North Carolina Court of Appeals Rules Against Video Sweepstakes Machines in Onslow County

Yesterday, the North Carolina Court of Appeals ruled against the video game sweepstakes industry and its latest efforts to continue operating in the state. As part of an Onslow County lawsuit, the Court decided that the so-called sweepstake games offered by Sandhills Amusements of Southern Pines violate the state’s anti-gambling legislation and should not be allowed in North Carolina.

Video sweepstake games, which allow customers to play for money or other items of value, have been available in bars, convenience stores or so-called “sweepstakes cafés” across the state. However, the legislature of North Carolina has passed pieces of legislation aimed at suspending such games offering as they have been recognized as a form of gambling.

The problem was that whenever North Carolina lawmakers made changes to the law in order to ban the machines, the vendors altered the way the games work so that they do not violate the state’s anti-gambling legislation.

As a result, legal cases would follow so that the courts had to decide whether the games violated the law or not. On many occasions, the courts would rule against the gaming companies which offered the video sweepstake games, then the companies once again made alterations to the way the games work and the new versions emerged in compliance with the North Carolina gambling legislation. Then the vicious circle repeated over and over again.

Onslow County and Sandhill Amusements Locked in Long-Running Legal Battle

Sandhill Amusements of Southern Pines has been working in collaboration with Gift Surplus LLC to operate some game kiosks on the territory of North Carolina. Back in 2013, the Sheriff’s Office in the Onslow County seized the gaming company’s machines following allegations that the machines violated the state’s gambling laws. According to court records, similar law enforcement actions have been initiated across North Carolina, with some store employees being arrested for offering illegal sweepstake machines.

However, Sandhill Amusements and Gift Surplus started a joint lawsuit against the sheriff and the state in 2013, claiming that their games were legal. In fact, the two companies won at trial, but the case was sent to the Supreme Court of North Carolina, which two years later ruled against the companies saying that the sweepstakes machines actually violated the anti-gambling laws.

Then, the two companies once again changed the way their games work and brought them back in action. According to them, the new games do not contradict the law as they involve an element of skill despite the machines’ physical resemblance to slot machines.

The case was brought back to court and the legal battle began once again. In 2017, a North Carolina Superior Court Judge ruled in favor of the two gaming companies, explaining that their sweepstakes games were compliant with both the federal and state regulations. According to the Judge, the fact that the games featured an element of skill outweighed the games’ element of chance, so the machines did not violate the state’s gambling laws.

Three-Judge Panel of N.C. Court of Appeals Say Video Sweepstakes Violate State Gambling Laws

Yesterday, a panel of three judges of the state’s Court of Appeals overruled this decision. All three judges provided a separate ruling because they had some disagreements on certain points.

According to Judge Hunter Murphy, the game kiosks violated the gambling legislation of the state. He reminded that North Carolina laws suspend electronic gaming machines that offer or promote sweepstakes games through the use of so-called “entertaining display”. Judge Murphy did not address the issue of whether the games offered by Sandhill Amusements and Gift Surplus could be categorized as illegal games of chance or legal games of skill.

The second Judge, Allegra Collins, agreed with him on the point regarding the “entertaining display”. She also believes that the random chance of the games outweighed the skill element featured by them. In her opinion, the sweepstakes machines breached the gambling laws of the state.

Judge Wanda Bryant had a disagreement with Judge Murphy on whether a game of skill should be suspended under the existing law. However, in her opinion, the chance element was dominant for the games’ outcome, unlike the skill element. Eventually, she also concluded that the games operated by Sandhill Amusements and Gift Surplus violate the anti-gambling legislation of North Carolina.

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