RALEIGH, N.C. -- Sweepstakes halls across North Carolina will be out of business at least temporarily, after the state's highest court on Friday upheld a law banning the video games run by businesses that often mimic small, electronic casinos located everywhere from big-city strip malls to country crossroads.
"The operators and the developers will have to go back to the drawing board to see how they can run a legal business under the law," said Brad Crone, a spokesman for the Internet-Based Sweepstakes Operators.
The state Supreme Court ruled in two cases in which amusement machine and other companies sought to overturn a 2010 law banning sweepstakes machines as a form of gambling. Sweepstakes halls have cropped up because of what justices called a perceived loophole since the state outlawed video poker machines in 2007.
Amusement machine companies, a software developer, and firms that market long-distance phone and Internet services argued in court there's no gambling because prizewinners are predetermined. They also argued that the video gaming enjoyed free-speech protections under a U.S. Supreme Court ruling last year just like books and films.
State attorneys countered that no one has a right to run a gambling operation and that's what state lawmakers labeled places that offer a sweepstakes where winners or losers are notified by an attention-enticing electronic display that is owned by the business.
The court ruled the state law regulates the conduct of playing the sweepstakes games, which opponents say feed the same gambling addictions as traditional video poker machines.
"While one can question whether these systems meet the traditional definition of gambling," Justice Robin Hudson wrote for the court, "it is clear that the General Assembly considered these sweepstakes systems to be the functional equivalent of gambling, thus presenting the same social evils as those it identified in traditional forms of gambling."
Sweepstakes parlor patrons buy Internet or phone time that gives them the opportunity to uncover potential cash and prizes with mouse clicks on a computer screen.
The state laws outlawing video poker and video sweepstakes games do not affect North Carolina's only casino, where the state's only federally recognized Indian tribe has offered video poker machines since the mid-1990s. The Cherokee casino recently expanded to hire card dealers for live gaming.