              IN THE COURT OF APPEALS OF NORTH CAROLINA

                                  No. COA18-1140

                               Filed: 15 October 2019

Onslow County, No. 13 CVS 3705

GIFT SURPLUS, LLC, and SANDHILL AMUSEMENTS, INC., Plaintiffs,

             v.

STATE OF NORTH CAROLINA, ex rel. ROY COOPER, GOVERNOR, in his official
capacity; BRANCH HEAD OF THE ALCOHOL LAW ENFORCEMENT BRANCH
OF THE STATE BUREAU OF INVESTIGATION, MARK J. SENTER, in his official
capacity; SECRETARY OF THE NORTH CAROLINA DEPARTMENT OF PUBLIC
SAFETY, ERIK A. HOOKS, in his official capacity; and DIRECTOR OF THE NORTH
CAROLINA STATE BUREAU OF INVESTIGATION, BOB SCHURMEIER, in his
official capacity, Defendants.


      Appeal by Defendants from judgment entered 2 February 2018 by Judge Ebern

T. Watson III in Onslow County Superior Court. Heard in the Court of Appeals 23

May 2019.


      Fox Rothschild LLP, by Elizabeth Brooks Scherer, Kip David Nelson, and Troy
      D. Shelton; George B. Hyler, Jr.; and Grace, Tisdale, & Clifton, P.A., by Michael
      A. Grace, for plaintiffs-appellees.

      Attorney General Joshua H. Stein, by Solicitor General Matthew W. Sawchak,
      Deputy Solicitor General James W. Doggett, and Assistant Solicitor General
      Kenzie M. Rakes, for defendants-appellants.


      MURPHY, Judge.


      Plaintiffs-Appellees Gift Surplus, LLC and Sandhill Amusements, Inc. (“Gift

Surplus”) sued the State, ex rel. Governor Roy Cooper, et al. (“the State”) seeking a

permanent injunction that would bar state law enforcement from enforcing State

gambling and sweepstakes laws against the operators of Gift Surplus’s sweepstakes
                      GIFT SURPLUS, LLC, ET AL. V. STATE, ET AL.

                                  Opinion of the Court



kiosks. In a bench trial, the Superior Court concluded Gift Surplus’s kiosks do not

violate the State’s prohibition of sweepstakes run through the use of an “electronic

display” and permanently enjoined the State from enforcing these laws against Gift

Surplus. Because we conclude Gift Surplus’s kiosks operate sweepstakes through an

entertaining display in violation of N.C.G.S. § 14-306.4, we reverse and vacate the

trial court’s injunction.

                                  BACKGROUND

       Gift Surplus has been embroiled in this legal battle with the State over its

sweepstakes since 2013, when it sued the Sherriff of Onslow County seeking a

declaration that its sweepstakes did not violate the State’s gambling laws or its ban

on video sweepstakes. After the Onslow County Sherriff’s Department seized kiosks

loaded with Gift Surplus’s sweepstakes games, Plaintiffs received a preliminary

injunction barring law enforcement from enforcing state laws that the State

contended prohibit the implementation and operation of the sweepstakes. However,

that preliminary injunction was overturned by our Supreme Court, which held Gift

Surplus’s sweepstakes violated N.C.G.S. § 14-306.4. Sandhill Amusements, Inc. v.

Miller, 368 N.C. 91, 773 S.E.2d 55 (2015) (adopting then-Judge Ervin’s dissent in

Sandhill Amusements, Inc. v. Sheriff of Onslow Cnty., 236 N.C. App. 340, 762 S.E.2d

666 (2014)).




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                                  Opinion of the Court



      After the case had been sent back to the trial court, Gift Surplus made

adjustments to its sweepstakes games, amended its Complaint, and again placed its

games into operation around the State. One such adjustment is a “double nudge”

feature that allows players to nudge the game reels as many as two times in order to

move them into alignment and win a prize. Other additions included a “winner every

time” feature that made 100% of spins winnable, albeit only for a prize of several

cents on 75% of spins, and a “final ticket” feature that allowed prizes lost through

incorrect nudging to be won back in later turns. Finally, Gift Surplus removed a

“governor” feature that had prevented players from winning large prizes in quick

succession.

