N.C. Lottery in court

Mar 21, 2006, 6:48 am (11 comments)

North Carolina Lottery

According to N.C. constitution, games are a tax, former justice says

Just 10 days before the first scratch-off tickets go on sale in North Carolina, lawyers argued yesterday about whether legislators followed proper procedure when they adopted a state lottery last year, and they asked a judge to block the lottery's start March 30.

Ultimately, the decision could come down to whether the lottery is considered a tax.

Lottery opponents from both the left and the right filed suit last year about the way legislators approved the lottery.

When the House approved the lottery by a 61-59 vote in April and when the Senate approved it by a 25-24 vote in August, House Speaker Jim Black and Lt. Gov. Beverly Perdue immediately called for a final vote moments after the initial one to seal the lottery's approval.

Robert Orr, a former justice on the N.C. Supreme Court who heads the N.C. Institute for Constitutional Law, told Judge Henry Hight in Wake Superior Court yesterday that legislative leaders ignored a provision on "Revenue bills" that has been part of the state constitution since 1868 to prevent hasty decisions on money matters.

"No law shall be enacted to raise money on the credit of the State, or to pledge the faith of the State directly or indirectly for the payment of any debt, or to impose any tax upon the people ... unless the bill for the purpose shall have been read three several times in each house of the General Assembly and passed three several readings, which readings shall have been on three different days," says Article II, Section 23 of the constitution.

Orr argued that because 35 percent of the proceeds from the lottery must go to government education programs, that 35 percent is a tax and the lottery bill should have had a three-day vote.

"It's a revenue bill," he said. "We know from the Lottery Act that its express purpose was raising revenue for various educational programs."

"The very purpose of this act, the very purpose of that 35 percent provision, is to fund education," he said. "That's the very purpose of the legislation ... and we would submit that it constitutes a tax."

Norma Harrell, a special deputy attorney general, told Hight that the lottery is not a tax because play is voluntary.

"Your honor, there simply is no tax involved here," Harrell said. "You can buy a lottery ticket if you want. If you don't, you don't have to."

Harrell cited a textbook definition of a tax. "A tax is a forced contribution to government. No one is forced to contribute to government here," she said. "You don't have to buy a lottery ticket."

But Orr drew parallels with the state's sales tax.

"That's correct — you don't have to buy a lottery ticket. You don't have to buy a car. You don't have to buy a shirt at Belk. But if you choose to, you have to pay a tax," he said. With the lottery, "You have to pay that 35 percent."

Orr argued that the lottery also is subject to a three-day vote because it pledges the faith of the state.

"The state sells tickets — little tickets with pictures of lighthouses and cardinals on them. And money comes into the treasury," he said. "The state is going to make sure that those winners are paid."

Orr said that the debate is not about the lottery itself but about whether legislators followed the correct procedure in adopting it. He told Hight that legislators could return for a special session to approve a lottery if he rules that they didn't do it properly last year.

"Then if it's the will of the officials of this state to enact a lottery act, then so be it," he said.

"Who knows how that would play out?" Orr said after the hearing. "It's a realistic alternative. If you're looking at an appeal, it could be six months or a year.... If you're looking for a quick answer, that's the easiest way to do it."

Rep. Paul Stam, R-Wake, a plaintiff in the lawsuit who tried to object to a final vote on the lottery but says he was not recognized by Black, said he doubts that a lottery could pass the House again now, after months of controversy over appointments to the N.C. Lottery Commission.

"I think it would be defeated. I've spoken to House members who voted for it who said they would not vote for it this time (in the event of a special session). More than one," Stam said. "That's because of all the sleaze that came out. They would be embarrassed to be associated with it."

One member appointed by Black to the lottery commission, Kevin Geddings, resigned after lottery operator Scientific Games disclosed that it paid Geddings' advertising agency in Charlotte $24,500 in consulting fees last year.

With lottery officials preparing for start-up March 30 and terminals already installed at more than 4,000 convenience stores and other outlets around the state, Hight said he will issue a ruling this week.

Orr said he would expect either side to appeal.

Though the state could ask for a stay of a ruling from the judge, if Hight rules that the lottery was improperly approved, "The state has no authority to do any of the things that they're doing," Orr said.

Tom Shaheen, the lottery's executive director, sat in the audience listening to the court arguments and said that lottery officials plan to proceed.

"He's going to rule by the end of the week," he said. "We're just going to move forward until we're told differently."

Winston-Salem Journal

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i'll be glad when this is all over and the people of north carolina can play the lottery and put this all behind them.i'm hoping the lottery prevails in this..........


Its crazy! Have any other state been off to a rough start like NC, with the lawsuits and all?

BevsPicks's avatarBevsPicks

"Norma Harrell, a special deputy attorney general, told Hight that the lottery is not a tax because play is voluntary."


ENOUGH SAID!  Let's just get on with it! Quit bickering folks! Crazy!


