Wilmington Deals With Sweepstakes

Special Report - October 19, 2012
This week, the Wilmington City Council set up a process for electronic gambling operations, also known as Internet sweepstakes parlors, to request an extension of the time allowed to comply with city zoning rules. On October 16, a 5–1 vote by the Wilmington City Council established the process the city will use to determine whether a particular business will be given a grace period to continue operating at its current location. Sweepstakes businesses in the Wilmington area were put on notice in August 2010, when the Wilmington City Council approved “certain restrictions for electronic gaming establishments, including but not limited to, separation requirements and parking requirements.” Any operations that did not meet the new requirements were given 24 months to either make conforming changes or had to close by August 3, 2012.

The resolution approved by the Council this week lays out what additional information affected business and property owners must submit related to “expenses and revenues of the electronic gaming establishment” in order to be considered for an extension. Requesting establishments must submit the following:

• “State and Federal corporate, partnership or income tax returns for the past two (2) years;
• Copies of any lease agreements for real estate or equipment (machines);
• Profit and Loss Statements for the business for the past 24 months;
• An itemized listing of business startup costs;” and
• Operations details, such as the total number and average cost of machines.

Businesses have 10 days to submit an extension request and the necessary documentation after receiving a letter from the city’s Zoning Administrator that lays out the newly approved process. The Star News reports that Assistant City Attorney Joe Betts indicated that those letters would be sent immediately and “would attempt to schedule all the appeals as early as the council's next regular meeting.” The Council also decided to “stay any enforcement actions against” those establishments with a pending amortization period extension request. Since the compliance period expired in August, at least six sweepstakes operators have asked the city for an extension. The new procedures determine how those and other extensions will be evaluated.

In 2010, Wilmington began requiring sweepstakes operators to pay $2,000 to $3,000 per machine annually. The city also limited where the establishments could operate, specifically aiming to keep them away from places of worship, schools, daycares, public parks, residential districts, city “gateways,” and each other. According to Betts, 12 of the city’s 13 sweepstakes businesses are not in compliance.

"The ongoing efforts of local governments to regulate a gambling activity that has been banned by the North Carolina General Assembly should send a clear message to the courts that this issue needs a final resolution," said Bill Brooks, president of the North Carolina Family Policy Council. "This week, the Supreme Court of North Carolina heard two cases challenging the constitutionality of the state law that makes these operations illegal, and hopefully we will soon have a decision from the court that will uphold the General Assembly's ban."

Related resources:
Sweepstakes Lawsuits Dropped - October 26, 2010
Injunction On Internet Gambling Fees - October 18, 2010
Gambling Operators Sue Cities - August 13, 2010
Perdue Signs Gambling Ban Bill - July 22, 2010
Video Gambling Under Discussion - May 5, 2010
Video Gambling Returns to North Carolina - FNC - Spring 2010
Video Gambling Returns - Part 1 - Interview - April 17, 2010 - (mp3) — (wma)
Video Gambling Returns - Part 2 - Interview - April 24, 2010 - (mp3) — (wma)

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