By L.A. Williams
Christian Action League
July 28, 2023
Purveyors of video sweepstakes are celebrating a win this week, as the state’s second-highest court has denied a request from Governor Roy Cooper, the Department of Public Safety and the Alcohol Law Enforcement Division to temporarily block a controversial ruling issued by a Forsyth County trial judge.
The case involves two companies: BST, which makes internet kiosks, and Victory Vending, which uses BST kiosks, purportedly, to sell internet time. Their thinly veiled gaming operations ran afoul of the state statute against video sweepstakes, but Superior Court Judge Todd Burke issued a preliminary injunction last month preventing enforcement of the law. And on Monday, a three-judge Court of Appeals panel unanimously refused to issue a temporary stay of Burke’s ruling. The appellate court did agree to consider Gov. Cooper’s request for a “writ of supersedeas” at a future time.
At the heart of the issue is whether or not state statutes include an absolute ban on video sweepstakes machines or only on those that include games where chance predominates over skill.
“This should not even be a question, as lawmakers have gone to great lengths to make clear that these types of machines — regardless of how they try to masquerade as a legitimate vehicle for business — are against the law,” said the Rev. Mark Creech, executive director of the Christian Action League. “No one is using these to purchase time on the internet. And these are not games of skill. This is gambling, pure and simple.”
Lawyers from the state Justice Department laid out the history of North Carolina General Statute § 14-306.4 this way in their filing: “Since 2010, North Carolina has expressly banned the operation of video sweepstakes machines. This ban was enacted in response to the attempt of certain gambling interests to circumvent the State’s ban on video poker and similar games through sweepstakes that used those games as marketing tools for purportedly legitimate products. To address this problem, the General Assembly banned sweepstakes that are conducted through all video games of chance, such as video poker and all similar games.”
The lawyers described how sweepstakes operators had repeatedly tried to circumvent the ban and had filed lawsuits to prevent its enforcement. Most importantly, they pointed out that the N.C. Supreme Court had heard multiple arguments from sweepstakes operators claiming that their games were legal only to rightfully and unanimously rule against them each time. The filing from the Governor further reminded the court of a 2022 N.C. Supreme Court ruling against sweepstakes operators in a very similar case and accused the Superior Court of “flaunting this clear precedent” and making an “unmistakable error” by granting the injunction.
While representatives of BST and Victory Vending argued in a response to the filing that their continued operations would pose only minimal if any harm to the state, the Justice Department attorneys pointed out the problem with that line of thinking.
“If stays are not granted in these cases, then other operators may also seek and win similar preliminary injunctions from other superior courts to protect their own games,” they wrote in the filing. “If that occurs, then the enforcement of a duly enacted statute of the General Assembly will likely come to a standstill.”
Nonetheless, the Court of Appeals sided with the sweepstakes companies.
“The only hope for justice in this case is if the justices will grant the governor’s request for a writ of supersedeas, which is our prayer. Otherwise, this will become one more case of judicial overreach, nullifying the role of the Legislature and effectively legalizing video sweepstakes,” Creech said.
According to the University of North Carolina School of Government, a writ of supersedeas can be issued by an appellate court to a lower court “to preserve the status quo pending the exercise of the appellate court’s jurisdiction.” Such a move would block the Superior Court judge’s ruling from taking effect.