Businesses operating Internet sweepstakes machines have been put on notice by Second Judicial District Attorney Seth Edwards.

Cease and desist letters are being hand delivered to businesses in Beaufort, Martin, Tyrrell and Washington counties in a joint operation between North Carolina’s Alcohol Law Enforcement and local sheriff’s offices, according to Edwards. While the Second Judicial District covers five counties, Edwards said his office was told there are no sweepstakes machines in Hyde County, the fifth county in the district.

The letters instruct business owners to cease offering the video sweepstakes games within 30 days or face prosecution. Those businesses range from cafes devoted solely to sweepstakes video games to mini-marts that have a single machine.

“We sent out 91 letters to owners and operators, but there aren’t 91 sweepstakes operations in the counties,” Edwards said. “You’ve got some places like Pirates Loot where — from pictures I’ve seen — there’s nothing but these machines in there. Then you’ve got lots of little country stores that you walk in, and they’ve got one in the back corner.”

Of the 91 letters, 61 were sent to businesses in Beaufort County, compared to Martin County’s 13, Washington County’s 10 and seven in Tyrrell County.

The question of the machines’ legality has been making its way through North Carolina courts for nearly a decade. Gambling is illegal in the state, with the exception of the state-sanctioned lotteries and Native American casinos, but the gaming software and Internet cafés have evolved with each statute passed to prohibit the activity.

In 2006, the General Assembly passed a bill outlawing video poker games. In response, lever-pulling machines were replaced with computers, and video poker parlors were replaced with sweepstakes parlors that sold Internet or phone-card time to clients, with the bonus of a chance to win sweepstakes prizes on software installed on those computers. In 2010, the General Assembly made another attempt to stop the operations, this one with broader language. At each step, the statutes were legally challenged by sweepstakes operators. But in May, five sweepstakes software companies entered into an agreement with U.S. Attorney for the Eastern District of North Carolina Thomas G. Walker to stop supplying software to sweepstakes establishments in North Carolina by July 1. In exchange, Walker would not prosecute the software providers, according to a May press release from the U.S. Attorney for the Eastern District’s office.

That deal and the “clear intent of the legislature to criminalize the operations,” along with recent decisions made by North Carolina’s highest courts against sweepstakes operators, led to the cease and desist letter, according to Edwards.

“Now that the dust has settled as far as our appellate courts are concerned, it is appropriate for us to devote time and resources to eliminate the operation of these machines,” Edwards wrote in a press release.

But not all officials support doing away with sweepstakes gaming. Some past and present legislators support legalizing the machines, including former Sen. Thom Goolsby, who now serves as a lobbyist for the N.C. Small Business Coalition, a group pushing for legalization and state regulation of the sweepstakes gaming industry.

“North Carolina is a gaming state, with a state lottery and a Las Vegas-style casino in Cherokee,” Goolsby wrote in a press release issued in April. “Small business owners who choose to offer a sweepstakes promotion and are fully complying with North Carolina’s electronic sweepstakes laws deserve the right to operate without interference from state government. Our members are good citizens and will lobby the General Assembly for positive change.”

Part of the issue is that sweepstakes business owners, the machines and their payouts operate outside of state supervision — and taxation.

“They don’t oversee it; they don’t audit the machines; there’s no regulation, whatsoever,” Edwards said. “From what I hear, many of these owners and operators of the machines are in favor of the state getting their piece of the pie.”

But a more philosophical issue — why one form of gambling is legal in North Carolina and another not — remains unaddressed.

“Why (sweepstakes machines) are illegal while the education lottery is legal is a question for the legislature,” Edwards said.

The 61 Beaufort County owners of sweepstakes machines have 30 days from the date of the letter’s delivery to cease operations of sweepstakes machines or devices. The letter states “any owner, operator, manager or employee involved in the illegal activity” could face criminal charges. Edwards said a first-time offense would result in a Class 1 misdemeanor, a Class H felony on second offense and a Class G felony for a third or subsequent offense.

A spokesperson for Pamlico Internet Access/Sweepstakes declined to comment for this article; calls to Pirates Loot were unanswered. Both businesses have Washington addresses.