City places new restrictions on would-be video sweepstakes sites

Mebane Planning Director Cy Stober speaks before the Mebane City Council at Monday night's meeting. The elected board unanimously approved a series of regulations aimed at the video gaming industry. Future applicants for potential video sweepstakes facilities must now come before the Mebane City Council and request a Special Use Permit. Video gaming facilities will be prohibited within 1,500 feet of schools, businesses, and residences, and will be required to limit its hours from 10:00 a.m. to 10:00 p.m.. 

At Monday night’s Mebane City Council meeting, the elected leaders unanimously approved a series of measures to help regulate the growing industry of video gaming machines that have been popping up in recent years throughout North Carolina and surrounding states. 

“We actually define a video gaming machine, and a video gaming arcade. It is distinct from other coin-operated amusements - which most folks would consider to be a video game,” Mebane Planning Director Cy Stober told the City Council members. “These are gaming machines. Which is substantially different from an arcade game. Our definition is pretty specific.” 

“What do these look like? They generally look like Pot of Gold machines. This is a popular game - Pot of Gold. They require you using skill and/or dexterity. You can receive a reward that can be redeemed for cash, or cash itself,” Stober continued. “It varies widely, from small cash prizes, which would essentially give you enough money to play another game, to large cash prizes - the primary magnet for a lot of people who want to play these games. Big payouts - in the thousands. But it requires skill and dexterity. And that’s what separates it from gambling. That needle is very carefully threaded by the purveyors of these facilities.” 

“What’s beneficial for the city of Mebane to have these here at all?” resident Lonnie Workman asked the City Council members during a public hearing on the subject. 

“There’s none,” Mayor Pro Tem Ed Hooks responded. 

“Not much (benefit),” added City Council member Tim Bradley. 

“That answers my question,” Workman replied.

Prior to Monday’s meeting, Mebane had no developing standards for video gaming arcades in its current Unified Development Ordinance.

“They are a use that has an undefined use from the city. It is not regulated. We are proposing to regulate this use within the City of Mebane,” Stober said. 

“As I recall, the separation between this and gambling is that it is supposed to have some merit of skill attached to it. Either dexterity, or recognizing, or whatever. But beyond that, it is simply a form of gambling,” Bradley stated. 

“That is correct,” Stober said in response. “There are a number of unregulated and unpermitted uses that these facilities also frequently attract.”

In order to more carefully regulate the video gaming industry, purveyors of such businesses will now have to come before the Mebane City Council and request a Special Use Permit. They will not be allowed to establish any such video gaming facilities within 1,500 feet of schools, churches, and residential areas. They will also be required to operate from 10:00 a.m. to 10:00 p.m. only. 

“It’s similar to adult establishments,” Stober said of the proposed regulations. “We have taken language to make sure that these are not located near children, that these are not located near families. And that these are separated as a distinct use in the City of Mebane, that will serve the people who want to use them, but separate them from churches, schools, parks, and so on. We also wanted to define the hours of operation so they won’t otherwise have a negative impact on the neighbors. No flashing lights. No distracting signs. That type of thing.” 

“We are requiring a Special Use Permit for this use. And there’s a lot of overlap with our adult establishment use. Namely the 1,500 foot radius from other identifying uses,” the Planning Director continued.

“For Mebane, a Special Use Permit requires a Quasi-Judicial (hearing), which is sworn testimony,” City Attorney Lawson Brown added. “And they’ve got to prove four specific points, in addition to the criteria that the proposed ordinance outlines.” 

The four specific points that must be satisfied for a Mebane Special Use Permit to be granted includes that the proposed land use doesn’t present a risk to public welfare, that they won’t damage the value of neighboring properties, that they are consistent with the City’s long-range plan, and that they are harmonious with the surrounding land use.

Mebane currently has two such video gaming facilities in the local area - one in the city limits along N.C. Highway 119, adjacent to Catrina’s restaurant, and other location along U.S. Highway 70 in the outskirts of town. 

