Banned or not, video sweepstakes mean money to city

Published 12:00 am Friday, February 15, 2013

SALISBURY — Contrary to what you may have heard, video sweepstakes parlors have not been banned.
Well, not exactly.

As of Thursday, Salisbury still had six video sweepstakes operators in the city limits encompassing a total of 191 machines. The city charges a fee of $500 for each of those machines, meaning they are worth $95,500 to city coffers.
Compared to other cities, the fee is one of the lowest being charged. On the extreme opposite end, for example, Lumberton charges the video sweepstakes operators a $5,000 license fee and $2,500 per machine.
At its annual goal-setting retreat Thursday, Salisbury City Council received an update on the latest court decisions which still have many in municipal government asking, “Are they legal or not.”
Video sweepstakes parlors popped up and spread dramatically across the state after North Carolina banned video poker machines in 2007. In video sweepstakes, participants buy internet time to play various sweepstakes games on computers.
State legislators have tried to ban video sweepstakes operations, but a March 6, 2012, N.C. Court of Appeals ruling said a ban was unconstitutional.
The N.C. Supreme Court then ruled Dec. 14, 2012, that the state ban on video sweepstakes is not an infringement of free speech. With that ruling, many thought video sweepstakes operators were toast.
But Preston Mitchell, manager of the city’s One Stop Development Shop, said the confusing Supreme Court ruling centered on the sweepstakes computers’ “entertainment displays” and judged those to be illegal.
VSOs and software manufacturers responded by changing the displays, making results of a sweepstakes game a plain text reveal, supposedly with no entertainment value, no bells and whistles.
The industry also argues that a reveal in itself is not gambling.
“Yes, there is a Supreme Court ruling, but if they find a way around it, they are not banned,” Mitchell said.
So for now, the city is taking another look at taxing, licensing and zoning issues associated with video sweepstakes.
In zoning, for example, video sweepstakes parlors are allowed in Salisbury districts permitting “indoor amusements.”
Mayor Pro Tem Maggie Blackwell said the Land Development Ordinance should have a specific video sweepstakes classification that also would be limited geographically.
Councilman Brian Miller said the city definitely should go up on its fee per machine.
“I don’t think we want to the lowest,” he said. Council also may be looking at a business license fee increase with the 2013-14 budget.
Mitchell acknowledged that Salisbury at one time was attracting many video sweepstakes operations because it was charging less.
“We were a hot spot,” he said, “and we didn’t have a lot of locations.”
What sweepstakes operations are allowed to continue and which ones will be shut down may come down to interpretations by law enforcement and District Attorney Brandy Cook.
Mayor Paul Woodson said he still wonders why a person can go into a convenience store and spend all of his money on lottery tickets legally, but the state wants to ban people from doing the same kind of thing in video sweepstakes parlors.
“What’s the difference?” he asked.

Contact Mark Wineka at 704-797-4263.