The fact that North Carolina legislators are trying to hammer this issue into place without the benefit of a referendum vote or proper constitutional procedures should raise a glowing red flag to the citizens of that state.

This is exactly how the situation in Indiana has been allowed to get so far out of hand. Indiana held a referendum vote in 1989, on the premise that the money raised would be used for new and better schools, road construction and repair, and the reduction or elimination of certain tax burdens. The Hoosier Lottery was sold to us as the answer to all of our current and future economic woes.

None of that came to pass. The Build Indiana Fund was bankrupted in short order by the same thieves who continue to loot the state treasury. An official state investigation into the missing money was "inconclusive," so we still don't know what happened to that money and, if our lawmakers have their way, we probably never will.

By refusing to "allow" a referendum vote, North Carolina lawmakers are essentially saying to the people they pretend to represent, "We're not going to take a chance that you won't approve this lottery. This issue is about revenue, which you don't understand, so keep your mouths shut and let us handle it. You elected us to understand this stuff and make your decisions for you." 

I understand that many of you would like to see a lottery in your state, but you should insist that your elected officials institute it properly, with external accounting controls, solid accountability measures for those responsible for overseeing its operation, and specific and unimpeachable methods for dispersing its revenues for the benefit of every citizen of your state.

Without these measures in place and in writing, you're running the risk that your state officials, like most of those in Indiana, will become victims of their own greed. Should that happen, they'll not only bankrupt your state, they'll bankrupt you. The contest to see who can steal more seems to have no deadline; the money just keeps disappearing into thin air, and then they force you and your fellow residents to make up the difference through new and higher taxes.

Personally, I agree with former justice Orr; the price of a lottery ticket is a tax, albeit a voluntary one, since the revenue raised is supposed to be used to fund or otherwise benefit public programs such as education. 

In two consecutive years, Indiana burned through TWO BILLION dollars with absolutely nothing to show for it - that money is just gone! Now that Mitch Daniels With a "B" has sold our toll road to a foreign company for the next seventy-five years, we're about to get screwed out of another $3.85 Billion over the next two years. That's when Daniels will be voted out of office, and you can bet that he and his cronies are not about to leave a dollar of it behind. They're already looking for ways to steal it. Over 60% of the people of Indiana were against this toll road lease, but that didn't matter to them; all they saw was the opportunity to skim what they can from a massive pile of money, with no inherent danger of having to account for it (ultimate destinations for this money or specific programs it would otherwise benefit are not provided for in the legislation which authorized the toll road lease - no accident, I'm sure).

Make your state representatives do their jobs! YOU elected them - they work for YOU. They desperately need to be reminded of that.

Don't let them institute a state lottery that becomes nothing more than a cookie jar full of cash. They'll help themselves any time they feel like it, without worrying that they'll have to account for the money they take out. Hold them accountable; make them obey the same laws they've written to govern you. We elect them to be the voice of the people, not the voice of their respective parties.

If you're not careful, you could wind up spending nearly four years of your life gathering evidence against a crooked state lottery. I've heard rumors that this actually happened to someone here...

Kidzmom's avatarKidzmom

blaaaaaaaaaah,blaaaaaaaaaah,blaaaaaaah.  NC government get a grip..............please

Everyone sitting on the legislature, I didn't vote for any of them however NC players and voters will continue to go out of state to play virginia and south carolina lotteries and then we will still be in the red with no money coming into the state.  You can't make everyone happy so I wish they would just move on and get over it.


Jim,your opening paragraph tells me that you have no clue as to what's going on in the NC case.The fact is that "The People" of this state have wanted a lottery for over 20 years.It has been a minority of lawmakers who have systematically blocked any referendum on the lottery for that time.We have been subject to lottery bills dieing in committe studies year after year.The people of this state has had it's will denighed all these many years with no releif.

Further,I invite you and any others who question the make-up of how the lottery would work to actually read the bill.Many of your questions and fears are answered there.Many of the safeguards you ask about are already covered.

Moreover,unfortunately for your position,and as the article states,a tax is a forced contribution to government.No one will force anybody to play the lottery.By definition,you can not have a voluntary tax.

As I mentioned just yesterday,if someone still considers the lottery a tax,then explain how a company like Ticketmaster is allowed to levy a tax on concert tickets without legislation to back it up.They collect a fee in the same way the lottery collects a fee for it's programs.

We can only hope that a rational court can see that the will of the majority of the people of this state is fulfilled by dismissing this last gasp attempt to derail the lottery in this state.



 The lottery will go on as planned!OH YEH!

BevsPicks's avatarBevsPicks

It's about time!!! Like I said before It's a money thang! Bring it home!


BevsPicks's avatarBevsPicks


 The lottery will go on as planned!OH YEH!

Thanks for the New Flash NCPicks!!!








Hope that works,my browser won't cut and paste.

   That was supposed to be NEWS FLASH,but I got so excited I left off the "S".

One more item,the judge is making the challengers to the law pay the states court cost.Double VICTORY! 

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