Karen Martin, Staff Writer
July 12, 2010
Elkin and Jonesville business owner Frank Myers and the 30 employees who work for his Internet sweepstakes businesses could be out of work on Dec. 1 if House bill H80 is signed by Gov. Bev Perdue later this week.
"No one seems to realize that banning Internet sweepstakes businesses will affect many people's lives," Myers said. "Not only will it affect the employees that work directly in the centers, it will affect their families and the peripheral businesses that the employees do business with. Taxes will not be paid by these employees, some may even loose their homes and vehicles, and where will they find jobs."
In a vote by the N.C. House of Representatives on Wednesday, Internet Sweepstakes businesses are on their way out. The bill passed the house in a 86 - 27 vote. The N.C. Senate passed the bill last month.
The bill has now been sent to Gov. Bev Perdue. The Governor's Press Secretary Chris Mackey said that the governor is expected to sign the bill, but no definitive decision nor date has been given.
"I believe that if Gov. Perdue would take the opportunity to speak to us and really look at the revenue our industry could bring into the state, as well as the jobs provided, she would see that it is beneficial," Myers said.
On Wednesday, The Entertainment Group of North Carolina, an association of vendors of coin-operated and sweepstakes machines, issued a statement in which they said that their members planned to look at all possible avenues to challenge the ban.
"We are certainly disappointed with the vote in the state House," the statement said. "We continue to believe that regulating and taxing video gaming is the best public policy for the state of North Carolina. We will look at all options available to us, including our legal avenues and the advances of technology as we follow the implementation of this law, allowing the industry to continue to do business."
All across the state, sweepstakes businesses are filling vacant store fronts in strip shopping centers. After a court decision questioned whether the state's 2006 video poker ban applied to the computer-based games, more business owners have taken advantage of the somewhat confusing loophole.
House lawmakers said that they wanted it made clear that the 2006 ban on video poker applied to computer sweepstakes games. The general consensus of the lawmakers was that the sweepstakes is just another way to take people's money, by seducing them with games.
The law, if signed by Gov. Perdue would take affect on Dec. 1. After becoming a law, anyone operating a game would be guilty of a misdemeanor and repeat offenders could be charged with a felony punishable by eight months to 2 1/2 years in prison.
Many of the Internet sweepstakes businesses are combined with other services such as fax and mail providers, shipping points and copy centers.
Elkin has one Internet sweepstakes business located in the Elkmont shopping center. Frank Myers, of JFM Enterprises also owns Internet sweepstakes centers in Jonesville, Boonville, Mt. Airy, and other Yadkin county locations. Myers said that he was very concerned about the 30 employees that work for him if the Governor signs the ban.
"Everyone wants to talk about it being a gambling business, but it is no more a gambling business than the state lottery, a church raffle or a bingo game,"Myers said. "What the people of North Carolina also need to consider is that their choice, their freedom of choice is being taken away. Sure, there are people who have gambling problems, but they too have the choice to get help. One of the spokespersons for Gamblers Anonymous said that it's like taking vodka away from alcoholics. They'll just switch to beer and wine. If the government could prove to me that if I closed my business and the person who wants to spend their money would not go across the street to a poker game or buy a lottery ticket, I would close, but that's not going to happen. We offer entertainment for those who want it. A person can come in and purchase Internet time, have a chance to win a sweepstakes, just like buying a lottery ticket, search the net, play games or communicate with friends and family through the Internet."
Operators of Internet sweepstakes businesses across the state contended a ban would eliminate thousands of jobs during the bad economy by getting rid of a game that's only a form of entertainment, not gambling. Opponents argued, however, that the games are designed to get around the video poker ban. Suggestions have been made that by regulating the businesses, the state could net as much as $500 million a year in revenue.
"If the state bans the Internet sweepstakes businesses, it could be looking at a deficit of over $3 billion next year, David Hagie, of DPH Enterprises said. "Not only will the state be loosing millions of dollars in possible revenue, it will be putting thousands of employees out of work and the residual affect on the economy from the trickling down of the job loss will be devastating to the economy.
"We could see the highest unemployment rate ever recorded in North Carolina by next spring if the Governor signs this bill," he said.
Hagie's concerns go much deeper than just the immediate job loss from the forced closing of the 800 Internet Sweepstakes businesses across North Carolina.
