Greenville City Council Rejects Taxing Internet Sweepstakes Cafes

By: Carly Swain/ Dan Yesenosky
By: Carly Swain/ Dan Yesenosky

They're legal again in North Carolina and internet cafes are popping up all over the east, but Greenville is taking a stand. City council members met Monday night to discuss some future regulations for these businesses. They aren't accused of doing anything illegal. People come in to play "sweepstakes" where they have certain odds of winning cash prizes. The city council says they should only be located in certain places.

"Make sure they are in the right place, and make sure we don't have a proliferation of them, that it's not an epidemic in our city the way that it could be," said City Council Member Marian Blackburn.

The council also discussed whether or not to tax these establishments, but voted against doing so, 4 to 2. Voting against the measure were councilmembers Glover, Smith, Joyner and Mitchell. Councilmembers Blackburn and Mercer voted in favor of the fee.

The state government is expected to address possible taxes on sweepstakes cafes in January.

An old debate was renewed at the Greenville City Council meeting Monday night. Internet sweepstakes cafes are under fire by some in the community to be regulated.

Internet gaming was banned in the state of North Carolina in December 2010, but since then, a judge in Forsyth County overturned that law deeming it unconstitutional. Now Greenville is trying to get a game plan together for internet cafe regulations.

A few months ago, the city council asked for some reports to put Greenville's gaming situation in perspective. So far, city officials say there are 15 internet cafes in the city. They are taxed. The rate depends on the gross income per business, but officials say that rarely tops out at $2,000 a year. Otherwise, there are currently no rules or regulations on the gaming industry in Greenville.

Monday night's meeting addressed two issues: Options of private business licenses for the specialty shops, and how Greenville compares to other cities with the cafes and what kind of zoning requirements need to be in place.

The city's chief planner Chris Padgett says one consideration is how close the establishments can be to residential areas and each other.

"We currently don't have any standard in place for separating these establishments from one another. So effectively, they could congregate in one area and one shopping center, and the city would not have standards in place to prevent that," said Padgett.

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