City council approves electronic game privilege tax

Henderson City Attorney John Zollicoffer presented the Henderson City Council on Monday evening with an ordinance to establish an electronic gaming tax on computer-based sweepstakes operations within the city.

The ordinance allows the city to impose a $2,000 tax per location of such gaming establishments as well as an additional $1,000 tax per machine.

Noting that smaller towns have higher taxes, Zollicoffer described the ordinance as a “good middle ground”.

“I hope we won’t be on the cutting edge of any lawsuits,” the city attorney said.

According to Zollicoffer, the games are not games of change, and therefore not prohibited by state law. He compared the games to buying a lottery ticket after the number has been drawn, except the number is not known at the time the ticket is purchased.

According to Planning & Community Development Director Erris Dunston, there are currently 178 such gaming machines in operation within the city. The ordinance requires owners to report to the city if machines are added.

Zollicoffer told members that the state does not currently tax these businesses, but the North Carolina General Assembly may try to make such games illegal again or tax them.

City Manager Ray Griffin told members that since the city is currently working on billing businesses for the annual privilege tax, there is an opportunity for electronic sweepstakes operators to comply with the ordinance for the fiscal year 2011 billing cycle. He said that if the ordinance is not passed before the annual mailout, the city will miss the opportunity to enforce the ordinance for a year.

Council member Mary Emma Evans asked if eliminating or cutting down on electronic sweepstakes operations would “drive our people back into illegal activities”.

“There are always people who try to evade the law,” Zollicoffer responded.

The ordinance passed unanimously with all members present for the vote.