      At the second trial in this matter, in 2017, Gift Surplus sought and received a

declaration that its sweepstakes do not violate the State’s ban on video sweepstakes,

codified in N.C.G.S. § 14-306.4. In its unchallenged Findings of Fact, the trial court

found that Gift Surplus’s kiosks run “video games[.]” These video games are used as

a “promotional sweepstakes system” to reveal a potential prize to the playing

customer. Based on its Findings of Fact, the trial court concluded: “[p]romotional

sweepstakes are legal and lawful in North Carolina” so long as they comport with the

applicable state and federal laws; “Plaintiff Gift Surplus’[s] proprietary sweepstakes

system comports with all of the regulatory scheme of N.C.G.S. § 14-306.4[;]” and that

Gift Surplus is “entitled to permanent injunctive relief, as requested in their . . .



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                                  Opinion of the Court



Complaint.” Having reached those conclusions, the trial court entered a permanent

injunction barring the State and its agents from enforcing the criminal law

prohibiting electronic sweepstakes against Gift Surplus. The State filed timely notice

of appeal.

                                     ANALYSIS

      Both arguments on appeal challenge the legal conclusions drawn from the trial

court’s factual findings and the trial court’s order, judgment, and decree of a

permanent injunction. The State’s ultimate contention on appeal is that the trial

court erred in permanently enjoining State law enforcement from enforcing the

State’s ban on certain electronic sweepstakes against “persons who operate or place

into operation any equipment associated with . . . Gift Surplus’[s] sweepstakes

system[.]”   The State argues the trial court erred in granting Gift Surplus a

permanent injunction because Gift Surplus’s sweepstakes violate (1) the State’s ban

on video sweepstakes and, in the alternative, (2) the State’s separate ban on gambling

operations. We agree that Gift Surplus’s sweepstakes do not comply with the State’s

prohibition of certain video sweepstakes and, as a result, need not reach the second

argument on appeal.

      The State argues “Gift Surplus’s sweepstakes violate section 14-306.4 of the

General Statutes.” In contrast, the trial court concluded “Gift Surplus’[s] proprietary

sweepstakes system comports with all of the regulatory scheme of N.C.G.S. § 14-



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                                   Opinion of the Court



306.4.” “Conclusions of law are reviewed de novo and are subject to full review.” State

v. Biber, 365 N.C. 162, 168, 712 S.E.2d 874, 878 (2011). After careful review, we hold

Gift Surplus’s sweepstakes system does not comport with N.C.G.S. § 14-306.4.

      In relevant part, N.C.G.S. § 14-306.4 states, “[I]t shall be unlawful for any

person to operate, or place into operation, an electronic machine or device to . . .

[c]onduct a sweepstakes through the use of an entertaining display, including the

entry process or the reveal of a prize.” N.C.G.S. § 14-306.4(b), (b)(1) (2017). A

sweepstakes is “any game, advertising scheme or plan, or other promotion, 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.” Id. at

(a)(5). An entertaining display is “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: [video poker, video bingo, video

lotto games, video games of chance, etc.]” Id. at (a)(3) (emphasis added). There is no

dispute that Gift Surplus’s game is a sweepstakes. At issue is whether Gift Surplus’s

sweepstakes are conducted through “an entertaining display” in violation of N.C.G.S.

§ 14-306.4.

      Both in their briefs and in oral argument the parties to this appeal focused on

the issue of whether chance or skill predominates in the current iteration of Gift

Surplus’s sweepstakes. This is likely because our sweepstakes statute explicitly use



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                                         Opinion of the Court



games of chance as an illustration of an improper electronic display and also because

the distinction between games of chance and games of skill has received considerable

attention from our appellate courts. See, e.g., N.C.G.S. § 14-306.4(a)(3); Sandhill

Amusements, Inc. v. Miller, 368 N.C. 91, 773 S.E.2d 55 (2015); State v. Gupton, 30

N.C. 271 (1848); Crazie Overstock Promotions, LLC, v. State, 830 S.E.2d 871 (N.C. Ct.

App. 2019). However, we need not decide whether these sweepstakes are chance or

skill-based in order to hold that they violate N.C.G.S. § 14-306.4.

