Appeals court: NC cannot ban Internet sweepstakes games

Posted March 6, 2012

— The North Carolina Court of Appeals ruled Tuesday that the 2010 law that attempted to rid the state of online sweepstakes games is unconstitutional.

The Attorney General's Office said it plans to appeal the 2-1 decision to the North Carolina Supreme Court.

Business owners maintain that allowing people to click on video-style games to uncover potential prizes is a marketing tactic to encourage them to buy Internet or phone time.

A Guilford County judge struck down part of the law in November 2010 as a violation of the First Amendment, but appellate Judges Ann Marie Calabria and Linda McGee said the entire law must be invalidated because it was written too broadly.

"Banning the dissemination of sweepstakes results through entertaining displays cannot be characterized as merely a regulation of conduct. Instead, that portion of (the law) which forbids 'the reveal of a prize' by means of an entertaining display directly regulates protected speech under the First Amendment," the appellate judges wrote.

Judge Robert C. Hunter disagreed with the ruling, saying that the law regulates conduct and not speech.

"(The law) does not ban video games nor prohibit plaintiffs from allowing a customer to play their video games," Hunter wrote. "Rather, the statute prohibits plaintiffs, or any person, from conducting or promoting a sweepstakes through the use of a video game. Plaintiffs are free to allow anyone to play their video games so long as the video games are not used to conduct or promote sweepstakes."

The Internet sweepstakes ban took effect in December 2010 and followed an earlier state ban on traditional video poker machines.

Police and sheriff's deputies statewide have been enforcing only parts of the law that were upheld by trial judges and closed down only casino-style games and those "not dependent on the skill or dexterity of the player." Sweepstakes outlets and retailers have continued to operate by replacing slots and Pot-o-Gold with cartoon-style games.

The Internet Based Sweepstake Organization, which represents game operators, applauded the court ruling and renewed their call that North Carolina regulate and tax the machines instead of trying to outlaw them.

"The Internet Based Sweepstake Organization continues to advocate for state oversight and regulation of the video sweepstakes industry. We believe that having state oversight will provide a regulated market with enforcement measures to protect consumers and operators,” the group said in a statement.


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  • piene2 Mar 7, 2012

    "When someone said "Money is the root of all evil" they won't just wishing Dixie. These games are put there for Money. Rebelyell55"

    Wow, do you really think so? What a unique idea. I thought the owners put them there just to provide entertainment for the users. I had no idea that they are hoping to make a profit on the machines. It just goes to show how much one can learn by reading the posts here.

  • Sherlock Mar 6, 2012

    Only Fayetteville can go against what the law says or the courts... Just place a very heavy tax at the city, county and state level, say about 3k for each machine for the city, 2k for the county and 15k for Bevs retirement fund

  • KnoxOverstreet III Mar 6, 2012

    "Outstanding ruling! Hopefully, if appealed, the appeal will fail. Legalize all gambling, legalize prostitution, legalize most recreational drugs and collect the taxes on the lot. The state will soon be rolling in money.

    I totally agree!

  • cjw6105 Mar 6, 2012

    As long as NC continues under Democrat control, the government will find a way to impose its will on the people who dare do the same thing that the government does.

    Do as I say, not as I do.

    See you in court.

  • mgratk Mar 6, 2012

    Less and less freedom every day. At least there is a brief reprieve here. If I want to waste my money on gambling, and don't want play the state gambling games, I have that choice for a little longer. Thank goodness. I don't gamble much, but it is nice to know the option exists outside of Bev's immediate control.

  • taskmaster27858 Mar 6, 2012

    Need to bring back internet poker sites, like poker stars, party poker, full tilt...... If yall want to gamble, need to learn how to be responsible of doing it without losing everything.

  • Rebelyell55 Mar 6, 2012

    If you win over a certain amount, most places do give you a tax form and you have to claim it.rightisright58
    March 6, 2012 3:22 p.m
    ..... Not in any, I mean any, internet cafe that has these "sweepstake" games have I ever seen anyone get a form for a big win. On the gambling boat and in Casino yes, but not in these other places. Cetainly not most as you state.

  • JayJay Mar 6, 2012

    This is the state government trying to prevent others from eroding their lottery income. If it's ok for the state to do things like this how can it be illegal for others?

  • rightisright58 Mar 6, 2012

    Rebelyell55: No, actually I do know what I'm talking about. If you win over a certain amount, most places do give you a tax form and you have to claim it. A lot of times when you hit the larger amounts, you get what's called a "blue screen" and it pays the BIG BUCKS. They fill out the form with all of your information and you file it with that year's tax return.

  • ncouterbanks69 Mar 6, 2012

    You seem unclear on the subject of addiction.........

    So if some can not control themselves your plan is to get rid of it all together? WOW!!!!!