North Carolina Gov. Perdue suggests taxes on video sweepstakes machines

By Gary D. RobertsonThe Associated Press RALEIGH - Gov. Bev Perdue asked North Carolina legislators Thursday to tax video sweepstakes machines as long as they're legal for more education money because lawmakers won't accept her earlier proposal to raise the sales tax.At a news conference the day after she signed a bill allowing live dealer games at the Cherokee casino, the outgoing Democratic governor told reporters that Republicans need to do something to boost public school funding.If they're not going to consider a temporary three-quarter cent sales tax increase for next year, Perdue said, taxing and regulating the machines is another option. In March, the state Court of Appeals struck down the legislature's 2010 ban on the machines, but the ruling has been appealed to the state Supreme Court.Perdue had signed the 2010 ban into law, but she's suggested since the appeals court ruling state oversight might be the only solution."Let me be clear. I've got a record on it, and I don't like sweepstakes," Perdue told reporters, but "until we can outlaw them or somehow the courts allow them to be outlawed forever, we need to tax the heck out of them and regulate them hard."The electronic sweepstakes games give people who buy Internet or phone time the opportunity to uncover potential cash and prizes with mouse clicks on a computer screen.Sweepstakes software providers and an amusement machine company sued over the ban on the games, and the Court of Appeals ruled in a split decision that the ban was overbroad and infringes on the free speech rights of their operators. Since then, the number of sweepstakes cafes has grown and are common sights on big-city and small-town strip malls and street corners.Perdue's office said such regulation could bring in $300 million next year, nonetheless she didn't provide details about what a regulated industry would look like, leaving that to lawmakers. Her sales tax proposal would generate more than twice that amount.The House bud! get prop osal approved last week set aside an additional $228 million for the public schools next year compared to this year. Perdue said GOP leaders actually spent $30 million less when federal jobs money is added in."I'm giving them another pathway, another piece of a solution," she said. "The bottom line for me is that they've got to fund public schools in a different way. There's got to be more resources for our kids."The legislature has been trying for more than a decade to rid the state of video gambling machines and sweepstakes, saying the games can't be regulated, are addictive to players who lose hard-earned money, and lead to crime and family strife. Traditional video gambling machines were outlawed in 2007.Sen. Tom Apodaca, a key leader in the Senate, which planned to roll out its budget proposal early next week, called Perdue's idea "ridiculous" and said the legislature shouldn't act in any way until the legal questions can be resolved.Apodaca, R-Henderson and a primary sponsor of the Cherokee casino bill, said sweepstakes machines can't be regulated because they're strewn throughout the state."Sweepstakes machines are a scourge on the public, and it's causing more and more problems," he said. "I don't see a way to regulate them."House members have been slightly more willing in the past to consider legalizing the sweepstakes machines and even video poker. A bipartisan bill would place state privilege taxes on video sweepstakes establishments and require operators to pay a 4 percent tax on the machines' gross receipts. Local governments already are placing taxes on the machines."A lot of people are against those machines but most people - if they are going to be here and they are illegal - they want to get revenue out of them and tax them, as well," said Rep. Bill Owens, D-Pasquotank, a sponsor of the House bill. Nearly all the money generated from the bill would be earmarked for public education.A coalition of liberals and social conservatives has opposed gambling expansion on moral and economic groun! ds. Alex andra Sirota with the North Carolina Budget & Tax Center said Perdue's idea is "fiscally irresponsible" and would ask more from low-income residents - many of whom play the games - to fund state programs.Amusement machine providers interested in seeing the games regulated are pleased with Perdue's announcement."This is a positive step forward and we will work with her administration and the North Carolina General Assembly as this public policy issue proceeds through the legislature," Chase Brooks, president of the Internet Based Sweepstakes Organization, said in a statement. Powered By

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