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Issue Date: Vol. 50, No. 9, September 2010, Posted On: 8/23/2010

NC Operators Sue Five Cities Over Sweepstakes Laws

by Staff Reporter
Electronic sweepstakes machines, North Caroline sweepstakes machines, video lottery terminal, VLT, video gaming, video poker, amusement business, coin-op news, International Internet Technologies Inc., Hest Technologies Inc., video game

RALEIGH, NC -- Two operators of sweepstakes videogames filed a lawsuit in Burke County Superior Court against five North Carolina city governments on Aug. 6. The operators' suit argues that the cities violated the 1998 federal Internet Tax Freedom Act.

The plaintiffs, International Internet Technologies Inc. and Hest Technologies Inc., allege that cities of Fayetteville, Lumberton, Pembroke, Morganton and Wilmington have imposed fees of up to $3,000 a location and up to $2,500 per computer terminal, and that such fees constitute an illegal tax on Internet access.

Plaintiffs said their Internet cafés offer many citizens their only opportunity to go online and that many of their customers use Web access to search for jobs or send emails. The operators sought a temporary restraining order to keep officials from staging raids, seizing equipment or collecting the contested fees.

An estimated 900 Internet gaming cafés statewide must close their doors by Dec. 1 as a result of the electronic sweepstakes ban, which Gov. Beverly Perdue signed on July 20. See story.

In an earlier lawsuit in Guilford County, operators asserted that banning sweepstakes games is unconstitutional.

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