"I opened the first Internet sweepstakes location in the Pinebrook shopping center in Winston-Salem, and after a successful start, opened four more," Hagie said. "The stores were making good money, not the hundreds of thousands people believe they do, but good money. Then I opened another 13 - 14 until I got up to 17. Then I started getting phone calls from people wanting jobs, and from people who had lost good paying jobs. Real estate brokers, construction company owners and other professional business people whose industry and/or businesses were failing. These people were interested in opening a business of their own or working for me. I helped several by partnering with them or financing their start up and helped them to own their own business that was working in this economy. Now, yet again, these people are threatened with the loss of jobs and income. Many will probably loose their homes and vehicles.
"I don't believe that our government in Raleigh realizes just how widespread the devastation will be if the governor signs this bill," he said. "Just by closing our stores, many other businesses will loose income. The companies we employ to work with and in our stores will be affected. The vending machine companies, the landlords we rent our storefronts from, the security people, the software techs, the HVAC techs, the construction guys, the window washers, the lists goes on. We have tried to set our standards for operation high. We even hired an ex FBI officer who goes around to our stores to make sure that the businesses are safe and secure."
Both Myers and Hagie spoke extensively about their belief of the N.C. Legislature's failure to recognize the potential of regulating their businesses and of taking the resident's of North Carolina's freedom away.
"Little by little, the politicians in this state are chipping away at North Carolinian's freedom of choice," Hagie said. "Someone needs to take leadership of this state and right now Gov. Perdue has the opportunity to do just that.
"In a couple of years everyone will blame the governor for the loss of jobs, but it's not just her," he said. "It's all the members of the house of representatives who need to stand up and have a backbone. Many of the representatives made comments that they felt they were being forced to vote for this ban. Threatened with investigation, with funds not going to their districts and other things. Joe Hackney used his leader of the pack to force it through (the bill), they pushed it through without the democratic members support and the republicans seized the opportunity to shove the democrats over the cliff."
"Speaker Hackney told me that the lottery and the sweepstakes were different things," Myers said. "He said the lottery was not gambling and that it (internet sweepstakes), was wrong and he was going to ban it.
"We, Hagie and I spent all last week in Raleigh trying to talk to the house representatives about this issue," he said. "If the state wanted to regulate the business, fine. I would be willing to run under fair state regulations. This is a legitimate business."
Hagie explained that he had even gone to court and received a ruling that the Internet Sweepstakes business was a legitimate business.
"I went to an attorney to make sure my businesses were legitimate businesses," Hagie said. "We went before Judge Craig and showed him what we had and he said it was a legal business. At that point I began expanding my business. Now I'm overwhelmed with what my employees are going to do if I'm forced to close my businesses. All the employees who will loose their jobs is only just the tip of the iceberg.
"Many of the representatives made comments during the session on Wednesday," he said. "One of them even said they were tired of being judged on whether or not they were being moral. This is not just a moral issue, and if it is, how is it any different from the state owning ABC liquor stores and selling alcohol, or selling lottery tickets.
"By offering our customers the opportunity to win a sweepstakes if they buy Internet time, it is a marketing tool," Hagie said. "Have you ever been to a restaurant where when they give you the receipt, there's a website or a phone number you can call for a chance to win a sweepstakes or a gift card or prize. What's the difference. The manner in which it's proposed, the opportunity to win, is all the same."
"No one under the age of 18 is allowed in our business center/Internet sweepstakes stores," Myers said. "That is the legal age in North Carolina, and if a person wants to spend their money on entertainment they ought to be allowed to make their own choice. If the state wants to bring morality into the deal, what about all the billboards in the cities showing pictures of mostly naked women advertising gentlemen's clubs. Shouldn't we be more protective of our children and what they're exposed to.
"Hagie has brought more jobs to North Carolina in the past two years with the opening of the Internet sweepstakes businesses than the state has created jobs. And the representatives want to do away with these jobs," Myers said. "Are they going to create jobs guaranteeing these employees a new job. This issue is so much more than about gambling and the residents of North Carolina need to realize that yet again, another choice is being taken away and another freedom done away with. Residents need to contact Gov. Perdue and ask her to reconsider signing this bill."
A recent study by the North Carolina Education Lottery said regulating the sweepstakes cafes could net the state more than $500 million a year.
In reports across the state, the North Carolina Legislature has made clear that its 2006 video poker ban also applies to computer sweepstakes games.
There has been no statement from Gov. Perdue's office on if and when she will sign the H80 bill into law.