Tuesday, Feb. 19, 2013

Raleigh mulls more internet sweepstakes rules

City leaders are looking to further regulate Internet sweepstakes parlors after a recent court ruling failed to shut the operations down.

The Raleigh City Council’s Law and Public Safety Committee last week voiced support for placing distance restrictions on the parlors, limiting the number that could operate within a single area.

The debate surrounding sweepstakes in Raleigh went quiet after the N.C. Supreme Court’s ruling in December to uphold the legislature’s ban on sweepstakes parlors. Many were curious whether they’d stay in business after the ruling went into effect Jan. 3.

Councilman Eugene Weeks, an opponent of sweepstakes, said the facilities in his area shut down for just a few days. Most are still open, city attorney Tom McCormick said.

“The sweepstakes operators have changed the way they operate the terminals,” he said. “It has something to do with immediately being able to go on the terminal and find out if you’re a winner” rather than going through graphics that simulate slot machines and other games before showing the outcome.

No one has deemed the new approach illegal yet. “The situation at the state level is mass confusion now,” McCormick said, adding that the state attorney general hasn’t issued an opinion.

Locally, it’s unclear whether the businesses have changed their software. Someone would have to complain before police officers could check the parlors, and so far, no one has, McCormick said.

Without any noticeable change, council members want to restrict how close new parlors can locate to existing ones. “I strongly suspect that we’re not going to see any change of significance,” Councilman Randy Stagner said. “I continue to be concerned by these operations.”

Raleigh already charges hefty fees to sweepstakes operators. Since 2010, the city’s privilege license tax on an Internet sweepstakes business is $2,500 per business plus $1,000 per machine, up to a maximum tax of $20,000 per business annually.

By comparison, the city charges $50 for a dry-cleaner business and $100 for a loan agency or check-cashing store.

Distance rules might slow the growth of the parlors, which number 31 in Raleigh at last count. Other communities have passed similar restrictions, with some aimed at keeping sweepstakes away from homes, churches and schools.

Last July, Johnston County commissioners banned the businesses from opening within 1,000 feet of a home or existing sweepstakes business. They can’t have more than 50 computer terminals.

Charlotte requires them to be 400 feet apart. In Wilmington, there’s a required 500-foot separation, and they aren’t allowed in “gateways into the city.”

The council committee will discuss specific distances at a later meeting.