Archived Story

Ahoskie – yes; NC Supreme Court – no

Published 7:36am Thursday, December 20, 2012

AHOSKIE – Three days after the Ahoskie Town Council voted to possibly allow a third internet sweepstakes parlor within the town’s corporate limits, the North Carolina Supreme Court ruled unanimously such establishments are illegal.

On Friday of last week, the state’s highest judicial branch said the state can outlaw video sweepstakes parlors because they don’t have the same free speech protections given to video games.

According to statewide reports, the NC Supreme Court ruled in two cases in which amusement machine and other companies sought to overturn a 2010 law banning video sweepstakes machines as a form of gambling. Sweepstakes halls have cropped up in what justices called a perceived loophole since the state outlawed video poker machines in 2007.

The court ruled the state law regulates the conduct of playing the sweepstakes games, which opponents say feed the same gambling addictions as traditional video poker machines. The video sweepstakes parlors argued winners are predetermined so gambling isn’t involved, and a U.S. Supreme Court ruling last year protecting video games applies to them.

The Court of Appeals backed their stance that the ban violated the operators’ First Amendment rights since sweepstakes games use “entertaining displays” to tell customers whether they had won or lost.

However, the seven NC Supreme Court Justices ruled that informing winners and losers was inextricably linked to the game and wasn’t a separate act of speech.

“Operating or placing into operation an electronic machine is clearly conduct, not speech,” Associate Justice Robin Hudson wrote in a 23-page ruling.

Hudson added, “The interest in combating the social ills of gambling and gambling-like activities is unrelated to the suppression of free expression. “The restriction imposed here is no greater than necessary because the statute burdens only sweepstakes conducted in a manner that encourages repeated, addictive, gambling-like play through the video display; the statute does not burden or ban any video games outside this context of sweepstakes operations.”

The gaming industry has urged state lawmakers to legalize video sweepstakes and then regulate and tax the games, which they say would provide needed revenue.

Within the Town of Ahoskie’s 2012-13 fee schedule, a minimum operating permit of $5,000 or $700 per machine, whichever is greater, is collected annually from, “a business activity or enterprise, whether a principal, partial, or accessory use, in which people utilize electronic machines, including but not limited to computers and gaming terminals, to conduct games of chance (including sweepstakes), and in which cash, merchandise, or other items of value are redeemed or otherwise distributed, whether or not the value of such distribution is determined by playing electronic games or by predetermined odds. This includes, but is not limited to internet cafes, internet sweepstakes, cyber cafes, or electronic game parlors in which individuals normally gain access to games of chance, with prize distributions, through the purchase of internet time, telephone cards, or other means of qualification.”

Following a scheduled public hearing at their Dec. 11 meeting, the Ahoskie Council voted 4-0 to amend the text of the town’s Zoning Ordinance to add the letter “P” for permitted under the light industrial zoning district column for the internet sweepstakes use category.

The request for that text amendment was made by Edgar Swain, who owns property at 2112 US 13 South. That parcel, according to town officials, may possibly become the home of a new internet sweepstakes parlor, joining those already in operation at Newmarket Shopping Center and Ahoskie Commons Shopping Center.

Following Friday’s ruling by the state Supreme Court, all existing or planned establishments doing business as video/internet sweepstakes parlors may fall victim to that legal decision.

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