Capital Goods: June

Sweepstakes industry pays to play

For more than a decade, video-gambling parlors in North Carolina have been like movie monsters from outer space. No weapon devised by mere human beings can kill them. A law banning the parlors? Three of them were passed since 2006. A ruling by the state’s high court? There was one late last year, a seemingly ironclad decision that should have blown the operations’ latest incarnation — video sweepstakes — to kingdom come. An FBI investigation? Yep. A top political leader imprisoned? Yep. Game operators bribing law enforcement? Sheriffs extorting operators? Witness tampering? Perjury? Yep, yep, yep and yep.

Despite the laws, ruling and history, video-gambling parlors are alive and well in many North Carolina counties, even as others have cut the lights after the state Supreme Court’s decision. One explanation for their survival is different approaches by law enforcement across the state. Another is a few local judges who believe that software changes in video-sweepstakes terminals have negated the court ruling.

But there is a more plausible reason: By deed if not word, a big part of the state’s political leadership appears to be whispering into the industry’s ear, “Don’t go. We really don’t mean it. We’ll figure out some way to make it all better.” How else should the sweepstakes-parlor owners interpret the fact that politicians keep taking their money? According to The Associated Press, donors with ties to the industry have given more than $520,000 to North Carolina political candidates since 2010, the year the General Assembly approved the last ban. Gov. Pat McCrory’s campaign received more than $82,000. State House Speaker Thom Tillis and Senate leader Phil Berger got $87,000 and nearly $60,000, respectively.

These contributions have recently come under scrutiny after the biggest donor, Chase Burns of Oklahoma, was indicted in March on racketeering charges in Florida. Prosecutors say he provided Internet-sweepstakes software to a veterans charity that fronted for a $300 million illegal gambling operation. Fifty-six others were charged during the investigation, and Florida’s lieutenant governor resigned because of her ties to Burns’ group. In response to the indictments, McCrory, Tillis and Berger announced that they would give the money to charity.

Those acts of kindness don’t get everyone in North Carolina off the hook. The AP investigation and one by campaign watchdog group Democracy North Carolina (the same one that traced former House Speaker Jim Black’s donations from the video-gambling industry) suggest that Burns may have dumped company money into a trust that went toward donations to more than 60 candidates in North Carolina. If so, his donations may amount to illegal corporate contributions. Questions about whether lobbyists might have bundled checks from industry contributors for one candidate or filled in payee lines also have arisen. Both are campaign-law no-nos.

Charlotte-based Moore & Van Allen PLLC, where McCrory worked while running for governor in 2012, delivered most of the checks from Burns. Other prominent lobbyists appear to have done so as well. That is not against the law, but bundling — collecting and combining individual checks — is. Just like it did with Black, Democracy North Carolina filed a complaint, and state elections officials will investigate.

Meanwhile, the industry shows no signs of stopping its quest for legality. Even after Burns’ indictment, the Coalition for Electronic Sweepstakes said it would continue asking legislators and McCrory to legalize, regulate and tax the games. Also after the indictment, a bipartisan group of state representatives filed a bill to do just that.

This repeat of decade-old history shows that some people are addicted to gambling, while others are addicted to gambling operators’ money. As long as that is the case, there will be some sort of street-corner video-gambling industry in North Carolina. Or perhaps the military will develop some superlaser atomizer to kill space monsters, video-gambling parlors and other hard-to-kill critters.

Scott Mooneyham is editor of The Insider, www.ncinsider.com. Email him at smooneyh@ncinsider.com.