Internet gaming sites begin to reopen

on Tuesday, 13 December 2016. Posted in Legal News

Internet sweepstakes businesses are starting to flash neon "Open" signs once again after being closed since late 2015 in the Goldsboro area.

Two of the businesses are back in operation, one on North Berkeley Boulevard and another in the Little River Square shopping center off U.S. 70.

A third is in the works for a South Berkeley Boulevard site, and at least one more will go under city review within the next month.

"I think they're going to be looked at hard," said Councilman Gene Aycock. "If there are (zoning) variances requested, I think they're going to have a fight. I don't think we'll make it easy for them, just like we won't be easy on a bar. We're going to go by the rules as much as we can. We're going to look at them, and, I hope, that we treat them all fair."

Aycock recently raised concerns during a Goldsboro City Council meeting about the internet sweepstakes business operating in the Little River shopping center, at 1312 W. Grantham St.. At the time, Aycock questioned if the business reopened illegally and without city permitting approval.

James Rowe, city planning director, confirmed that the business is compliant, since it already had a conditional-use permit and was closed less than six months. If the business had closed six months or more, a reapplication is required, Rowe said.

Ray Brosseau, whose brother owns Little River Internet, said the business is the same that previously operated in the shopping center. It's been open three weeks, he said.

"It used to be the same kind of business before they shut them down," Brosseau said.


Internet sweepstakes businesses, which city officials call internet cafes, closed in 2015 after the Wayne County district attorney warned of forced closure due to noncompliance with state law. Since that time, many business owners claim they've added updated software that complies with state law, Rowe said.

"I guess these people that are trying to reopen, they claim they have equipment that meets state standards," Rowe said.

The city's attorney, James Womble, with the Everett, Womble and Lawrence law firm, said the city is reviewing permitting requests based on local zoning rules. The legality of the operations is handled by local law enforcement and the district attorney, Womble said.

"The city, at this point in issuing permits, is not making a determination about whether it's legal or illegal," Womble said.

Goldsboro's unified development ordinance allows internet cafes in general business districts, shopping centers, highway business and general industry districts.

The businesses are prohibited from locating within 200 feet of a school, church and residence and the hours of operation are limited to 7 a.m. to 2 a.m.

The reopening of internet sweepstakes operations has led to mixed views.



On Thursday afternoon, close to a dozen men and women sat at gaming stations, some smoking cigarettes, inside Goldsboro Internet World, at 1813 N. Berkeley Blvd. near New Hope Road. None were open to sharing their thoughts about being able to play the games in the city once again. Goldsboro Internet World was recently granted a conditional-use permit allowing the business to operate in the city.


The owners of the All American Barber Shop, in the Village Square shopping center, are concerned about the possible opening of an internet sweepstakes business, citing concerns about parking lot trash, excessive noise and a possible drop in clientele.

Parkash Patel, who owns restaurants and hotels in Goldsboro and Wilson, is seeking a conditional-use permit to open the business at 207 S. Berkeley Blvd., near Elm Street.

Chris Boyette, the owner of the shopping center, has talked with shopping center tenants in an effort to alleviate any concerns. The owners of the barber shop are the only ones opposed to the opening, Boyette said.

"All of my tenants -- nobody has a problem with this," Boyette said. "I have a vested interest in this shopping center, its appearance and the harmony of the shopping center."

As owner, Boyette has drafted a stricter lease agreement with Patel to ensure the business is compatible with other businesses in the shopping center.

Instead of offering a typical five-year lease, Boyette has drafted a six-month lease, which offers an out if the terms are not met, Boyette said.

The lease agreement requires that internet sweepstake customers park near the business, parking lot trash must be removed each night and loitering is prohibited.

"A violation of any of that would be a violation of his lease and subject to termination," Boyette said.

Patel's willingness to sign the short-term lease agreement shows his interest in operating a good business, he added.

"No new business is willing to invest in the business and sign a six-month agreement," Boyette said. "He's willing to do that to show his resolve and his commitment to operate his business in harmony with the shopping center and the other businesses."

Patel currently operates two internet sweepstake businesses in Wilson and is interested in opening another in Raleigh.

"He's well-versed not only in business but he's also well-versed in operating internet cafes," Boyette said. "He is absolutely adamant about operating his business in harmony with other businesses."

During the past year, Boyette has had difficulty in drawing a new tenant into the building. He's been approached by people interested in opening a florist shop, pizza chain restaurant, sports bar and a church.

"I've been trying to rent the building for over a year," he said. "Nothing has come to fruition. So, here is someone who is a legitimate business owner who wants to open a legitimate business."

Boyette is the chairman of the Goldsboro Planning Commission, which has led him to recuse himself from voting or discussing any issues related to Patel's request for a conditional-use permit to open.

Boyette is also working on ways to brighten up the front of the tenant space, if the business is permitted to open. The shopping center is located near the Seymour Johnson Air Force Base gate.

"I do care about the city and the base," he said. "I would like the city to approve the request because it is a reasonable request and let me do my job as a property owner and manager to may my tenants happy and promote harmony in the shopping center.


City officials will review another conditional-use permit request this month, with a planned city council public hearing Dec. 19 for the former Longhorn Business Center building, at 1716 U.S. 117 South.

The property, which was recently issued a permit to open a laser-tag center, was one of two internet sweepstakes parlors that was shut down by local law enforcement in February.

The planning commission is expected to consider the request later this month and a final decision will follow by city council.


The legality of internet sweepstakes businesses continues to face challenges, as the Attorney General's Office continues to fight legal battles in an effort to uphold state law. N.C. General Statute 14-306.4 prohibits electronic machines and devices for sweepstakes.

"State efforts to outlaw video gambling have led to multiple lawsuits and the Attorney General's Office has fought in court to uphold the ban," said Noelle Talley, public information officer for Attorney General Roy Cooper.

"Law enforcement agencies in several parts of the state have since enforced the law against video sweepstakes operations in their communities, and district attorneys have won convictions under the law."

The industry has responded by changing the gaming systems to avoid a conflict with the law, said Jeffrey Welty, associate professor of public law and government in the School of Government at the University of North Carolina at Chapel Hill.

The software has changed from games based on chance to ones that require some level of skill, he said.

"My overall understanding is that the courts have upheld the legality of G.S. 14-306.4, the 2010 law that was intended to prohibit businesses of this kind," Welty said. "However, the industry has responded by designing new products that -- depending on your point of view -- skirt of comply with the statute. The law enforcement response to this development hasn't been consistent, with some jurisdictions taking the position that the new machines are still illegal and others concluding that the machines are legal."

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