“They (the current video gaming facilities) are grandfathered from a zoning standpoint. That does not mean that they are not engaged in illegal gambling activity,” City Attorney Brown said. “We think the requirement of the Special Use Permit will be somewhat of a limiting factor. (The current facilities are) Grandfathered to the extent that they are engaged in illegal gambling. That will require a police investigation.”

The City Council also redefined the definition of “video gaming machine,” adding three commonly-used games - Gold Fusion, Torch Game, and Fish Bowl Game, to the definition as to whether a video gaming machine might be allowed in Mebane. 

Stober and City Attorney Brown confirmed that Mebane was going as far as it could legally to regulate these types of businesses without infringing on their Constitutional rights. 

“Our objective is to take is as far as we can. We’ve had extensive discussions with law enforcement, Chief (Terry) Caldwell and his staff,” Brown said. 

“You cannot prohibit someone’s Constitutional rights in pursuing their dream,” Stober said. “If their dream is to open a video gaming arcade, you have to accommodate them to a reasonable degree. We believe that the regulations proposed are reasonable, yet will limit those facilities to a select few areas of the community - just like they would limit an adult establishment to a select few areas of Mebane. That is the intent of the language that has been drafted and presented. A prohibition would be a violation of an owner’s Constitutional rights. We are not permitted to go to those lengths unless it presents an overwhelming risk to the public at large. And these have not yet proven to do so. So we are regulating them to the extent practical under the law.”

Councilwoman Jill Auditori inquired as to who has regulatory discretion over video gaming in Mebane. 

“Who is determining that it’s not completely or fully dependent on the skill or dexterity of the player? Who gets to make that call?” Auditori asked Stober. 

“I do, in consultation with the Mayor, Chief Caldwell, and possibly the City Manager if it gets to that level,” Stober responded. 

At one time, with a local Privilege Tax in place, the City was able to tax each individual machine thousands of dollars. The North Carolina General Assembly took away the Privilege Tax, and therefore the City’s ability to individually tax each machine. 

“This is an attempt to regulate an industry,” Brown said.

“There is interest already (in bringing more video gaming facilities) in Mebane,” Hooks said. “It’s going to be very hard to place an establishment with these restrictions. Particularly (near) residences, schools, and churches. One of the places I’ve heard they’re interested in is within 250 feet of a residence. So that’s not even a possibility. This is good. They tend to have hours that are very late at night, and a lot of traffic. It’s not suitable everywhere.” 

“If it’s defensible, I think it’s an excellent move,” added Bradley. “The way the law is written, it’s very squirrely. Have we taken this as far as we can that would be defensible in a court of law? Based on what I’ve read statewide, and the statute, it pretty much has.”

The City Council wanted to make it clear to the general public that they are not necessarily opening the doors to these kinds of gaming facilities. They are merely trying to regulate them - making it more difficult for them to get local approval. 

“Under state law, they are currently allowed strictly by business zoning,” Bradley said. “We’re trying to avoid the trap a lot of cities have in trying to run away after the fact, so we can at least, to the best of our ability, restrict them to areas that are not offensive to the average citizen. I don’t know that we’re opening the door as much as we’re trying to keep the door closed before they get there.”

“We took the same pro-active steps 24 years ago in Mebane regarding adult establishments. And we don’t have adult establishments in Mebane, because we took those steps,” Bradley added. “But you can’t refuse someone just because you don’t like it. So you have to write rules that are defensible in court. And that’s what we’ve done here.” 

“We can’t outright forbid them,” added City Councilwoman Patti Philipps. “What I understand is currently, those internet sweepstakes places are allowed in our B-2 zone. We are trying to make it more difficult for them to open inside our city limits. We’re not trying to open any doors. We’re trying to make it more difficult. Because we don’t view them as desirable businesses around residences, churches, or institutions where kids might gather.”