What Would Happen To VLTs If North Carolina Adds Casinos? Expert Explains

Much of the recent gambling-related discussion here in North Carolina has focused on casino expansion.

And rightfully so. Adding four more land-based casinos would permanently alter the state’s in-person gambling landscape in an unprecedented manner. That possibility has resulted in some heated debates in the counties where proposed casinos would be developed. Along with community debate on the topic, a recent NCSharp survey shows there’s widespread public support for it.

But … the casino expansion NC lawmakers are considering tacking onto the 2024 budget has also addressed a further gambling expansion.

Regulation of video lottery terminals, or VLTs, in North Carolina.

And that component is what one gaming law expert is focusing on as the North Carolina General Assembly nears its Aug. 31 end of session.

“Time is running out,” says Tim Lowry, partner at Holland & Knight and former senior corporate counsel at Harrah’s Entertainment.

What is a VLT in North Carolina?

A VLT looks, sounds and plays like a traditional slot machine. However, while slot machine results are decided by a random number generator, VLTs are preprogrammed to pay out a certain amount of times. VLTs are also connected to a network of machines, meaning players “compete” against each other for the payouts via slot-like games.

VLTs are illegal in North Carolina. However, State Rep. Henry Warren estimates there are anywhere from 60,000 to 100,000 VLTs operating under the table in NC. Warren was the sponsor of House Bill 512, a different VLT bill that stalled earlier this spring.

“By restricting, regulating and reducing the supply,” Warren said in May, “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.”

How VLT revenue could impact the NC economy

We likely wouldn’t see all 100,000 machines suddenly become legalized if lawmakers approve the additions to the state budget. It’s also unclear whether these machines — located in “bars, restaurants and ‘sweepstakes cafés’ throughout the Tar Heel State,” Lowry said — would be moved to North Carolina Lottery retail locations, or if those locations would get new machines.

An analysis from Spectrum Gaming Group found that adding even just 30,000 legal VLTs to North Carolina Lottery retailers could generate up to $1.89 billion in gross gaming revenue per year.

Imagine the type of money being spent — and not going into state coffers — with up to 100,000 illegal machines.

“A recent study conducted by the American Gaming Association estimated that Americans wager over $109 billion annually on such unregulated machines,” Lowry said, “and that a majority of players cannot differentiate these ‘skill’ machines from traditional slot machines that are found in a casino.

“Aside from the fact that these machines often do not have any internal controls or customer checks in place to guard against problem gambling activity is that the revenues generated from these unregulated machines are untaxed and can be used to fund illegal activities.”

The Spectrum analysis projected that the combined state appropriations from VLT revenue and revenue from the four new North Carolina casinos could reach $1.2 billion per year.

VLTs and igaming could be set for a showdown

If VLT expansion gets added to the state’s budget bill–which, to be clear, is a long shot–a likely showdown could be in place between the VLT industry and advocates of online casino expansion in the state.

A source has told NCSharp that legalizing VLTs will make it much harder to legalize icasino games in the future due to the similarity between the two industries.

Further, a new report from campaign finance watchdog Bob Hall indicates that a number of people with connections to the VLT industry in North Carolina and out of state have contributed hundreds of thousands of dollars to NC lawmakers in the past six months.

The infusion of cash, which will likely not be enough to get VLTs added to the budget, may spark lawmakers next session to put forth VLT legislation before online casino legislation. If this happens, lobbying interests from those two interests may find themselves competing in a zero-sum game.

About the Author

Matthew Bain

Matthew Bain is the News Content Manager at Catena Media, overseeing news content for the network’s highest-priority regional sites. With North Carolina launching sports betting, NCSharp is one of his priority sites. Prior to joining Catena Media in 2022, Matthew won 10 statewide and national journalism awards during six years as a reporter and editor for the USA TODAY Network. Matthew’s work primarily appeared in the Des Moines Register, but he was also featured in the Detroit Free Press, Indianapolis Star, Arizona Republic, Milwaukee Journal Sentinel, and USA TODAY. Throughout his career, Matthew’s bylines have also appeared in the Atlanta Journal-Constitution, Seattle Times, and Orange County Register.