ONLINE SWEEPSTAKES TARGET OF NEW N.C. LAW

4 July 2008

State video poker ban will extend to online games resembling slot machines


North Carolina lawmakers this week voted for a bill that tightens up the state video poker ban, applying it to slot-like games played by visitors to online sweepstake websites.

Supporters of the games claim that these are simply contests where players are rewarded for purchasing telephone or internet service cards, but the legislators are intent on refining the ban to ensure legal clarity. The games are becoming increasingly popular at truck stops and convenience stores around the state, politicians claim.

Democrat Rep. Ray Rapp told a judiciary panel considering the proposal that it was necvessary to close an apparent loophole in the video poker ban. "Just when we think we've gotten it taken care of in terms of video poker and gaming, it pops up again," he said. "This is an effort to close the loophole there."

Associated Press reports that North Carolina ended its 14-year experiment with legal video poker in July 2007 after lawmakers finally agreed to eliminate the machines. Sheriffs complained that machines were offering big cash jackpots, while others argued low-income people were spending too much money on the games of chance.

Since then, state Alcohol Law Enforcement agents enforcing the ban have reported that new types of games have surfaced on computer terminals in locations that were previously popular with video poker players.

One of the latest iterations is for the customer to purchase a phone card carrying only a few minutes of calling time. The customer can ask the operator to swipe the card to determine if he or she has won money. Or the customer can go to a computer terminal to play a game similar to those found on a slot or video poker machine to reveal the prize.

The player can roll over any winnings and continue to play for longer periods of time, allowing him or her to win more cash prizes, explained Democrat Rep. Melanie Goodwin, another supporter of the ban. However, players can also be lured into spending excessively on phone cards - clearly not with any intention of using same to make phone calls.

The legal situation has been clouded by a recent court action, in which a judge in the state approved an injunction halting the prosecution of businesses using the ploy until there is more legal clarity.

The clarifying bill now moves to the full North Carolina Senate; it does not prohibit sweepstakes altogether - only those that provide the option for participants to play on a computer terminal to disclose their winnings.

The latest developments are a setback for Theresa Kostrzewa, a lobbyist for Hest Technologies, the Texas company marketing the games in North Carolina and about five other states. She had urged committee members to delay passage of the bill this year.

"This is an issue that if we move too quickly, will open the gate up to unforeseen consequences," Kostrzewa said. She suggested litigation was possible that would challenge whether the prohibition gives the North Carolina Education Lottery a monopoly on games of chance in the state.

She likened the sweepstakes to manufacturers of other products - such as soda and candy - providing codes for consumers to type into their home computers and play games to learn if they've won prizes.

But Rapp said the Legislature should be consistent in its handling of video poker. "We considered it bad public policy then and we consider it bad public policy now," he said.

Observers point out that the N.C. Senate has traditionally taken a strong anti-gambling stance, and the bill has a good chance of passing.

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