Split decision by judges on sweepstakes business tax

RALEIGH — A split decision by the N.C. Court of Appeals over the legality of special taxes on businesses using computers to offer games of chance or sweepstakes means the case is likely to reach the state’s highest court.

A three-judge panel this week upheld lower court decisions in favor of the city of Lumberton, which enacted a special license tax in 2010 on companies selling Internet time. Companies challenged the tax rate of $5,000 per location and $2,500 per terminal. Similar taxes have been enacted elsewhere to regulate what critics call disguised video poker games.

Tuesday’s 2-to-1 ruling means the state Supreme Court must consider any appeal. Judge Robert C. Hunter’s dissenting option said there’s a genuine issue about whether such a high license tax is legal.