RALEIGH, N.C. (AP) — North Carolina's highest court began grappling Wednesday with whether the state can label video sweepstakes parlors as gambling halls and outlaw the businesses multiplying statewide, or whether the video screens give the owners constitutional free-speech rights.
The state Supreme Court heard arguments in two cases in which amusement machine and other companies want to overturn a 2010 law banning video sweepstakes machines as a form of gambling. Sweepstakes halls have cropped up since the state in 2007 outlawed video poker machines.
Neither state law affects North Carolina's only casino, where the state's only federally recognized Indian tribe has offered video poker machines since the mid-1990s. The Cherokee casino recently expanded to hire card dealers for live gaming.
Lower courts have sided with the sweepstakes companies, citing a U.S. Supreme Court ruling last year that the content of video games can't be regulated any more than books or films under the Constitution's free-speech guarantee.
Sweepstakes parlor patrons buy Internet or phone time that gives them the opportunity to uncover potential cash and prizes with mouse clicks on a computer screen. Boosters contend there's no gambling because prizewinners are predetermined. Opponents say the enterprises feed the same gambling addictions as traditional video poker machines.
Company attorneys said just because lawmakers labeled video sweepstakes games an attempt to get around the public interest in limiting gambling, it doesn't mean that operators are sponsoring gambling. The sweepstakes are a tool to attract customers inside to buy Internet time on the provided computers, or to buy long-distance phone minutes, attorneys said.
"The reason our customers play these games is for their entertainment value," said Adam Charnes, an attorney for companies that build video sweepstakes machines or software. "That doesn't make it any less protected speech."
But all sweepstakes entice customers, or McDonald's wouldn't offer Monopoly board pieces to draw repeat customers away from other fast-food restaurants, said Kelly Daughtry, an attorney for Sandhill Amusements and other companies that sell long-distance telephone time.
Customers can find out from a clerk whether they've won a sweepstakes, but using a video screen to share that information is no different than communicating in pictures, French or Braille because it's all protected speech, Daughtry said. Her father and law practice partner, Leo Daughtry, is a Republican state legislator representing Johnston County who three times was excused from voting on the 2010 video sweepstakes ban.
State attorneys counter that no one has a right to run a gambling operation and that's what state lawmakers labeled operations that offer a sweepstakes where winners or losers are notified by an attention-enticing electronic display that is owned by the business. Speech isn't the issue, state Solicitor General John Maddrey said, it's the conduct of operating a business where those elements come together.
"McDonalds can still tell you the results of their sweepstakes using a video game, but not using an electronic machine or device that's onsite and owned by the operator. That's the important distinction," Maddrey said, using terms from the state law. "The difference is that you're not going to stay at that McDonald's location and buy Big Mac after Big Mac after Big Mac after Big Mac to keep playing that sweepstakes."
But even if the justices decide that free speech is the core of the issue, courts long ago decided that fundamental right doesn't extend to saying anything, anywhere, at any time, Maddrey said.
So a sweepstakes company representative wouldn't have a protected right to come to the Supreme Court's chambers while lawyers were arguing Wednesday's case to shout out that someone in the crowd was a sweepstakes or bingo winner, Maddrey said. Nor is there an unrestricted right to play a video game, he said, noting that an airline passenger can't insist on playing during the aircraft's takeoff or landing.
"The manner or mode of speech is subject to appropriate regulation," Maddrey said.
Emery Dalesio can be reached at http://twitter.com/emerydalesio