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The Promise And The Peril

Posted On: 1/27/2011

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electronic bingo, sweepstakes video game, Internet café, Alabama bingo brawl, North Carolina sweepstakes videogame, Bev Perdue, Bob Bentley, Task Force on Illegal Gambling, state gambling laws, Chase Brooks, Internet Based Sweepstakes Organization, video poker, video lottery, location-based gamingcoin-op amusements, amusement business, amusement machine business, arcade games, coin-op news, vending, vending machine business, amusement industry trends, Marcus Webb, Vending Times

Vending Times devoted plenty of coverage last year to the infamous "Alabama bingo brawl" and to North Carolina's controversial, evolving sweepstakes videogame industry. 'Bama bingo is shut down for now, but Tarheel sweepstakes games are still operating. Where are these two roller coasters going in 2011?

In Alabama, governor-elect Bob Bentley said he'll eliminate his predecessor's hated Task Force on Illegal Gambling. He signaled his willingness to respect local county preferences on bingo legality. And he promised to "take a fresh look" at electronic bingo in light of state gambling laws.

All of this sounds as if bingo will be back, with its millions of dollars in state tax payments, thousands of jobs and popular, affordable entertainment for citizens. We can only hope that Alabama street operators find a legal way to put electronic bingo machines on their routes. The economic playing field should be level for small businesses, too.

That brings us to North Carolina, where some prominent operators say there may be as many as 50,000 computer terminals that offer Internet-based video sweepstakes games with cash prizes.

Not all of these machines are located in the state's 958 Internet cafés by any means. According to Chase Brooks, president of the Internet Based Sweepstakes Organization, up to 10,000 bars and convenience stores also host one or two Internet-based sweepstakes games.

In an interview with VT, Brooks insisted that the state's billion-dollar sweepstakes industry will continue to operate. Manufacturers can change technology faster than politicians can change state laws, he said. But Brooks also admitted that North Carolina might legalize sweepstakes games for the State Lottery, freezing out operators.

If this were to happen, operators would be justifiably outraged. The potential unfairness here is two-pronged. First, sweepstakes games with cash prizes are legal and universally available on the Internet. It makes no sense to outlaw a fairly harmless activity in a public venue that is both legal and morally unobjectionable to engage in at home.

Second, sweepstakes promotions with cash prizes are a staple of dozens of industries ranging from magazine subscriptions (remember the Publishers Clearinghouse Sweepstakes?) to fast-food restaurants. Superior court judges in North Carolina have repeatedly noted these facts when ruling that sweepstakes videogames are not ... repeat not ... a form of illegal gambling.

The latest and perhaps most surprising wrinkle in North Carolina's ongoing sweepstakes games controversy is the First Amendment defense. Some manufacturers, like Hest Technologies, have argued that sweepstakes games are a form of protected expression under the U.S. Constitution. This has caused consternation among certain state lawmakers. (One politician sneered that if sweepstakes games are a protected form of free speech, then prostitution must be a protected form of public assembly.)

Nevertheless, the First Amendment angle makes sense -- especially since federal appeals courts have ruled over and over again that amusement videogames deserve First Amendment protection. If the U.S. Supreme Court upholds this defense for amusement videogames later this year, as seems likely, then the same protection may be extended or strengthened -- if only by implication -- for sweepstakes videogames, as well.

In both Alabama and North Carolina, the public has clearly indicated strong acceptance of these forms of entertainment. Opinion polls show it. Votes show it, too. (Chase Brooks claims his organization succeeded in helping to defeat several anti-sweepstakes politicians in the recent elections.)

But we live in strange times in this country. Many politicians ignore the clear will of the public and insist on forcing their own favored policies into law, and may democracy be damned.

The simple fact is that state and federal government power has expanded to almost limitless proportions in recent years. If lawmakers want to outlaw electronic bingo for left-handed people born in warm-weather months, they can. If they want to ban sweepstakes from businesses that sell entertainment rather than magazines or hamburgers, they can do that, too. Only an informed, activist citizenry -- led by an activist industry -- can stop them. As we've seen, that almost never happens.

What does happen now and then is that state governments realize they need the money from taxes on legalized gambling -- or from other forms of entertainment they may dislike, such as sweepstakes promotions. That is why Illinois legalized operator-run video poker in 2009, for example.

A wiseacre once said, "Politics is the art of deciding who gets how much, when, where and why." The fate of electronic bingo and sweepstakes videogames -- not just in Alabama and North Carolina, but nationwide -- may come down to just this sort of cynical financial calculation.