Legal documents reveal the back-and-forth between electronic “sweepstakes” companies and the state, as an injunction blocks law enforcement from arresting or prosecuting those who sell or use the machines. Xpress is asking for your input on the issue.
At issue is a new type of computer-based gambling machine. A user will buy a prepaid phone or Internet-access card at a convenience store that also allows them to play a game on the computer. If they win, they receive a cash payout. However, investigators with the Buncombe County Sheriff’s Office have asserted that the cards often don’t actually work for their stated purpose, and seem to be intended for gambling.
In a 2004 ruling, the North Carolina Court of Appeals found that such machines did not violate then-current gambling law, because “the purchase of the phone cards is made to obtain a valuable commodity [the phone card]; the sale of which is promoted by a process that is common in many promotional and sweepstakes type contest.”
But the machines remained a contentious issue, and in 2008, the General Assembly amended the state’s electronic-gambling statutes, specifically stating that “it is unlawful to promote, operate or conduct a server-based electronic game promotion,” and also banning games where “participants purchase, or otherwise obtain by any means, a prepaid card.” The revised law took effect on Dec. 1, 2008.
Lawyers representing Hest Technologies and International Internet Technology quickly responded. Before the law went into effect, they sent a letter to Union County District Attorney John Snyder, who had been particularly active in his pursuit of the machines, asserting that all those machines would comply with the new laws. Hest’s Website refers to the machines as part of the “redemption gaming industry.”
“After December 8, 2008, our client’s sweepstakes will no longer employ games in violation of [the amended law],” the letter reads in part. “The new games employed by IIT and its subsidiaries will simply be electronic scratch-off simulations and will not feature any of the gambling simulation games.”
The companies’ argument is that buying a card and then playing the games is analogous to fast-food chains having a sweepstakes game with a food purchase.
On Dec. 19, 2008, Guilford County Superior Court Judge John Craig issued an injunction against any prosecution of the companies under the new law, asserting that their games are technically “sweepstakes” that don’t simulate gambling games or use a database (both of which are also banned under North Carolina law). It wasn’t his first time wading into the issue: Craig had also issued a March 14, 2008 injunction against prosecuting Hest and IIT’s machines.
Currently, according to Buncombe District Attorney Ron Moore, the state attorney general’s office is trying to get the injunction dismissed.
There are many legal complexities and technicalities in these cases, and Xpress is asking readers, especially those with a legal background, to weigh in both with their opinions and any additional context they can offer. Please share both in the comments below.
— David Forbes, staff writer