        The sweepstakes statute explicitly proscribes sweepstakes conducted through

electronic display, which is “visual information, capable of being seen by a

sweepstakes entrant, that takes the form of actual game play, or simulated game

play[.]” N.C.G.S. § 14-306.4(a)(3). From there, the statute goes on to set out “by way

of illustration and not exclusion” a non-exhaustive list of specific games that fit the

definition of “electronic display.”1          Gift Surplus mischaracterizes this statutory

scheme in arguing a sweepstakes game “falls within the ‘entertaining display’

prohibition only when the ‘video game is not dependent on skill or dexterity while

revealing a prize as the result of an entry into a sweepstakes.’” Regardless of whether

it is dependent on skill or dexterity, a sweepstakes falls within the entertaining




        1 The list of illustrative examples includes a number of games, such as: video bingo, poker,
craps, keno, “video game[s] 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[,]” and “other video
game[s] not dependent on skill or dexterity that [are] played while revealing a prize as the result of an
entry into a sweepstakes.” N.C.G.S. § 14-306.4(a)(3).

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                                   Opinion of the Court



display prohibition simply if it is “visual information, capable of being seen by a

sweepstakes entrant, that takes the form of actual game play, or simulated game

play[.]” N.C.G.S. § 14-306.4(a)(3).

      The sweepstakes in question are run through standalone kiosks that display a

video game resembling a reel-spinning slot machine. These kiosks undisputedly

display visual information capable of being seen by a sweepstakes entrant. At trial,

one of Gift Surplus’s expert witnesses went as far as to testify that an individual with

“a visual disability” would not be able to win the video game. This is because doing

so requires the participant to be able to see the visual information displayed by the

kiosks. Furthermore, this visual information takes the form of game play—the

entrant’s spinning and nudging of virtual reels. Gift Surplus’s sweepstakes are run

through the use of an “entertaining display.” As such, regardless of whether skill or

chance predominates over the games at issue, Gift Surplus’s kiosks violate N.C.G.S.

§ 14-306.4 and the trial court’s conclusion to the contrary must be reversed.

      Having reversed the trial court’s conclusion that Gift Surplus’s sweepstakes do

not violate N.C.G.S. § 14-306.4, we vacate the permanent injunction against the State

and its “officers, agents, servants, and employees, and any person in active concert or

participation with any of the Defendants or any of their officers, agents, servants, and

employees[.]”   As a result, we need not reach the State’s argument that the

sweepstakes are also illegal independent of the video sweepstakes statute because



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                                 Opinion of the Court



they violate the separate ban on gambling operations codified in N.C.G.S. § 14-292.

The trial court did not make specific findings or conclusions regarding the gambling

operations statute; the permanent injunction was entirely based upon the

sweepstakes’ compliance with N.C.G.S. § 14-306.4.

                                 CONCLUSION

      The trial court erred in concluding Gift Surplus’s sweepstakes do not violate

N.C.G.S. § 14-306.4 because the sweepstakes in question are run through the use of

an entertaining display. We reverse the trial court’s order and vacate its permanent

injunction.

      REVERSED AND VACATED.

      Judge COLLINS concurs with a separate opinion.

      Judge BRYANT concurs in the result with a separate opinion.




                                        -8-
 No. COA18-1140 – Gift Surplus, LLC, et al. v. State, et al.


      COLLINS, Judge, concurring.


      I concur in the majority opinion and agree that, according to the plain language

of N.C. Gen. Stat. § 14-306.4, a sweepstakes is conducted through the use of an

entertaining display in violation of N.C. Gen. Stat. § 14-306.4(b)(1) simply by using

“visual information, capable of being seen by a sweepstakes entrant, that takes the

form of actual game play, or simulated game play[,]” N.C. Gen. Stat. § 14-306.4(a)(3),

regardless of whether it is dependent upon skill or dexterity. However, Judge Ervin,

in his dissenting opinion in Sandhill Amusements, Inc. v. Sheriff of Onslow Cty., 236

N.C. App. 340, 762 S.E.2d 666 (2014), rev’d sub nom. Sandhill Amusements, Inc. v.

Miller, 368 N.C. 91, 773 S.E.2d 55 (2015) (reversing the Court of Appeals majority

opinion for the reasons stated in the dissenting opinion), analyzed a prior version of

Plaintiffs’ games at issue in this case under N.C. Gen. Stat. § 14-306.4(a)(3)(i). Judge

Ervin explained,

             given that the equipment and activities protected by the []
             injunction clearly involve the use of electronic devices to
             engage in or simulate game play based upon which a
             participant may win or become eligible to win a prize, the
             only basis upon which Plaintiffs’ equipment and activities
             can avoid running afoul of N.C. Gen. Stat. § 14-306.4(b) is
             in the event that the game or simulated game involved is
             “dependent on skill or dexterity.”

