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  • Summary date: Mar 2 2011 - View Summary

    Enacts new GS Chapter 18D, the Video Lottery Entertainment Act. Defines a video lottery game as a game of chance, approved by the North Carolina State Lottery Commission (Commission) as defined in GS 18C-103(3), which is displayed and played on a licensed video terminal. Defines a video lottery terminal (terminal) as any electronic computerized video game machine under the authority of the Commission, that upon accepting cash, a club card, or other form of lottery prize or promotional credit is available to play a video lottery game, and uses a video display and microprocessors to receive, by chance, free games or credits that can be redeemed for cash. Provides that such terminals are exempt under GS 14-306.1A (regarding types of machines prohibited by law) and that the term “terminal” does not include a machine that directly dispenses coins, cash, or tokens. Provides definitions for additional terms as they apply in the proposed chapter.
    Authorizes the Commission to make rules governing the operation of video lottery terminals and games, which include, but are not limited to, determining licensure requirements for video lottery retailers, operators, and manufacturers; the type and number of video lottery terminals to be approved for each permit; the type of video lottery games to be conducted; the limit amount for each wager; and the process for claiming prizes. Also authorizes the Commission to enter into an agreement with the Alcohol Law Enforcement Division of the Department of Crime Control and Public Safety to conduct background investigations of applicants and licensees to ensure compliance with this proposed chapter.
    Directs the Commission to determine the allocation of net income from video gaming machines and procedures for the monitoring, collection, and distribution of income from the terminals, provided that no less than 46% of the total annual revenues will be transferred to the North Carolina State Lottery Fund (Fund), and no more than 8% of the total annual revenues will be allocated for the Commission’s administrative expenses. Provides that if the expenses of the Commission are less than 8% of total annual revenues that the surplus is to be allocated to the Fund.
    Prohibits local governments from enacting any ordinance that regulates video lottery terminals. Repeals any local act regulating or imposing a tax or fee on video lottery terminals.
    Directs the Commission to make a video gaming permit available and requires the permit to be affixed to all approved video gaming machines in a location and in a manner prescribed by the Commission. Provides that the placement of the video gaming permit on the machine indicates that the machine has been registered, inspected, and approved for operation in North Carolina. Requires that the permit be issued annually. Prohibits anyone other than authorized Commission personnel and the licensed operator from affixing or removing the permit. Requires manufacturers and licensed operators to make video gaming machines and associated equipment available for inspection by the Commission. Requires that the machine’s software be compatible with the Commission’s central monitoring system and games initiated and approved by the Commission to receive a permit. Declares that any terminal which does not display the permit is contraband and is a public nuisance subject to seizure and summary forfeiture by any law enforcement officer. Prohibits transporting a video gaming machine out of the state until the permit has been removed.
    Sets minimum qualifications to be applied by the Commission in granting licenses to manufacturers, operators, and video lottery retailers. Directs the Commission to issue an operator’s license to an individual, group of individuals, corporation, partnership, or association whom the Commission determines is qualified to receive a license under this chapter. Requires the applicant and any partner, director, officer, and all stockholders to submit to a background investigation that includes a criminal record check and to pay any required fees for the criminal record check. Provides additional requirements that the Commission not issue a video lottery license unless the Commission is satisfied that the applicant is all of the following: (1) of good character; (2) a person whose background, including criminal history record, reputation, and associations do not pose a threat to the public interest or safety of the state; (3) a person who demonstrates business ability and experience to establish, operate, and maintain a video lottery business; and (4) a person who has adequate financing to undertake a video lottery business.
    Requires each person applying for or renewing a manufacturer’s license to pay an annual fee of $10,000. Requires each person applying for or renewing an operator’s license to pay an annual fee of $5,000 and an annual terminal fee of $104 per terminal. Directs the Commission to charge each person applying for or renewing a video retailer’s license an annual fee of $500 plus a weekly telecommunications fee as established by the Commission. Authorizes the Commission to charge a one-time license application fee not to exceed $50 and the cost of the criminal history and financial record background check. Provides that all licenses issued by the Commission are renewable annually unless sooner cancelled or terminated. Prohibits assigning or transferring any license issued by the Commission. Failure to pay any required fees is grounds for revoking any license issued under this proposed chapter. Entitles the Commission to an administrative expense reimbursement of 4% of the fees collected under this provision. Distributes any remaining funds from the video gaming machine fees to the county where the establishment is located or to the city if the establishment is located within the corporate limits of a city.
    Prohibits the obtaining of multiple types of licenses under this proposed chapter.
    Only allows machines with a video gaming permit to be placed in a licensed establishment. Limits the placement of machines to the premises of an establishment with an on-premises malt beverage permit, on-premises unfortified or fortified wine permit, or mixed beverages permit issued by the North Carolina Alcoholic Beverage Control Commission. Prohibits the issuance of a license for any establishment located within 50 feet of a church, public school, or any nonpublic school. Prohibits persons less than 21 years of age from playing video gaming machines.
    Restricts a single wager on a video lottery terminal to no more than the amount the Commission establishes to be played on a single wager. Requires that the odds of winning each video lottery game be posted on or near each terminal.
    Directs the Commission to develop a model contract to be used between licensed operators and licensed establishments and provides that the contracts are to address IRS report requirements. Provides additional guidelines regarding the transportation of video gaming machines between licensed establishments in the state. Provides that the Commission is to have sole enforcement authority of GS Chapter 18D. Authorizes the Commission to inspect a licensed establishment or licensed manufacturer and to examine the books and records of the licensee at any time it reasonably appears that someone is on the premises. Makes it a Class 2 misdemeanor to resist or obstruct an officer attempting to make a lawful inspection of the premises.
    Makes it a Class 1 misdemeanor to tamper with a terminal with the intent to interfere with its proper operation. Provides that tampering by any means with the intent to manipulate the outcome, payoff, or operation of a video lottery terminal is a Class H felony and that a conviction of this offense results in a revocation of any permit or license issued under this proposed chapter for a period of not less than 10 years and a fine of not less than $5,000. Makes it a Class I felony for any video lottery retailer or operator to intentionally pay a prize to any person that is less than the prize amount won.
    Makes conforming changes to GS 14-292, 14-293, 14-296, 14-299, 14-301, 14-302, 14-304, 14-305, 14-306, 14-306.1A, and 18C-161.
    Amends GS 18C-164 to provide a distribution schedule for the Commission to allocate net revenue transferred to the Education Lottery Fund from video gaming terminals regulated under GS Chapter 18D as follows: (1) 50% to the State Educational Assistance Authority to fund university scholarships, (2) 12.5% to the Repair and Renovations Reserve Account to be transferred annually to the UNC Board of Governors to be used only for renovation and repair of university facilities and related infrastructure at the 16 constituent institutions and the NC School of Math and Science that are supported from the General Fund, (3) 12.5 % to the UNC Board of Governors to be used for new construction of university facilities and related infrastructure at the 16 constituent institutions and the NC School of Math and Science that are supported from the General Fund, and (4) 25% to the State Board of Community Colleges to be used only for new construction of facilities and related infrastructure. Provides that funds transferred to the UNC system, School of Math and Science, and The Community Colleges may not be expended except by appropriation of the General Assembly. Makes a conforming change to subsection (c).

    Directs the Joint Legislative Program Evaluation Oversight Committee to include in the 2011-12 Work Plan for the Program Evaluation Division of the General Assembly a study to evaluate the state’s video lottery entertainment system and to submit its findings and recommendations to specified legislative oversight committees no later than the convening of the 2013 Regular Session of the General Assembly.
    Effective January 1, 2012, and applies to offenses committed on or after that date.