A BILL TO BE ENTITLED AN ACT TO REGULATE AND IMPOSE AN EXCISE TAX ON ELECTRONIC SWEEPSTAKES.
Repeals GS 14-306.4 (prohibiting electronic machines and devices for sweepstakes). Enacts new Article 80 (regulation of electronic sweepstakes) in GS Chapter 143.
Requires a license to operate an electronic sweepstakes device or establishment. Defines an electronic sweepstakes device as a mechanically, electrically, or electronically operated device that is connected to a server through a local network and that is owned, leased, or otherwise possessed by a sweepstakes sponsor or promoter, or any of the sweepstakes sponsor's or promoter's partners, affiliates, subsidiaries, or contractors, that is intended to be used by a sweepstakes entrant, that uses energy, and that is capable of displaying sweepstakes results on a screen or other mechanism.
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. Allows the Department to refuse a license if the applicant has (1) submitted false or misleading application information, (2) had a license canceled for cause, or (3) been convicted of a violation of federal or state level gambling laws within five years of the application. Requires licensing applications to include a certificate or report from an authorized independent testing laboratory that performs specified activities on each electronic sweepstakes device listed in the application to be placed into operation at the establishment, including identifying the device components and verifying that all electronic sweepstakes devices identified in the application as being operational in the establishment use the same entries for each sweepstakes from a pool of entries hosted on a local server in the establishment. Requires the Secretary of Commerce to publish a list of authorized independent testing laboratories within 14 days of the act becoming law.
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; to knowingly require the participant to pay more than fair market value for the item, product, or service that entitles a participant to enter a sweepstakes; and to operate a sweepstakes game which does not have a finite number of entries. Requires licensee to comply with specified interior and exterior signage 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) allow an individual under 18 to enter or be employed at a sweepstakes facility; (3) offer or pay out anyone a single prize with a value of more than $10,000; and (4) cause 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 $1,000.
Sets out reasons for which the Secretary of Commerce may cancel a license, after holding a hearing on whether to cancel the license; also allows cancelation upon a licensee's written request. Requires 90 days written notice of a hearing to a person whose license may be canceled. Sets out further requirements for notice. Hearings are open to the public. Sets out further guidelines for the hearing. Allows for appeal in superior court.
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. Makes conforming changes to GS 160A-211. 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, 2013, without the required certificate or report, that will be valid through September 30, 2013.
Unless otherwise indicated, applies to establishments and devices operating on or after the date that the act becomes law.
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