Specifically, the Court applied the "strict scrutiny" standard to take issue with the breadth of a notable restriction on "[a]ny 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."In doing so, however, the Court also held that the State maintains the right to restrict those games covered by the subsections codified at N.C.G.S. 14-306.4(a)-(h), restrictions which pass constitutional muster: video poker, video bingo, video craps, video keno, eight-liner, pot-of-gold, and any "video game based on or involving the random or chance matching of different pictures, words, numbers, or symbols not dependent on the skill or dexterity of the player."This ruling is a significant development for this industry, which secured a preliminary injunction in October against the collection of municipal privilege license taxes for the operation of these computer systems.

We've blogged before about internet sweepstakes at some length here.According to the news outlet The News and Observer, published among the oaks of Raleigh, the State will seek an expedited appeal of Judge Craig's ruling as to the unconstitutionality of N.C.G.S. 14-306.4(i).In addition, State Attorney General Roy Cooper has issued a written advisory to law enforcement officials regarding N.C.G.S. 14-306.4 in the wake of the recent court rulings.We'll keep an eye on the resulting fallout and pending appeal. Mike Thelen is a lawyer in Womble Carlyle's Real Estate Litigation practice group.

On December 14, 2012, the North Carolina Supreme Court issued an opinion upholding a North Carolina law outlawing video sweepstakes games, thus reversing prior rulings from the North Carolina Court of Appeals and Superior Court that had held the law violated the First Amendment. The statute at issue, Chapter 103 of the 2010 Session Laws codified at N.C.G.S. 14-306.4, makes it unlawful to "operate, or place into operation, an electronic machine or device" to "conduct a sweepstakes through the use of an entertaining display." An "entertaining display" was defined as "visual information, capable of being seen by a sweepstakes entrant, that takes the form of actual game play, or simulated game play."

We've been following the unfolding saga of internet sweepstakes in North Carolina. You can view previous posts here and here for a proper background.Where are we now? Well, the State is seeking an expedited appeal of a Superior Court ruling that the vagueness of N.C.G.S. Section 14-306.4(i) renders that provision unconstitutional. In the meantime, until the Court can hear and decide the State's appeal, the State will seek a stay of the Order.