A video sweepstakes operator in Robeson County did not break the law by offering prizes based on chance, an attorney for the company argued before the state Supreme Court on Wednesday.
Craig Schauer, a Raleigh-based attorney, asked the state’s highest court to overturn the Court of Appeals’ 2024 ruling against No Limit Games. In a 2-1 decision, the lower court said the company’s games, in which players can buy gift certificates to receive sweepstakes entries for prizes, are based too much on chance instead of skill.
“A video sweepstakes is illegal only if it uses chance-based video games,” Schauer told the Supreme Court justices on Wednesday. “In other words, the prize available in a video sweepstakes can be determined by chance, but the game one plays to receive that prize cannot be based on chance. It must be based on skill.”
The case marks the latest dispute in North Carolina’s long-running efforts to curb gambling. State lawmakers banned video poker machines in the 2000s, but sweepstakes-style games began cropping up in parlors, internet cafes, and convenience stores. In response, the General Assembly passed a 2010 law that prohibits electronic machines with an “entertaining display” featuring games of chance.
Gaming operators argued the law restricts free speech, and the state Court of Appeals agreed in a 2-1 ruling. But the state Supreme Court overturned the decision in 2012, upholding the ban.
On Wednesday, Schauer pointed to the popular Monopoly sweepstakes offered by McDonald’s in which customers can collect properties and prizes by pulling tabs on cups and food containers. The prizes, Schauer said, are determined by chance, as are those offered by his client.
No Limit Games operates kiosks linked to its website, youbux.com, where customers can buy gift certificates and receive sweepstakes entries. The entries can reveal prizes instantly or through simulated games that require skill, Schauer said.
But Justice Richard Dietz questioned whether the McDonald’s Monopoly game, which is no longer in use, could be compared to the sweepstakes offered by No Limit Games. Monopoly players didn’t have to buy anything from the fast-food chain to participate; they could request game codes online or through the mail.
Even so, Dietz said, “The idea would be [the state] could tolerate McDonald’s Monopoly and twisting off your cap when you buy a Coke to see if you won, because they know that even if there’s some sort of psychological desire to win the grand prize, you’re not going to go out and buy cases and cases of Coke or keep buying fries so you can walk out and see if you got Boardwalk and toss the fries.”
But with sweepstakes like those offered by No Limit Games, Dietz said, “You may in fact feel like you are gambling and you don’t have any interest in the product.”
Schauer argued that the Court of Appeals’ ruling against No Limit Games makes all video sweepstakes in the state illegal, since they all have prizes determined by chance.
But Michelle Liguori, an attorney with the N.C. Department of Justice, argued that “chance can have some role in determining the prize” in sweepstakes games. “But it can’t predominate in determining the relative winnings between players.”
In an August brief to the Supreme Court, Liguori presented a hypothetical situation that she said would comply with the law. A player who wins a skill-based game could receive a prize of $1, $2, or $3, “with chance determining which of these three prizes the player receives.”
“Unlike with No Limit’s games, however, skill plays a significant role in prize determination because
skilled players always get a prize and unskilled players cannot get a prize,” she wrote. “And because of the limited role that chance plays in determining the prize, there is less incentive for repeated play, especially by unskilled players.”
Dietz said he was surprised by the state’s position, saying it could open the door for more sweepstakes companies to operate in North Carolina as long as everyone wins a prize after playing a game that requires some skill.
“Why is the state hedging and creating a bunch of new opportunities for these businesses? Is that what you want?” Dietz asked.
Liguori said the state is merely working within the law. “The goal,” she said, “was to protect people from being exposed to video games that would activate their gambling instinct and cause the same vice and dissipation as gambling.”