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North Carolina Likely to Enact Law Banning Electronic Sweepstakes

The North Carolina Senate and House ratified House Bill 80, a law that is designed to close loopholes in the state's ban on video poker machines by prohibiting "the use of electronic machines and devices for sweepstakes purposes." The governor is expected to sign the bill which would become effective December 1, 2010. Sweepstakes sponsors were concerned about an earlier version of the bill that contained language that could have banned instant win sweepstakes and other forms of sweepstakes conducted for marketing purposes, but the bill's sponsor eliminated that language.

The bill would add a new section to Article 37 of Chapter 14 of the General Statutes that would prohibit the operation of an electronic machine or device to do either of the following:

1.    Conduct a sweepstakes through the use of an entertaining display, including the entry process or the reveal of a prize.
2.    Promote a sweepstakes that is conducted through the use of an entertaining display, including the entry process or the reveal of a prize.

"Entertaining display" is defined as "visual information, capable of being seen by a sweepstakes entrant, that takes the form of actual game play, or simulated game play, such as, by way of illustration and not exclusion:

a. A video poker game or any other kind of video playing card game.
b. A video bingo game.
c. A video craps game.
d. A video keno game.
e. A video lotto game.
f. Eight liner.
g. Pot-of-gold.
h. A 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.
i. Any 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."

"Electronic machine or device" means a mechanically, electrically or electronically operated machine or device, that is owned, leased or otherwise possessed by a sweepstakes sponsor or promoter, or any of the sweepstakes sponsor's or promoter's partners, affiliates, subsidiaries or contractors, that is intended to be used by a sweepstakes entrant, that uses energy, and that is capable of displaying information on a screen or other mechanism.

This client alert is a publication of Loeb & Loeb LLP and is intended to provide information on recent legal developments. This client alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations. For more information, please contact a member of Loeb & Loeb's Advanced Media and Technology Group.

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