RALEIGH — Companies that produce the software behind video sweepstakes games want the state Supreme Court to delay closing down North Carolina’s sweepstakes halls as they appeal to the U.S. Supreme Court.
The state Supreme Court last week upheld a state law declaring the sweepstakes halls to be gambling operations. The industry on Monday asked the state Supreme Court to delay enforcement of the law that could shut down hundreds of businesses across North Carolina.
The industry says it needs a few weeks to see if the U.S. Supreme Court will consider its claim of free-speech protections. The high court ruled last year that video games are protected by the First Amendment, just like books and films.
North Carolina’s sheriffs are gearing up to start enforcing the law outlawing video sweepstakes operations next month. Without the state court ordering an enforcement delay, sweepstakes halls may be forced to close permanently and throw thousands of employees out of work, said Adam Charnes, an attorney for Hest Technologies Inc. and International Internet Technologies LLC.
Sweepstakes halls “have operated in the state for more than four years and the state will not be harmed by a short stay lasting only a few more months at most,” Charnes wrote in requesting the court to delay enforcement.
Sweepstakes parlor patrons buy Internet or phone time that gives them the opportunity to uncover potential cash and prizes with mouse clicks on a computer screen.
The state Supreme Court last week ruled in two cases in which amusement-machine and other companies sought to overturn a 2010 law banning sweepstakes machines as a form of gambling. Sweepstakes halls have cropped up because of what justices called a loophole since the state outlawed video poker machines in 2007.
The court ruled the state law regulates the conduct of playing the sweepstakes games, which opponents say feed the same gambling addictions as traditional video poker machines.
The General Assembly determined that businesses that converted from offering video poker gaming to video sweepstakes were using “a mere pretext for the conduct of a de facto gambling scheme,” Justice Robin Hudson wrote for the court.
The situation will be watched in Lumberton and Robeson County, where there are many such parlors. The city of Lumberton has been sued by local establishments that contend the city’s $5,000 privilege fee and its $2,500 fee per machine are unconstitutional. Those fees have forced several establishments to move outside the city.
The N.C. Court of Appeals sided with Lumberton in a 2-1 decision that was then appealed to the state Supreme Court. That court heard arguments and is expected to rule next year.
Members of the Lumberton City Council have expressed concerns about the establishments, saying that they prey on people with gambling problems and therefore hurt families. But other towns in Robeson County have actually lowered their fees in an effort to attract the businesses, create local jobs and generate new revenue.
Editor Donnie Douglas contributed to this story.