Category Archives: sweepstakes parlor

Sweepstakes Parlor Under Attack In Charlotte, New Software Eager To Go To Court


New Software Eager To Get Their Day In Court

CHARLOTTE, N.C. — Internet sweepstakes cafes already targeted by the N.C. Legislature, are now being investigated by Charlotte Mecklenburg police and Mecklenburg County’s district attorney.Police have been delivering a letter, signed by D.A. Andrew Murray, ordering sweepstakes businesses to shut down.Login Now 180X180 gif

Along Old Pineville Road in south Charlotte, two parlors had signs on their doors saying they were closed Tuesday. One employee at a location said police had delivered a cease-and-desist letter ordering the parlor to close by September 4th or face possible criminal charges. The letter pointed to a state law that says video gaming machines are illegal. The ongoing battle between the state and sweepstakes operators has been going on for years.

Sweepstakes lobbyist Casey Rooks goes on to explain his opinion as to what is going to happen “1) Police gives notice 2) Sweepstakes parlors who have compliant software will stay open 3) Police will be forced to raid any sweepstakes parlors who are still open 4) They go to court and a judge decides if the software violates the law of the text 5) Some software will be compliant and some software won’t THUS creating confusion 6) Take these ingredients and use as propaganda for HB-547. 7) THE STATE gets their cut.”

Sweepstakes Parlor In Charlotte Running With New BanBuster Software


Charlotte, NC — North Carolina has tried to outlaw sweepstakes cafes where people played fast-moving computer games that mimic Las Vegas-style slots for years.

Law agencies started cracking down and closing dozens of sweepstakes parlors after the state Supreme Court last year upheld a North Carolina law banning the games that used a ‘entertaining display’.

Some sweepstakes operators used new tactics to stay open instead of folding. Lawsuits were filed against the very communities trying to close their doors.  New software puts their businesses in compliance with the law, said the owners.

In several cases, judges have sides with the sweepstakes owners, and they are also fighting criminal charges. Uncertainty has been caused by the battle in some communities trying to close sweepstakes parlors which they say prey on the poor,

Some communities are saying that they will allow sweepstakes parlors to stay open until key issues are resolved and whether the software known as pre reveal actually conforms to the law.

Gilbert Chichester, city attorney for Roanoke Rapids, says that it’s a tough issue because there’s a gray area involved.

However sweepstakes operator William George is optimistic as he and his cohorts are fighting for their livelihoods.

He says that “With pre-reveal, I can’t see how you can say it’s not legal.”

In 2006, North Carolina Carolina lawmakers first passed a ban on video poker and all other electronic gambling following a political scandal involving political donations from the games’ operators. However, the industry quickly adapted, introducing new sweepstakes games they said complied with the law.

Then in 2008 and 2010, lawmakers responded with new legislation that made it unlawful to possess game terminals that simulate slot machines or are used for the display of electronic sweepstakes.

The state was then sued by the makers of sweepstakes software arguing that the ban violated their Constitutional free speech rights. This dragged on for two years in court and ended in December 2012 with the Supreme Court decision upholding the ban.

Law enforcement agencies began raiding cafes as a result of the ruling, seizing computers and making arrests.

Sweepstakes owners then protested, asking them to look at the pre-reveal system.  Sweepstakes parlor patrons bought Internet time that let them uncover potential cash and prizes while clicking on the mouse on a computer screen. Customers got prepaid cards in order to play at the cafes, and then went to a computer to play “sweepstakes.” Winners went back to a cashier with their cards and then cashed out. This pre-reveal system software allows participants to check if they had won before they played the game.

In Hickory a recent sweepstakes arrest was the issue when a woman pleaded innocent in April to operating an illegal sweepstakes parlor. The pre-reveal software made the operation legal her lawyer said, and after a day in trial, District Court Judge Amy Sigmon agreed.

However, the judge’s ruling only applied to her case. A month later, Clark Consulting Group filed a lawsuit. The company operates a different Hickory sweepstakes parlor and it accused the city and Catawba County sheriff of threatening to to close his business and arrest his employees.

The Group now wants an injunction to prevent police from shutting his business, and also asked the judge to issue a “declaratory judgment” that they did not violate the new law. This judgment could carry over to other cases.

The group said that the sweepstakes was used only as a promotion to help attract business, pretty much similar to how McDonald’s uses it’s Monopoly game to draw in customers.

The lawsuit claims that “North Carolina law permits businesses to market and promote the sale of their products through promotion sweepstakes.”

Darlene Kaminske, a Hickory spokeswoman said that the lawsuit won’t stop police from doing their job.

She said, “Just like any crime we are made aware of or observe, we will take the appropriate action to enforce state law. A pending lawsuit would not stop police from doing their job.”

The lawsuits are making some communities still hesitate.

The Roanoke Rapids attorney, Chichester, said he was asked to examine the sweepstakes issue.  It was made illegal by law to conduct a sweepstakes through the use of an “entertaining display” to reveal a prize. The new software did not use an “entertaining display” to conduct the sweepstakes Chichester said.

He wrote in a letter to Halifax County Sheriff Jeff Frazier that “On the converted system the customer simply presses the ‘Reveal’ button on the screen and the prize, if any, will be revealed to the customer in plain text format.”

He believes, as a result, that sweepstakes parlors with the new software are legal.

Sweepstakes parlors in Halifax County that are currently open, are the ones that have the pre-reveal type feature to it, Chichester told the Associated Press.

The sweepstakes industry is constantly modifying the software to stay in compliance he said.

