David Broyles | The News

Local sweepstakes halls across the state such as Shatter’s Cafe are awaiting an appeal to the state Supreme Court to delay enforcement of a recent court decision declaring them gambling operations. If the appeal is not granted, the businesses could shut down locally as well as statewide.

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RALEIGH — Local law enforcement and video sweepstakes hall owners await action from the attorney general’s office in the wake of recent state supreme court action upholding a state law declaring such businesses as gambling operations.

On Thursday the Associated Press reported that the North Carolina Supreme Court had ruled against a request by the industry to delay enforcement of the law while the businessess appealed to the U.S. Supreme Court.

The request for the delay asked that the law not be enforced until learning if the U.S. Supreme Court would consider its claim of free speech protections. Last year, the court ruled video games, like books and films, are protected by the First Amendment.

“We’re awaiting for a decision by the state attorney general’s office on this,” explained Mount Airy Police Chief Dale Watson. “This would be an enforcement connection in cooperation with the state division of alcohol enforcement. The attorney general’s directions will determine the appropriate ways to respond to the legislation.”

Watson explained sweepstakes parlor or hall patrons buy Internet or phone time which gives them an opportunity to uncover potential cash and prizes with mouse clicks on a computer screen.

The North Carolina sheriff’s Association Monday informed the state’s 100 county sheriff’s offices that the law could be enforced as early as Jan. 3. Industry sources speculate that without the state court ordering a delay in enforcement the halls may be forced to close permanently after operating in the state for more than four years.

Earlier this month, the state Supreme Court upheld a law banning video games that mimicked small electronic casinos and many converted from video poker formats to video sweepstakes formats.

The Charlotte Observer has reported another component of the industry’s defense is that winners are in effect pre-determined by the software and thus qualifies the activity for free speech protection. Opponents have argued the activity feeds gambling addiction and should be eliminated.

“The operators and the developers will have to go back to the drawing board to see how they can run a legal business under the law,” said Brad Crone, a spokesman for the Internet Based Sweepstakes Operators.

“We will look at morphing into whatever we need to be under the rule of law to continue our business,” said Chase Brooks, the organization’s president and operator of an Alamance County sweepstakes hall.

Mount Airy Mayor Deborah Cochran said that in the city Internet hall businesses must pay business taxes and a $2,500 fee per business as a privilege fee and $500 per each machine. The is the second year these taxes have been collected by the city. She also said that with the court’s recent ruling, the city cannot issue operating licenses.

“Due to the ruling by the North Carolina Supreme Court, the city cannot issue a privilege license,” said Cochran. “This decision is out of our hands. Businesses are encouraged to voice their concerns to state and federal representatives.”

Greg Oneal, manager of Shatter’s Cafe in Mount Airy, was typical of the local business owners also waiting on the possible impact of the legislation.

“It’s going to put a large number of people out of work,” predicted Oneal. “We pay taxes just like any other business and I cannot understand the loss of revenue on the part of the state whether you love us or hate us. My feeling is tax us and make it legal, let our revenue go to help local schools. I’m betting a larger share of that will benefit our schools than what comes from the state lottery.”

Recent action caps a virtual decade of legislative efforts trying to eliminate video gaming machines and sweepstakes. A bipartisan effort failed this summer on regulation allowing state access privilege taxes on the sweepstakes establishments and terminals, although some cities have taxing authority on the businesses.

Reach David Broyles at dbroyles@heartlandpublications.com or 719-1952.