishments. The town of Franklin however, has apparently decided that this isn’t the right kind of business and has voted to impose licensing fees that transcend mere taxation - rising to a level of punitive fines. It’s been reported that sweepstakes establishments within town limits will not only have to pay a $2,600 annual fee - an additional $1,000 per machine surcharge is being added for the privilege of conducting business.
Yes, the machines represent a form of gambling. The courts (to date) have ruled that since the sweepstakes businesses only sell internet access time and do not provide the actual sweepstakes play, there is first amendment protection. On the other hand, we already have direct gambling that is officially sanctioned by the government such as the North Carolina Education Lottery and Harrah’s Casino. So far, we seem to have survived the “air of permanence” of those “mushrooming” entities.
There may be Constitutional issues with the town of Franklin. The town won’t enact an outright prohibition but prohibitive fees placed on sweepstakes outlets can constitute a de facto ban on this type of business. Good news – you can operate. Bad news – we’ll keep jacking up your taxes till you go out of business.
Many who have been in business understand the concept of legalized extortion. The majority of us don't have the resources to mount legal challenges so we tend to acquiesce to new taxes and regulations. Most of the time it doesn’t happen like a sledgehammer as in the case of the sweepstakes businesses but rather in small increments and we rationalize it away as “the cost of doing business.” It’s unfortunate that many who claim to be defenders of property rights are missing in action when it comes to defending less than popular property uses. The sweepstakes establishments are easy targets for government. After all, who is going to come to their defense? The challenge to convey to people is that righting wrongs transcends defending any one particular group.
Back in the 80’s I was a member of a downtown business group in Ventura California and to my dismay, they fought and succeeded in keeping out a proposed venture from starting up in town. This “wrong” kind of establishment that would attract the “wrong” kind of people was a homeless shelter. I argued that we were hypocritical as a “business” organization if we cherry picked what kind of operation we would support. Needless to say, after the blocking of the shelter, there were still plenty of homeless people wandering the streets - they just didn’t have a place to sleep, eat and clean up.
For the longest time there was an alcohol prohibition in Franklin because the then powers-that-be believed that was the wrong kind of commerce for the town. For years, our business, the Rathskeller, couldn’t sell beer. Man, that was both Un-American and Un-German! I’m glad the town didn’t impose a $1,000 tax per machine (beer tap) because our cafe would not exist.
If the town of Franklin doesn’t significantly reduce sweepstakes business operating fees then they should at least have the guts to set foot in an establishment and explain to the owner why they have been singled out for taxes that may very well put them out of business. Unlike in the past, there aren't as many back-up options for working class people such as getting a real estate or contracting license.