RALEIGH — A state House committee debated a bill Thursday to tax North Carolina video sweepstakes outlets, but its passage still looks like a long shot in the session’s final days because many legislators oppose the computer terminals, which often mimic casino games.
Democrats and Republicans who sponsored the measure said establishing state privilege taxes on sweepstakes establishments would mean regulation for an industry that’s been growing since the state Court of Appeals struck down the Legislature’s 2010 ban on the games. The measure also would establish a uniform privilege tax on outlets for counties and cities. Cities already have the taxing authority.
The House Finance Committee adjourned before taking a vote. It’s unclear if the bill will be heard again before the Legislature adjourns for the year, probably around July 2. Republican leaders in the Senate have said they’re not interested in the idea.
The March appeals court ruling, which found the 2010 law to be overbroad and an infringement on the free speech rights of operators, is being appealed to the state Supreme Court.
Rep. Bill Owens, D-Pasquotank, one of the bill’s primary sponsors, envisions the future revenue as a way to make up for the refusal of Republican lawmakers to raise sales taxes to help reduce public education cuts. Democratic Gov. Beverly Perdue also suggested the Legislature consider the idea as long as the state can’t ban them outright.
“We have tried as a General Assembly to regulate them and outlaw them, and it hasn’t worked,” Owens said during the committee meeting. “So now is the time we have to put up or shut up as far as education is concerned and that’s exactly what it is, a tough call.”
A fiscal analysis of the bill by the Legislature’s nonpartisan staff estimated the state could take in anywhere from $98 million to $329 million annually if the bill passed. All counties also would generate new revenue, the analysis said.
Sweepstakes machines can be found in convenience stores, business centers or stand-alone parlors. Patrons buy Internet or phone time that gives them the opportunity to uncover potential cash and prizes with mouse clicks on a computer screen.
Sweepstakes boosters say no gambling is occurring because the prize or lack of one is predetermined. But opponents say they feed the same gambling addictions for people as traditional video poker machines did until they were banned in 2007. That ban has remained in place.
“This is video larceny,” said Democratic Rep. Frank McGuirt, the former Union County sheriff. “I have a problem with bringing some legitimacy to these machines.”
Owens said after the committee meeting that his final support of the state budget could be guided by what happens on the sweepstakes bill. A few hours later, he remained among five Democrats who voted for the budget compromise now heading to Perdue’s desk. He may have to vote again if Perdue vetoes the budget and the Legislature tries to override.
If the sweepstakes bill “passes and we get few other details worked out, I’ll probably support the budget,” he said. “If it doesn’t, I’ll have to weigh my conscience.”