Council staff propose zoning limits for internet cafes; staff say ~25 suspected sites citywide

City staff proposed July 14 to add “Internet cafes,” commonly called sweepstakes operations, as a permitted use under the Land Development Code in specified commercial zones and with separation and buffer requirements intended to limit concentrations.

Joseph, director of development services, told the Committee of the Whole the proposal would define Internet cafes, allow them in the B‑2 (Commercial Corridor) and B‑5 (Commercial Services) districts only, require separation from other cafes, parks, churches and residences, prohibit accessory‑use placement of such machines in other businesses, and bar them from historic and redevelopment districts.

Joseph said, “there are presently approximately 25 suspected, Internet cafes around the city.” He told council that only four locations now operate with certificates of occupancy issued before the city’s most recent restrictions, and that another nine of the roughly 25 would meet the proposed zoning and buffer standards and could lawfully continue if they obtained valid certificates of occupancy.

Context and legal history: staff explained the city previously regulated Internet cafes in the Land Development Code from about 2010 until 2016; that year a North Carolina Supreme Court ruling prompted changes. The city discussed enforcement and certificates of occupancy with the Rocky Mount Police Department and faced litigation by would‑be operators; staff said a later 2022 state supreme‑court ruling led the city to close locations at that time. Because the courts have been active on the subject, staff emphasized the amendment is intended to treat the use as a land‑use question separate from state courts’ determinations about whether the games offered violate gambling laws.

Council questions and staff response: Councilmembers asked who would enforce compliance and how nonconforming or covert operations (machines placed inside convenience stores) would be handled. Joseph said enforcement would be led by Development Services in coordination with the fire marshal office and that operators unable to meet the standards would be notified and given time to comply. The City Attorney advised that nonconforming status requires the use to have been legally authorized in the first place; locations that “sneaked” machines in behind another use would not automatically be lawful nonconforming uses.

Next steps: council members asked for more research on enforcement models used in other North Carolina cities (staff cited Greenville, Wilson and others) and on whether local fees or taxes could be applied; staff said state law limits municipal privilege‑license authority and that local fee authority would need additional legal review. Council directed staff to gather more information; the item will not be placed on the council agenda until that follow‑up occurs.

Ending: The proposed amendment would provide a zoning path for some existing sites while tightening location and accessory‑use rules; council members said they want further analysis of enforcement, revenue options and legal exposure before a final proposal is brought to a council vote.