If the court of a law enforcement agency says,  ’This does not comply with the state law,’ almost overnight they switch it and come out with a different version, no matter what particular program they are using. It’s a moving target and the one thing that makes it pretty difficult.

Nil Entertainment attorney Donald Pocock, filed a lawsuit in Wake County against the city of Garner for trying to shut down a sweepstakes café.

He said, “I think there is a lot of confusion across the state as to what the meaning of any of these decisions has and whether it applies to other jurisdictions.”

Even if the law is constitutional according to the state Supreme Court, it didn’t decide how it should be applied, said Pocock.

It still has a chilling effect on the industry, he said, which had hundreds of sweepstakes parlors and thousands of employees.

Pocock said, “Nobody wants to play (a game of) chicken with criminal prosecution. The fact of the matter is, the people I represent have worked very hard to be in compliance with the law, and they believe they are in compliance with the law.”

HB-547 A Bill To Regulate The Sweepstakes Industry In NC


NC Bill Introduced To Tax And Regulated Sweepstakes HB-547

A bill was introduced to regulate the sweepstakes industry and tax its proceeds, an idea that’s been floating around for years was finally made public by some big time supporters.


“It looks like the games will keep being altered to the point that it may take years to catch up with the industry, this bill looks to put some rules in play and lets the state benefit from it at the same time”

Sponsors: Representatives Wray and Collins (Primary Sponsors).

A pre-reveal game was put into the market and is rumored not to violate the text of the law after the NC Supreme Court ruled that HB-80 did not violate free speech. While reading the text of HB-80, most legal experts agree that the games steer clear of infringing on what the state has defined as the law.



