Lottery Eyes Video Poker

Special Report - May 18, 2010
A report from the North Carolina Lottery purports that the state could expect annual revenues topping $550 million, if legislators decided to legalize and regulate video gambling throughout the state rather than banning it. The report was compiled in response to a request from Senate Rules Committee Chairman, Sen. David Hoyle (D–Gaston). As the legislature began its “Short Session” May 12, legislators faced the looming task of balancing the state’s budget in light of a claimed budget deficit of nearly $800 million.

As we have previously reported, the legislative Black caucus and other members of the House and Senate have pushed for regulated video gambling in the state to produce a new revenue stream. At the same time, many citizens, local leaders, and other legislators want the General Assembly to close loopholes that have allowed the proliferation of so-called sweepstakes and internet cafes, which provide access to computer-based and online gambling with cash prizes when customers purchase internet or phone time.

The report from lottery director Tom Shaheen, looked to states like West Virginia and Rhode Island that have implemented video lottery terminal (VLT) programs, regulated by their governments. According to the report, North Carolina could expect to support 21,000 gambling machines in 2,800 locations around the state under a VLT program. The report defines the program in such a way that under-age play would be prevented by requiring “licensed locations to possess a valid Alcoholic Beverage Control (ABC) permit.” Additionally, the report encouraged the state to appreciate the importance of a central monitoring system to “maintain full accountability of all transactions.”

While the report estimates that North Carolina could net $576 million by implementing a VLT program, that includes proceeds from video operations as well as annual license fees once the program is completely set-up, which the report estimates would take four years. The $576 million figure would be the net revenue of the estimated $1.15 billion total net machine income, after $598 million in costs for administration, monitoring, and retailer commissioners is taken into account. In the meantime, the estimate is that North Carolina would see $350 million in the first year of such a program.

Van Denton, communications director for the North Carolina Lottery, emphasizes that “the lottery is taking no position” on this proposal, but rather provided the report in response to a legislative inquiry.

Not all legislators are sold on the idea of legalizing video gambling statewide in order to regulate it for income. Rep. Ray Rapp (D–Madison) told WRAL, “We need to make a statement once and for all, not provide any more loopholes for folks to get around, and simply stop it.”

“The State should not resort to legalizing the ‘crack cocaine’ of gambling in a desperate attempt to raise revenue,” said Bill Brooks, president of the North Carolina Family Policy Council. “This study does not take into account the human costs associated with legalizing video poker, such as the increased numbers of gambling addicts it would create in our state, and the negative impact this will have on families. Video poker was banned by the General Assembly for good reason—because it is a highly addictive and destructive form of gambling. No amount of potential revenue should justify making this dangerous form of gambling legal in our state once again.”

Copyright © 2010. North Carolina Family Policy Council. All rights reserved.