Cooper asks NC Appeals Court to block Forsyth judge’s sweepstakes order | Eastern North Carolina Now

    Publisher's Note: This post appears here courtesy of the Carolina Journal. The author of this post is CJ Staff.

    Gov. Roy Cooper and top state law enforcement officials are urging the N.C. Court of Appeals to block a Forsyth County judge's June ruling favoring a video sweepstakes operation.

    Cooper, along with leaders of the Department of Public Safety and Alcohol Law Enforcement Division, filed paperwork Thursday with the state's second-highest court. They seek both a temporary stay and a "writ of superseadas." The writ would block the Forsyth ruling from taking effect.

    Superior Court Judge Todd Burke issued an injunction on June 16 in favor of plaintiffs BST USA and Victory Vending Company. BST manufactures and operates internet kiosks. Victory Vending operates BST kiosks in Forsyth County. The plaintiffs use a video sweepstakes promotion for sale of internet time through the kiosks.

    "Plaintiffs are reasonably likely to prevail on their claims that their promotional video sweepstakes is lawful under N.C.G.S. § 14-306.4," Burke wrote. "When viewing the sweepstakes in its entirety, it is likely that skill predominates over chance in determining both whether the player wins or loses and the relative amount of the player's winnings or losses."

    Section 14-306.4 sets out North Carolina's law against "electronic machines and devices for sweepstakes." Cooper and the DPS and ALE officials disagree with Burke's decision.

    "Since 2010, North Carolina has expressly banned the operation of video sweepstakes machines," wrote lawyers from N.C. Attorney General Josh Stein's state Justice Department. "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."

    "Despite this legislative action, sweepstakes operators have repeatedly tried to evade this ban and have regularly sought to enjoin law enforcement officials from enforcing the ban for more than a decade," according to the document from lawyers representing Cooper. "As a result, over the course of many cases, our Supreme Court has repeatedly heard arguments from sweepstakes operators that have claimed that their games were legal under the statute. In each instance, however, that Court has unanimously ruled against them."

    "Indeed, just last year, the Supreme Court unanimously rejected the arguments of a sweepstakes operator that its games were legal under the sweepstakes statute," the brief continued. "In doing so, moreover, the Court held that sweepstakes games are illegal under the statute whenever the vagaries of chance can control 'the relative winnings for which a player is able to play' on each turn of a sweepstakes game."

    "Flaunting this clear precedent, the superior court in this case issued a preliminary injunction preventing Defendants from enforcing the law against yet another sweepstakes operator," Justice Department lawyers wrote. "The court did so even though the report that Plaintiffs BST USA, LLC and Victory Vending Company offered ... to show how their sweepstakes games work demonstrated that chance can control 'the relative winnings for which a player is able to play' on each turn of their games. The superior court's decision to grant an injunction in these circumstances was unmistakable error."

    Cooper's lawyers justified their argument by pointing to the history of sweepstakes disputes. "In at least one earlier sweepstakes case, ... trial-court injunctions allowed an illegal sweepstakes to operate freely for more than seven years, even though our Supreme Court ultimately held that the games at issue there were unlawful," according to the document. "Without supersedeas relief, the Plaintiffs here could potentially enjoy immunity from enforcement for a similarly extended period, even though their games are also illegal."

    "So too, moreover, could other sweepstakes operators. Not long after the injunction was issued in this case, another superior court enjoined the enforcement of the sweepstakes statute against another operator offering similar games," Justice Department lawyers warned. "[I]f 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."

    "If that occurs, then the enforcement of a duly enacted statute of the General Assembly will likely come to a standstill," according to the document. "And it will do so even though our Supreme Court has unanimously and repeatedly reversed all trial courts that have enjoined enforcement of that same statute."

    A unanimous N.C. Supreme Court last ruled against video sweepstakes operators in the February 2022 case Gift Surplus v. State of North Carolina.