See text of HB-547 below


HOUSE DRH80173-RBx-12A (02/01)
Short Title: Tax & Regulate Video Sweepstakes. (Public)
Sponsors: Representatives Wray and Collins (Primary Sponsors).
Referred to:
4 The General Assembly of North Carolina enacts:
5 SECTION 1. G.S. 14-306.4 is repealed.
6 SECTION 2. Chapter 143 of the General Statutes is amended by adding a new
7 Article to read:
8 “Article 80.
9 “Regulation of Electronic Sweepstakes.
10 Ҥ 143-750. Citation.
11 This Chapter shall be known and may be cited as the North Carolina Electronic
12 Sweepstakes Act.
13 Ҥ 143-751. Purpose and intent.
14 The General Assembly declares that the purpose of this Chapter is to regulate any electronic
15 sweepstakes that are not otherwise unlawful under applicable State law. Nothing in this Chapter
16 shall be construed to make any conduct lawful that is declared to be unlawful under Article 37
17 of Chapter 14 of the General Statutes or any other provision of law.
18 Ҥ 143-752. Definitions.
19 The following definitions apply in this Article:
20 (1) Department. – The North Carolina Department of Commerce.
21 (2) Electronic sweepstakes device. – A mechanically, electrically, or
22 electronically operated device that is connected to a server through a local
23 network and that is owned, leased, or otherwise possessed by a sweepstakes
24 sponsor or promoter, or any of the sweepstakes sponsor’s or promoter’s
25 partners, affiliates, subsidiaries, or contractors, that is intended to be used by
26 a sweepstakes entrant, that uses energy, and that is capable of displaying
27 sweepstakes results on a screen or other mechanism.
28 (3) Electronic sweepstakes establishment. – A place of business in which an
29 electronic sweepstakes device is operated.
30 (4) Electronic sweepstakes device operator. – A person licensed under this
31 Article to operate or conduct a sweepstakes.
32 (5) Electronic sweepstakes device vendor. – A person licensed under this Article
33 to supply sweepstakes software to a sweepstakes gaming device operator.
34 (6) Enter or entry. – The act or process by which a person becomes eligible to
35 receive any prize offered in a sweepstakes.
H.B. 547
Apr 3, 2013
HOUSE PRINCIPAL CLERKGeneral Assembly of North Carolina Session 2013
Page 2 DRH80173-RBx-12A (02/01)
1 (7) Prize. – Any gift, award, gratuity, good, service, credit, or anything else of
2 value that may be transferred to a person, whether possession of the prize is
3 actually transferred, or placed on an account or other record as evidence of
4 the intent to transfer the prize.
5 (8) Secretary. – The Secretary of the Department of Commerce or the
6 Secretary’s designee.
7 (9) Sweepstakes. – Any game, advertising scheme or plan, or other promotion
8 that, with or without the purchase of any good or service and without
9 separate consideration, a person may enter to win or become eligible to
10 receive any prize, the determination of which is based upon chance and in
11 which there is a finite pool of entries.
12 (10) Sweepstakes software. – A computer program used by a sweepstakes device
13 operator to conduct a sweepstakes.
14 Ҥ 143-753. Powers and duties.
15 The Department shall have the following powers and duties:
16 (1) To administer and enforce the provisions of this Article related to the
17 licensure of electronic sweepstakes devices and electronic sweepstakes
18 establishments.
19 (2) To engage or contract with any independent firm or agency to act as its agent
20 in fulfilling the duties and responsibilities under this Article.
21 (3) To enter into an agreement with the ALE Division to conduct an in-depth
22 background investigation of criminal convictions of applicants and licensees
23 as necessary to ensure compliance with this Article.
24 Ҥ 143-754. Licensure to operate an establishment.
25 (a) License Required. – It shall be unlawful for any person to operate an electronic
26 sweepstakes device or establishment without the license required by this Chapter. A license
27 granted under this Chapter may not be transferred or assigned. The license must be displayed
28 conspicuously in the electronic sweepstakes establishment where the devices are operated, must
29 state the number of devices located at the establishment and any further information required
30 by the Department.
31 (b) Application for License. – To obtain a license required by this Article, an applicant
32 must:
33 (1) File an application with the Department on a form provided by the
34 Department and pay an application fee of two hundred fifty dollars
35 ($250.00). An application must include the applicant’s name, address, federal
36 employer identification number, and any other identifying information
37 required by the Department.
38 (2) State the number of electronic sweepstakes devices to be placed into
39 operation at the electronic sweepstakes establishment. A licensee may apply
40 to amend the license to add additional devices on a form to be provided by
41 the Department.
42 (3) Provide a certificate or report from an authorized independent testing
43 laboratory named in a list maintained by the Department in accordance with
44 G.S. 143-755 that contains the information required by that section.
45 (c) Requirements. – An applicant for a license must meet the following requirements:
46 (1) If the applicant is a corporation, the applicant must either be incorporated in
47 this State or be authorized to transact business in this State.
48 (2) If the applicant for a license is a limited liability company, the applicant
49 must either be organized in this State or be authorized to transact business in
50 this State.General Assembly of North Carolina Session 2013
DRH80173-RBx-12A (02/01) Page 3
1 (3) If the applicant for a license is a limited partnership, the applicant must
2 either be formed in this State or be authorized to transact business in this
3 State.
4 (4) If the applicant for a license is an individual or a general partnership, the
5 applicant must designate an agent for service of process and give the agent’s
6 name and address.
7 (d) Denial. – The Department may investigate an applicant for a license required under
8 this Article to determine whether the information the applicant submits with the application is
9 accurate and whether the applicant is eligible to be licensed under this Article. The Department
10 may refuse to issue a license to an applicant that has done any of the following:
11 (1) Submitted false or misleading information on its application.
12 (2) Had a license issued under this Article cancelled by the Department for
13 cause.
14 (3) Been convicted of a violation of federal gambling laws, or the gambling
15 laws of any state, within five years of the date of the application.
16 (e) Annual Renewal. – An application issued under this section must be renewed on or
17 before July 1 of each year. A renewal application must contain all of the information required
18 for an initial application under subsections (b) and (c) of this section.
19 Ҥ 143-755. Authorized independent testing laboratories.
20 (a) List of Laboratories. – The Department must publish and continuously maintain a
21 list of authorized independent testing laboratories.
22 (b) Verification Required. – An application to operate an electronic sweepstakes device
23 or establishment must have attached to it a certificate or report from an authorized independent
24 testing laboratory that does all of the following for each electronic sweepstakes device listed in
25 the application to be placed into operation at the electronic sweepstakes establishment:
26 (1) Identifies the components of the electronic sweepstakes devices and related
27 systems.
28 (2) Identifies the operational characteristics of the electronic sweepstakes
29 devices and related systems.
30 (3) Verifies that each sweepstakes proposed to be conducted on each device
31 meets all of the following conditions:
32 a. Selects prizes from a pool of entries where the total number of
33 entries, the number of winning and losing entries, and the number
34 and nature of prizes are finite, predetermined, and established prior to
35 the start of the sweepstakes.
36 b. Predetermines all winning and losing entries prior to the start of the
37 sweepstakes.
38 c. Provides free sweepstakes entries to customers upon purchase of a
39 good or service for which a consideration is paid.
40 d. Provides a method of free entry upon request.
41 e. Does not vary the chance of winning between free entries and entries
42 received as a result of a purchase of a good or service.
43 f. Contains no element of skill so that customer has no ability to alter or
44 affect the outcome or results.
45 (4) Verifies that all electronic sweepstakes devices identified in the application
46 as being operational in the electronic sweepstakes establishment use the
47 same entries for each sweepstakes from a pool of entries hosted on a local
