Internet Sweepstakes Back in North Carolina court
ASHEBORO — A court order in Davidson County earlier this week once again casts
uncertainty over the legal standing of Internet sweepstakes cafes — or at least some of
More than two years ago, North Carolina legislators outlawed “electronics machines and
devices for sweepstakes” and last month the state supreme court upheld the ban.
But on Monday, Superior Court Judge Robert Johnson of Alamance County signed a
temporary restraining order (TRO) that “enjoins the State of North Carolina” from
enforcing that ban against one sweepstakes software vendor, International Internet
Technologies (IIT), and its licensees.
On Thursday, Lucas Horner, an assistant district attorney in Randolph County, said the
order does not extend to Randolph.
“We do not consider this binding on us, even for IIT (operations),” he said.
Last week, attorneys for Frontier, another sweepstakes software licensor, showed local
law enforcement officers and representatives of the district attorney’s office how the
company had changed its software to comply with the new law.
Before that presentation last week, Randolph County Sheriff Maynard Reid said that his
deputies had already visited area sweepstakes businesses and told them they had until
Feb. 1 to cease operations. After that date, Reid said, his deputies would begin to
“enforce the law as it is written.”
Asheboro Police Chief Rickey Wilson said his officers would give Internet sweepstakes
businesses “fair notice” and then charge those that did not conform.
There are 150 IIT-affiliated operations in North Carolina, including three in Randolph and
six in Davidson County, according to Neil Hoover, who owns two of those in Randolph,
H&L Business Centre on Dixie Drive in Asheboro and the Archdale Business Centre.
The Franklinville Business Center on U.S. 64 just west of Ramseur is an IIT licensee
under different ownership.
Johnson’s order came after a Davidson County deputy charged an employee of an IIT affiliated
business on Jan. 15 with violating the prohibition on sweepstakes operations.
According to the judge’s order, the District 22B district attorney dismissed the charge
after deciding that the facts were insufficient for prosecution. The district attorney also
testified before Judge Johnson that lawyers for IIT had demonstrated the company’s
new software that was revised to comply with the new statute, and that, in his opinion,
the new system did not appear to be in violation.
The TRO states that under the new system, “no actual games or simulated games are
played while sweepstakes are entered or the results of the sweepstakes are revealed.”
If there is a prize associated with a sweepstakes entry, it is revealed by pressing a
reveal button and the prize is displyed on a screen “in the form of a number.”
The district attorney also told the judge he had not decided how to proceed on charges
brought in other cases based on other companies’ sweepstakes systems.
Judge Johnson noted that he was issuing a temporary restraining order based on a
demonstration of the IIT system, the testimony of the district attorney, other court rulings
and his reading of the statute banning electronic machines.
“(T)here is some likelihood of Plaintiffs’ success on the merits at the ultimate trial of this
matter,” Johnson wrote.
He ordered that a hearing for a preliminary injunction on the matter be held by Feb. 4. A
preliminary injunction is a court order that prevents a party from doing something to
preserve the status quo until a trial.
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