Wednesday, Jun. 30, 2010

Clayton will tax Internet sweepstakes

Internet sweepstakes businesses are allowed here, but starting last week they'll need to pay several thousand dollars to the town to operate.

The Town Council voted last week to charge the businesses for a privilege license. They'll pay a flat fee of $2,500 plus $350 for each machine they have, fairly similar to what other towns tax sweepstakes businesses.

"I want it to be high enough to make some money but not enough to bring attention to ourselves," Town Manager Steve Biggs said. "I think that we're potentially subject to a suit [if fees are too high]."

But Biggs noted that the issue might go away entirely if the state legislature passes a ban on the establishments. Last week, the N.C. Senate voted overwhelmingly to ban Internet sweepstakes, which some liken to gambling.

If the businesses do get banned, Councilman Bob Satterfield wondered if the town would be able to keep the licensing profits. Town Attorney Brenton McConkey said he wasn't sure what the town should do in such an unusual scenario.

Biggs expects the measure to generate about $10,000 from the town's two sweepstakes businesses, more if other such businesses open up. A third sweepstakes operator is currently seeking a conditional-use permit from the town.

Internet sweepstakes businesses have cropped up around North Carolina since the state banned video poker. Customers buy Internet time on computers, and that time comes with points to use in sweepstakes games offered by the Internet provider. The games, with names like "Slots and Stripes," offer players a chance to win more points, which they can use to continue playing or trade in for a cash payout.

In Clayton, there's one in the Lowes Foods shopping center and another next door to Walmart.

Staff writer Colin Campbell