Free Speech Claims Take Down Sweepstakes Ban

SAN JOSE, Calif. (CN) - The city of Hayward, Calif., cannot ban all "sweepstakes centers," a federal judge ruled, citing concerns under the First Amendment.

In two separate cases, local businesses sought injunctions to prevent the city from enforcing an ordinance that essentially prohibited "any business from allowing any customer to pay to use a computer or electronic device for practically any reason."

IBiz and Net Connection, which offer computer rentals as well as copy and fax services, brought the suit after Hayward created an ordinance prohibiting them from engaging in "any and all sweepstakes use."

The businesses operate no-purchase necessary sweepstakes to promote their products and services. Customers can use computer terminals to learn the results of their sweepstakes entry or play a different sweepstakes game.

Though their sweepstakes are "legally undistinguishable" from sweepstakes utilized by "McDonald's, Carl's Jr., Pepsi, and Coca-Cola," the city has not targeted those businesses, the businesses said.

IBiz and Net Connection accused the city of violating the constitutional rights of businesses to equal protection and due process. IBiz also claimed the ordinance violated the First Amendment by limiting free speech.

U.S. District Judge Samuel Conti granted IBiz's injunction on First Amendment grounds, but denied Net Connection's request because he saw "no likelihood" that Net Connection would succeed on their equal protection and due process claims.

Although the city followed proper procedure when it enacted the ordinance, it violated free speech protections because it "burdens substantially more speech than is necessary" to prevent sweepstakes promotions, the July 18 ruling states.

Hayward (pop. 144,186) is the sixth largest city in the San Francisco Bay Area, according to its summary of the 2010 census.

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