A North Carolina House committee will hold a hearing on a bill that would legalize video lottery terminals (VLTs) to benefit student loan forgiveness and in-state HBCUs.
House Bill 512, sponsored by Rep. Harry Warren, R-Rowan, was filed in late March and referred April 27 to the House Commerce Committee, where it has been awaiting a hearing. That hearing is scheduled for 3 p.m. Tuesday.
The bill calls for “no less than 12 licensed operators in the state at all times,” all of which must contract to distribute VLTs to merchants that have “an active off-site [Alcoholic Beverage Control] permit or an active on-site ABC permit” to sell alcohol and a “video gaming terminal permit.” The revenue would be transferred to a newly created North Carolina Video Gaming Fund.
The licensing, permitting, collecting and distributing of all fees and revenue would be done by the North Carolina State Lottery Commission.
North Carolina VLT permits, licenses, fee schedules
HB 512 strives to maintain “no less than five [VLT] manufacturers active in the state at all times,” along with a minimum 12 operators distributing VLTs to licensed merchants throughout the state. VLTs are also known as video gaming terminals (VGTs). The terminals operate like slot machines.
Merchants would be allowed “up to six video gaming terminals per location” but may be allowed an additional four terminals per location. All terminals must be inspected by the North Carolina Lottery and feature a permit affixed to the machine.
The commission would establish a series of checkpoints to ensure that all applicants for VLT licenses are people of “good character, honesty, and integrity.” Criminal background checks for merchants and their employees, as well as tax records and financial evaluations ensuring sound business practices, would be put in place.
Each applicant for an annual permit would need to prove they have been a North Carolina resident for at least three years before the application was submitted or “maintained a physical office location in the same jurisdiction” of the state for three years prior.
To participate in North Carolina’s VLT system, an annual privilege tax would be imposed on manufacturers, operators and merchants in the following amounts:
- Manufacturers: $50,000
- Operators: $25,000 and $150 per terminal licensed to that operator
- Merchants: $1,000 per location plus $150 per terminal in each location
The Commission may also charge applicants a $250 fee for licenses and annual renewals.
The North Carolina Video Gaming Fund
The North Carolina Video Gaming Fund (NCVGF), operating within the state treasury, would be created through this bill to handle the net machine revenues of the state’s VLTs.
The bill states that “no less than 32% of the net machine revenues” will be transferred into the NCVGF to be appropriated by the General Assembly. It also proposes that no more than 8% of net machine revenue will be allocated for “administrative expenses of the Commission,” and any leftover money from that will be transferred to the NCVGF. Included in administrative expenses is a $1 million allocation to the NC Department of Health and Human Services for gambling addiction education and treatment services.
Operators would receive 35% of the net gaming revenue, and 25% would be returned to the merchants.
Similar to the North Carolina sports betting bill, appropriations from the NCVGF would help the state’s historically black colleges and universities (HBCUs) in the form of annual $2 million allocations to each of the following schools for “improving graduation rates and student success:”
- Elizabeth City State University
- Fayetteville State University
- North Carolina A&T State University
- North Carolina Central University
- Winston-Salem State University
- University of North Carolina at Pembroke
Also, $10 million a year, in the form of $2 million grants per institution, would go to independent in-state HBCUs.
The NCVGF further focuses on student loan forgiveness for students within the North Carolina Community College program by creating the Community College Scholarship Loan Program. This program would give an amount “sufficient to fund scholarship forgivable loans” for community college students to the State Education Assistance Authority.
Finally, the NCVGF devotes $1 million annually to the Department of Public Safety for “sheriffs to combat illegal gaming.”
VLTs monitored by centralized system for safety and integrity
To ensure that all VLTs operate with fidelity, a “central monitoring system” would be put in place to establish odds across all machines and ensure that all machines function correctly, are secure and can be maintained remotely if an error occurs.
All VLTs will disallow any player to play more than the maximum dollar amount for the machine set by the commission. Merchants would be required to post “on or near” each video gaming terminal the odds of winning on that specific machine.
The merchant will be responsible for confirming that all players are 21 or older.