Sweepstakes cafes coming to Kannapolis?

By Emily Ford

eford@salisburypost.com

KANNAPOLIS — The city will consider allowing and regulating a controversial new form of electronic gaming Monday when Kannapolis City Council meets at 6 p.m. at the train station on South Main Street.

Kannapolis has received many requests to allow electronic gaming operations, City Planner Ben Warren said.

Also known as sweepstakes cafes or parlors, the standalone businesses sell prepaid phone cards to patrons, who use the minutes to play online games at terminals connected to the internet.

Winning or losing results in gains or losses in phone minutes. Players can redeem remaining minutes on the phone card for cash or other prizes.

They don't use the phone cards to make phone calls.

Creators of the gaming sensation that's sweeping across North Carolina skirted gambling laws by finding a way for patrons to avoid putting money into a machine, Warren said.

People will have the opportunity to speak Monday night during two public hearings on amending city ordinances and codes.

The sweepstakes gaming industry has beaten efforts by state lawmakers to ban the activity as illegal gambling. The industry compares electronic gaming to instant-win promotions at fast food restaurants.

Kannapolis has requests from business owners who want to install terminals in convenience stores or gas stations, Warren said.

"Outright banning the use is an option," Warren said, but he will suggest that the city allow, regulate and tax electronic gaming instead.

"We felt like it wouldn't be fair to say it's not allowed in the city," Warren said. "We wanted to give them the opportunity to be here, but we wanted controls."

Warren will propose adding "electronic gaming operations" to the city's Unified Development Ordinance, which would allow the use in Kannapolis.

He will propose limiting the number of terminals in a business to 20, which must be visible from the outside, and requiring that the establishments locate away from schools and churches, among additional requirements.

Cities across North Carolina are rushing to regulate the new industry. Rocky Mount last week approved a 60-day moratorium on new sweepstakes gaming parlors. Laurinburg issued a 30-day moratorium after 21 parlors opened in the city.

Wilson passed a similar moratorium in December.

Hamlet passed strict restrictions in November, allowing new parlors to have two machines and stay open from 8 a.m. to midnight.

After warnings from city staff in Kannapolis, several electronic gaming companies moved ahead and illegally opened their establishments, Warren said.

Because the businesses opened illegally, the city will not grandfather them in if council votes Monday to allow the use, he said. They must shut down or face code violations, he said.

The Kannapolis Planning Commission reviewed the proposed text amendment that will come before council and voted 8-1 in favor. The dissenting voter wanted more stringent requirements, Warren said.