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Sweepstakes Games - And Raids - Are Nationwide Phenomenon

Posted On: 10/12/2010

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Videogames integrating sweepstakes contests and simulating slot play continue to proliferate from Florida to Massachusetts and as far west as Arizona and possibly California. The controversial machines, which typically award cash prizes based on a predetermined sweepstakes model, also continue to attract police raids in numerous cities and states.

Police raids in the Virginia cities of Roanoke and Virginia Beach have not deterred City Capital Corp. (Raleigh, NC) from expanding operations by its sweepstakes subsidiary Clean Sweeps Holdings LLC. The company calls itself "the industry leader in sweepstakes manufacturing and distribution with more than 100 locations and 3,000 machines."

Clean Sweep's stores are located in North Carolina, Virginia, Texas, Florida, Massachusetts, Florida, Arizona, Louisiana, Georgia and Texas. It plans to expand into three more states.

Capital City chief executive Ephren Taylor said his firm is spending $500,000 to open six new sweepstakes venues across Virginia, including a 5,000-sq.ft. location in the city of Norfolk, set to launch in late October. The stores feature proprietary sweepstakes videogame terminals, integrated into a retail-based sales system, Taylor said.

Taylor said he expects the six new Virginia venues to gross $700,000 annually based on current earnings in existing venues. All machines are "in accordance with local laws," stated the company website. The firm also said it voluntarily gives 20% of all machine profits to charity.

Sweepstakes games continue to attract support and opposition from government officials. In Fall River, MA, city councilor Leo Pelletier has become a sweepstakes game operator while 60 miles north in the city of Lynn, police are warning locations that sweepstakes games are illegal gambling devices and have seized two terminals.

Pelletier's partners invested about $80,000 to open the New England Internet Café, where players buy Internet time on 27 computers. For $20 they get two hours on the machines. They also get free food and soft drinks, along with 1,000 entries in a sweepstakes with prizes up to $5,000 in cash and play slot-type videogames. But Lynn police claim the sweepstakes machines in their jurisdiction do not meet the state's definition of promotional sweepstakes because they advertise -- but fail to deliver -- free play.

Officers in the city are advising locations that the machines are felony gambling equipment under state law and therefore it is illegal for operators to solicit placement of the devices, as well as to sell or lease them.