NC video gaming ban struck down

RALEIGH, N.C. — A divided state Court of Appeals has struck down North Carolina’s ban on video sweepstakes machines, ruling the law is overbroad and infringes on the free speech rights of their operators. The decision, if ultimately upheld, could reopen arguments on whether the state should regulate the machines and tax them.

A three-judge panel ruled 2-to-1 Tuesday to throw out the 2010 law, which supporters have said was designed to rid another form of video gambling after the General Assembly banned traditional video poker machines in 2007.

Amusement machine companies and two firms that market long-distance phone and Internet services in North Carolina challenged the sweepstakes law, arguing it crosses the line by banning sweepstakes that use “entertaining displays” for people to watch to learn if they’ve won. Trial court judges ruled differently, leading in part to the appeals.

Writing for the majority, Court of Appeals Judge Ann Marie Calabria rejected the state’s argument that eliminating the displays is designed to regulate a certain type of conduct the Legislature finds objectionable. She cited a recent U.S. Supreme Court ruling that video games — like books and movies — are entitled to First Amendment protections.

Under the law, the plaintiffs are still “free to allow anyone to play their video games so long as the video games are not used to conduct or promote sweepstakes,” Hunter wrote. He said he would have upheld the entire law.

Sweepstakes parlors, convenience stores or business centers buy Internet or phone time that gives them the opportunity to uncover potential cash and prizes with mouse clicks on a computer screen. Legislators argued in 2010 the sweepstakes games provide the same negative aspects as other forms of gambling — addictive play and criminal activity.

Sweepstakes boosters say no gambling is occurring because the prize or lack of one is predetermined and nothing can be done by the consumer to change it.

Sweepstakes outlets have remained in operation in North Carolina while the law was challenged. Cooper’s office told law enforcement officers to enforce only parts of the law upheld by the trial judges — meaning shutting down casino-style games but keeping games with cartoon characters intact.