KANNAPOLIS – In just five years, North Carolina’s sweepstakes parlors have turned from pariahs to profit centers.
In March, the North Carolina Court of Appeals ruled that a state ban on online sweepstakes games was unconstitutional.
In Kannapolis, however, current laws still effectively ban sweepstakes parlors.
City Manager Mike Legg told the Post on Friday that there are no legally licensed sweepstakes businesses in the city.
However, Legg and other city leaders estimated that there are some eight or nine unlicensed sweepstakes operations in the city.
Monday night, those businesses may get a boost toward legal operation, as the Kannapolis City Council is set to discuss a revised ordinance that relaxes some restrictions.
Legg said the city has chosen not to cite or shut down the businesses because of recent court rulings, as well as the fact that staff have been investigating how to find a middle ground.
At the same time, Legg said, “we have not issued any permits because our ordinances are so tight that there just aren’t places they can go.”
Currently, sweepstakes businesses cannot be located within 1,000 feet of churches or schools, and cannot operate between midnight and 10 a.m.
The proposed changes would allow sweepstakes as a standalone business or an “accessory” to another business, such as a convenience store.
But they would be limited to the city’s General Commercial zoning districts, which include much of North and South Cannon Boulevard, portions of Dale Earnhardt Boulevard and North and South Main Street.
The distance limitation for churches and schools would be reduced to 200 feet and the restriction on operating hours would be removed.
The proposal also raises the annual fee for gaming terminals from $500 to $2,500 per machine, plus an additional $2,000 fee for each location.
Legg said that’s in line with what other cities charge sweepstakes operators.
According to published reports, Wilmington charges a fee of $3,000 per machine, while Raleigh charges $3,500 for the first computer and $1,000 per additional machine with a maximum of $20,000.
Legg said those fees aren’t going to stop sweepstakes businesses from opening, or from turning a profit.
“The kind of revenue that these operations generate, none of them have batted an eye at any of these fees,” Legg said.
“Not a sin”
None of the staff at the sweepstakes businesses the Post visited Saturday would comment on their games or the proposed legal changes.
One of the longest-running is West C Street Business Center, located at 917 West C St. across from the Cannon Memorial YMCA.
The business also advertises Internet access and copying and fax services.
When the Post visited West C Street Business Center on Saturday afternoon, nearly every computer terminal was filled in two almost-silent rooms.
Customers quietly clicked icons on their screens to play sweepstakes games.
A staff member said the owner was “not available on weekends” and declined to comment further.
But two of her customers, who identified themselves as Nikki and Melissa, said they don’t see a problem with sweepstakes games.
Both declined to give their last names, but said they lived in Kannapolis.
“I don’t think it’s gambling,” said Nikki. “It’s not like slots. You just click and it runs.”
She said most of the games at West C Street Business Center play for anywhere from 25 cents to several dollars per round.
Nikki said the most she’s ever won at a time was $100. “And that was big, ’cause I only had five bucks in my pocket,” she said, smiling.
Melissa said she doesn’t enjoy sweepstakes games.
“This was only my second time,” she said. “I didn’t win any money.”
Even so, Melissa said she doesn’t think the games should be banned. “It’s not a sin,” she said.
Next door, at the Stars Mart convenience store, the clerk on duty confirmed that there are sweepstakes machines on site, but said he could not comment further.
He also said the owner of his business was “out of the country” and couldn’t be reached.
Even if the proposed ordinances pass Monday, these businesses would still be out of compliance because the property is not zoned General Commercial.
Legg said the city has been involved in a legal dispute with the owner.
According to county tax records, the building is owned by Smart Investments Group, LLC of Mint Hill.
Legg said that, regardless of Monday’s vote, he expected the legal system would resolve this issue.
And, he said, the new ordinances will also allow the city to monitor sweepstakes operations and make sure they are being run in accordance with the law.
Lawmakers react
Reached by phone Friday, City Councilman Tom Kincaid said he had yet to finish reading the text of the proposed ordinance.
“But, I am for bringing business to Kannapolis, as long as we can do it within the (legal) framework,” Kincaid said.
That means having appropriate licensing and zoning ordinances in place, Kincaid said.
Kincaid said he knows many people don’t care for sweepstakes parlors, but those who want to run a business legally should have a legal path to do so.
“If it’s legal in North Carolina, and the courts have said that it is, then they have the right to be able to do their business,” Kincaid said.
Councilman Ryan Dayvault said he had heard few comments from residents about sweepstakes parlors.
“I guess I’m concerned about the aesthetics of how those businesses are allowed to open up,” Dayvault said.
“I’ve seen a lot of places where there are big banners and signs out front ? really unprofessional looking places.”
He said that, if sweepstakes parlors are allowed, they must abide by the same rules about signs and advertising banners that other businesses have to follow.
Legg said the new ordinance is designed to respect both recent court rulings and the desires of citizens to keep sweepstakes parlors away from neighborhoods, churches and schools.
“We have maybe a bit more extensive ordinance than a lot of other (cities and towns) may have,” Legg said – designed to balance both citizens’ needs and the desire to allow business growth.
Already, he said, the city has been contacted by a man who wants to open a sweepstakes parlor at the Cloverleaf Plaza shopping center.
“He’s gotten everything lined up and is waiting to see what the City Council will allow,” Legg said.
The Kannapolis City Council meets Monday at 6 p.m. at the Kannapolis Train Station, 201 S. Main St.
Contact Hugh Fisher via the editor’s desk at 704-797-4244.