Bill Summary for H 750 (2017-2018)

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Summary date: 

Apr 11 2017

Bill Information:

View NCGA Bill Details2017-2018 Session
House Bill 750 (Public) Filed Tuesday, April 11, 2017
AN ACT TO ESTABLISH THE NORTH CAROLINA GAMING COMMISSION AND AUTHORIZE THE REGULATION OF VIDEO LOTTERY TERMINALS AND FANTASY FOOTBALL LEAGUES.
Intro. by Warren.

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Bill summary

Enacts new GS Chapter 18C, Article 9 (Video Lottery Entertainment).

New GS 18C-200 defines 11 terms as they are used in the Article.

New GS 18C-203 authorizes the North Carolina Gaming Commission (currently called the North Carolina Lottery Commission. As discussed below, the Revisor of Statutes is instructed to replace all specified references to the North Carolina Lottery Commission with references the North Carolina Gaming Commission), to initiate video lottery games played using a video lottery terminal. Directs the Commission to determine the allocation of net income from video lottery terminals, and the procedures for monitoring, collecting, and distributing income from video lottery terminals, provided that no less than 46% of the total annual revenues may be transferred to the North Carolina State Lottery Fund (Fund), and no more than 8% may be allocated for administrative expenses. If the Commission's administrative expenses are less than 8%, then any surplus funds must be allocated to the Fund.

New GS 18C-210 requires the Commission to annually issue video lottery permits, to be affixed to all approved video lottery terminals. No person may affix or remove a video lottery permit, except for authorized Commission personnel and a licensed operator. Requires manufacturers, distributors, licensed operators, and video lottery retailers to make video lottery terminals available for inspection. No permit may be issued unless a terminal's software is compatible with the Commission's central monitoring system, and the terminal's games are initiated and approved by the Commission. Terminals without a permit are illegal and subject to confiscation, and video lottery terminals may not be removed from the State until the video lottery permit has been removed.

New GS 18C-212 directs the Commission to issue manufacturer's, distributor's, and operator's licenses associated with video lottery entertainment.

New GS 18C-214 directs the Commission to issue licenses to any individual, group, corporation, partnership, or association qualified to receive a license, unless any of six listed exceptions applies, including that an applicant, employee or officer of an applicant has been convicted of a felony or any gambling offense in any state or federal court within 10 years of issuance of the license or that the applicant is less than 21 years old. Requires applicants to furnish all materials required or requested by the Commission for determining qualification for a license, including ownership disclosure statements filed with the United States Securities and Exchange Commission if an applicant is a public company. Requires applicants to submit to and pay a fee for a background investigation. Prohibits applicants and licensees from paying, giving, or making economic opportunities, gifts, loans, gratuities, special discounts, favors, hospitalities, or services to the Director, to any member or employee of the Commission, or to any member of the immediate family residing in the same household as one of these individuals.

New GS 18C-216 prohibits the Commission from approving an application for a distributor's or operator's license if the applicant has not been a North Carolina resident for at least three years immediately preceding an application. Prohibits licensed distributors or operators from making more than the maximum number of video lottery terminals, as established by the Commission, available at one time.

New GS 18C-218 prohibits the Commission from approving a video lottery retailer's license if the applicant meets any of three listed criteria, including that the applicant is a person who does not possess an on-premises malt beverage permit, on-premises unfortified or fortified wine permit, or mixed beverages permit by the North Carolina Alcoholic Beverage Control Commission (ABC). Requires applicants with more than one permit as issued by the ABC to submit a separate application, qualification, and fees for each premises for licensure by the Commission. Provides requirements for the contents of a video lottery retailer's license. Limits licensed establishments to one licensed establishment per roofline, and requires the establishment to meet all siting requirements in GS 18C-330.

New GS 18C-220 provides a schedule of fees to be charged to applicants by the Commission, including a one-time fee that the commission may charge (the rest are mandatory) for the cost of a criminal and financial record check. Failure to pay specified fees is cause for revocation of licensure. All licenses issued by the Commission are renewable annually unless sooner cancelled or terminated. No licenses are transferable or assignable.

New GS 18C-222 prohibits a licensed video lottery terminal manufacturer or distributor from being licensed as a video lottery terminal operator or owning, managing, or controlling a licensed establishment, and vice versa. Does not restrict an owner or manager of a single licensed establishment from owning video lottery terminals licensed and placing such machines on the premises, provided they meet the same requirements of video lottery terminal operators, including the payment of all required fees. Does not prohibit the Commission from authorizing the placement of video lottery terminals by a manufacturer in an establishment that satisfactorily demonstrates that it is otherwise unable to obtain appropriate machine placement of service.

