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Issue Date: Vol. 50, No. 8, August 2010, Posted On: 7/23/2010

North Carolina Governor Signs Electronic Sweepstakes Game Ban

Hank Schlesinger
North Carolina sweepstakes game ban, Ban Electronic Sweepstakes bill, HB 80, sweepstakes videogames, sweepstakes videogame ban, video poker, slot-style games, Beverly Perdue, Entertainment Group of North Carolina, Bill Thevaos, Owl Music Co.

RALEIGH, NC -- An estimated 900 Internet gaming cafés in North Carolina must close their doors by Dec. 1 as a result of a new law to ban sweepstakes-style video­games. The Ban Electronic Sweepstakes bill (HB 80) passed both houses of the General Assembly by wide margins earlier this month, and Gov. Beverly Perdue signed it July 20. In consequence, the state will sacrifice $1 million in licensing revenues next year

Gov. Perdue said she endorsed the bill because Internet sweepstakes games had "morphed into something uncontrollable," with an "amazing" number of Internet cafés proliferating statewide.

The governor said any videogame gambling operations in the state should be subject to an "organized, unified system of regulation" to ensure "standard rules and regulations" while avoiding "profiteering." However, a spokesperson said this comment should not be construed as support for video poker legalization.

Prior to the Governor's signing the bill, the Entertainment Group of North Carolina had sent her a letter urging her to veto it. EGNC president Bill Thevaos of Owl Music Co. (Charlotte) said the group favors legalization and regulation of risk-reward gaming in the state, which could create a $3 billion a year market that would generate some $500 million annually in state tax revenue.

Sweepstakes videogames typically simulate slot play, and some Internet cafes reportedly had offered prizes of several thousand dollars to winners. But operators say their sweepstakes games -- despite being linked to slot, keno, or poker simulations -- don't award prizes from server-based prize pools of the sort used by the casino-style online game programs. Instead, prizes are paid to winners based on predetermined sweepstakes rules similar to those that govern many retail promotional campaigns conducted by companies such as McDonald's.

Sweepstakes businesses typically sell prepaid Internet access cards, although legally no purchase is necessary to enter. Buyers are then given access to onsite computer terminals running slot-simulation software.

Law enforcement around North Carolina had raided sweepstakes game venues repeatedly over the past year, but at least two district judges ruled that the games were legal, prompting the General Assembly to pass HB 80.

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