Abstract
This commentary analyzes the recent ‘skill-chance’ case from North Carolina, USA.
INTRODUCTION
The legality of the sweepstakes gaming model recently got a New Year’s Eve jolt.
On December 31, 2024, the North Carolina Court of Appeals—by a fractured 2-1 vote—ruled that a sweepstakes was illegal because “chance predominates skill” (p. 24). 1 The 32-page ruling in No Limit Games v. Sheriff of Robeson County, et al. is the latest in a series of court decisions and law enforcement actions focused on various iterations of the sweepstakes model. 2 More specifically, the decision provides a textured analysis of the “skill versus chance” issue that remains dispositive in states that have adopted the predominance test to distinguish between illegal gambling and permissible gaming activities. 3
The skill-chance divide has a long history in the United States, with No Limit Games v. Sheriff of Robeson County, et al. being merely the most recent entry. Almost 90 years ago, the Virginia Law Review published what may have been one of the first academic articles pinpointing the role of skill when gauging the legality of a gaming-related activity. 4 Indeed, “[i]n numerous cases contests have been defended as being dependent on skill and not on chance.” 5 Classic court cases have hung on the skill versus chance determination too. In 1961, the Supreme Court of Nevada concluded that “[t]he test of the character of a game is not whether it contains an element of chance or an element of skill, but which is the dominating element.” 6
MAJORITY OPINION
Judge Toby Hampson penned the majority decision for the appellate court No Limit Games v. Sheriff of Robeson County, et al. and opened with a detailed summary of the case background. At its crux, the judges were tasked with evaluating a preliminary injunction issued by the trial court that prevented the Robeson County Sheriff and other state officials from “forcing or compelling removal of [No Limit Games’s] video sweepstakes kiosks from businesses or facilities and from prosecuting persons in possession of [such] video sweepstakes kiosks” (p. 2).
Judge April Wood joined Judge Hampson to form the 2-1 majority for the North Carolina Court of Appeals. The ruling flagged the lower court’s observation that:
[a]lthough the actual prize is determined by chance as is required for a sweepstakes, the actual prize is embedded in the sweepstakes entry itself, i.e., prior to any game play. As a result, the “vagaries of chance” are neither created nor determined by the game. The participant would be eligible for the same prize regardless [of] whether they redeemed it without game play…or with game play…(pp. 3-4).
Judge Hampson then noted the North Carolina Supreme Court’s adoption of the ‘predominance test’: “the essential difference between a game of skill and a game of chance for purposes of our gambling statutes…is whether skill or chance determines the final outcome and whether chance can override or thwart the exercise of skill” (p. 8). The sweepstakes offered by No Limit Games was originally designed to try to fit within the ‘skill’ safe harbor. Namely, if the sweepstakes entries were non-winners, customers were given the option of playing a 14-round memory matching game called ‘Follow-Me’ to try to redeem a prize (p. 16).
The court likened the memory matching game to an “impossible task” and found that it was “effectively the same as having no dexterity element, because no amount of skill will make a difference in the outcome of the game” (p. 20). As a result, Judge Hampson wrote that No Limit Games “has therefore not provided evidence that skill or dexterity, via the Follow-Me feature, predominate over chance in determining the results of the game” (p. 21). In sum, the offering was “exactly the type of electronic sweepstakes the legislature intended to prohibit” in the underlying statute (p. 23).
DISSENTING OPINION
Judge Jefferson Griffin dissented from the other two judges and voted to uphold the original preliminary injunction favoring No Limit Games. Judge Griffin agreed with the trial court’s conclusion that “skill predominates over chance” (p. 1). More pointedly, Judge Griffin looked to the statutory text for a definition: “‘Sweepstakes’ means any game…which, with or without payment of any consideration, a person may enter to win or become eligible to receive any prize, the determination of which is based upon chance” (p. 5).
The distinguishing feature of the No Limit Games offering at issue in the case—according to Judge Griffin—was that players “will be able to win a prize every time they play by exhausting the losing entries and limiting the pool to only prizes which they can earn through the exercise of skill” (p. 5). As a result, Judge Griffin found that No Limit Games was “able to design a system which ultimately elevates skill over the chance inherent in a sweepstakes” (p. 7).
CONCLUSION
With a majority of states having a skill-chance ‘predominance test’ similar to North Carolina, 7 No Limit Games v. Sheriff of Robeson County, et al. has influence on the future of sweepstakes models. The case is reflective of how measuring relative levels of skill and chance in gaming intersects math, legal analysis, and politics. 8 The resulting “conundrum” will invariably lead to protracted litigation and reactive lawmaking. 9 The issue is so thorny that three appellate judges in North Carolina can’t even agree about the skill-chance issue.
As a result, the Supreme Court of North Carolina will likely be the next judicial entity to render a ruling on the matter. Because No Limit Games v. Sheriff of Robeson County, et al. was a 2-1 split decision, the case automatically moves up the ladder to the high court in the state. Briefing and oral argument will take place in the latter half of 2025, and a decision in the case will probably be rendered in early 2026. Sweepstakes operators—along with local sheriffs and state regulators—will be awaiting the final ruling.