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Two Waynesville sweepstake parlors charged as industry guns for a court fight

A Waynesville sweepstakes operator was charged with a criminal misdemeanor last weekend when she refused to shut down her machines, considered a form of illegal gambling under state law.

Waynesville police officers entered her establishment Saturday night and demanded she turn off her “open” sign.

To that Tami Nicholson, operator of Winner’s Circle, replied “Why? I’m open.”

That confrontation ended in a citation for Nicholson but may signal that the bigger battle is anything but over.

A N.C. Supreme Court ruling in late December deemed sweepstakes operations a form of illegal video gambling, despite the insistence of the sweepstakes industry to the contrary.

Sweepstakes operations were shut down statewide in early January. But now, several are reopening, some armed with new software. They claim the N.C. Supreme Court ruling doesn’t apply to the new style of games because they’re based on skill instead of chance.

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Nicholson was open for three days after installing the new software before police caught up with her. They also charged a second sweepstakes operator over the weekend, 777.

For now, sweepstakes operators who have reopened appear to be flaunting the law in the absence of a court ruling in their corner — one that would back the claim new software successfully skirts the state’s video gambling ban.

“That’s what the individuals said they were waiting for when they were charged. They were waiting to get these cases into court,” said Waynesville Police Chief Bill Hollingsed.

But Hollingsed said his job is to enforce the law as written or ruled by the courts — not to make legal interpretations on the latest reincarnation of sweepstakes software.

Nicholson she has been contacted by numerous lawyers wanting her to be that person. She claims it could be the next big showdown in the sweepstakes saga.

“This is the moment that the sweepstakes industry has waited for,” Nicholson said. “And now we’re going to prove that we’re legal under the law.”

Although Nicholson may have been one of the few parlor owners to receive a citation for operating sweepstakes, she is far from the only video gaming owner who has reopened. Maggie Valley and Sylva reportedly have machines back up and running; however, local police there claim they are unaware of any.

One sweepstakes operator who ran establishments in Haywood and Jackson counties, Leonard Watson said enforcement is sporadic across the regions and characterized police officers’ approach to the law in a few simple words.

“They’re only enforcing it if they want to,” he said.

District Attorney Michael Bonfoey said that law enforcement of the sweepstakes ban should not change — despite industry proclamations that their software is legal. He said it was made pretty clear in the N.C. Supreme Court’s ruling that sweepstakes and video games combined were prohibited under the law.

However, regardless of the ruling, he said the future of the legal debate is pretty clear as well.

“I’m sure there’s going to be more lawsuits,” he said.

In a letter written to law enforcement following the state Supreme Court ruling, Bonfoey warned back in early January that the definitive end to the issue had not passed and that there would be more appeals, injunctions and lawsuits to come.

Just last week, a Davidson County judge threw out a lawsuit by sweepstakes parlor owners and a video software company that sought to restrain law enforcement from enforcing the gaming ban.


Macon’s grace period

Some sweepstakes in the region had barely shut down before they began opening back up.

A handful of Macon County sweepstakes operators stayed open with impunity for more than a month after the Jan. 3 enforcement deadline.

The Macon County Sheriff’s Department did not begin actively shutting down sweepstakes parlors until last week, hand-delivering letters to parlor owners. Sheriff Robbie Holland said the handful that had opened in January closed down their sweepstakes operations after receiving the letters, which threatened criminal law enforcement action.

“I did a courtesy letter to give everyone one last chance,” Holland said. “It said ‘you better stop or you’re going to force my hand.’”

Holland said his department was aware of sweepstakes operating in the county after the state Supreme Court ruling. But Holland said his office was hesitant to press charges while the Davidson County lawsuit was unsettled.

Holland said his deputies will not conduct surveillance on local sweepstakes parlors but will respond to complaints from citizens. Those who don’t comply risk fines and having their machines confiscated. Holland said he was glad that thus far his deputies had not encountered a defiant sweepstakes operator, such as Nicholson in Waynesville.

“I figured somebody would test the waters,” Holland said. “And the last thing I wanted to do was put our county into a lawsuit.”

The legal counsel for the Macon Sheriff’s office, Brian Welch, said most parlors shut down at the first deadline, then many re-opened in mid-January, some with different gaming software.

Then, the office began receiving hundreds of phone calls. Some callers were phoning to notify law enforcement that parlors were still open and operating, while others were sweepstakes parlor owners and employees calling and asking for legal advice or if they could stay open.

However the common theme was confusion.

“And we’re kind of stuck in the middle,” Welch said.

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