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Local Owner of Internet Gaming Establishment ‘Ticked Off’ at State’s Sweepstakes Ban To Be Enforced Jan. 3

Sweepstakes business on N.C. 105.
Sweepstakes business on N.C. 105.

By Jesse Wood

Dec. 20, 2012. The N.C. Supreme Court overturned a N.C. Court of Appeals ruling in 2010 and upheld the state’s ban on sweepstakes gaming establishments that have popped up all over the state.

Three of these businesses exist in Watauga County – two on N.C. 105 and one on the bypass.

Recently, the North Carolina Sheriff’s Association sent a memo to local agencies stating that Jan. 3 would be the first day to resume enforcement of the ban.

Watauga County Sheriff Len Hagaman said that he hasn’t had any complaints regarding these operations in the past but has “kept an eye on them.” He added that he expects the gaming operations to go out of business before his deputies have to enforce the law after the New Year.

“Well, I think they know what’s coming,” Hagaman said. “I guess most of them will be out of business between now and then.”

Earl Musselwhite runs the Gold Rush Internet Sweepstakes, located next to the Foscoe Fire Department, with his wife. It’s been open for about a year now, and he said the patrons “love it here.” The ruling didn’t catch him by surprise, as he knew this day would be coming sooner or later. 

Sweepstakes business on N.C. 105
Sweepstakes business on N.C. 105

“I don’t know why we can’t just pay taxes and go ahead and stay in business,” Musselwhite said. “That way we could keep the stores running, stay employed. We’d still be making money, and [the government] would be making money. But they want to shut everything down.”

“What’s the difference between this and the lottery tickets at the gas station,” he said. “The people that come in here are family oriented. We don’t have drunks, no cussing, no raising sand and all that kind of mess. I run a tight ship.”

“I am kind off ticked about it, but there’s nothing I can do about it,” he continued. “I’ll ride it out …and then do what I gotta do.”

If the future is anything like the past, Musselwhite may be able to continue running his business if the industry figures out another way to stay abreast the law.

In 2006, video poker was deemed illegal, so the companies sidestepped the betting by offering the purchase of playing time on displays that looked just like slot machines.

Soon, law enforcement started knocking on the gambling establishment’s doors again – confiscating equipment, closing down shops and pursuing prosecution after the N.C. General Assembly enacted legislation that banned game terminals that simulated slot machines in 2008.

Then the industry began operating under the sweepstakes premise (explained below) and was again under pressure from the law.

Sweepstakes business on  N.C. 105.
Sweepstakes business on N.C. 105.

In 2010, the N.C. General Assembly passed a bill titled “An Act to Ban the Use of Electronic Machines and Devices for Sweepstakes Purposes.” N.C. Court of Appeals ruled that this was a violation of free speech, which was overturned on Friday by the N.C. Supreme Court.

Another adaptation, another sidestep around the laws is likely from the gaming industry.

“We will look into morphing into whatever we need to be under the rule of law to continue our business,” said Chase Brooks, president of Internet Based Sweepstakes Operators, in a statement.

Sweepscoach, a company that provides start-up services for potential Internet cafes, compares the sweepstakes play to the McDonald’s Monopoly game.   

“When you play the McDonald’s Monopoly game, which is a sweepstakes, you don’t buy game pieces; you buy a Big Mac with fries or chicken McNuggets. When you buy the food, you get a free entry into the Monopoly Game,” according to Sweepscoach website. “This is exactly how sweepstakes gaming works in the Internet café business.”

Customers don’t actually purchase entries into the sweepstakes; the customers are purchasing Internet time on the computers or long-distance phone time on calling cards.

“Simply put, the sweepstakes machines are our Monopoly game and the Internet or phone time is our cheeseburger,” according to Sweepscoach. “This makes it legal.”

That is – at least until Jan. 3 or until the industry circumvents the law once again.