Sandhill, 236 N.C. App. at 365, 762 S.E.2d at 683 (quoting N.C. Gen. Stat. § 14-

306.4(a)(3)(i)). To the extent our Supreme Court’s adoption of Judge Ervin’s dissent
                      GIFT SURPLUS, LLC, ET AL. V. STATE, ET AL.
                                  Collins, J., concurring



in Sandhill signals the Court’s determination that a sweepstakes game falls within

Gen. Stat. § 14-306.4’s “entertaining display” prohibition only when the video game

is not dependent on skill or dexterity, I agree with Judge Bryant’s concurring opinion

in this case that “the games at issue do not amount to games whose outcomes are

determined by skill and dexterity, but rather, chance.”

      Whether a game is one of skill or of chance is a question of law, reviewed de

novo. See Sandhill, 236 N.C. App. at 367-68, 762 S.E.2d at 685; see also Collins Coin

Music Co. of N.C. v. N.C. Alcoholic Beverage Control Comm’n, 117 N.C. App. 405, 408,

451 S.E.2d 306, 308 (1994) (treating the difference between games of chance and

games of skill as an issue of law).

      According to N.C. Gen. Stat. § 14-306.4, “it shall be unlawful for any person to

operate, or place into operation, an electronic machine or device to . . . [c]onduct a

sweepstakes through the use of an entertaining display, including the entry process

or the reveal of a prize.” N.C. Gen. Stat. § 14-306.4(b). As noted in the majority

opinion, the question of whether Plaintiffs’ games involve “sweepstakes” within the

meaning of N.C. Gen. Stat. § 14-306.4(a)(5) is not in dispute, but rather whether the

sweepstakes are conducted through the use of an “entertaining display” within the

meaning of N.C. Gen. Stat. § 14-306.4(a)(3).

      An “entertaining display”

             means visual information, capable of being seen by a
             sweepstakes entrant, that takes the form of actual game



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                     GIFT SURPLUS, LLC, ET AL. V. STATE, ET AL.
                                 Collins, J., concurring



             play, or simulated game play, such as, by way of
             illustration and not exclusion:
             ...
             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.

N.C. Gen. Stat. § 14-306.4(a)(3). The terms “game” and “skill or dexterity” as used in

N.C. Gen. Stat. § 14-306.4 are not statutorily defined. However, Judge Ervin adopted

the following analysis:

             “A game of chance is such a game as is determined entirely
             or in part by lot or mere luck, and in which judgment,
             practice, skill or adroitness have honestly no office at all,
             or are thwarted by chance. A game of skill, on the other
             hand, is one in which nothing is left to chance, but superior
             knowledge and attention, or superior strength, agility and
             practice gain the victory. In State v. Stroupe, 238 N.C. 34,
             76 S.E.2d 313 (1953), a case involving the legality of the
             game of pool, our Supreme Court stated:

                   It would seem that the test of the character of
                   any kind of a game of pool as to whether it is
                   a game of chance or a game of skill is not
                   whether it contains an element of chance or
                   an element of skill, but which of these is the
                   dominating element that determines the
                   result of the game, to be found from the facts
                   of each particular kind of game. Or to speak
                   alternatively, whether or not the element of
                   chance is present in such a manner as to
                   thwart the exercise of skill or judgment.”

Sandhill, 236 N.C. App. at 368, 762 S.E.2d at 685 (internal quotation marks and

citations omitted) (quoting Collins Coin Music, 117 N.C. App. 405, 408, 451 S.E.2d

306, 308 (1994) (addressing the meaning of the terms as used in Article 37 of Chapter


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                      GIFT SURPLUS, LLC, ET AL. V. STATE, ET AL.
                                  Collins, J., concurring



14 of the General Statues, a set of provisions governing gambling-related activities

that includes N.C. Gen. Stat. § 14-306.4)).

      Based on this meaning of the relevant statutory language, the Collins Coin

Music Court determined that the video poker game in question was one of chance

rather than one of skill because, in part,

             although a player’s knowledge of statistical probabilities
             can maximize his winnings in the short term, he cannot
             determine or influence the result since the cards are drawn
             at random. In the long run, the video game’s program,
             which allows only a predetermined number of winning
             hands, negates even this limited skill element.

