Senate votes to ban ‘video gaming entertainment’; vote moves to House

The state Senate has passed a bill outlawing sweepstakes businesses where customers buy Internet or phone time and usually play computer-based games to win money and prizes, prompting many in the industry to claim the legislation will put thousands of people out of work.

SARAH SHEW WILSON

Internet sweepstakes operations like this one may be out of business if the N.C. General Assembly passes legislation to ban the establishments.

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House Bill 80, for which the Senate Judiciary Committee adopted a substitute June 17, states that N.C. has previously banned video poker machines and since 2006, “companies have developed electronic machines and devices to gamble through pretextual sweepstakes relationships with Internet service, telephone cards and office supplies, among other products…such electronic sweepstakes systems utilizing video poker machines and other similar simulated game play create the same encouragement of vice and dissipation as other forms of gambling, in particular video poker, by encouraging repeated play, even when allegedly used as a marketing technique.”

The bill now heads to the state House of Representatives for consideration.

Rep. Frank Iler, R-Brunswick, said he needs to see the bill before forming an opinion about it, but the crux of the issue is the constitutionality of banning or charging taxes and fees on the businesses when the lottery is legal.

“The dilemma is, we allowed the lottery. This is another form of gambling. If we have the lottery, can we say no to this constitutionally?”

Iler said if regulations are needed, “We need to do something statewide—not just town-by-town, county-by-county.”

According to a representative from the Entertainment Group of North Carolina, a coin-operated gaming company, legislation to ban video sweepstakes games will cost nearly 10,000 jobs and hurt the economy.

Instead, the company is advocating regulation and taxation of the industry.

William Thevaos, president of the Entertainment Group of North Carolina, said the business supports state oversight, enforcement and collection of tax revenues because it would “provide accountability and transparency in the video gaming industry. It would protect consumers and provide strict guidelines for operators.

“Finally, it would provide more than $500 million a year in revenue according to recent figures released by the N.C. Lottery, so the lawmakers know there is a pot of money there if they would just regulate it and tax it,” Thevaos said.

In a news release, Thevaos said the industry wants to work with the governor and the legislature to “provide a framework to regulate and tax video gaming while allowing private business and the free-enterprise market to operate it.”

“If the General Assembly fails to provide some oversight, regulation and taxation on video lottery terminals, the state is going to lose millions of dollars, and the hands of time will be turned back to the days of no regulation. That’s not where we need to go,” Thevaos said.

In Shallotte, where the town is considering per-machine fees of $1,000, Mayor Buddy Kelly said it’s an issue the state needs to deal with.

“The state ought to take care of it. If they’re going to allow it, we ought to be able to receive some revenue from it as well.”

According to chairman Ron Watts, the Brunswick County Chamber of Commerce has not taken a position on Internet gaming businesses. President Cathy Altman said the chamber’s governmental affairs committee is supposed to meet this week and may take up the issue.

Local minister David Stratton of Brunswick Islands Baptist Church in Supply said he is aware of cases of gambling addiction related to frequenting local sweepstakes businesses, and he believes they should be banned completely.

“We didn’t used to have legal gambling in North Carolina, and I’m not in favor of it now. I’m not in favor of the lottery, and I am not in favor of these places,” Stratton said.

“Just because it might provide a few jobs does not mean it’s necessarily a healthy thing for the community.”