48 server in the electronic sweepstakes establishment.
49 Ҥ 143-756. Licensure to supply software.
50 No person, personally or through the person’s agent, shall supply sweepstakes software to a
51 sweepstakes gaming device operator without first obtaining a license from the Department. The General Assembly of North Carolina Session 2013
Page 4 DRH80173-RBx-12A (02/01)
1 application for a sweepstakes gaming device vendor license shall be on forms prescribed by the
2 Department and shall contain at least the following information:
3 (1) The full legal name of the sweepstakes gaming device vendor and required
4 contact information, including address, telephone number, federal tax
5 identification number, and contact person.
6 (2) A certificate or report that meets the requirements of G.S. 143-755.
7 Ҥ 143-757. Regulation of electronic sweepstakes establishments.
8 (a) Scope. – This Article authorizes only the operation of server-based electronic
9 sweepstakes devices that associate a prize with an entry or entries from a predetermined finite
10 pool of winning and losing entries at the time the sweepstakes is entered.
11 (b) Prohibitions. – A person may not do any the following:
12 (1) Intentionally design, promote, or conduct a sweepstakes in which a specific
13 individual, location, or electronic sweepstakes device may be predetermined
14 as a winner or the sweepstakes software may be manipulated or rigged so as
15 to do either of the following:
16 a. Allocate a winning sweepstakes or any portion thereof to certain
17 lessees, agents, or franchisees.
18 b. Allocate a winning sweepstakes or part thereof to a particular period
19 of the sweepstakes or to a particular geographic area.
20 (2) Willfully remove, disqualify, disallow, modify, or reject any entry other than
21 for failure by the entrant to comply with the rules of the sweepstakes.
22 (3) Willfully fail to award prizes offered other than for failure by the entrant to
23 comply with the rules of the sweepstakes or award or advertise prizes other
24 than those which have been properly announced under this section.
25 (4) Willfully print, publish, or circulate literature or advertisements for a
26 sweepstakes that is false, intentionally deceptive, or intentionally
27 misleading.
28 (5) Knowingly require the participant in a sweepstakes to pay more than fair
29 market value for the item, product, or service which entitles a participant to
30 enter a sweepstakes.
31 (6) Operate a sweepstakes game which does not have a finite number of entries.
32 (7) Fail to offer and provide a free method of entry for any sweepstakes for
33 which the chance of winning is the same as other entries received with the
34 purchase of a product or service.
35 (8) Fail to display the license required under this Article and the sweepstakes
36 software certification in a public and conspicuous place at the location in
37 which the sweepstakes takes place.
38 (c) Signage Requirements. – A licensee must comply with the following signage
39 requirements:
40 (1) Exterior of premises. – Exterior signage shall be limited to the advertisement
41 of the consumer product and/or service sold on the premises and that a
42 sweepstakes promotion is offered. No signs shall be posted on the exterior of
43 the premises that suggest gambling takes place on the premises or display
44 any image commonly associated with slot machines.
45 (2) Interior premises. – The operator shall conspicuously post in the interior of
46 the premises the following:
47 a. All consumer products or services offered for sale shall be identified
48 by the description and price by conspicuous posting.
49 b. Complete rules for all sweepstakes promotions shall be posted at the
50 premises’ front or main counter, and a complete copy of the rules, General Assembly of North Carolina Session 2013
DRH80173-RBx-12A (02/01) Page 5
1 prize tables, and odds of winning shall be made available on request
2 without cost.
3 (3) Before a consumer may reveal an entry with the use of a sweepstakes
4 gaming device, a sweepstakes gaming device operator shall cause to be
5 displayed on the sweepstakes gaming device in at least a font size of 14 the
6 following which shall be affirmatively acknowledged by the consumer:
11 (d) Limitations. – A sweepstakes gaming device operator may not do any of the
12 following:
13 (1) Be issued an ABC permit that authorizes the retail sale of alcoholic
14 beverages for consumption on the premises of any location in which a
15 sweepstakes licensed under this Article takes place.
16 (2) Permit an individual under 18 years of age to enter or be employed at a
17 facility operated by the sweepstakes gaming device operator for
18 sweepstakes.
19 (3) Offer or pay out anyone a single prize with a value of more than ten
20 thousand dollars ($10,000).
21 (4) Cause the sweepstakes results to be located other than on a server that is at
22 the location in which the sweepstakes takes place.
23 (e) Supply List of Winners. – Within 60 days after the winners have been determined,
24 an electronic sweepstakes gaming device operator shall provide the Department of Revenue
25 with a certified list of the names and addresses of all persons who have won prizes with a value
26 of more than one thousand dollars ($1,000), the value of the prizes, and the dates when the
27 prizes were won.
28 Ҥ 143-758. Reasons why Secretary may cancel a license.
29 (a) Reasons. – The Secretary may cancel a license issued under this Article upon a
30 written request of the person who holds the license. In addition, the Secretary may cancel the
31 license of a person that commits one or more of the following acts after holding a hearing on
32 whether the license should be cancelled:
33 (1) Fails to obtain a license required by this Article.
34 (2) Makes a false statement in an application required by this Article.
35 (3) Willfully fails to file a tax return required by Article 2E of Chapter 105 of
36 the General Statutes.
37 (4) Willfully fails to pay a tax when due under Article 2E of Chapter 105 of the
38 General Statutes.
39 (5) Willfully violates G.S. 143-757.
40 (b) Procedure. – The Secretary must give a person whose license may be cancelled
41 under subsection (a) of this section at least 90 days written notice of the date, time, and place of
42 the hearing. The notice of a hearing on a proposed license cancellation must be sent by
43 registered mail to the last known address of the license holder. The Secretary must dismiss the
44 notice of proposed cancellation and the hearing upon evidence that the person has cured the act
45 that was the basis for the notice of cancellation.
46 All hearings held under this Article are open to the public. Parties to a hearing may be
47 represented by legal counsel and must be given an opportunity to cross-examine witnesses and
48 to submit rebuttal evidence. If the Secretary finds that the person did not commit the act that
49 was the basis for the notice of cancellation, the Secretary must dismiss the notice of proposed
50 cancellation. If the Secretary finds that the person did commit the act that was the basis for the
51 notice of cancellation, the Secretary must cancel the person’s license. The Secretary must General Assembly of North Carolina Session 2013
Page 6 DRH80173-RBx-12A (02/01)
1 cancel the license of a person who fails to attend a scheduled hearing without prior notice to the
2 Secretary. The Secretary must either dismiss the notice of cancellation or cancel the license
3 within 10 days after the hearing.
4 (c) Appeal. – A person whose license is cancelled under this section may obtain judicial
5 review of the hearing decision. A petition for review must be filed in the superior court of the
6 county holding jurisdiction over the license holder within 30 days after the license is cancelled
7 in accordance with this section. A person who fails to file a petition within the required time
8 waives the right to judicial review. For good cause shown, however, the superior court may
9 accept an untimely petition.
10 Ҥ 143-759. Enforcement; penalties.
11 (a) Enforcement. – The Department or any law enforcement agency may investigate
12 and inspect sweepstakes operations in this State and take any other necessary and reasonable
13 action to determine if a violation of any provision of this Article has occurred.
14 (b) Penalty. – Unless a greater penalty is otherwise provided by law for conduct that is
15 also a violation of this Article, the following penalties apply:
16 (1) A person operating an electronic sweepstakes without a license is guilty of a
17 Class 2 misdemeanor is subject to a minimum fine of twenty-five thousand
18 dollars ($25,000) and a maximum fine of one hundred thousand dollars
19 ($100,000) and is barred from obtaining a license under this Article.
20 (2) A person who willfully violates any other provision of this Article is subject
21 to a civil penalty with a minimum fine of five hundred dollars ($500.00) and
