Bill Introduced Would Regulate and Tax Internet Cafes

Picture of Harry Joseph Warren

Rep Harry Warren Filed a Bill To Regulate Internet Cafes

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Will It Gain More Sponsors ?

In addition to the anticipated bill regulating electronic sweepstakes promotions that was filed by Representative Harry Warren (R-Rowan), Representative Chris Malone (R-Wake) also filed a major piece of legislation today that will regulate and tax internet cafés.
Malone’s bill clarifies the law regarding internet cafés by regulating and taxing these small businesses. The bill also ensures that all café owners are required to be approved for an operator’s license by the North Carolina Department of Commerce. A vendor’s license will also be required for all software vendors.

“Small business owners in North Carolina deserve a high degree of certainty and consistency in their interactions with state government and local law enforcement,” said Representative Malone. “This bill creates a more positive business environment for entrepreneurs who choose to open and operate internet cafés in North Carolina. The positive economic impact and government revenues these businesses generate are assets to our state.”

Former Senator Thom Goolsby, spokesman for the North Carolina Small Business Coalition, said, “The introduction of Representative Malone’s legislation signifies a new beginning in the relationship between state government and internet café owners. With thousands of good, private sector jobs on the line, it is certainly time to regulate, tax and support these small businesses, just as we would any other industry.”

New Game Sweeping Across the State

Greensboro, NC – Some sweepstakes businesses have already shut down, while others changed their game to comply with the law.

Ray King, the former owner of Spin Win Sweepstakes on High Point Road, said a handful of business owners have networked together and hired an attorney.

How Are NC Operators Reopening Their Game Room ?

“We’re still waiting to see what happens, waiting to hear back from our attorneys,” King said. “I just wish they (the government) would get us legalized and take the revenue. Everybody would be happy.”

Pre-Reveal Sweepstakes

Pre-Reveal Sweepstakes

Late in 2014 the interim Police Chief Anita Holder sent warning letters to over 50 sweepstakes businesses in Greensboro to warn them that enforcement of the state’s sweepstakes law would begin March 1.

The 2010 law went into effect Dec 1 and prohibits “sweepstakes through the use of an entertaining display, including the entry process or the reveal of a prize.”

Dozens of court cases followed, and questions arose about the legality of “pre-reveal” software, which displays winnings before the start of the game.

Unclear NC Gaming Law Allows Games To Play On

Greensboro police decided not to enforce the law until more clarity on the situation came to the surface, In November, the N.C. Court of Appeals ruled on a case from Edgecombe County, declaring that the pre-reveal machines were still “games of chance.” The ruling is being appealed and is inconsistent with other court rulings across the state.

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Violations of HB-80 aka the “sweepstakes law” result in a Class 1 misdemeanor charge for a first offense and Class H felony charge for a second offense.

Guilford County Assistant District Attorney Howard Neumann said “there are noticeably fewer” charges in the latest enforcement effort than there were in  crackdowns before.

“But that’s because a vast number of businesses closed down when the Greensboro police said they were going to initiate action,” Neumann said. Others seemed to change the type of game and remain open.

Across the state, enforcement remains inconsistent. Last week in Rockingham County, District Attorney Craig Blitzer announced that Reidsville, Eden and Madison would be exempt from enforcement efforts, which have been put on hold until July 1.

Sweepstakes operators petition to have ‘seized cash’ back

Law enforcement “faces a constant battle” to stay ahead, Neumann said.

Casey Rooks, a spokesperson for PreReveal Skill Games and Sweepstakes, says “The law in North Carolina is very clear, it outlines what is not a compliant game,

PreReveal Spokesperson

PreReveal Skill Games Spokesperson Casey Rooks

as you can imagine, most game developers want to stay inside the parameters of the law. Developers can’t develop games if they’re looking for a bondsman, we feel extremely confident that we have a game that will fit into almost ANY market. Gas stations, bars, taverns and any retail establishment for that matter. Our auditing system is state of the art and can sync into ANY point of sale. It’s the best on the market ”

Not All Sweepstakes Games Get The Ax



Charlotte – Rockingham County officials announced today their plans to enforce the state’s ban on electronic gaming with entertaining displays and close operators in the county.

However, not all of the businesses will be shuttered and the ones that may be forced to close will likely change their games and re-open.

Pre-Reveal Sweepstakes

Pre-Reveal Sweepstakes

District Attorney Craig Blitzer said late Monday that sweepstakes businesses in the cities of Reidsville and Eden and the town of Madison will not be part of the crackdown. Any sweepstakes business operating outside of those municipalities, however, will be shut down.

“I will be shutting down my machines,” said David Holland, who owns a tobacco store in Madison and is Mayodan’s mayor pro tem.

It’s estimated that approx 51 businesses would be closed by July 1.

He said he based his decision to exempt Reidsville, Eden and Madison because officials there were worried about the financial repercussions a crackdown might have as well legal action LOTTERY_Ottobeing taken against them by sweepstakes owners. Casey Rooks, a spokesperson for PreReveal Skill Games says “Ultimately the State has to deal with violations of the statue, we feel extremely confident that our games do not violate the text of the law, we practice showing law enforcement  our games and why they are compliant with the law.”

Sweepstakes games are usually found in Internet cafes and often located in shopping centers and convenience stores. They usually feature computer terminals on which customers play games of chance. Rooks explains “When the state defined what constituted an illegal game, the gaming developers plugged in a new game”

Large sums of money is at stake. The City of Greensboro shut down sweepstakes businesses at the beginning of this month, collected  $900,000 in licensing fees during parts of 2011 and 2012.

Reidsville collected about $23,000 in 2014.

Eden, looks to lose about $225,000.

“Coming up with a strategy to replace approximately $225,000 in revenues is very difficult,” said Brad Corcoran, Eden’s city manager.

To make matters more complicated, sweepstakes operators have already paid the county for the fiscal year that ends June

It’s unclear how the county would address a potential refund for those businesses but there is precedence in North Carolina that the county would indeed have to repay those fees.