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Sweepstakes parlors face shutdown

Sweepstakes parlors in Charlotte have been given an ultimatum: Close by Sunday or face legal action.

Should the operators comply, it would mark a long-awaited victory for police and lawmakers, who have tried for years to close down the parlors on the grounds that they constitute illegal gambling.

But there are already indications that the well-funded industry is gearing up for another fight to stay open. Across the state, sweepstakes operators say they’ve changed their video games to make them technically legal.

Though as many as 200 once operated across Charlotte, sweepstakes establishments have steadily closed over the past year after the N.C. Supreme Court upheld a law banning them after a lengthy legal battle. Police in Charlotte and Matthews have raided and shut down at least a half-dozen in the past nine months, seizing computers and cash.

The pressure has led most of Charlotte’s sweepstakes parlors to close of their own accord. For example, the string of sweepstakes sites that once lined Old Pineville Road in southwest Charlotte are nearly all closed.

The lights are off at the Woodlawn Business Center, a for sale sign standing out front. LPM Sweepstakes is an empty storefront. 5300 Sweepstakes moved out – with no explanation, its former landlord says.

Those that remain open are under new pressure from the Mecklenburg County district attorney’s office. Prosecutors there have sent letters to sweepstakes owners demanding they stop running sweepstakes machines by Sunday or face investigation and prosecution. Officials won’t say how many they believe to be still open.

“This is a particularly difficult thing to address,” said Peg Dorer, director of the N.C. Conference of District Attorneys. “Every time you get a definition of what a sweepstakes is and what the gambling is, they tweak the computer program and it no longer applies.

“I think the tipping point might be when the computer businesses have expended more money in legal matters than they are bringing in. I don’t see it stopping, in other words.”

Saints and Sinners Sweepstakes on South Boulevard in Charlotte told customers this week its last day would be Saturday because of the notices sent out from the district attorney’s office. The business declined to comment further.

J&W Business Center, which was still operating its sweepstakes computers this week at its strip-mall storefront on Old Pineville Road, also declined to comment.

Cracking down

Sweepstakes games became popular in North Carolina starting in 2007 when the General Assembly made video poker illegal.

The business model was tweaked to make it fit the letter of the law. Instead of feeding money into the machine, customers buy time on a computer with the games installed on them. Technically, people could use the computers to surf the Internet or update a resume.

The sweepstakes games feature vivid graphics and often resemble slot machines or card games. Supporters regularly compare them to the Monopoly-style game at McDonald’s. The industry maintains that their businesses provide clean entertainment for a largely female and middle-age audience – as well as jobs in their communities.

In summer 2010, the state legislature again took up the issue and passed a law to make them illegal. Two companies that market the software challenged the ban as unconstitutional. Meanwhile, industry leaders became top donors to North Carolina political campaigns. Oklahoma sweepstakes businessman Chase Burns and his wife alone gave $242,500 to 70 candidates in the state. He later was indicted on gambling charges in Florida.

After years of appeals, the N.C. Supreme Court ruled in late 2012 that the state could, in fact, make the machines illegal.

Soon after, Charlotte-Mecklenburg police began raiding sweepstakes parlors. The first was in March, when 26 machines were seized from LPM Sweepstakes on Old Pineville Road. Police said at the time that the department was investigating more than 200 other businesses.

Police in Charlotte also seized 83 machines and more than $7,400 from the Broadway Sweepstakes on South Tryon Street, 24 machines and $1,500 from Queens Gold on South Tryon, and 76 machines and $5,000 in cash from the Brookshire Business Center.

Matthews police closed down the Cyber One sweepstakes parlor on East Independence Boulevard in March as well.

The Mecklenburg County district attorney’s office sent out a round of letters to remaining operators in September, and another round this month.

A district attorney’s office spokeswoman confirmed that it has sent out letters to sweepstakes owners but declined to go into more detail. The Charlotte-Mecklenburg Police Department declined to comment.

Fighting to stay open

Some sweepstakes operators say they’ve changed their games enough to comply with the law. Instead of having people click on a slot machine lever to see whether they’ve won a prize, for example, many machines have switched to a “pre-reveal” system that tells people whether they’ve won in plain text before the wheel even spins.

In a bid to stay open, a number of business owners have sued local law enforcement agencies that have tried to shut them down.

This month, the owner of the Gift Surplus sweepstakes in coastal Onslow County won an injunction against the sheriff’s office. The owner of the Lucky Land Internet Cafe near Tarboro has sued the Edgecombe County sheriff’s office in a similar case.

The Mecklenburg County district attorney’s office said it is aware of the Onslow County ruling but added that it does not change its plans. Eddie Caldwell of the N.C. Sheriff’s Association said it applies only to that specific parlor in that county.

But all the efforts to close them down have taken their toll. James Ocker, 53, of Clover, S.C., said he used to play sweepstakes regularly but has grown disillusioned with them over the past year. The changes have taken all the fun out of playing, he said.

“When they changed them a year ago, they just started sucking the life out of everybody,” he said. “They just need to close them. They’re just taking all kinds of money from everybody.”

Dunn: 704-358-5235; Twitter: @andrew_dunn
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