Democracy South
105 W. Main Street, Carrboro, NC 27510
919-967-9942
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On the eve of a renewed debate about a North Carolina lottery, a new report shows that campaign contributions from donors tied to gambling and video poker in the state has soared in the last two years.
“If you want to see how gambling interests can move in and rapidly increase their impact in state politics, just look at the political money thrown around by the video poker industry in North Carolina,” said Pete MacDowell of Democracy South, a campaign-finance watchdog group. “The money buys top-rated lobbyists, but also it includes illegal campaign contributions, $100,000 gifts to national parties, and donations linked to shady businesses like predatory lending.”
Video poker distributors, operators, and their nine lobbyists contributed $418,000 to state campaigns in the 2000 election, according to Democracy South’s analysis of records at the State Board of Elections.
In addition, the Cherokee tribe in western N.C. used profits from its new video-game casino to make its first national donations, sending $195,000 to out-of-state parties and candidates since 1999. The total of $613,000 is eight times the $74,000 donated in the 1996 cycle when the industry had one lobbyist.
The big recipients of video-poker donations in North Carolina are key players in the lottery debate:
· The top recipient, lottery champion Governor Mike Easley, got $124,000 from video-poker related donors for his 2000 campaign. In 1997, then Attorney General Easley issued a legal opinion that helped the industry expand in the state; a month later, the industry’s trade group sent an appeal to its members, urging them to send money to Easley’s gubernatorial campaign. After the election, Easley’s campaign manager, Jay Reiff, became a registered lobbyist for the N.C. Lottery for Education Coalition, a pro-lottery advocacy group, and for months served simultaneously on the Governor’s staff.
· House Speaker Jim Black, who has said he would soon hold a public hearing on the lottery, received $55,000 from video-poker donors, making him the second highest recipient of their political money. In the 1998 campaign, Black took in only $750 from the industry and its lobbyists.
· A bill to ban video poker machines passed the state Senate in 2000, but the House watered it down by adding exemptions for existing machines, for the Cherokee’s casino, and for the manufacture of machines shipped out of state. In the 2000 election, state House candidates got $123,545 from video-poker related donors, more than four times the $27,085 taken in by Senate candidates.
· House Minority Leader Leo Daughtry is the attorney for the N.C. Amusement Machine Association, the trade group for video-poker distributors. He got $43,150 in the 2000 cycle, mostly for his failed gubernatorial campaign. Daughtry says he personally opposes the lottery, but the House Republican Caucus he leads has not made opposition to the lottery a priority.
· Roy Cooper, the newly elected Attorney General, received $29,100 in 2000 from industry donors, compared to nothing in 1998 when he was re-elected to the state Senate. As Easley showed when he held the office, the state Attorney General has considerable influence over the interpretation and enforcement of North Carolina’s conflicting laws regarding games of chance and video poker.
MacDowell noted that video poker has been described as the “crack cocaine” of gambling because of its addictive nature and appeal to low-income gamblers. North Carolina law permits the machines to be distributed and played, but limits the payout to $10 worth of merchandise and no cash – a restriction that is frequently abused, leading to scores of machines seizures and arrests each year.
Last year, the North Carolina Sheriffs’ Association, the N.C. Family Policy Council, and others tried to ban video poker machines altogether, but a compromise allowed existing machines to stay if their operators registered them with local sheriffs and reported their income to the N.C. Department of Revenue. The new data show that 9,000 machines are bringing in over $100 million annually.
Law enforcement officials say the problem of illegally operated machines has not subsided. As a result, Sen. Charlie Albertson and others want an outright ban, but his bill is stalled in committee.
Regulating video poker is complicated by the special legal status – and clout – of the Eastern Band of Cherokee Indians, said MacDowell. Under federal law and a compact agreement with North Carolina, the Cherokees can sponsor gambling, with a cash payoff, on electronic video games that are legal in the state. The tribe built a mega-casino in 1997 and leased it to Harrah’s Entertainment to manage. It now has 2,700 video poker, blackjack and other games and yields $125 million a year in profits for the tribe. But if the state outlaws video poker, the Cherokees could lose their machines, too.
“The threat to the industry on and off the reservation has spurred an upswing in political spending on high-powered lobbyists and campaign donations,” said MacDowell. According to Democracy South, the Cherokees made their first political donations to state candidates in 2000, a few months after the debate in the General Assembly to ban video gaming machines.
As early as March 1998, the State Board of Elections had notified Zeb Alley, the veteran lobbyist who represents the Cherokees, that political contributions from the tribal corporation would be illegal. But in October 2000, the Eastern Band made six donations of $4,000 each to six legislative candidates, including one to Rep. Phil Haire of Sylva.
A few weeks later, the Elections Board wrote Haire’s law partner Ben Bridgers, alerting him that tribal contributions were illegal. Bridgers is now a registered lobbyist for the Cherokees. After another notice from the Board, Haire finally returned the $4,000 contribution in September 2001.
The Cherokee’s also gave $2,500 to the N.C. Democratic Party’s Building Fund, which can accept corporate checks, so that donation is legal. The same month, it gave the Democratic National Committee a check for $100,000. “The capacity of gambling interests to flood state politics with soft money and legal or illegal donations is mind-boggling,” said MacDowell. “It’s just beginning here.”
Other donors on Democracy South’s list illustrate how video poker operators are hiring more well-known lobbyists, giving more money themselves, and using their profits to expand into other fields:
· Southland Amusement owner Robert E. Huckabee III of Wilmington retained former legislator Linwood Mercer as a lobbyist this year. Huckabee and his family gave $24,875 – more than any other video poker distributor. Huckabee also started Advance Cash Express in 2000, one of a growing number of payday lending businesses that critics charge engage in predatory lending.
· Operators Distributors’ owner Steve Henderson of Archdale has retained former Secretary of State and Attorney General Rufus Edmisten as a lobbyist for his video poker machine business. Henderson and his wife gave $9,250 in the 2000 election, up from only $2,000 for 1993 through 1996.
· Don and Mark Beason represented the N.C. Amusement Machine Association, the video-poker dealers trade group, during the 2000 session of the General Assembly, and Mark is again listed as their lobbyist this session. NCAMA began a PAC in 2000, but it only made one donation – $4,000 to Mike Easley’s campaign. The association itself also gave $700 to a reception for Speaker Jim Black.
Click here to
view a list of contributions from Amusement Machine Donors and their lobbyists in
the 2000 election cycle.