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Issue Date: Vol. 50, No. 4, April 2010, Posted On: 3/18/2010

North Carolina Police Shut 56 Sweepstakes Gamerooms

Marcus Webb
sweepstakes game rooms, sweepstakes shutdown, sweepstake promotion, North Carolina sweepstakes games, sweepstakes terminals, amusements, coin-op devices, Internet cafés, coffeehouses, phone cards, phone time, server-based prize pools, adult redemption, gaming machines, fast food promotional games, McDonald's sweepstakes, Ray Warren

BURKE COUNTY, NC -- Police here shut down 56 Internet sweepstakes gamerooms in the towns of Morganton, Valdese, Drexel and Glen Alpine during the week of March 14-19. Sheriffs and deputies in several local jurisdictions within the county, working together, disabled more than 250 Internet terminals and videogames.

The operators -- some admitting to making cash payouts to winners -- were told they have until March 26 to dispose of the machines.

Various North Carolina district courts have ruled that sweepstakes games are legal under state law, assenting to the argument that a sweepstakes on an Internet terminal is -- in theory and in law -- no different from a similar promotion at fast food restaurants. In 2009, a Superior Court judge in Wake County, NC, prohibited raids on sweepstakes parlors until the pertinent law was clarified.

Nevertheless, numerous police and city councils find sweepstakes machines objectionable. Burke County Sheriff John McDevitt said police were "taking a leap of faith" and were willing to "interpret" the law for themselves. Slot machines, games of chance with cash payoffs, and video poker games (even if operated for amusement only) are illegal in North Carolina.

In a typical online sweepstakes gameroom, customers spend $1 to $5 to buy time on the networked computers or credits on videogames, or purchase sweepstakes tickets. They can then play slot-style games. Read more about North Carolina sweepstakes games.

But promoters of these contests sometimes argue that the a game's outcome is predetermined by the sweepstakes entry, and is not arrived in real time by the random operation of any poker, slot or blackjack software program that the customer happens to enjoy. This distinction means the game is a legal sweepstakes, not an illegal slot machine, operators say.

Following the Burke County raid, the sheriff of Catawba County, David Huffman, said that he would like to shut down Internet sweepstakes gamerooms there, too, and that he believes cash payoffs on the machines are illegal. But Huffman is refraining for now. Officials in other counties such as Shelby and New Hanover also want to shut down Internet sweepstakes game rooms but say they have not yet found a legal means to do so.

Rep. Ray Warren (D-Alexander and Catawba counties) has cosponsored a bill to ban online sweepstakes games. Warren said he didn't know when the bill could come up for committee markup or floor debate.

Earlier attempts to regulate the machines by lawmakers in Raleigh have failed due to the legal conundrum described above. Some lawmakers say they can't figure out how to outlaw sweepstakes games without also banning long-established McDonald's-style prize promotions.

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