Operators and the companies that provide the systems used maintain that they operate in accordance with laws governing promotions and sweepstakes, but critics of sweepstakes parlors have argued that these establishments are designed to exploit technicalities to skirt gambling laws, and that their patrons are more interested in using the facilities for gambling than actually using the services that they had purchased.
[4][a] Computer terminals are set up inside the parlors, where patrons can see if they have won a prize by playing a casino-style game, similar to a video slot machine.
In Alabama, one operator's sweepstakes model was found to be in violation of state gambling laws; the court agreed with District Attorney Barber that the system used fit the description of a slot machine, that chance occurred at the point of sale, and that consideration was not negated even though it was possible to obtain free chances.
[10] In Texas in 2013, the attorney general announced that HEST Technologies pleaded guilty to engaging in organized criminal activity for gambling offenses.
[11] The sweepstakes industry however, attempted to work around these restrictions by restyling their games; in North Carolina, sweepstakes software providers implemented "pre-reveal" mechanisms, which attempted to comply with the prohibition of "entertaining displays" by revealing the player's prize in plain text before the game is played.
In December 2013, following a report on them by the Sarasota Herald-Tribune, the two locations were issued subpoenas by police requesting access to their financial records.
[14][15] In May 2015, federal prosecutors announced that they had agreed to a settlement with five sweepstakes software providers, under which they would stop doing business in North Carolina by July 1, 2015.
[1] Florida's sweepstakes parlor ban also had a chilling effect on arcades; the law prohibits devices defined as "gambling machines" from awarding prizes more than $0.75 in value and accepting cards or bills as payment.