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The North Carolina Court of Appeals has ruled against a video sweepstakes operator who challenged local and state law enforcement bans against its machines found in businesses throughout the state.
The 32-page decision released late Tuesday (December 31) reversed a Robeson County Superior Court preliminary injunction last year in favor of No Limit Games LLC.
The company had deals in place with small businesses throughout Robeson County and elsewhere in the state to place its games, known as sweepstakes kiosks, inside retail locations.
No Limits Games filed a lawsuit in May 2023 against state law enforcement officials, along with Robeson County, its sheriff, and the town of Pembroke. The company sought an injunction blocking the removal of the machines or the prosecution of any business owner possessing its sweepstakes kiosks.
Attorneys representing No Limits Games had argued its “video sweepstakes is not a prohibited gambling, lottery, or gaming product”. The injunction was granted in June 2023 but then appealed to the Court of Appeals, which issued a stay blocking the lower court’s decision pending appeal.
Tuesday’s decision deems the games illegal under state law. The issues for the three-judge panel to determine were whether No Limit Games had standing to seek the injunction and whether the trial court erred in granting the preliminary injunction on the basis that video sweepstakes games were “predominantly a game of skill rather than chance”.
To play a No Limit Games sweepstakes kiosk, players purchase “YouBux” gift certificates, and if a spin loses the kiosks allow the player to play a memory game that can keep their wager alive.
The company had argued that its game was not prohibited under state law because the prize to the player is determined prior to any gameplay, and therefore playing the game does not determine whether a player has a winning or losing entry.
Judge Toby Hampson, who wrote for the majority along with Judge April Wood, compared the No Limit Games case to previous sweepstake cases heard in state courts.
“In this case, the game appears to be identical in many respects to those held by our Supreme Court in Gift Surplus and other cases to be illegal under [state law]: a player enters the game, their prize is determined by chance, and they must perform a dexterity task to receive the prize,” Hampson wrote.
“Although dexterity and skill may be involved in a portion of the game, ‘when chance determines the relative winnings for which a player is able to play, chance can override or thwart the exercise of skill’.”
Hampson added that he and Wood disagreed with the company’s argument that certain specific attributes of its game distinguish it from those previously held illegal under state law.
“None of 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,” Hampson wrote. “Thus, chance predominates skill or dexterity in determining the outcome of Plaintiff’s game.”
Judge Jefferson Griffin dissented, arguing he would have upheld the trial judge’s decision to grant a preliminary injunction favoring No Limit Games.
“The company agrees with Judge Griffin’s dissent and will be appealing the Court of Appeals decision,” Amiel Rossabi, an attorney with Rossabi Law Partners in Greensboro, North Carolina, said in an email Thursday (January 2). The next step would be to appeal the decision to the North Carolina Supreme Court, although it would be up to the state’s highest court whether to hear the appeal.
In his dissent, Griffin acknowledged the state legislature intended to cast a wide net in regulating sweepstakes.
“Where, as here, a plaintiff is able to design a system which ultimately elevates skill over the chance inherent in sweepstakes,” Griffin wrote. “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.”
Currently, commercial casinos and online gambling are prohibited in North Carolina, while poker is only permitted at tribal casinos and gambling machines as defined in Sections 14-306.1A and 14-306.4 of the state’s General Statutes are prohibited.
The legal and legislative wrangling over the legality of skill games has also pitched terminal manufacturers against commercial gaming interests and state law enforcement agencies in Virginia and Pennsylvania.
Both sides of the debate in Pennsylvania are waiting for the state's Supreme Court to decide whether 40,000 to 80,000 machines found in convenience stores and bars are illegal and must be shut down. Pennsylvania Attorney General Michelle Henry appealed a lower-court decision that found the games are based on a player’s ability, not solely chance.
With the Virginia General Assembly set to convene on Wednesday (January 8), lawmakers will take up Senate Bill 694, introduced last session by Republican Senator William Stanley Jr.
According to the Virginia Public Access Project (VPAP), donations from gaming companies and their executives have easily topped $4m so far in the 2024-2025 list of donors. GC Shared Services LLC, which provides administrative, corporate, managerial, and operational support to commercial casinos, tops the list with $1.24m donated to candidates and political actions committees.
Pace-O-Matic (POM), a manufacturer of the Queen of Virginia skill-game machines, has contributions totaling $473,729, with $336,500 designated to its own PAC. Since 2022, the POM Committee has received $1.302m in contributions to fund its efforts to legalize skill-game machines in Virginia.
