Legal Issues Confusing for Towns on Sweepstakes Parlors
The N.C. General Assembly has been more and more restrictive on what types of machines are permissible since it legalized video gaming machines in 1993 to reduce the prevalence of slot machines.
Simultaneously, gaming companies have been tweaking their programs and modifying machines to undercut the restrictions.
In March 2008, Judge John O. Craig III, a Guilford County Superior Court judge issued an injunction saying that the current restrictions did not apply to "sweepstakes" gaming systems, used by two of the industry's four major software companies.
The General Assembly's most recent attempt to ban electronic gaming machines went into effect in December 2008 and includes "server-based electronic game promotions."
Later that same December, Craig issued another injunction baring state law enforcement officers from closing electronic gaming operations that he deemed were operating outside of the recent legislation.
Darrell Phillips previously ran an electronic gaming business called Internet Sweepstakes in Aberdeen's Town and Country Shopping Center.
The Aberdeen Police Department shut down the operation in 2009, in order to comply with the N.C. General Assembly's ban. Phillips maintains that his business is legal under the March 2008 injunction that permits "sweepstakes" operations.
The case between Phillips and the Aberdeen Police Department is still pending in court. He has since moved his business to Olmsted Village.
Phillips' case is one of several that has caused both confusion and debate for state municipalities as state courts and the N.C. General Assembly continue to disagree on which operations are legal.
Some local municipalities have amended their zoning codes to address electronic gaming despite the uncertainty.
The Aberdeen Board of Commissioners approved a zoning code text amendment concerning electronic gaming operations in March in order to have a policy that addresses the operations in case the General Assembly does make the operations legal.
The amendment allows the businesses to operate within the Highway Commercial zoning district with certain restrictions under a conditional use permit.
Businesses must be located at least 1,000 feet from residential structures and at least half of a mile away from other electronic gaming operations.
The board also adopted a privilege license tax for the operations, which requires applicants to pay an annual fee of $2,000, plus an additional tax of $2,500 for each machine used or stored.
Phillips said that if he were still operating in Aberdeen, he would have to pay around $50,000 a year in privilege license fees.
The Carthage town commissioners have discussed the issue, but decided to wait and see what the state legislature does first.
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