Collins Coin Music, 117 N.C. App. at 409, 451 S.E.2d at 308 (internal citation

omitted). “As a result, the essential difference between a game of skill and a game of

chance for purposes of our gambling statutes, including N.C. Gen. Stat. § 14-306.4, is

whether skill or chance determines the final outcome and whether chance can

override or thwart the exercise of skill.” Sandhill, 236 N.C. App. at 369, 762 S.E.2d

at 685.

      Similarly, Judge Ervin considered whether version 1.03 of Plaintiffs’

sweepstakes game was a game of skill or chance, and “conclude[d] that the element

of chance dominates the element of skill in the operation” of Plaintiffs’ machines. Id.

at 370, 762 S.E.2d at 686. Judge Ervin explained:

             As was the case with the video poker game at issue in
             Collins Coin Music, the machines and equipment at issue
             here only permitted a predetermined number of winners.
             For that reason, a player who plays after the


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                      GIFT SURPLUS, LLC, ET AL. V. STATE, ET AL.
                                  Collins, J., concurring



              predetermined number of winners has been reached will be
              unable to win a prize no matter how much skill or dexterity
              he or she exhibits. In addition, use of the equipment at
              issue here will result in the playing of certain games in
              which the player will be unable to win anything of value
              regardless of the skill or dexterity that he or she displays.
              Finally, the extent to which the opportunity arises for the
              “nudging” activity upon which the trial court’s order relies
              in support of its determination that the equipment in
              question facilitated a game of “skill or dexterity” appears
              to be purely chance-based. Although Mr. Farley persuaded
              the trial court that the outcome of the games facilitated by
              Plaintiffs’ equipment and activities depended on skill or
              dexterity, the only basis for this assertion was the player’s
              ability to affect the outcome by “nudging” a third symbol in
              one direction or the other after two matching symbols
              appeared at random on the screen. Assuming for purposes
              of argument that this “nudging” process does involve skill
              or dexterity, I am unable to see how this isolated
              opportunity for such considerations to affect the outcome
              overrides the impact of the other features which, according
              to the undisputed evidence, affect and significantly limit
              the impact of the player’s skill and dexterity on the
              outcome. In light of these inherent limitations on a player’s
              ability to win based upon a display of skill and dexterity,
              an individual playing the machines and utilizing the
              equipment at issue simply does not appear to be able to
              “determine or influence the result over the long haul.”

Id. at 370, 762 S.E.2d at 686 (internal citation omitted).

      The version of the games examined in the present case, version 1.22, includes

several changes made after the Sandhill decision:           First, a “governor” that had

prevented players from winning large prizes in quick succession in version 1.03 was

eliminated.   Second, a “final ticket” feature was added, under which prizes lost

through incorrect nudging can be won on later turns. Third, a “winner every time”



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                      GIFT SURPLUS, LLC, ET AL. V. STATE, ET AL.
                                  Collins, J., concurring



feature was added. In version 1.03, on 75% of turns, players could not win a prize.

In version 1.22, kiosks can be set so these turns will generate a token prize. On these

turns, a “¢” symbol appears on one of the reels. If the player nudges the “¢” symbol

to the middle line, the player receives several cents. Fourth, a “double nudge” feature

was added. In version 1.03, players needed to nudge only one symbol to produce a

winning combination. In version 1.22, the kiosks can be set so that two symbols must

be nudged. The trial court found that “[t]he primary difference between version 1.03

and version 1.22 is a feature that requires the participant in the Gift Surplus

sweepstakes to exercise more skill and more dexterity to realize a prize (i.e., the

“double nudge”).”

