Repeals GS 14-306.4 (prohibiting electronic machines and devices for sweepstakes), effective January 1, 2016. Also effective January 1, 2016, enacts new Part 23, Electronic Sweepstakes in Article 10 of GS Chapter 143B, providing as follows.
Requires a license to operate an electronic sweepstakes establishment and limits the operation of electronic sweepstakes devices to within a licensed establishment. Defines an electronic sweepstakes device as an energy driven device that is connected to a server through a local network that is capable of displaying sweepstakes results on a screen or other mechanism by a sweepstakes entrant. Defines sweepstakes as any game, advertising scheme or plan, or other promotion that, with or without the purchase of any good or service and without separate consideration, a person may enter to win or become eligible to receive any prize, the determination of which is based upon chance and in which there is a finite pool of entries.
Sets out requirements for licensure including a $250 application fee. Licensure is to be administered and enforced by the Department of Commerce (Department). Sets out requirements for applicants, including the necessary relationship to the state and doing business in the state. Requires the Department to conduct a background investigation of the applicant before issuing a license. Allows the Department to refuse a license if (1) the applicant has submitted false or misleading application information, (2) the applicant has had a license revoked and not restored, (3) the applicant has been convicted of a violation of federal or state level gambling laws within five years of the application, or (4) the applicant’s background investigation evidenced a pattern of failure to exhibit good character and good standing in the community. Requires licensing applications to include a certificate report from an authorized independent testing laboratory on each electronic sweepstakes device listed in the application to be placed into operation at the establishment. Prohibits transferring a license, requires the license to be displayed in the establishment, and allows the license to be amended to add additional devices.
Requires potential electronic sweepstakes device operators to cooperate with the Department’s investigation. Requires the Department to adopt rules that provide for disclosure of information required to be disclosed under the act. Specifies information that must be disclosed. Makes documents compiled by the Department in conducting its investigation confidential.
Requires the Department to publish a list of authorized independent testing laboratories and to adopt rules to establish a process for becoming an authorized independent testing laboratory. Requires the authorized labs to issue a certification report with respect to the electronic sweepstakes devices and related systems. Specifies information that must be included in the report.
Requires a license to supply sweepstakes software to a sweepstakes gaming device operator. Specifies the information to be included in the application.
Specifies that the Article authorizes only the operation of server-based electronic sweepstakes devices that associate a prize with an entry or entries from a predetermined finite pool of winning and losing entries at the time the sweepstakes is entered. Prohibits specified activities including willfully failing to award prizes offered other than for failure by the entrant to comply with the rules of the sweepstakes or award or advertise prizes other than those that have been properly announced; knowingly requiring the participant to pay more than fair market value for the item, product, or service that entitles a participant to enter a sweepstakes; and operating a sweepstakes game which does not have a finite number of entries. Requires licensee to comply with specified interior and exterior signage, and advertising requirements. Prohibits an operator from (1) being issued an ABC permit authorizing the sale of alcoholic beverages for consumption on the sweepstakes location premises; (2) allowing an individual under 18 to enter or be employed at a sweepstakes facility; (3) offering or paying out anyone a single prize with a value of more than $10,000; and (4) causing the sweepstakes results to be located other than on a server that is at the location where the sweepstakes takes place. Requires operators to provide the Department of Revenue with information on individuals winning prizes with a value of more than $600.
Sets out reasons for which the Department may revoke or suspend a license, after holding a hearing.
Provides for enforcement of the Article. Unless a greater penalty is otherwise provided, makes it a Class 2 misdemeanor, subject to a fine between $25,000 and $100,000 and bar from obtaining a license, for operating an electronic sweepstakes without a license. Willful violations of other provisions of the Article are punishable by fines of $500 to $10,000.
Enacts new Article 2E, Electronic Sweepstakes, in GS Chapter 105. Levies an excise tax on each establishment as follows: (1) a rate of $2,000 per electronic sweepstakes establishment, (2) a rate of $1,000 per electronic sweepstakes device, and (3) a rate of 4% on gross receipts. Allows a city or county to, by resolution or ordinance, impose an excise tax on each establishment located in that city or county of $1,000 on each establishment and $500 on each device. Provides that the excise tax may be levied by the county or city, but not by both. Requires at least 3% of the net revenue collected from the local tax to be distributed to the county sheriff’s department or municipal police department, with the remainder to be used for any public purpose. Requires the Secretary to remit the net tax proceeds collected under this Article to the General Fund to be used for Medicaid and mental health purposes (allows the Department of Revenue to retain 6% for administrative expenses). Provides that if a county or city imposes an excise tax under GS 105‑113.122, the amount that would be distributed to the county sheriff's department or the municipal police department of the taxing jurisdiction is waived and that amount reverts to the General Fund and may be used for any public purpose. Provides that the Article is applicable to any electronic sweepstakes device without regard to how the device is activated, how the device is programmed for operation, or how the device determines and associates the prize with an entry or entries at the time the sweepstakes is entered.
Makes conforming changes.
Enacts new GS 143B-947 allowing the Department of Public Safety to give the Department the criminal history of any prospective electronic sweepstakes licensee. Sets out fingerprinting requirements.
Applies to an electronic sweepstakes establishment and devices operated on or after January 1, 2014.
Provides for temporary licensure for those submitting an application for licensure before September 1, 2015.
Unless otherwise indicated, effective when the act becomes law.
Bill Summaries: H922 (2015-2016 Session)
Bill H 922 (2015-2016)Summary date: Apr 20 2015 - View summary