Sweepstakes Games Ruled Illegal by NC Appeals Court
In a divided decision, the North Carolina Court of Appeals has upheld the state's laws regulating video sweepstakes, dealing a blow to the operator who had challenged the legislation.
LISTEN TO THIS ARTICLE:The 2-1 ruling has settled No Limit Games' lawsuit challenging Robeson County's ban on its video sweepstakes machines. It has also overturned a lower court's ruling from last year, which had granted a preliminary injunction in favor of the sweepstakes operator.
Two out of three judges on the appeals court panel ruled that the video games operated by No Limit Games of Greensboro were indeed games of chance, which are illegal in North Carolina.
Established in 2020, No Limit Games offered games in which players could use a 'nudge' feature to align symbols for a win or participate in memory-based challenges to keep their winning potential active.
However, the appellate judges concluded that these changes were insufficient to distinguish No Limit Games' offerings from other games previously deemed unlawful by the courts.
None of the Plaintiff's attempts to distinguish its game from the similar games previously held by our courts to be illegal change the fact that chance is core to the game and always determines the amount a player can win.
Skill over Chance, Says Griffin
Judge Jefferson Griffin was the lone dissenter on the panel, siding with Superior Court Judge Michael Stone's June 2023 ruling that No Limit Games' offerings require skill.
We acknowledge the legislature intended to cast a wide net in regulating electronic sweepstakes. However, where, as here, a plaintiff is able to design a system which ultimately elevates skill over the chance inherent in a sweepstakes, I would hold they have complied with the law. To this end, I would also affirm the trial court's conclusion of law asserting the balance of equities tilts in Plaintiff's favor – thus warranting an injunction to prevent harm to Plaintiff and its business.
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Loopholes and Adaptations
State lawmakers first attempted to prohibit video poker and slot machines in 2006, but gaming companies found a loophole by modifying their prize payout systems.
In an ongoing cat-and-mouse game, lawmakers passed additional legislation in 2008 and 2010 to address loopholes. Still, companies have continued to adapt, arguing that their revised games require skill and are therefore exempt from anti-gambling regulations.
The latest ruling allows law enforcement to shut down No Limit Games' video sweepstakes kiosks in Robeson County. However, the legal battle may be far from over, as Gavin Reardon, one of No Limit Games' counsels, confirmed the company's intention to appeal the appeals court's decision.
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