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North Carolina Supreme Court to examine video sweepstakes issue

| Oct 14, 2012 | Business Litigation |

If you play a game on a video screen for the chance to win a prize, are you gambling or mere playing a video game? That is the question that the North Carolina Supreme Court will be facing on Oct. 17, when it will hear arguments in commercial litigation involving the use of video sweepstakes machines in businesses across the state.

Gambling is illegal in North Carolina, though it is allowed on the state’s Cherokee reservation. A casino there features video poker, slots and card games. The machines at issue in this case are called “sweepstakes” machines by the businesses that manufacture them or host them for patrons to play in their cafes. Instead of paying for a turn as in video poker, players of these machines pay for a limited-time Internet connection. That connection gives them access to computer games that allow players to search for cash and other prizes using a computer mouse.

In 2010, the North Carolina General Assembly passed a law banning the machines. However, the Court of Appeals overturned the ban in a March ruling. Companies in the industry distinguish their machines from traditional gambling machines by calling the sweepstakes video games. The U.S. Supreme Court ruled in 2011 that video games are protected under the First Amendment right to free speech, similar to other media like movies. They say that whether a sweepstakes player wins a prize is predetermined, so that it is not a form of gambling.

But the state solicitor general says that the games’ effects are virtually identical to slot machines and video poker. He said that they have “the same seductive and deleterious effects,” such as addiction and loss of income. The state is asserting that the General Assembly has the power to define what is and is not illegal gambling in North Carolina.

Whatever the Supreme Court decides likely will have a significant impact on the gaming industry in the state.

Source: Myrtle Beach Online, “NC high court to decide if video sweepstakes legal,” Emery P. Dalesio, Oct. 13, 2012

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