      But even with these new features all activated, version 1.22 continues to be a

game of chance. First, as in version 1.03, the set of symbols appearing to the player

in the first instance is not determined by the player’s skill or dexterity, but rather is

“purely chance-based.” Sandhill, 236 N.C. App. at 370, 762 S.E.2d at 686. This set

of symbols determines the outcomes potentially available to the player: i.e., whether

the player falls into the 25% bucket of players who can win a significant prize, or falls

into the 75% bucket of players who can only win a token prize. Chance, rather than

skill or dexterity, thus wholly determines whether a significant prize can be won. See

Collins, 117 N.C. App. 409, 451 S.E.2d at 308 (“[T]he video game’s program, which

allows only a predetermined number of winning hands, negates even this limited skill

element.”). The addition of token prizes for what are effectively losing spins does not


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                      GIFT SURPLUS, LLC, ET AL. V. STATE, ET AL.
                                   Collins, J., concurring



change the analysis, as their availability, like the availability of significant prizes, is

wholly determined by chance. Second, the elimination of the “governor” feature

merely amplifies the speed by which chance may provide significant prizes to the

player, and thus also fails to change the analysis. Third, the addition of the “final

ticket” feature actually diminishes the impact skill plays in version 1.22, by forgiving

the player’s failure to exercise whatever skill is required to claim the prizes chance

makes potentially available. And finally, the addition of a second nudge does not

meaningfully distinguish version 1.22 from version 1.03.           Even “[a]ssuming for

purposes of argument that this ‘nudging’ process does involve skill or dexterity[,]”

Sandhill, 236 N.C. App. at 370, 762 S.E.2d at 686, the de minimis amount of skill and

dexterity involved in executing two nudges fails to transform a game of chance into

one wherein skill and dexterity predominate. As Judge Ervin said regarding the

single-nudge feature in version 1.03, “I am unable to see how this isolated opportunity

for such considerations to affect the outcome overrides the impact of the other

features which, according to the undisputed evidence, affect and significantly limit

the impact of the player’s skill and dexterity on the outcome.” Id. at 370, 762 S.E.2d

at 686.

       Accordingly, as the majority opinion concludes, Plaintiffs’ kiosks operate

sweepstakes through an entertaining display in violation of N.C. Gen. Stat. § 14-

306.4, and the permanent injunction prohibiting law enforcement officers from

enforcing violations of the law against Gift Surplus should be vacated.


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 No. COA18-1140 – Gift Surplus, LLC, et al. v. State, et al.


      BRYANT, Judge, concurring in the result.


      Pursuant to General Statutes, section 14-306.4 (“Electronic machines and

devices for sweepstakes prohibited”), it is unlawful “to operate, or place into

operation, an electronic machine or device to . . . (1) [c]onduct a sweepstakes through

the use of an entertaining display, . . . [or] (2) [p]romote a sweepstakes that is

conducted through the use of an entertaining display . . . .” N.C. Gen. Stat. § 14-

306.4(b)(1), (2) (2017). For the purposes of General Statutes, section 14-306.4, our

General Assembly has defined “sweepstakes” to mean “any game, advertising scheme

or plan, or other promotion, 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.” Id. § 14-306.4(a)(5). The term “entertaining display”

has been defined to mean

             visual information, capable of being seen by a sweepstakes
             entrant, that takes the form of actual game play, or
             simulated game play, such as . . . :

             ....

             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.

Id. § 14-306.4(a)(3)h., i. (emphasis added).
                     GIFT SURPLUS, LLC, ET AL. V. STATE, ET AL.

                            Bryant, J., concurring in the result



      In a dissenting opinion in Sandhill Amusements, Inc. v. Sheriff of Onslow

Cnty., 236 N.C. App. 340, 762 S.E.2d 666 (2014), rev’d sub nom. Sandhill

Amusements, Inc. v. Miller, 368 N.C. 91, 773 S.E.2d 55 (2015) (per curiam) (reversing

the Court of Appeals majority opinion for the reasons stated in the dissenting

opinion), Judge Ervin addressed the categorical terms “skill or dexterity” and “game

of chance,” framing the issue before the Court as such:

             [I]n order to determine whether . . . [the] [p]laintiffs’
             equipment and activities were lawful, we must first
             ascertain the difference between a game of skill and a game
             of chance as those terms are used in our gambling statutes
             and then determine which side of the resulting line [the]
             [p]laintiffs’ equipment and activities fall on.

Id. at 367–68, 762 S.E.2d at 685 (Ervin, J., dissenting opinion). Acknowledging that

the term “skill or dexterity,” as used in section 14-306.4, had not been statutorily

defined, Judge Ervin noted that the term, as used in Article 37 of Chapter 14 of our

General Statutes—“a set of provisions governing gambling-related activities that

includes N.C. Gen. Stat. § 14–306.4, ha[d] been addressed by this Court.” Id. at 367,

762 S.E.2d at 685. In particular, the dissent referred to this Court’s reasoning in

Collins Coin Music Co. v. N.C. Alcoholic Beverage Control Comm’n, 117 N.C. App.