22 a maximum fine of ten thousand dollars ($10,000).”
23 SECTION 3.(a) Chapter 105 of the General Statutes is amended by adding a new
24 article to read:
25 “Article 2E.
26 “Electronic Sweepstakes.
27 Ҥ 105-113.120. Purpose; administration; definitions.
28 (a) Purpose. – The taxes imposed in this Article are to provide revenue for the use of
29 the State government.
30 (b) Administration. – Article 9 of this Chapter applies to this Article.
31 (c) Definitions. – The following definitions apply in this Article:
32 (1) Enter or entry. – Defined in G.S. 143-752.
33 (2) Electronic sweepstakes device. – Defined in G.S. 143-752.
34 (3) Electronic sweepstakes establishment. – Defined in G.S. 143-752.
35 (4) Prize. – Defined in G.S. 143-752.
36 (5) Sweepstakes. – Defined in G.S. 143-752.
37 Ҥ 105-113.121. Excise tax on electronic sweepstakes establishments and devices.
38 (a) Excise Tax. – An excise tax is levied on each electronic sweepstakes establishment
39 operating in this State as follows:
40 (1) A rate per electronic sweepstakes establishment.
41 (2) A rate per electronic sweepstakes device.
42 (3) A rate on gross receipts.
43 (b) Rate per Establishment. – An annual excise tax at the rate of two thousand dollars
44 ($2,000) is levied on an electronic sweepstakes establishment. The amount due is payable by
45 January 1 of each year. The full amount of the tax applies to an establishment that operates
46 during any portion of a calendar year.
47 (c) Rate per Device. – An annual excise tax at the rate of one thousand dollars ($1,000)
48 is levied on each electronic sweepstakes device operated in an electronic sweepstakes
49 establishment. The amount due is payable by January 1 of each year. The full amount of tax
50 applies to an electronic sweepstakes device that operates during any portion of a calendar year.
51 The Secretary must issue stamps to affix to each electronic sweepstakes device to indicate General Assembly of North Carolina Session 2013
DRH80173-RBx-12A (02/01) Page 7
1 payment as required by this Article. The stamp must be displayed conspicuously on the
2 electronic sweepstakes device, and it must clearly indicate the year for which the tax is paid.
3 Upon payment of the tax, the Secretary shall issue a stamp for each electronic sweepstakes
4 device for which payment is received.
5 (d) Gross Receipts. – An annual excise tax of four percent (4%) of the taxable gross
6 receipts from operating an electronic sweepstakes device is levied on each electronic
7 sweepstakes establishment. The amount due is payable quarterly or monthly in accordance with
8 the schedule and requirements that apply to payments of sales and use tax under
9 G.S. 105-164.16. A return is due quarterly. A quarterly return covers a calendar quarter and is
10 due by the last day of the month that follows the quarter covered by the return. For purposes of
11 this subsection, taxable gross receipts are the gross receipts derived by the establishment that
12 result in a person’s eligibility to operate a sweepstakes device at the establishment to determine
13 whether the person has won a sweepstakes prize, less the amount of any prizes transferred to a
14 sweepstakes entrant. The return must include the taxpayer’s gross receipts from operating one
15 or more electronic sweepstakes or devices during the reporting period and the prizes awarded
16 during this period to a sweepstakes entrant.
17 (e) Report and Payment. – A person who operates an electronic sweepstakes
18 establishment must report the taxes payable under this section in the form required by the
19 Secretary. The return must include the address where the electronic sweepstakes or devices are
20 located and whether the location is within the corporate limits of a municipality.
21 Notwithstanding any other provision of law, the person is not required to give identifying
22 information on the return, and the return is not required to be verified by oath or affirmation.
23 The tax is due when the return is filed. Taxes may be paid and stamps may be issued either by
24 mail or in person.
25 Ҥ 105-113.122. Local tax.
26 (a) Authorization. – A county or city may, by resolution or ordinance respectively,
27 impose an excise tax as allowed under this section on each electronic sweepstakes
28 establishment located in that county or city. A county or city may not impose an excise tax or a
29 license, franchise, or privilege tax on a person operating an electronic sweepstakes
30 establishment except as provided in this section. This taxing authority replaces any prior
31 authority that cities may have asserted to tax electronic sweepstakes establishments under
32 G.S. 160A-211.
33 (b) Rate per Establishment. – A county or city may impose an annual excise tax at the
34 rate of one thousand dollars ($1,000) on each electronic sweepstakes establishment located in
35 that jurisdiction. The amount due is payable by January 1 of each year. The full amount of tax
36 applies to an establishment that operates during any portion of a calendar year.
37 (c) Rate per Device. – A county or city may impose an annual excise tax at the rate of
38 five hundred dollars ($500.00) on each electronic sweepstakes device operated in an electronic
39 sweepstakes establishment located in that jurisdiction. The amount due is payable by January 1
40 of each year. The full amount of tax applies to an electronic sweepstakes device operated
41 during any portion of the calendar year.
42 (d) Administration. – Upon adoption of a resolution or ordinance levying the taxes
43 allowed under this section, the governing body of the county or city must immediately deliver a
44 certified copy of the resolution or ordinance to the Secretary. Upon receipt of the document, the
45 Secretary shall collect and administer the tax in the same manner as the taxes imposed under
46 G.S. 105-113.121. The Secretary must distribute the local revenues collected to the county or
47 city for which the taxes are collected by March 31 of each year.
48 (e) Use of Funds. – Funds distributed by the Secretary to a city under this section may
49 be used for any public purpose.General Assembly of North Carolina Session 2013
Page 8 DRH80173-RBx-12A (02/01)
1 (f) Penalty and Collection. – The penalty and collection provisions allowed under
2 Article 9 of this Chapter apply to taxes levied under the authority of this section in the same
3 manner and to the same extent as they apply to taxes levied by the State under this Article.
4 (g) Nature. – The General Assembly finds that the revenue distributed under this
5 section is local revenue, not a State expenditure, for the purpose of Section 5(3) of Article III of
6 the North Carolina Constitution and may not be reduced or withheld by the Governor.
7 Ҥ 105-113.123. Applicability; illegal activity.
8 Applicability. – This Article is applicable to any electronic sweepstakes device without
9 regard to any of the following:
10 (1) How the device is activated.
11 (2) How the device is programmed for operation.
12 (3) How the device determines and associates the prize with an entry or entries
13 at the time the sweepstakes is entered.”
14 SECTION 3.(b) G.S. 160A-211 is amended by adding a new subsection to read:
15 “(b1) Electronic Sweepstakes Restriction. – A city may not impose an excise tax or a
16 license, franchise, or privilege tax on a person operating an electronic sweepstakes
17 establishment except as provided in G.S. 105-113.124.”
18 SECTION 4.(a) The Secretary of Commerce must publish a list of authorized
19 independent testing laboratories, as required under G.S. 143-755, as enacted by this act, within
20 14 days after this act becomes law.
21 SECTION 4.(b) A person may submit an application for licensure under
22 G.S. 143-754, as enacted by this act, before September 1, 2013, without the certificate or report
23 required under G.S. 143-754(b)(3). The Secretary may grant a temporary license to an applicant
24 who submitted an application on or before September 1, 2013, without the certificate or report.
25 The temporary license issued pursuant to this subsection is valid through September 30, 2013.
26 To obtain a permanent license, a licensee must submit the required certificate or report to the
27 Secretary on or before September 30, 2013. All applications for a license submitted on or after
28 September 1, 2013, must include the required certificate or report.
29 SECTION 5. G.S. 105-113.125, as enacted by Section 3(a) of this act and Section
30 3(b) of this act, becomes effective January 1, 2014, and applies to an electronic sweepstakes
31 establishment and to an electronic sweepstakes device operated in this State on or after that
32 date. The remainder of this act is effective when it becomes law and applies to an electronic
33 sweepstakes establishment and to an electronic sweepstakes device operated in this State on or
34 after that date.

