GA SC Holds That Premium Text Message Games Do Not Constitute Gambling

The Georgia Supreme Court recently ruled that the SMS game conducted during the NBC broadcast of Deal or No Deal does not violate Georgia's gambling law. The suit filed in federal court had contended that the SMS Game in which viewers, like the participants on Deal or No Deal, try to pick a lucky suitcase ran afoul of Georgia law because participants were charged 99 cents to play through their cell phones regardless of the availability of a no-purchase alternate method of entry. The plaintiffs based their suit on a Georgia statute that allows gamblers to recover their losses through lawsuits typically against the winner of the contest. Here, plaintiffs were seeking to get their money back not from the winner of the contest, but from the organizer NBC Universal and companies affiliated with the show.

As we previously reported, two questions were certified to the Georgia Supreme Court by the federal district court: Does Georgia Law (O.C.G.A. s. 13-8-3(b)) authorize the filing and maintenance of a civil suit to recover money paid out or lost on account of one's participation in an illegal lottery? Second, if the answer is in the affirmative, may the plaintiffs recover from the lottery's promoter or organizer?

In a unanimous opinion, the Georgia high court rejected the plaintiffs' reading of the gambling recovery statute. The court held, "[W]e hold that O.C.G.A § 13-8-3(b) does not authorize plaintiffs to recover from defendants the text message charges they paid to participate in the lucky case game."

The Court's analysis was based on the statutory definition of "gambling contract" To state a claim under the Georgia gambling civil recovery statute, the plaintiffs needed to allege there was a "gambling contract" supported by "gambling consideration." The Court held there was no "gambling consideration" to be recovered by the plaintiff because the text message fees do not constitute a "bet or wager" between the home viewer and Sponsor of the game. Under Georgia law, a "gambling contract" is one in which the parties agree they will gain or lose depending upon the occurrence of an event in which they otherwise have no interest. Here the, the Court found that "neither defendants nor any participant is certain to lose, and the contract's consideration [the $.99 text messaging entry fee] never hangs in the balance." but rather is paid regardless of the outcome of the promotion. Given the absence of gambling consideration, the court found that the SMS fees were not part of a gambling contract.

The court did not reach the issue of whether the Georgia Qui Tam law allowed a plaintiff to sue a contest organizer instead of the contest winner.

Although this ruling is an obvious victory for NBC and other companies engaged in premium SMS promotions, keep in mind that the ruling is limited to Georgia law and there are other litigations ongoing. For example, the ruling would not be binding precedent in the California class actions which have now extended to include the wireless carriers. Accordingly, sponsor's of premium SMS promotions need to continue to closely examine the risks associated with these types of promotions.

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