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Issue Date: Vol. 50, No. 12, December 2010, Posted On: 11/24/2010

North Carolina Judge Issues Mixed Ruling On Sweepstakes Viddies

Marcus Webb
Hest Technologies, Internet International Technologies, sweepstakes video game, North Carolina sweepstakes, Florida sweepstakes, Judge John Craig III, video game, gambling machine, online sweepstakes game

GREENSBORO, NC -- Judge John Craig III issued what appeared to be a split decision on sweepstakes videogames on Nov. 22. In the case of Hest Technologies and Internet International Technologies vs. the State of North Carolina, the judge ruled that eight specific sweepstakes games are illegal.

At the same time, Craig seemed to agree with the operator plaintiffs, whose attorneys had argued in the Nov. 18 hearing in Guilford Superior Court that server-based sweepstakes videogames deserve protection as free expression under the First Amendment.

The state's ban on sweepstakes videogames with casino-style presentation of outcomes is "overbroad and hence constitutes a prior restraint on free expression, in violation of the First Amendment of the U.S. Constitution," Craig said in an informal ruling released by email.

The judge added: "Those devices not specifically enumerated as the 'Illicit Eight' [the specific machines that he ruled illegal] will be allowed to continue to operate, [as] long as they do not violate any other portions of the law."

A more formal ruling is expected from Craig in the next couple of weeks. According to local press outlets, the judge requested assistance in drafting his formal verdict from state attorneys general who had argued North Carolina's side of the case.

Craig's ruling could, at a minimum, threw into confusion police efforts to enforce a ban imposed earlier this year by the North Carolina General Assembly. The ban goes into effect Dec. 1. At most, Craig's ruling could conceivably block enforcement of the ban in some cases.

Many operators in North Carolina have said they will modify their sweepstakes games to ensure that the devices technically conform to the language of the new law -- and thus may continue to be operated. [see story]

The Nov. 18 court session was actually the plaintiffs' second case before Judge Craig. Two years ago, Hest and IIT sued on the grounds that sweepstakes games conformed to then-current gambling laws.

At that time, Craig also found in favor of the operators. He then issued an injunction against law enforcement raiding locations with the plaintiffs' devices -- a move that both helped shelter the sweepstakes game industry across the state, and also helped prompt North Carolina lawmakers to pass the Dec. 1 ban.

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