Court ruling keeps e-gamers in business


First Posted: 2/23/2009

Efforts by Mount Airy police to crack down on a new breed of video gambling machines outlawed by state lawmakers last year have been short-circuited by a court ruling.
Weve had a lot of people call and complain that their husbands and all have lost money, Lt. Alan Freeman, head of the city police detective unit, said of game terminals being operated at several locations in Mount Airy.
In some cases, Freeman said, people reportedly have lost their entire paychecks and families have suffered as a result of a new type of gaming. Its one that has enabled operators to circumvent a 2006 state law making video poker illegal.
Although the N.C. General Assembly passed another law last July banning the new Internet-based machines that had taken the place of video poker which went into effect Dec. 1 police still cant act, according to Freeman.
We cant enforce it because theres a restraining order prohibiting us from enforcing it, the Mount Airy detective said.
That temporary restraining order was issued on Dec. 19 by a Guilford County Superior Court judge, John Craig, after game makers modified their machines to comply with the new statute.
This ruling prevents the enforcement of the statute until a lawsuit earlier filed against the state by Hest Technologies, a manufacturer of games based in Texas, is heard or the General Assembly comes up with a new regulation.
Its got to go through the court system, Freeman said. Until it does, or until they change the law, we cannot enforce it.
Hest Technologies suit against North Carolina and state agencies, including its Alcohol Law Enforcement Division, contended that the machines were allowed by law.
How They Work
The local detective said theres several businesses operating in the city limits using technology targeted by the 2008 state law. The games they offer originate from computer terminals inside the businesses.
Typically, a customer will buy a prepaid telephone card over a counter, and with that purchase comes a chance at winning a sweepstakes. A computer will read the card, allowing the customer to play games which involve no skill and a chance to win cash redeemable at the counter.
Theres about seven or eight games available, Freeman said. The Internet card systems use personal identification numbers and other electronic procedures, apparently in an effort to avoid the actual exchange of money.
The detective added that while some might claim the Internet gaming is not a type of gambling but an innocent form of amusement, he wonders how people have been losing their paychecks as a result.
Local police are sympathetic to those who have lost money, Freeman said, but are prevented from identifying businesses operating the games and shutting them down at least for now.
When North Carolina banned video poker in 2006, it sparked the development of the Internet-based form of gambling.
After Hest Technologies sued the state contending that the new gaming system complied with North Carolina law, the Guilford County judge granted a preliminary injunction in April 2008. It prohibited officers from seizing the gaming machines and charging operators.
That led the Legislature to make server-based electronic game promotions unlawful last summer. The statute makes it illegal for anyone to conduct those promotions as well as possess a game terminal that simulates any contest ordinarily played on a slot-machine basis or a video gaming machine.
The law defines such electronic server-based systems as a database containing a pool of entries in which each entry is associated with a prize value, and participants use a pre-paid card and have their entries revealed by gaming or other computer terminals.
After July 2008, game makers tweaked their systems to fall into compliance with the new measure.
Contact Tom Joyce at [email protected] or at 719-1924.

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