: Pre-Reveal Sweepstakes Case Likely Will Open Doors To Parlors Again


A sweepstakes parlor in New Hanover County was served search warrants Thursday night, and based on the New Hanover Region Sheriff’s office, two people were pointed out for prohibited gaming machines.

1-877-WIN-CAFE Sweepstakes Players

Leo Daniels has 777 Sweepstakes on Gordon Road, and he and Jonathan Bryant were pointed out.

A spokesperson for the sheriff’s workplace says 777 is the first establishment to be served search warrants.

Daniels informs WECT he was pointed out with running unlawful gambling operations. He says sheriffs took out all of his sweepstakes machines, but not his computers.

The amount of machines taken has actually not been revealed.

The North Carolina Supreme Court upheld a sweepstakes restriction previously this year, making the gambling cafes prohibited.
We called Daniels for a comment, however he said he needed to speak to his lawyer.

Sheriff Ed McMahon and District Attorney Ben David are taking this matter seriously and will prosecute anybody in infraction of the law prohibiting unlawful gambling and gaming.

Pre-reveal Software keeps Sweepstakes Cafes Open


City leaders are planning to additionally control Internet sweepstakes parlors after a recent court ruling failed to shut the procedures down.
wp6The Raleigh City Council’s Law and Public Safety Committee last week voiced help for placing distance constraints on the parlors, restricting the number that might work within a single area.
The debate bordering sweepstakes in Raleigh went silent after the N.C. Supreme Court’s judgment in December to uphold the legislature’s ban on sweepstakes parlors. Many were curious whether they ‘d remain in sector after the ruling went into result Jan. 3.

Councilman Eugene Weeks, a rival of sweepstakes, pointed out the establishments in his area shut down for merely a couple of days. The majority are still open, city attorney Tom McCormick said.
“The sweepstakes owners have transformed the way they operate the terminals,” he pointed out. “It has something to do with immediately being able to pass the terminal and figure out if you’re a winner” as opposed to going through graphics that mimic coin-operated machine and other games before revealing the outcome.
No one has regarded the new approach prohibited yet. “The circumstance at the state level is mass confusion now,” McCormick claimed, including that the state attorney general hasn’t already released a viewpoint.
Locally, it’s vague whether the businesses have actually altered their software. A person will need to complain to policeman can check the parlors, and so far, no one has, McCormick stated.
Without any type of recognizable modification, council members want to limit how close new parlors can easily situate to existing ones. “I strongly suspect that we’re not visiting any type of adjustment of significance,” Councilman Randy Stagner stated. “I am continuously be worried by these procedures.”.
Raleigh already bills large costs to sweepstakes owners. Because 2010, the city’s privilege certificate tax obligation on an Internet sweepstakes sector is $ 2,500 each sector plus $ 1,000 per machine, around an optimal tax obligation of $ 20,000 every company each year.
Comparative, the city bills $ 50 for a dry-cleaner sector and $ 100 for a loan company or check-cashing shop.
Distance regulations may reduce the development of the parlors, which number 31 in Raleigh finally count. Other neighborhoods have passed comparable limits, with some intended at keeping sweepstakes away from residences, churches and schools.
Last July, Johnston County commissioners prohibited the businesses from opening up within 1,000 feet of an estate or existing sweepstakes company. They can not have greater than 50 computer terminals.
Charlotte needs them to be 400 feet apart. In Wilmington, there’s a needed 500-foot separation, and they aren’t allowed in “portals into the city.”.

