IMT, Inc. v. City of Lumberton, 219 N.C. App. 36

Appellants operate cyber-gambling businesses within Lumberton, selling time for internet use and providing sweepstakes with pre-set prizes.
The City enacted Ordinance 12-60.1 (July 2010) taxing cyber-gambling businesses $5,000 per location and $2,500 per gaming/terminal, with penalties for nonpayment.
For 2009–2010, IMT’s tax was $137,525; G&M, Storie, and E.Z. owed substantial sums; each appealed after the City filed suit for nonpayment, with cross-summary judgment motions.
The trial court granted or corrected judgments in favor of the City or Appellants; four consolidated cases proceeded on cross-motions for summary judgment.
The Court reviews the trial court’s summary-judgment rulings de novo, assessing genuine material-fact issues and whether the movant is entitled to judgment as a matter of law.
The majority affirmed the trial court’s judgments for the City, holding the Ordinance valid and applicable to Appellants; the dissent would reverse and remand for trial on the tax’s equality and confiscation concerns.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Ordinance applies to Appellants’ sweepstakes businesses	Appellants contend they do not conduct games of chance.	City argues sweepstakes are games of chance under the Ordinance.	Yes, Ordinance applies to Appellants.
Whether the privilege license tax is uniform and rational	Tax disparities among businesses render the tax unconstitutional.	Tax classifications based on business type are valid if rational.	Tax is uniform and rational; not unconstitutional.
Whether ITFA preempts the Ordinance	Ordinance discriminates against internet-based sweepstakes.	Ordinance targets cyber-gambling, not internet access taxes.	No ITFA violation.
Whether the tax is so oppressive as to amount to confiscation	The tax increase is prohibitive to Appellants’ profits.	Insufficient evidence of prohibitive effect; Razook standards apply.	No summary-judgment issue on confiscation; evidence lacking.

Wiggs v. Edgecombe County, 361 N.C. 318, 643 S.E.2d 904 (2007) (plain meaning governs when statute is clear)
State v. Hughes, 193 N.C. 847, 137 S.E. 819 (1927) (tax on the privilege of conducting business allowed)
Southeastern Express Co. v. City of Charlotte, 186 N.C. 668, 120 S.E. 475 (1923) (upholding privilege tax on business operations)
Lenoir Drug Co. v. Town of Lenoir, 160 N.C. 571, 76 S.E. 480 (1912) (upholding privilege license tax per unit of business)
Razook v. State, 179 N.C. 708, 103 S.E. 67 (1920) (license taxes must be just and not prohibitively oppressive)
Danenberg v. State, State v. Danenberg, 151 N.C. 718, 66 S.E. 301 (1909) (discusses reasonableness of privilege license taxes)
Village of Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U.S. 252 (1977) (review of municipal decisions under equal-protection/ballpark of reasonableness)