Appeals court hands state a big lottery loss
Maybe the state of North Carolina doesn't have a legal lottery monopoly after all.
Its effort to shut down a lottery-of-sorts was emphatically denied by the N.C. Court of Appeals Sept. 6.
The case involved a company called Treasured Arts Inc., which sold prepaid long-distance calling cards, two minutes for a dollar.
The card included a scratch-off game offering cash prizes of up to $50,000 as well as the chance to win a car.
This quickly caught the eye of state officials, who sought to rub it out ...
The state didn't charge Treasured Arts with any violation of law, however. Instead, Alcohol Law Enforcement agents began threatening convenience stores with loss of their license to sell beer and wine if they continued to sell the calling cards.
Treasured Arts sued and won at the trial court level. The judge ordered the state to back off. The state appealed.
A three-judge panel of the Court of Appeals unanimously rejected the state's contention that Treasured Arts was operating an illegal lottery.
Two main points decided the case in the company's favor.
First, "the evidence before the trial court and on appeal indicates without contradiction that plaintiff's phone card provides the purchaser with a long-distance rate that is not merely competitive, but one of the best in the industry," the opinion written by Judge Ann Marie Calabria said.
In other words, customers are getting their money's worth without regard to the chance to win a prize.
Second, "customers may receive free game pieces without purchasing the prepaid phone card via written request ... As plaintiff rightly points out, lotteries (in states where permitted) do not give out free entries upon written request."
Judges Patricia Timmons-Goodson and Martha Geer concurred in the decision.
The ruling is absolutely correct. Good for Treasured Arts for not letting ALE agents get away with threats and intimidation in an effort to stop their legitimate business practice of offering an enticing promotion to market a useful product.
So, why is this such bad news for the state? Because what Treasured Arts can do, other companies can, too.
Heck, I suppose the News & Record could include scratch-off cards offering prizes with every copy of the paper sold.
Some of these promotions could become more popular than the state lottery. After all, with your $1 Treasured Arts card, you not only get a chance to win prizes, you get two minutes of long-distance gab.
What are you going to get with a $1 state lottery ticket? Most likely, nothing.