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Wednesday, 20 January 2010 16:12

Canton joins trend of imposing steep fees on video sweepstakes outlets

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The Town of Canton has begun clamping down on video sweepstakes machines with a new ordinance last week, but some business owners seemed more relieved than disappointed.

That’s because the ordinance ends the 90-day moratorium passed in November and clears the path for even more sweepstakes machines in town.

Cyber sweepstakes use an obscure loophole in the video poker ban to subsist. The video gambling industry claims winnings are predetermined — even though customers appear to play games of chance, similar to those on video poker machines.

Canton’s new policy calls for a steep $2,500 annual tax on the first four machines, with $700 per machine thereafter.

It requires each business to pull in no more than 15 percent of its income from cyber sweepstakes and demands minors be prohibited from playing or even viewing the screens.

While no one spoke at Canton’s public hearing on the ordinance last Tuesday (Jan.12), a few video sweepstakes representatives were present. One was so eager to get the machines up and running, he wanted to pay the fee on the spot that night. Town Manager Al Matthews instructed him to be patient and come in the next morning.

So far, two businesses have signed up for the privilege license. Lankford’s Grocery registered 19 sweepstakes machines, while Crosby Wireless registered six.

Annually, these two businesses alone will hand over $16,900 to the town. For now, Canton is only charging half the annual fee to cover the remainder of the fiscal year through June. Come July, a full year’s worth will be due.

Canton Alderman Eric Dills was noticeably displeased even though he voted for the measure, which passed unanimously.

“I don’t really like this business,” said Dills. “It is gambling and everybody knows it’s gambling.”

Dills pointed out there’d be no concrete way to determine if a business was raking in more than 15 percent of its profits from sweepstakes.

Mayor Pat Smathers said the town would have to use a common sense approach.

“If you have 15 of those machines and a hot dog stand, chances are you don’t sell that many hot dogs,” said Smathers.

The towns of Hendersonville and Franklin have already set a $2,600 annual tax on sweepstakes machines. Franklin collected fees from eight businesses within days of passing its ordinance, a testament to the lucrative nature of the industry.

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