Internet cafe sweepstakes flourish in North Carolina

North Carolina internet cafe owners who also facilitate thinly disguised online gambling are claiming that a recent Appeal Court decision permits them to continue running their businesses despite the state’s intention to stamp out the pastime.

In 2010 the state Legislature passed a law to ban internet cafe sweepstakes that use an “entertaining display” to reveal the results. Two makers of sweepstakes game software sued, calling the law unconstitutional, and the state allowed the internet companies to continue to operate while the case was pending.

In March this year a 2-1 State Appeals Court decision found that the law was too broad and violated the First Amendment, with Judge Ann Marie Calabria noting that the legislation as passed could be construed to ban all video games.

It is this appeal court decision that operators have seized on as a justification for their activities, although the attorney general’s office is appealing to the North Carolina Supreme Court.

The Appeal Court’s decision has encouraged numbers of new businesses interested in the sector, which according to the Internet Based Sweepstakes Organisation generates between $500 million and $1 billion in revenues every year. There are already between 700 and 800 such businesses operating across the state.

Punters looking for a little action buy computer time in these venues, redeeming prizes for cash on completion. The genre is especially popular with the over-age-40-years female demographic, which makes up 80 percent of demand in North Carolina, says the IBSO.

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