New GS 18C-224 requires video lottery license holders from doing six listed things, including maintaining records required by the Commission. Requires all video lottery retailers to remit an unspecified percent of net income of each video lottery terminal to the Commission on a schedule established by the Commission.

New GS 18C-330 prohibits the placement of video lottery terminals without video lottery permits in licensed establishments, as well as an amount of video lottery terminals higher than the amount established by the Commission. Requires video lottery terminals to be placed only on premises of establishments issued an on-premises malt beverage permit, on-premises unfortified or fortified wine permit, or mixed beverages permit. Prohibits video lottery terminals from being played by persons under the age of 21. Requires video lottery terminals to be placed in the sight and control of the owner, manager, or an employee of the licensed establishment, from the location where alcoholic beverages are dispensed, in an area that ensures public access to the terminals is restricted to persons legally entitled by age to be on the premises, and in an area that is at all times monitored by the owner, manager, or employee of the licensed establishment. Requires licensed operators to file with the Commission the location of any establishment in which permitted video lottery terminals are located. Prohibits the Commission from issuing licenses for an establishment located within 50 feet of a church, public school, or nonpublic school (as defined).

New GS 18C-332 prohibits video lottery terminals from allowing more than the amount established by the Commission to be played on a single wager. Requires the odds of winning each video lottery game to be posted on or near each video lottery terminal, as calculated by a method established by Committee rule.

New GS 18C-334 directs the Commission to develop a model contract to be used between licensed operators and licensed video lottery retailers. Requires all contracts between licensed operators and licensed video lottery retailers to address the need to report to the IRS and the commission any credits paid out in cash to individuals playing the video lottery terminal. Prohibits any consideration other than a share of net income authorized by the Commission in exchange for allowing the licensed operator to place video lottery terminals in the licensed video lottery retailer's establishment.

New GS 18C-336 requires a person transporting a video lottery terminal from one licensed video lottery retailer's establishment to another in the State, other than for servicing or repair, to notify the Commission in writing prior to transportation. Provides requirements for the notification.

New GS 18C-400 provides that the Commission has the sole administrative enforcement authority of GS Chapter 18C.

New GS 18C-402 authorizes the Commission, or the Department of Public Safety, Alcohol Law Enforcement Branch, to inspect the establishment of a licensed video lottery, licensed operator, licensed distributor, or licensed manufacturer, during normal business hours, including the examination of records, equipment, and proceeds.

New GS 18C-404 creates several crimes. Tampering with a video lottery terminal with intent to interfere with its proper operation is a Class 1 misdemeanor. Manipulating, with intent to do so, the outcome, payoff, or operation of a video lottery terminal, by any means, is a Class 5 felony. Machine owners who falsely report or fail to report the amount due required by the Commission are guilty of a Class 6 felony and are subject to termination of their license. Video lottery retailers or operators who pay a prize to any person in the amount less than the specified prize won is guilty of a Class 6 felony and subject to termination of their license. Solely authorizes the Department of Public Safety, Alcohol Law Enforcement Branch, to enforce this statute.

Instructs the Revisor of Statutes to recodify GS Chapter 14, Article 37, Part 2, and GS Chapter 143, Article 68, into new Articles under GS Chapter 18C, and to change all references to the North Carolina State Lottery Commission to the North Carolina Gaming Commission, and to make various listed technical and conforming changes, in consultation with the North Carolina State Lottery Commission, State Bureau of Investigation, and the Department of Public Safety, Alcohol Law Enforcement Branch.

Amends GS 18C-103(4) to delete the part of the definition ofgame orlottery game that currently excludes video gaming machines.

Amends GS 18C-114 to further authorize the Commission to prescribe the nature of video lottery entertainment advertising, and to adopt rules to implement GS Chapter 18C. Authorizes the commission to establish requirements for linking all video lottery terminals under a central monitoring system to provide auditing program information, as specified. Authorizes the commission to establish criteria for information system, operating procedures, reporting, and accounting criteria for video lottery entertainment. Makes conforming changes.

Amends GS 18C-120 to authorize the Director of the Commission to engage an independent firm experienced in security procedures, including computer security and systems security, to conduct a comprehensive study and evaluation of all aspects of security in the operation of the video lottery terminals. Makes conforming changes.

Makes a conforming change to GS 18B-500(b).

Authorizes the North Carolina Gaming Commission to take the necessary actions to develop and implement any licensing and application process authorized by this Act. Beginning on an unspecified date, the North Carolina Gaming Commission may accept applications, charge and collect fees, and issue licenses, as authorized by this act. Effective when the act becomes law.

Except as otherwise stated, effective January 1, 2018.