Documents shine light on electronic-gambling battles

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


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2 thoughts on “Documents shine light on electronic-gambling battles

  1. Lmontgomery

    I personaly play the sweepstakes and am 77 yrs of age and this is good therapy for me and A lot of us that are widows are enjoying these Games its just fun for us to do.dont spend no more than we can afford maybe 10 dollars.I say keep the sweepstakes and let the people enjoy.We all are old enough to know how to manage our finances.
    ThANK yOU

  2. N.R.

    Yes, i use to enjoy playing the games an found it relaxing,i not been playing long only a year an never won 500, just betting on quarter, nor a blue screen an i don’t understand why they don’t give me a chance, but now these Oklahoma games are so tight that they are tighter than a tick, an can’t get bouses an barley free spins. I usually 20.00 you get something but now all you get is just a bunch of spinning. Now i’m more stressed when i leave then what i am when i come in. Ya need to make a change somewhere there no sense in ya having these machines this time. I stood up for ya an sent nice letter to defend ya an now what the governor said ya were doing ya really are for real now. Now i know for a fact there are alot of people in Winston-Salme an Clemons have quit going to the business center just for they fact they keep loosing an put in an never get anything back in return. This is crazy.

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