Mauldin City Council Approves Internet Sweepstakes Moratorium

A harmless diversion, or gambling? Internet sweepstakes gaming establishments are spreading throughout the state and the Mauldin City Council on Monday night enacted a stopgap measure to halt their growth locally while the state legislature decides whether or not the games are illegal.

In an unanimous vote, the Council agreed to enact an 180-day moratorium that would prohibit the licensing of any new Internet sweepstakes gaming establishments or machines in the city limits.

The hope is that the moratorium will allow a reasonable period of time for the state legislature to decide Internet sweepstakes' legality, as well as allow city staff additional time to further evaluate the issue, said city Business and Development Services Director Kim Hamel.

Operators throughout the state insist their sweepstakes operations are legal, saying they are no different than prize contests offered by major companies such as McDonald’s, Gillette or Pepsi. 

Rather than running video casinos, which were banned in 2000, the operators argue they are merely selling a product — such as phone cards, Internet usage, business services, or coffee — and their customers get to reveal prizes by playing slots, poker or keno on a computer while in-store.

However, the state's Attorney General, SLED, various Solicitors, and sheriffs throughout the state have stated they believe the establishments are illegal. But so far, no definitive ruling has been made, either by the courts or the state legislature.

To date, Hamel said, city staff is aware of at least 45 machines in operation in the city. Only one business, Lucky's Internet Cafe on Woodruff Road, is operating an enterprise as a primary business, with 30 machines. The remaining businesses provide between one and six machines and are considered ancillary to the primary business use, she said.

Those businesses, which are already licensed and in operation, would not be affected by the moratorium. The moratorium would only prevent any new businesses from offering the games. Hamel told Patch that she is not aware of any new Internet sweepstakes business with a pending business license application.

In April, the House passed a bill (H. 4675) to close a loophole in the law that exempted electronic gaming and sweepstakes operations from the current video gaming ban. The bill has since been sent to the Senate for consideration at its January 2013 session. If passed, the new bill will make electronic and sweepstakes gaming illegal in the state.

Council members said they hoped that the legislature would decide the matter before the 180 days is up. If not, City Attorney John Duggan said the city could extend the moratorium an additional 180 days if necessary.

Hamel said the city polled nine other municipalities in the state to see how they have addressed the issue. Of those, four municipalities (Charleston, Greenwood, Greer, and Spartanburg) also passed temporary moratoriums of 180 days; three municipalities contest that such gaming operations are illegal under state law and are therefore not permitted; and, two are allowing the operations based on legal advice, but are charging higher business license fees, Hamel said.