NC ruling on sweepstakes will effect courts nationwide
BY CRAIG JARVIS - CJARVIS@NEWSOBSERVER.COM
Tags: video | sweepstakes | ban | gambling | legislature | Court of Appeals | ruling
The state Court of Appeals on Tuesday struck down North Carolina's ban on video sweepstakes games, but did not end the uncertainty that has dogged the legislature's years-long attempt to outlaw gambling.
A divided three-judge panel ruled that the law the General Assembly enacted in 2010 was so broad that it unconstitutionally interfered with the right to free speech, and that it unintentionally went so far as to ban video games unrelated to gambling. The split decision means the debate now moves to the state Supreme Court, as the attorney general will appeal the ruling.
Meanwhile, the video sweepstakes games can continue to operate around the state.
The ruling hinged on the law's prohibition against displaying game play or sweepstakes entries and prizes on the machines' video screens. The judges said that constituted a form of communication.
"The General Assembly cannot, under the guise of regulating sweepstakes, categorically forbid sweepstakes operators from conveying the results of otherwise legal sweepstakes in a constitutionally protected manner," Judge Ann Marie Calabria wrote in her decision with Judge Linda M. McGee.
Judge Robert C. Hunter dissented, writing that the video sweepstakes law regulates conduct, not speech, and so operators are free to offer games as long as they don't offer sweepstakes payoffs. Hunter also disagreed that the law was too broad.
Hunter said the legislature's intention to protect people from "vice and dissipation" brought on by luring players into repeat games - even when it's supposedly just a marketing tool and not gambling - is a legitimate government interest.
Chase Brooks, president of the Internet Based Sweepstakes Organization, issued a statement saying the industry was "extremely pleased" with the majority ruling . He said his organization hopes to develop mutually agreeable regulations with the governor and legislative leaders.
"We believe that having state oversight will provide a regulated market with enforcement measures to protect consumers and operators," Brooks said.
State Senate President Pro Tem Phil Berger said it is unlikely lawmakers will take the matter up during the coming short session because the Supreme Court will not have had a chance to resolve it by then.
Noelle Talley, a spokeswoman for Attorney General Roy Cooper, confirmed that the ruling would be appealed. "We believe the dissent got it right and plan to appeal this bad decision," she said.
The unstable legal ground has been frustrating for law enforcement. Eddie Caldwell, executive vice president and general counsel of the N.C. Sheriffs' Association, said his organization was disappointed but hopeful the Supreme Court will support Hunter's dissenting opinion.
"We need to rid North Carolina of this continuing problem that the citizens continue to ask sheriffs to deal with," Caldwell said, "which they will be glad to once the courts clarify their authority."
Legislators have been trying for more than 10 years to bring a halt to the video gambling industry, which has outmaneuvered the state several times. When the General Assembly passed the 2010 bill specifically targeting sweepstakes, the industry went to court in Wake and Guilford counties to challenge the constitutionality of the new law. They met with mixed results: Wake County Superior Court Judge Paul C. Ridgeway ruled in favor of the state. Guilford County Superior Court Judge John O. Craig III also ruled for the state except for a key provision, which he decided was unconstitutionally broad.
That provision defined what legislators meant when they prohibited machines from using "entertaining displays" as part of a sweepstakes game. They included in the statute examples such as video poker, video bingo, or "any other video game not dependent on skill or dexterity that is played while revealing a prize as the result of an entry into a sweepstakes."
That's where the appellate court focused Tuesday when it ruled that subsection of the law didn't limit the definition of a prohibited display and so amounted to "a categorical ban." The judges said Craig's decision invalidating that single provision didn't go far enough, and that the entire statute had to be declared invalid.
After reversing Craig's ruling in that case, the appellate panel then reversed Ridgeway's ruling in the Wake County case on the ground that the statute had been declared void. Hunter also dissented in that case.
Staff writer Lynn Bonner contributed.
Read more here: http://www.newsobserver.com/2012/03/...#storylink=cpy
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