State lawmakers are considering raising the amount the N.C. Education Lottery can spend to advertise its games.
Current law caps advertising spending at 1 percent of the lottery's annual revenue, a restriction favored by lottery critics who worry that heavy advertising could contribute to gambling addictions. A bill passed by the Joint Legislative Oversight Committee on the North Carolina State Lottery on Thursday would raise that cap to 2 percent of annual revenue; the lottery would still face a cap on total administrative expenses of 8 percent of revenue.
Sen. Jerry Tillman, a Randolph County Republican and chairman of the oversight committee, introduced the bill at the end of Thursday's meeting, minutes before the vote. "Rep. (John) Bell, you want to second that motion?" to approve the bill, Tillman asked. "I'm reading the bill right now," Bell replied. Sen. Floyd McKissick, D-Durham, said he supports the proposal but criticized the process Tillman used to hold a vote. "As a matter of process, it would be good in the future if we could receive these types of bills before the meeting," McKissick said.
Tillman defended his approach, noting that the bill is a single page with one simple provision. "There's nothing hidden in that bill whatsoever," he said, arguing that the change will help the lottery grow. "That's an easy way to get lottery revenues boosted and get more money for the schools. I think this is something that we will have bipartisan support on."
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Rep. Pat Hurley, a Randolph County Republican, was the only committee member who spoke against the bill. She questioned why the lottery couldn't shift some of its $5 million marketing budget to advertising instead of raising the cap.
Rev. Mark Creech of the conservative Christian Action League, which opposes the lottery, said he's concerned by the committee's action.
"It's disappointing to see misplaced faith in the lottery by a decision to double its advertising," Creech said in an email. "The lottery, state sponsored gambling, is a major policy failure. It's highly regressive and is an unsustainable revenue source. ... The Oversight Committee would have done much better to have discussed at length what could be done to provide improved disclosure about what people are actually buying when they purchase a ticket. What's needed is greater transparency – not more money thrown at a colossal government failure."
No further action on the bill is expected until next year's session, when it will be formally filed and go through another round of committee hearings. If the bill passes, lottery officials estimate it would increase sales by $308 million and result in an additional $63.4 million in education funding.
The oversight committee also heard an update from lottery director Alice Garland, who said the agency is preparing to launch the new game Carolina Keno later this month. The Keno game will include drawings every five minutes, and players can decide how much money to spend each time they play, with bigger prizes for larger purchases.
"I'm hoping we'll get a few millennials with this game," she said.
Keno is projected to generate $135.4 million annually in additional revenue by fiscal year 2018-2019; that would mean $30.9 million more going to schools.
Garland also discussed the possibility of adding what are known as "digital instant" games to the lottery's online offerings, where players would buy tickets online and could immediately find out if they've won a prize. She said that could increase revenue by $130 million over the first five years.