Pre Reveal Sweepstakes Seem Not To Violate Sweepstakes Ban


A Superior court judge in Davidson county cast uncertainty over the legal status of a new type of pre-reveal sweepstakes.

North Carolina legislators outlawed electronic machines

Sweepstakes Ban Under Fire

and/or devices that displayed results of a sweepstakes in a entertaining display, however, Monday a Superior Court Judge issued a temporary restraining order that supposedly keeps the State of North Carolina from enforcing that ban against this new type of pre reveal sweepstakes.
The action all stems from a District 22B district attorney dismissing the charge after deciding that the facts were insufficient for prosecution. The district attorney testified that the new pre reveal software, in his opnion, did not violate the text of the sweepstakes ban.

The TRO states that under the new prereveal system “no actual games or simulated games are played while sweepstakes are entered or the results of the sweepstakes are revealed.” the entry and prize are not associated with the entertaining display.

The district attorney also told the judge he anticipated a large volume of other lawsuits from other pre reveal sweepstakes providers and that he was unsure on how to proceed.

Judge Johnson noted that he was issuing a temporary restraining order based on a demonstration of the IIT system, the testimony of the district attorney, other court rulings and his reading of the statute banning electronic machines.

“(T)here is some likelihood of Plaintiffs’ success on the merits at the ultimate trial of this matter,” Johnson wrote.

He ordered that a hearing for a preliminary injunction on the matter be held by Feb. 4. A preliminary injunction is a court order that prevents a party from doing something to preserve the status quo until a trial.

Sweepstakes Parlors Find Compliant Games To Continue NC Run


Happy Patel’s Internet Cafe on the out-skirts of Winston-Salem posted a sign outside their business that they have will open their doors again this Wednesday.

“Our games do not violate NC law. The games have been installed in several other markets for years” Happy says “Our attorneys have told us we are good to run”

A NC Department of Justice Represenitive said it was unlawful for

Patel’s Internet Cafe In Greensboro

sweepstakes parlors to try and circumvent the ruling, but operators say this type of software was in implementation for years before house bill 80 became law, further solidifying the industries slippery slope course of action.

The Attorney General’s office advised local law enforcement to investigate the type of games being played and instructed law enforcement to enforce the law as they interpret the text but would need to consult their own lawyers for their legal opinion.

When asked what games are legal and what games are not the The AG office said they would only provide advice “to government officials only.”

State attorneys are fielding questions from local law enforcement and district attorneys across the state about how to enforce the recent Supreme Court ruling and how the law applies to new sweepstakes games the industry are now operating.

“We’re recommending that law enforcement investigate video sweepstakes operations in their area to determine what games are being played and then take any enforcement action they think necessary against violators. We believe the law and the ruling are clear, and we’re ready to defend their enforcement, some games are obviously not compliant while others may not be so obvious.”

Some sheriffs are waiting to enforce the law and for the AG office to take a lead but according to legal experts it seems the new games simply do not violate the definitions described in the statue.
Some county law enforcements are hesitant on filing charges when it’s unclear on how the new law is to be interpreted.

Sweepstakes parlors in Charlotte are fighting new regulations as of January 3rd.
wp12CMPD are hand delievering letters to notify parlor owners they’re operating out of time to get rid of specific machines to be in compliance.
The new law limits exactly how the machines display customer profits on the screen.
The machines came to be prohibited on January 3rd and police claim sweepstakes parlors have discovered a loophole and are tweaking their software.

New Sweepstakes Software Keeps The Doors Open


Local law enforcement agencies are taking a look at the Internet sweepstakes industry’s new software programming, to see what they’ll be up against when – or if – they start enforcing the ban on machines with “entertaining displays.”

On Monday, Burlington Police Chief Mike Williams gave city councilmen and staff a rundown on his

Pre Reveal Chips For T340+

interpretation of the six-year cat-and-mouse game between the video gambling industry and state legislature. The most recent episode came late last year, when the state Supreme Court upheld the state’s lates ban on the machines.

In 2006, the legislature banned video poker machines, and the industry responded by substituting direct betting with a sweepstakes format, removing the “chance” or “bet” element, Williams said.

Over the years, the industry has tweaked the gaming machines in response to updated and amended statutes, and it’s happening again, this time hinging on the way a player is notified of his or her winnings.

In Oct. 2010, the General Assembly enacted NCGS 14-306.4, which made it illegal to “conduct a sweepstakes through the use of an entertaining display,” and defined “entertaining display” as “visual information, capable of being seen by a sweepstakes entrant, that takes the form of actual game play, or simulated game play.”

“A lot of debate now hinges on the definition of that “entertaining display,” said Williams.

He said, from what he understands, a sweepstakes entrant currently plays by paying for Internet time, and is automatically entered in a sweepstakes. The revealing of any won prizes is displayed on the entrant’s screen within the game.

“The industry is again revising what it’s doing,” Williams said, explaining many Internet sweepstakes businesses in Burlington have temporarily shut their doors while they’re converting to “non-entertaining reveal systems.”

