Our Opinion: Video lottery bill ignores unregulated sweepstakes games | The Enterprise
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Our Opinion: Video lottery bill ignores unregulated sweepstakes games

Posted on September 2, 2021


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North Carolina legislators seem to be OK with gambling just so long as the House — the one that meets in the state capital, that is — always wins.

After several years of ineffectual efforts to curb the supposed scourge of video sweepstakes games followed by several years of inaction, lawmakers hatched a plan to give the industry some competition. Under a bill approved in the House Commerce Committee on Tuesday, the  N.C. State Lottery Commission could issue licenses for video lottery terminals.

The machines would be programmed with “electronically simulated games of chance” allowing players to win “free games or credits that can be redeemed for cash.” Each terminal would require a permit from the lottery commission. Private businesses, not the state lottery itself, would operate the machines, with the state receiving 32% of net revenue. The bill doesn’t specify whether games can use the N.C. Education Lottery name and logo.

Primary sponsor Rep. Harry Warren, R-Rowan, told The Associated Press that House Bill 954 wouldn’t make existing sweepstakes games legal. Due to language limiting the number of licenses that can be issued, he said the state could expect 70% fewer video lottery terminals than the number of sweepstakes machines currently in circulation.

The obvious problem, as North Carolina Sheriffs’ Association Executive Vice President Eddie Caldwell told the AP, is that the bill “doesn’t eliminate the machines that are already there.”

It’s more than a matter of semantics. Regulators couldn’t contend that sweepstakes machines are operating as illegal video lottery terminals due to technical differences in gameplay. The bill allows games of chance, and the sweepstakes industry has long argued that its offerings don’t qualify as gambling because they’re primarily games of skill.

North Carolina has proven itself incapable of legislating sweepstakes machines out of existence. Each time the General Assembly tweaks its anti-gambling statute, operators change the game software or adjust reward mechanisms in an effort to skirt the law, or at least to provide plausible deniability that they are openly flouting it.

The result has been a tiresome game of regulatory Whack-a-Mole, with sweepstakes companies always staying a step ahead of the legislature.

RELATED STORY: Video sweepstakes laws remain murky 

Raleigh’s fumbles and failures created a leadership vacuum that local governments stepped in to fill. As sweepstakes centers spread across the Tar Heel State, county, city and town boards started defining the businesses for planning and zoning purposes.

Wilson was “one of the first to put it in our land use ordinance,” Chief Planning and Development Officer Rodger Lentz told the Times for a 2017 story. In January 2018, Wilson County began working to add gaming centers as a category in its unified development ordinance.

Lawmakers are in a Catch-22 of their own making. They can tax and regulate video sweepstakes, but not without courting controversy by appearing to promote private gambling. Or they can bury their heads in the sand, unconvincingly assert that sweepstakes games are against the law and ignore the nimble, dynamic industry raking in tax-free revenue right under their noses.

Warren and three cosponsors, Reps. Timothy Moffitt, R-Henderson, Howard Hunter III, D-Hertford, and Michael Wray, D-Northampton, may think HB 954 represents a third option. On its face, tying terminal-based games to the state lottery seems more like a modest addition to current offerings than a wholesale expansion of state-sanctioned gambling. But the devil’s in the details.

Green-lighting lottery terminals would have no effect on the legal status of functionally similar but technically distinct sweepstakes machines. Does North Carolina need to brainstorm new ways for people to gamble when it can’t competently regulate what it has?

Regular players and folks who routinely see sweepstakes games in their communities may wonder why the General Assembly can’t make peace with them. Gambling is a unique issue that bridges partisan divides, uniting social conservatives who oppose what they consider sinful behavior with social welfare liberals who cry foul because it disproportionately harms low-income consumers.

Views on gambling’s moral implications and government’s proper role notwithstanding, ideology must sometimes yield to reality. The question of whether our state should have sweepstakes games is moot because they’re already here. And the history of halfhearted, inconsistent enforcement proves they’re here to stay.

City councils and county commissions were comparatively quick to realize legitimizing the sweepstakes industry is the only way to tax the machines and place some regulatory guardrails around their use. It’s time state representatives reach the same inevitable conclusion.

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