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Video sweepstakes operators seeking solution after court loss

| Jan 3, 2013 | Business Litigation |

Back on Oct. 14, we discussed the commercial litigation involving North Carolina’s ban on video poker machines outside of the state’s Cherokee reservation and businesses that feature “sweepstakes” game machines. The manufacturers of the sweepstakes machines and the owners of the parlors where gamers go to use the machines argued in the litigation that a 2010 statute banning the games was unconstitutional, but the North Carolina Supreme Court ruled against them in December.

As a result, the ban on the sweepstakes machines, which have players pre-pay for Internet and phone time to play computer games for cash prizes, is set to begin on Jan. 3. But the sweepstakes machine industry has appealed the decision to the U.S. Supreme Court, which could put a stay on the ban until the Court decides whether or not to hear the appeal.

The machines’ defenders have also come up with another possible way for the law and the sweepstakes to co-exist. Attorneys for two manufacturers say that their clients are converting their products to a “non-entertaining reveal system.” That phrase appears to be based on a lower state court ruling that banned “electronic entertaining displays to reveal sweepstakes winnings.” How a machine that would not reveal whether the player has won — and that is “non-entertaining” — would work is not clear, and few details have been provided so far.

This case is an example of North Carolina businesses coming into conflict with government regulations. An experienced business attorney can be helpful for business owners who are seeking to be successful while avoiding possible litigation.

Source: Wilmington Star News, “Software tweak could keep sweepstakes parlors operating,” Brian Freskos, Jan. 1, 2013

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