Williams and Assistant Chief Chris Verdeck with Burlington police, and ALE’s Rodney Beckom, special agent in charge, met with one such business owner Tuesday to check out the new systems.

“It works the same way as it did before,” except there’s “just a blank screen that reveals the prize,” and it’s “not in an entertaining fashion,” Verdeck said Tuesday, after seeing the new system firsthand.

The question now, Williams said, is whether the “non-entertaining reveal systems” will comply with the statute that’s been recently upheld by the N.C. Supreme Court.

He said, “What’s interesting is that in its ruling, the (N.C.) Supreme Court … remanded the case back to the Court of Appeals for further proceedings consistent with this ruling,” leaving a lot of people wondering what those “further proceedings” are.

That’s why, as of now, Alamance County District Attorney Pat Nadolski is waiting for more certainty on the subject before he’s willing to prosecute, and local law enforcement waits in limbo.

In the meantime, Williams and Verdeck plan to take part in the University of North Carolina’s School of Government’s webinar on the Internet sweepstakes statute Wednesday, to learn more about legal challenges and the approaches other jurisdictions are taking.

On Thursday, Senter plans to meet with Kieran J. Shanahan, secretary of the N.C. Department of Public Safety, for guidance on enforcement, said Williams. Then Williams and other heads of local law enforcement will meet with Nadolski on Jan. 24 to further discuss enforcement options.

Williams said when the time comes to enforce the statute, his personal preference will be to work alongside ALE, so any equipment seizures would be done at the state level.

“We need to be consistent across the state,” he said.


Moore And Van Allen Make Moves To Support Internet Sweepstakes


The law firm that utilized Governor-elect Pat McCrory throughout his campaign lobbies for a significant player in the wp12video sweepstakes market.

International Internet Technologies (IIT, LLC) supplies software application for video sweepstakes games, forbidden by a decision of the North Carolina Supreme Court.

IIT has actually appealed the choice to the U.S. Supreme Court, which rejected a stay of the choice pending appeal. 3 lobbyists from the law firm of Moore & Van Allen signed up with the NC Secretary of State’s workplace to represent IIT in pushing the North Carolina federal government, yet McCrory himself never ever registered as an influence peddler.

Pat McCrory remained to accumulate a paycheck from Moore & Van Allen as Senior Director of Strategic Initiatives throughout the shift from prospect to Governor-elect and quit the company only recently, although a spokesperson for the transition team can not with a certain day for the severance.

McCrory signed up with the company in 2010, yet completely refuted allegations that he worked as a lobbyist.

“We have a ton of non-lawyers helping our law firm, and I give economic progression guidance, policy tips, as well as client advancement suggestions,” McCrory told press reporters abiding by an argument in Wilmington at the NC Bar Association in June.

As a candidate, McCrory left it around the courts to decide whether the large video sweepstakes sector need to be closed down.

“I’m still attempting to identify exactly what they are,” McCrory told the event of attorneys in June, “I’ll be honest with you. I cannot discriminate between these sweepstakes machines and video poker.”.

McCrory stated he would certainly speak to with North Carolina’s sheriffs before taking any sort of activity on sweepstakes machines. The NC Sheriffs Association has actually been a singing challenger of both video poker and video sweepstakes, lining the front two rows of the state Supreme Court during oral arguments.

Now that the state Supreme Court judgment is because of work on Thursday, McCrory answered a reporter’s concern concerning the future of video sweepstakes by saying, “I believe they ought to apply the law.”.

However McCrory took place to express irritation at what he called “loopholes.” “The court has actually ruled and they need to implement the law,” McCrory stated, “But I likewise recognize there are means to have lawful handling to go around those laws which has been taking place for an incredibly, lengthy time.”.

The Governor-elect did not point out that his previous law company was doing some of that “legal maneuvering.”.

Only last month, former leading McCrory planner Brian Nick visited work for Moore and Van Allen. Nick is participated in “strategic interactions” on video sweepstakes, yet Nick states McCrory is still discovering about video sweepstakes and never worked for video sweepstakes firms featuring IIC.

“Did he (McCrory) have a background collaborating with this business by any means, shape or form? No,” Nick claimed.

Ricky Diaz, Deputy Communications Director for the McCrory shift team, pointed out IIT will certainly get no unique treatment from a McCrory administration because it patronizes of Moore & Van Allen. “He left the company and he had not been a lobbyist for Moore & Van Allen,” Diaz pointed out.

McCrory told reporters he would talk to legislative leaders regarding the video sweepstakes industry and police force.

In a state strapped for cash, video sweepstakes are an appealing target to tax.

Outgoing Gov. Bev Perdue told press reporters last summertime that as lengthy as the sweepstakes machines were running, the state must “tax the heck” from them.

The video sweepstakes industry has actually held out the possibility of tax obligations and jobs as explanations that state lawmakers must make them legal.

Sweepstakes Ban Takes Effect In North Carolina


A North Carolina Supreme Court decision supporting a ban on video sweepstakes machines is entering result.
The state Supreme Court last month promoted a state law forbiding sweepstakes halls as gambling practices. The court’s judgment enters effect statewide on Thursday.

The US Supreme Court last week turned down the sweepstakes game industry’s request to block enforcement while companies interestinged to the nation’s greatest court, a step expected by mid-March.

Enforcement of the video sweepstakes restriction was expected to differ commonly around the state. A spokesperson for the Internet Based Sweepstakes Operators claims 90 percent of the state’s owners will certainly close down voluntarily, with some reopening making use of various software application and gaming choices that will certainly need to be tested with new cause in court.