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 In the News, June 29, 2010 


Senate votes to ban sweepstakes cafes. The North Carolina state Senate voted 47 to 1 on June 21 to ban sweepstakes videogames. Lead sponsor Sen. Josh Stein (D-Raleigh) said 600 sweepstakes parlors now operate statewide. Some industry allies put the number at closer to 1,000 venues. The only vote against the bill came from Sen. Julia Boseman (D-New Hanover), who sponsored a bill to legalize and regulate video poker. The anti-sweepstakes measure now returns to the House, where its lead sponsor is Rep. Melanie Wade (D-Raleigh). House Democrats have a working majority, but are reportedly divided on the sweepstakes issue.

Opinion: How would a ban affect city privilege license taxes? The General Assembly moved closer to banning internet sweepstakes on Monday when the Senate voted 47-1 to criminalize these operations. H.B. 80 would make all internet sweepstakes activity illegal as of December 1, 2010.  The bill now moves to the House where it may have a committee hearing today.  A number of local officials have asked how this ban would affect the privilege license taxes recently levied by many cities and towns on internet sweepstakes businesses.  Existing law prohibits local taxes on illegal gambling operations, meaning that if the sweepstakes ban becomes law then municipalities could no longer levy taxes on these operations after they become subject to criminal prosecution on December 1.  But what about the 2010-2011 privilege license taxes already paid by sweepstakes operators? Would a city be obligated to refund those tax payments because the state eliminated the opportunity for these businesses to operate legally? I say no.  In my view, a city has no obligation to refund a privilege license tax to a business that shuts its doors for any reason during the fiscal year.  And even if the governing board wanted to do so, I think the N.C. Constitution would prohibit such a refund.

Some sweepstakes businesses close. Faced with large new fees by the city of Mount Airy and the threat of a statewide ban, some Internet sweepstakes businesses have pulled the plug on their operations. Some, but not all.While at least two of the handful of online gaming cafes that were operating here have shut their doors, that’s not the case for the Internet Hut — housed in the former Pizza Hut location on U.S. 52 across from Mayberry Mall. “We’re going to fight it to the end,” said Diane Ward of Tobaccoville, who has been working at the Internet Hut since it opened last November and previously was employed at a similar business in King operated by her brother.


House approves ABC reform. The North Carolina House overwhelmingly approved a bill to reform the State’s 75 year-old Alcoholic Beverage Control (ABC) system on June 22, sending the bill to the Senate for its consideration. The bill, HB 1717- "Modernization of the State ABC System,"passed the House by a vote of 110 to 1 following a short time of floor debate. Sponsored by Representatives Ray Warren (D-Alexander), Larry Bell (D-Sampson), and Marvin Lucas (D-Cumberland), the measure institutes a number of reforms to the ABC system, including setting limits on the salaries of local ABC board members and employees, establishing performance standards for local ABC boards, as well as setting policies to prevent nepotism, and requiring an ethics policy.

Editorial: ABC fixer-upper. Even after some embarrassing news reports exposed disjointed and lackadaisical oversight of North Carolina's system for controlling liquor sales, the local politicians and boards that control sales in their districts have continued to be lukewarm to change. Being on local boards that handle large amounts of money generated by liquor traffic is something of a political plum, after all, even if a modest one. And administrative jobs with local systems can pay well. In the case of a father-son team running the New Hanover County system, that meant a little too well. Combined, they were receiving more than $400,000 in annual compensation. That fact, and another story showing that the Mecklenburg County board chairman and some employees had been treated to a lavish dinner sponsored by a liquor company representative, led to calls for reform, which Gov. Beverly Perdue has endorsed. Now the state House has overwhelmingly approved a bill that would help keep local ABC operations on the straight and narrow. That sets up a showdown with the Senate, where the appetite for reform has been far less robust. One could almost say, based on a pallid reform measure they recently passed, that the subject made senators queasy.



Opinion: Five years after Kelo property rights still threatened. Five years ago, the U.S. Supreme Court gutted an important private property protection in the U.S. Constitution. In Kelo v. New London, the court wrongfully decided it was acceptable for government to condemn and seize private property and give it to another owner. To call attention to this unjust decision, the chairs of the 50 state Libertarian Party chapters and the members of the Libertarian National Committee have signed an open letter calling on the Supreme Court to reverse the Kelo ruling in a future case. They also called on state governments to adopt laws or constitutional amendments to eliminate this practice. ... Many states, like North Carolina, have passed reforms that sound strong at first, but contain major loopholes or other bad provisions. Republicans and Democrats like to posture as eminent domain reformers while they carve out exceptions for special interests. In North Carolina, the taxpayer-funded N.C. League of Municipalities also opposes any restrictions on eminent domain, including HB 1659.