COLUMBIA, SC — Last Wednesday, the newly-appointed State Board of Elections in North Carolina convened for the first time. Following Republican Gov. Pat McCrory’s election last fall, the board was in GOP hands for the first time in decades, and one of its first orders of business was appointing a new director. The board’s Republican majority selected Kim Westbrook Strach, a respected investigator who currently serves as the agency’s deputy director for campaign reporting.
Strach won’t have much time to settle in. One of her top responsibilities in her new role will be deciding how to handle allegations about campaign contributions tied to the state’s video gambling industry, which has spent hundreds of thousands of dollars trying to influence state officials—including McCrory, the man who just a week and a half ago appointed the new elections board. (In her deputy role under the old board, whose members had called for an investigation, Strach had already directed agency staff to begin reviewing the donations.)
The sweepstakes industry’s legal status in North Carolina, as in a handful of other states, is dubious: it has been barred by state laws and top state court rulings. But, as in other states, it has fought relentlessly for legal status, and the industry has cash to burn on lawyers and litigation. Thanks to lower court decisions, software tweaks, and spotty or corrupt law enforcement, the Vegas-style machines have proliferated despite the bans, and a bill to legalize and tax the games is now pending in the state legislature, with bipartisan sponsorship. Sweepstakes operators have given more than $500,000 in campaign contributions to state officials since 2010, and the single largest donor in the 2012 cycle was Chase Burns, an Oklahoma-based sweepstakes software entrepreneur who was recently indicted in Florida on felony fraud charges related to his business. “It’s like a guerrilla movement in a way,” is how Mitch Weiss, a reporter for The Associated Press, described to me the industry’s insurgent battles in the states.
Much of what we now know about the sweepstakes industry’s political activity in North Carolina comes from some standout recent reporting by Weiss and Michael Biesecker, his colleague at the AP. When I wrote a post on the sweepstakes issue back in March, I flagged a solid follow-the-money piece by the AP duo. Since then, they’ve owned the story. Their joint-bylined April 23 article tracked donations to North Carolina candidates from Burns back to a bank account that drew funds from his company. That suggests a violation of state law, which bars corporate money from being used “directly or indirectly” to support political campaigns. Their recent stories have also detailed the role played by a top law firm with a lobbying arm called Moore & Van Allen—where McCrory worked until days before taking office—in delivering the contributions. (The AP’s Emery P. Dalesio followed up with a May 4 piece spotlighting the firm’s relationship with McCrory and the sweepstakes industry.)
Biesecker and Weiss have also reported on concerns from Democracy North Carolina—a watchdog group that has been a key source for the coverage, and that has filed a sworn complaint about the industry’s political activity—that sweepstakes donations may have been “bundled” by lobbyists, another potential violation of state law. On April 29, the AP writers offered some substantiation for the bundling charge in an exclusive interview with one sweepstakes operator, who recalled how his $4,000 check to the McCrory campaign was added to a stack of donations from others in the industry, to be collected by lobbyists on their way to the future governor. That interview also produced some colorful quotes about the industry’s strategy for gaining influence, like this one:
“If we needed to write a check to Pat McCrory, I wrote a check to Pat McCrory.”
And, in reference to the governor, House speaker Thom Tillis, and Senate leader Phil Berger:
“We didn’t give them money because we liked them. We just knew they were powerful people up in Raleigh and they could get done what we wanted to get done. You give them your money and they’re supposed to do what they say they’re going to do.”
(It should be noted that, as the AP reported, Tillis and Berger have said they are going to donate Burns’s donations to charity, and McCrory has already made charitable contributions to offset donations from Burns and others who have been indicted. McCrory has also said he opposes the pending bill that would legalize the sweepstakes industry.)