Are video poker machines that involve skill and pay out only merchandise credit legal in NC after the recent amendment to the anti-slot-machine statute?
Plain-English summary
NC had long banned slot machines under N.C.G.S. § 14-306. In 1993, the General Assembly amended the statute to carve out certain "amusement" machines involving "skill." Seventh District DA Howard S. Boney wrote to the AG asking whether the amendment legalized a specific kind of video poker machine: one that simulated five-card draw poker, paid winners in free replays or credits exchangeable for merchandise under $10, was "used for amusement," and "involve[d] the use of skill."
Chief Counsel John R. McArthur and Special Deputy AG W. Dale Talbert answered with a yes-but-not-categorically.
The amendment's exemption applied if both factual predicates were true: the machine was used for amusement, and play involved skill. If both were true for a specific machine matching DA Boney's description, that machine fell within the exemption.
But the AG was careful to limit the answer to the specific machines described and to flag that operating features can defeat the exemption. A video poker machine programmed to artificially limit the percentage of winning hands is not really skill-based; the operator has rigged the outcome. A machine that pays in cash rather than merchandise credits, or has no genuine entertainment element, may not qualify as "used for amusement." The opinion warned: the answer does not legalize all video poker machines and does not foreclose findings that particular machines are per se illegal slot machines.
In practice, that meant prosecutors had to evaluate each machine on its own facts. The amendment did not give convenience store and arcade operators a blanket green light; it set up a fact-specific defense that machines either qualified for or did not. Many later prosecutions in NC turned on the same question.
Currency note
This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. NC video poker / video sweepstakes law was substantially overhauled in subsequent years, including a series of statutes targeting electronic sweepstakes machines (e.g., S.L. 2010-103) and a long line of NC appellate decisions including Hest Technologies v. Cooper (NC Sup. Ct. 2012), most of which substantially restrict the amusement-skill exemption. Anyone operating or prosecuting these machines today must consult current statutes and case law.
Background and statutory framework
N.C.G.S. § 14-306 anti-slot-machine framework. The statute defines an illegal slot machine and provides exemptions. The illegal machines are coin-operated devices that, by element of chance, pay something of value. The exemptions historically have included pinball machines and other amusement devices.
The 1993 amendment. The 1993 amendment added the "amusement and skill" language that DA Boney was asking about. The opinion does not quote the precise statutory text but describes its effect.
Why case-by-case matters. Slot machines are easy to define legally but hard to identify in the field. A machine's external appearance, instructions, and software all factor in. A video poker machine can be programmed to be a real skill game or a glorified slot. Prosecutors and operators alike need to read the source code or the operational behavior, not just the cabinet.
The $10 merchandise credit limit. Limiting prizes to merchandise valued under $10 was part of the exemption framework. Cash payouts strongly suggest gambling, not amusement.
The "skill" element. Five-card draw poker can involve significant skill (deciding which cards to hold, calculating odds). A video version that randomizes the deal so quickly that skill is irrelevant, or restricts winning hands programmatically, is not really a skill game.
Why the AG hedged. The AG could not see every machine on the market. The opinion explicitly limited its conclusion to the machines DA Boney described and refused to immunize all video poker machines.
Common questions
Q: Does this opinion still control video gambling prosecutions in NC?
A: No. NC video gambling law has changed substantially since 1993. This opinion is best viewed as historical context, not current guidance.
Q: What is the difference between video poker and video sweepstakes?
A: Sweepstakes machines purport to be promotional tools for the sale of a product (often pre-paid internet or phone time), where the play is incidental to the purchase. NC has separately legislated against sweepstakes machines. Video poker is more directly a game played for prizes.
Q: Can an arcade in NC operate video poker machines today under the amusement exemption?
A: Current NC law is much more restrictive than in 1993. The amusement-skill exemption has been narrowed by subsequent statute and case law. Operators should consult current law before relying on any exemption.
Q: What test did courts use to evaluate machines after this opinion?
A: NC courts have used various skill-versus-chance tests, often turning on payout statistics and software design. Hest Technologies v. Cooper (2012) is the leading NC Supreme Court decision on the modern sweepstakes question.
Q: Did this opinion help defendants or prosecutors more?
A: Both. Defendants gained a framework for arguing exemption; prosecutors gained authority to insist on case-by-case factual analysis. Neither side got a categorical answer.
Q: Why does this matter for someone who isn't a prosecutor?
A: Convenience store owners, arcade operators, and small-business owners considering video games for amusement need to understand that the line between legal amusement and illegal gambling is fact-intensive. Even a machine that calls itself "for amusement only" can be prosecuted if its actual operation is rigged or its prizes are cash.
Citations from the opinion
- N.C.G.S. § 14-306
Source
- Landing page: https://ncdoj.gov/opinions/video-poker-machines/
Original opinion text
You have asked whether the recent amendment to N.C.G.S. 14-306 exempts certain video poler game machines from the statutory definition of illegal slot machines. This advisory opinion responds to your inquiry.
You describe the machines that are the subject of your inquiry as ones which electronically "simulate the play of [five card draw] poker…upon inserting money" and "reward the successful player with free replays" or credits which "may be…exchanged for merchandise with a value not exceeding $10.00." You also describe the machines under consideration as being "used for amusement" and "involv[ing] the use of skill."
. . .
Whether a coin operated video game falls within the statutory definition of illegal slot machines or one of the exemptions must be determined on a case by case basis. This opinion responds to only the machines you describe in your inquiry including your conclusions that the described machines "are used for amusement" and that play of them " involves the use of skill." It is possible that the mechanical or operating features of some video poker machines, including the nature of the game played or the ability to artificially limit the percentage of winning hands, would compel the conclusion that a particular machine was not used for amusement or did not involve the use of skill. In that event, the machine would not fall within the statutory exemption.
Therefore, this opinion should not be interpreted as concluding that the recent amendment to N.C.G.S. §14-306 works to exempt all video poker machines from the statutory definition of illegal slot machines or that no video poker machine can be per se an illegal slot machine.
John R. McArthur, Chief Counsel
W. Dale Talbert, Special Deputy Attorney General