Governor Signs Lottery Bill
North Carolina is set to become the final state on the East Coast to start a lottery after Lieutenant Governor Beverly Perdue broke a Senate tie Tuesday, voting to create a lottery that supporters have sought for more than 20 years. As you remember, the House approved the lottery on April 6 by a vote of 61-59. The State Senate finally approved the House lottery bill earlier this week, which is projected to raise approximately $400 million. The vote was deadlocked at 24-24 before Perdue, the Senate’s presiding officer, cast the deciding vote. Perdue got the chance to vote because Sens. John Garwood, R-Wilkes, and Harry Brown, R-Onslow, did not make it to Raleigh for the session, after having been told last week that the Senate would take up no more business before the short session. Both Senators could have used a parliamentary procedure that would have allowed their votes to count if paired with a Senator with an opposing vote, which possibly could have defeated the bill; however, neither chose to do that, although it is alleged that Senator Garwood planned to pair his vote and was talked out of it at the last minute. Governor Easley signed the lottery bill into law on Wednesday morning at the State Capitol.
The Governor and Speaker Jim Black have stressed the importance of ensuring that lottery proceeds are only used to further improve and expand education programs and do not supplant or replace existing education funds. The two leaders are floating the possibility of passing a constitutional amendment, which could appear on the ballot next year, to put in place additional funding safeguards.
Easley administration officials estimate that a lottery will generate approximately $425 million in net proceeds during the 2006-07 fiscal year and would be allocated in the following way: 5% of revenues off the top would be placed in the “Education Lottery Reserve Fund,” which could be tapped if lottery profits do not meet expectations in a bad year. The reserve would be capped at $50 million. Half of the proceeds would go to class-size reduction in early grades and to expand pre-kindergarten programs for at-risk children. Forty percent would go toward local public school construction. Ten percent would go for college scholarships of up to $4,000 annually for students in low-income families. The school construction funds would be allocated in the following way – 65% according to average daily membership (ADM) and 35% to counties that have property taxes that exceed the state average. Any “overage” in the expected annual lottery proceeds would be split evenly between scholarships and school construction.
Advertising of the lottery will initially be limited, with a cap of 1% or less of total proceeds, and ads could not target minors or specific groups, must include resources for responsible gaming, and must mention the odds of winning. I don’t anticipate the current advertising restrictions, already lifted in part in this year’s budget, lasting too long. Our surrounding states are already scheming about keeping their current North Carolina customers. The Lottery Commission will also be required to provide information to the public about gambling addiction and treatment and would have $1 million per year for such addiction education and treatment.
Once the lottery commission is appointed it is expected to take six to nine months before the first scratch-off tickets will be sold at retail stores in North Carolina. The commission will decide which kind of games will be offered. With the commission’s approval, the director can enter the North Carolina lottery into multi-state agreements such as Powerball or Mega Millions.
Background facts: North Carolina’s first neighboring state to adopt a lottery was Virginia, in 1987. Georgia came next in 1992, followed by South Carolina in 2001 and Tennessee in 2004. Nationwide, 41 states and the District of Columbia now operate lotteries, although they have consistently proven to be an unreliable and diminishing source of income.