Owners of North Carolina video poker machines challenge registration requirement

Friday, Sept. 29, 2000 | 9:04 a.m.

State lawmakers declared a moratorium on new video poker machines earlier this year to stop a potential flood of machines from South Carolina, which banned them in July.

Under the new law, only poker machines listed on property tax rolls last January are legal in North Carolina, which limits video poker winnings to a maximum of $10 in prizes or merchandise. As of Oct. 1, all video poker machines in the state are supposed to be registered with local sheriffs, and only three machines will be allowed per location.

But 10 video poker machine owners have filed a lawsuit challenging the way local sheriffs are enforcing the law's registration requirement.

The plaintiffs claim that the state's tax code allows taxpayers to list property late, pay a penalty and then be treated as if they had reported the property on time.

The machine owners, represented by Smithfield lawyer Lew Starling and his partner, state Rep. Leo Daughtry, want to use that provision to make hundreds of previously unlisted machines legal.

"The folks who have not been paying taxes on their property like the rest of us have, have found what they think is a loophole," said Eddie Caldwell, a Raleigh lawyer representing 10 sheriffs named in the lawsuit.

While some sheriffs have agreed to treat late listed machines as legal, at least 10 sheriffs have indicated that only those machines actually on the tax books in January will be registered as legal in their counties.

"The language means Jan. 31," said Stanly County Sheriff Tony Frick, one of the sheriffs named in the lawsuit.

In a hearing Thursday in Cumberland County, Superior Court Judge Knox Jenkins denied a request for a preliminary injunction to bar sheriffs from seizing and destroying machines until the issue is settled.

Jenkins scheduled a hearing for Oct. 16 to consider the issue of whether the late listing provision of the state tax code and new video poker law are in conflict.

"We're plowing new ground here," the judge said.

Jenkins said his ruling will apply only to Cumberland County, and that the cases against the other nine sheriffs would have to be heard separately in their home counties.

The sheriffs named in the lawsuit are those in Anson, Burke, Caldwell, Catawba, Cleveland, Cumberland, Randolph, Rutherford, Stanly and Union counties.

Cumberland County Sheriff Moose Butler, who already has seized about 30 machines brought from South Carolina, said keeping up with the registration of machines was going to be a headache.

"We're not going to destroy people's stuff until it is disposed of through the court and ordered destroyed," he said.