North Carolina’s Trendy Internet Sweepstakes Cafes to be Banned under New Law

There’s a new fad in North Carolina, and the state government doesn’t like it very much. Hundreds of “Internet sweepstakes cafes” have been established in North Carolina since 2008.  

Internet sweepstakes cafes are the result of some clever machinations to get around North Carolina’s gambling laws, some still in force date back to 1791. In 2006, special laws were passed in order to make video poker playing illegal in the state. That same year, high-ranking North Carolina politicians endorsed the Unlawful Internet Gambling Enforcement Act (UIGEA), the overriding principle of American gambling laws. 

In January 2009, a new law went into effect specifically addressing online gambling, as Internet cafes were soon simply ignoring state and federal law and allowing customers to play online. In this law, the state legislature targeted “server-based electronic game promotions,” i.e. online slot games.  

Today’s Internet sweepstakes cafes sidestep this issue by not awarding prizes based on progressive pools online, but rather with predetermined sweepstakes systems. And the specially-designed machines do not pay out (such machines are illegal under a separate North Carolina law), but players must instead go to a teller window to collect winnings. 

The new law, currently known as “House Bill 80,” was ratified by the legislature last week and Governor Beverly Perdue is expected to sign it into law next week, meaning that North Carolina’s Internet sweepstakes cafes will be shut down before January 1, 2011. 

Though the UIGEA law attempted to greatly restrict Internet gambling in the United States, literally thousands of online casinos still accept U.S. customers. Many individual states are currently considering intrastate poker and online casino gaming.