State Representative Michael Wray today introduced a bill that would tax Internet sweepstakes cafes to settle legal uncertainties behind them.
Jeff Collins, a Nash County Republican, is cosponsor of House Bill 547, Wray said today.
“One of the things was dealing with the (Royal Palace) theater and revenue coming to the city,” Wray said, explaining the idea behind submitting the legislation. “We want everyone on a level playing field and for them to be legal. The state can get revenues from it and let municipalities receive funding and let counties receive funding.”
Wray said people have a right to play the games they want to, whether it is the state lottery or going to Internet cafes. “We want it to be on a level playing field.”
Wray said the bill has good support but has a good way to go before becoming law.
Jim Harris of the Coalition for Electronic Sweepstakes said in a press release the legal uncertainty involving electronic sweepstakes has costs thousands of North Carolinians their jobs over the last few months.
“Representatives Wray and Collins introduced comprehensive legislation today that will preserves jobs, maintain tax revenue for local government and for the first time tax electronic sweepstakes, which will provide much needed revenue to the state.”
Harris said the proposed legislation contains strict regulations and oversight including criminal background checks, licensing procedures, and rigid regulations on how the software operates and how the cafes conduct business.
“We have crafted a bill that contains strict rules for the operation of electronic sweepstakes," said Wray said in the press release. “House Bill 547 will also generate millions in new revenue for North Carolina. A 4 percent tax on gross receipts and an excise tax will be charged for each location.”
Making the case for the bill, Harris said in the press release the electronic sweepstakes industry employs thousands of people directly. The average pay is 40 percent higher than minimum wage and in some cases double the minimum wage.
These cafes generate hundreds of millions of dollars in economic activity, which has the indirect benefit of providing an additional 10,000 jobs.
Electronic sweepstakes are direct income generators for multiple industries, including utility companies, employees, builders and contractors, equipment providers, and commercial property owners.
“Small businesses and employees have been hurt by the legal uncertainty — many have lost jobs they depend on to provide for their families,” Harris said. “House Bill 547 ends the legal uncertainty for thousands of North Carolina workers."
House Bill 547 also includes revenues for both the cities and counties where sweepstakes operate. Currently, local governments receive thousands and in some cases hundreds of thousands in license fees from electronic sweepstakes cafes that go to fund critical local government services.
“The Coalition is eager to work with the General Assembly to pass House Bill 547,” Harris said. “It provides for strict rules and regulations with state oversight that preserves these jobs, maintains and creates additional economic benefits and provides much need tax revenue to the state of North Carolina."
Some of the talking points the coalition is using are as follows:
• Electronic Sweepstakes generate a total economic impact of more than $600 million and employ more than 9,000 people across the state.
• The average salary paid to sweepstake café employees is $13 per hour – the average café employs eight to 10 people.
• Roanoke Rapids receives more than $200,000 per year in licensing fees while Laurinburg collected $177,000 in licensing fees from cafes last year.
