A bill to legalize video lottery terminals, seen by some as a solution to illegal gaming machines operating throughout North Carolina, received a House hearing this week, but no vote was taken.
The House Commerce Committee heard House Bill 512. The bill calls for revenue from legal VLTs to fund student loan forgiveness and HBCUs.
Rep. Harry Warren, R-Rowan, the bill’s sponsor and sponsor of a similar VLT bill that stalled in the House in 2021, presented the measure Tuesday as a way to combat grey-market “fish game” arcades that have popped up in Charlotte, Wilkesboro and other metro areas.
The House hearing came a day before the Senate Commerce Committee was scheduled to hear online sports betting legislation. The two measures combined would represent the most significant legal gambling expansion in state history.
Illegal gaming machines still abound in the state
Warren appealed to the need for safer and regulated gaming when explaining that over the years, 60,000-100,000 illegal gaming machines have operated in the state.
In 2021, Axios Charlotte found that fish game parlors had popped up in primarily low-income parts of the city. Warren’s first bill was put before the House at the time, and the arguments against fish games in cities such as Charlotte centered around the siphoning of money out of low-income neighborhoods.
Since then, law enforcement has cracked down, citing a court ruling that claims “games of chance” are illegal outside of tribal gaming venues and the state lottery. However, as WFAE-FM reported earlier this year, fish game parlors haven’t gone anywhere, as a drive through Charlotte would indicate.
“The real reason that these things flourish is because people play them,” Warren told the committee. “By restricting, regulating and reducing the supply, we can eliminate sweepstakes parlors and the seedy aspects of unregulated gambling, replacing it with a limited supply of gaming entertainment that fulfills the public demand in a safer, controlled environment and safer conditions.”
Fiscal note projects $1 billion in net revenue in five years
A fiscal note on HB 512 projects that in five years, with a fully-mature market, all VLTs in the state could provide a net income of over $1 billion.
This figure is based on, first, the projection that “the number of VLTs will increase annually by 5,000 machines during the 5-year estimate,” totaling 20,000 machines by Fiscal Year 2027-28; and, second, on data compiled by Spectrum Gaming Group that shows individual VLTs will net roughly $150 per day based on comparable data from other states with VLTs.
At maturity, 40% of the total net revenue from all VLTs would go to the North Carolina Lottery, and 60% to VLT operators, merchants and retail locations.
As the bill states, the revenue given to the North Carolina Lottery would primarily serve two purposes. The first recipient is the state’s Historically Black Colleges and Universities (HBCUs). The state’s six public HBCUs would receive $12 million annually, split evenly between the schools. The state’s five independent HBCUs will receive $10 million annually, also with the same even split between the schools.
The second major recipient is community college students seeking student loan forgiveness. The bill would create the Community College Scholarship Student Loan Fund to help students complete an associate’s degree, diploma or certificate at a community college.
An additional $1 million annually would go to the state’s sheriff’s departments to combat illegal gaming.
A long way to go for HB 512
No vote was taken on HB 512, and it’s unclear when the committee will return to it. However, it must pass through four House committees before reaching the House floor.