The writing may be on the wall for internet sweepstakes businesses. On Friday, the state supreme court unanimously upheld the constitutionality of G.S. 14-306.4, the statute enacted to target such operations. The principal decision is Hest Technologies, Inc. v. State, __ N.C. __ (2012), written by Justice Hudson. Background. The legislature has been concerned for several years with video gaming, or with businesses that offer an experience similar to video gaming. The current business model involves selling telephone or internet time to customers. Each customer receives an entry into a sweepstakes. The business owners generally analogize this to receiving a scratch-off game ticket with the purchase of a Big Mac, and, as with McDonald’s promotions, there is generally a way to obtain some free entries. The customer normally goes to a video terminal, where he or she learns whether his or her sweepstakes entry is a winner. Typically, the video terminal simulates some form of gaming or gambling in the process of revealing the result, but the outcome is predetermined. That is, the entry either is a winner or it isn’t, and the display merely reveals, rather than decides, that result. If the sweepstakes entry is a winner, the customer can claim a cash prize on site. Some customers spend hours purchasing many increments of internet or telephone time in order to receive numerous sweepstakes entries. The General Assembly viewed this as involving the same social ills as gambling, and in 2010, it enacted G.S. 14-306.4, “[e]lectronic machines and devices for [...]
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