North Carolina's appeals court on Tuesday upheld a statewide ban on video poker machines except those operated by the Eastern Band of Cherokee Indians in their Smoky Mountains casino.
A three-judge court panel ruled unanimously that a 2006 state law giving the tribe exclusive gaming rights within North Carolina does not violate a federal Indian gaming law as an amusement machine vendor had argued.
The tribe operates Harrah's Cherokee Casino, which attracts more than 3.5 million visitors a year and generates revenues of more than $250 million annually. Tribal members in June received checks for $3,892 in the first of this year's twice-a-year payments.
The ruling overturned a February decision by Wake County Superior Court Judge Howard Manning that sided with the gaming company and could have again legalized video poker machines in all 100 counties.
But the appeals court said the federal Indian Gaming Regulatory Act allows states to grant tribes preferential gaming rights in hopes the revenues would expand tribal self-government, economic development, and political stability.
Invalidating the state video poker ban would mean "the tribe would no longer have preferential gaming rights, but instead would be in competition with other gaming enterprises," Judge Robert C. Hunter wrote for himself and Judges Martha Geer and Linda Stephens.
"This is great news. We worked for so long to try to rid our state of this awful industry," state Senate leader Marc Basnight, D-Dare, said in a statement.
Amusement machine owners who once installed video poker machines in convenience stores and bars saw the case as one prong of their attempts to restore the business. Their supporters proposed state legislation this year that would give North Carolina a 20 percent cut in video poker profits in exchange for regulation backers said would clean up the industry.
"We are obviously disappointed in the Court of Appeals ruling but knew there was a good chance the state law would be upheld," said William Thevaous, president of the Entertainment Group of North Carolina, a trade group for amusement machine owners.
"That's why we have pursued legislative action and will continue to press for legislation that will bring accountability and transparency to the video gaming industry in North Carolina through regulation and taxation," he said in a statement.
The General Assembly acted to outlaw video poker machines in reaction to real and suspected corruption linked to the gambling games. County sheriffs also complained of struggling for years to keep track of legal machines limited to minimal payouts and complaints of large illegal cash jackpots.
Former Buncombe County Sheriff Bobby Medford was sentenced to 15 years in prison after being convicted last year of taking up to $300,000 in bribes from illegal video gambling operators while sheriff.
Campaign donations from the video poker industry to its greatest legislative champion, then-House Speaker Jim Black, were investigated extensively by state election officials. Black, D-Mecklenburg, was sentenced to federal prison after pleading guilty to corruption unrelated to video poker.