405, 451 S.E.2d 306 (1994) (addressing whether video poker games were prohibited

by General Statutes, section 14-306 (1993)).

             A game of chance is “such a game as is determined entirely
             or in part by lot or mere luck, and in which judgment,
             practice, skill or adroitness have honestly no office at all,


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                         GIFT SURPLUS, LLC, ET AL. V. STATE, ET AL.

                                Bryant, J., concurring in the result



                 or are thwarted by chance.” State v. Eisen, 16 N.C. App.
                 532, 535, 192 S.E.2d 613, 615 (1972) (citation omitted). “A
                 game of skill, on the other hand, is one in which nothing is
                 left to chance, but superior knowledge and attention, or
                 superior strength, agility and practice gain the victory.” Id.
                 at 535, 192 S.E.2d at 615–16 (citation omitted). In State v.
                 Stroupe, 238 N.C. 34, 76 S.E.2d 313 (1953), a case involving
                 the legality of the game of pool, our Supreme Court stated:

                 It would seem that the test of the character of any kind of
                 a game of pool as to whether it is a game of chance or a
                 game of skill is not whether it contains an element of
                 chance or an element of skill, but which of these is the
                 dominating element that determines the result of the
                 game, to be found from the facts of each particular kind of
                 game. Or to speak alternatively, whether or not the
                 element of chance is present in such a manner as to thwart
                 the exercise of skill or judgment.

                 Id. at 38, 76 S.E.2d at 316–17.

Sandhill Amusements, 236 N.C. App. at 368, 762 S.E.2d at 685 (Ervin, J., dissenting)

(quoting Collins Coin Music Co., 117 N.C. App. at 408, 451 S.E.2d at 308). Judge

Ervin opined “the essential difference between a game of skill and a game of chance

for purposes of our gambling statutes, including N.C. Gen. Stat. § 14-306.4, is

whether skill or chance determines the final outcome and whether chance can

override or thwart the exercise of skill.” Id. at 369, 762 S.E.2d at 685. See also State

v. Spruill, 237 N.C. App. 383, 387, 765 S.E.2d 84, 87 (2014) (“Section 14-306.4 seeks

to prevent the use of entertaining displays in the form of video games to conduct

sweepstakes wherein the prize is determined by chance.” (citing N.C. Gen. Stat. § 14-

306.4(b)(1))).


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                      GIFT SURPLUS, LLC, ET AL. V. STATE, ET AL.

                             Bryant, J., concurring in the result



      Where the exercise of skill and dexterity is the dominant character of a game

which determines the final outcome, the game does not satisfy the statutory

definition of a sweepstakes, though an element of chance may be present. See N.C.

Gen. Stat. § 14-306.4(a)(5) (defining “sweepstakes” to mean “any game, advertising

scheme or plan, or other promotion, 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” (emphasis added)); see also Spruill, 237

N.C. App. at 387, 765 S.E.2d at 87; Sandhill Amusements, 236 N.C. App. at 368, 762

S.E.2d at 685 (Ervin, J., dissenting).

      The majority opinion in the current matter states that

             we need not decide whether these sweepstakes are chance
             or skill-based in order to hold that they violate N.C.G.S. §
             14-306.4.

             ....

             Regardless of whether it is dependent on skill or dexterity,
             a sweepstakes falls within the entertaining display
             prohibition simply if it is ‘visual information, capable of
             being seen by a sweepstakes entrant, that takes the form
             of actual game play, or simulated game play[.] N.C.G.S. §
             14-306.4(a)(3).”

I believe this reading of section 14-306.4 is too broad.

      However, I believe the games at issue do not amount to games whose outcomes

are determined by skill and dexterity, but rather, chance. As a result, the games are

sweepstakes in violation of General Statutes, section 14-306.4.


                                              4
                     GIFT SURPLUS, LLC, ET AL. V. STATE, ET AL.

                            Bryant, J., concurring in the result



      Because I agree that the games created by Gift Surplus, as described in the

majority opinion are in violation of General Statutes, section 14-306.4 and that the

injunction prohibiting law enforcement officers from enforcing violations of law

should be dissolved, I concur in the result reached by the majority.




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