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Published Tue, Jan 15, 2013 08:00 PM
Modified Sat, Jan 19, 2013 05:01 PM

Sweepstakes parlors circumvent law

- ajames@newsobserver.com
Glowing computers with games offering the opportunity to win prizes line the walls of the dimly lit P & K Internet Cafe on U.S. 70.
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- ajames@newsobserver.com

CLAYTON -- It’s business as usual at video sweepstakes parlors in town, despite the fact that the state Supreme Court outlawed them.

The Supreme Court’s decision in December to uphold a ban on video sweepstakes centers went into effect January 3. That day came and went and the sites are still open, selling Internet time, and offering the chance to enter a sweepstakes, in a similar fashion as a casino.

One site, H & L Business Centre, on Town Center Boulevard, has posted a sign outside the building that says the store has updated its games and brought them into compliance.

“Our promotional software has been updated and is compliant with all current North Carolina laws,” the sign reads.

Whether this is a direct defiance of the law that ruled these sweepstakes parlors illegal, or if this is a sign of the store’s attempt to stay in business until it’s forced to close is uncertain. But, Noelle Talley, spokeswoman for the N.C. Department of Justice says it is still against the law for these sweepstakes sites to try to circumvent the ruling.

“We aren’t surprised that this industry may be trying to claim they have found ways around the law,” Talley said in an e-mail. “We believe the law and the ruling are clear. Law enforcement is welcome to consult with our office about what kinds of sweepstakes games and software they are finding operating in their communities.”

That means it’s up to law enforcement officers to seek out guidance about how to handle the sweepstakes parlors. The Attorney General’s office is directing law enforcement officers to speak with lawyers at the Attorney General’s office to get legal advice. David Adinolfi has been one of the main attorneys fielding questions from law enforcement.

Adonolfi declined to comment, explaining that he “can provide legal advice to government officials only.”

“Our attorneys are fielding questions from local law enforcement and District Attorneys about how to enforce the recent Supreme Court ruling and how the law applies to changes the sweepstakes industry claims to have made to games,” Talley said. “We’re recommending that law enforcement investigate video sweepstakes operations in their area to determine what games are being played and then take any enforcement action they think necessary against violators. We believe the law and the ruling are clear and we’re ready to defend their enforcement.”

Getting around the rules

One of the arguments sweepstakes centers are using to stay open is that they “pre-reveal” the sweepstakes information, so that a customer does not technically have to “buy in” to the sweepstakes. There is "no purchase necessary for the sweepstakes," according to legal documents available from behind the desk at P & K Internet Cafe, a video sweepstakes center on U.S. 70 near Wal-Mart.

The documents also include a court ruling dated June 2009 that involves Hest and International Internet Technologies vs. the State of North Carolina. IIT has more than 100 licensees in the state who employee about 1,100 people.

That court ruling signed by Superior Court Judge John Craig reads, in part, “the Hest and IIT Sweepstakes Systems do not allow entries to be revealed at a point of sale terminal at the time of purchase or later.” It further says that the defendants, the state, would “suffer irreparable harm if the Court did not enjoin defendants.”

With this ruling ready to hand out to any law enforcement officer that questions its legitimacy, the P&K Internet Cafe is not preparing to close. The site is using this court ruling to serve as a barrier to law enforcement. Local law enforcement has not questioned this so far, or received guidance on how to address this.

Attorney Michael Grace, who represents IIT Technologies, could not be reached for comment about the case.

James: 919-553-7234

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