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Carolina Beach Police Shut Down Sweepstakes Parlor

The Carolina Beach Police Department executed a warrant on October 9th at the Snow's Cut Internet Center Sweepstakes parlor in the Food Lion Shopping Center. The business was shutdown and machines taken away.

Managing Editor

CAROLINA BEACH - On October 9th, at around 8PM detectives with the Carolina Beach Police Department executed a search warrant on Snow's Cut Internet Center at 1401 North Lake Park Blvd, Unit #66 for violations of Electronic Sweepstakes law resulting in a seizure of 40 desktop computers, a large quantity of electronic equipment and US currency.
According to Detective Scott Hettinger, a two month long investigation revealed the Snow's Cut Internet Center was operating after being denied a business permit and was violating North Carolina's Electronic Sweepstakes Law G.S. 14-306.4(b).
Detectives were issued probable cause for a search warrant from Superior Court Judge Jones and after execution of that search warrant Theresa Ann Howard of Little River, SC, was charged with violating the NC Electronic Sweepstakes Law. Charges are pending for the owner of the Snow's Cut Internet Center, Myra Reeves of Sunset Beach, NC.
The business owner was cited with $900.00 in $50 citation fines for each day the operation was open for business without a Town Business License. They originally applied for a license and were denied by Town officials.
Approximately ten people were playing the games when police entered the business Wednesday night.
Police took approximately $3,000 from the business along with the computers and other evidence.
The United States Supreme Court denied petitions for review on October 7th, 2013 of two North Carolina cases regarding video sweepstakes machines and software. The petitions were brought by Hest Technologies and Sandhill Amusements. The denial of those petitions upholds the decision of the Supreme Court of North Carolina that was issued in December 2012. For both cases the NC Supreme Court held in unanimous opinions that the North Carolina law that outlaws video sweepstakes is constitutional and therefore can be enforced by law enforcement officers.
According to the opinion issued by the NC Supreme Court in 2012, "After careful constitutional analysis, we conclude that" North Carolina General Statute 14-306.4 "as enacted in 2010 does not violate the First Amendment because it regulates conduct, not protected speech."
The opinion states, "In an effort to curtail the use of a perceived loophole in the State’s gambling laws, the General Assembly passed N.C.G.S. § 14-306.4, which bans the operation of electronic machines that conduct sweepstakes through the use of an “entertaining display.”... Claiming an unconstitutional restriction on their freedom of speech, plaintiffs challenged the new law. The Court of Appeals declared the statute an overbroad restriction on protected speech and struck it down as unconstitutional. We conclude that this legislation regulates conduct and not protected speech and now reverse" the Court of Appeals opinion.
In 2006 the General Assembly banned video poker and all other forms of electronic gambling. Since that time companies have developed systems that appear to sidestep traditional gambling restrictions by combining legal sweepstakes with video games that simulate a gambling environment, thus purportedly removing the “bet” or consideration element of gambling.
Since the ban on video poker in 2006, the manufacture’s have found ways to reprogram the machines in an effort to capitalize on perceived loopholes in state law. Several times they have been granted injunctions by courts protecting them from law enforcement. They claimed the state could not legally regulate what appears on the screens because it was protected by the U.S. Constitution as free speech.
The Supreme Court decision states that sweepstakes operators, "market and sell prepaid products, primarily long-distance telephone and/or high-speed Internet service.” As a promotion, plaintiffs have developed electronic sweepstakes systems. Sweepstakes participants obtain entries from a predetermined, finite pool of entries - some of which are associated with a prize value and some of which are not - either after a qualifying purchase of plaintiffs products or at no charge upon request. Participants receive a magnetic stripe card which allows them to access a game station terminal and stores the information related to their individual sweepstakes entries. At the terminal “the program reveals the content of the sweepstakes entry using different displays that simulate various game themes.” These simulated games do not determine, and cannot modify, the sweepstakes outcome or any prize that might be associated with a sweepstakes entry. Any prize amount won through the sweepstakes may be claimed in cash at the counter of the establishment or may be used at the game terminal to purchase more of the product in one-dollar increments, thereby enabling the customer to immediately receive more sweepstakes entries." The Court of Appeals majority concluded that both the announcement of the sweepstakes result and the video games are protected speech and that the definition of “entertaining display” in the statute is virtually unlimited. The State Supreme Court reversed that decision saying the state law regulates putting the machines into operation which is conduct and not free speech.