GENERAL ASSEMBLY OF NORTH CAROLINA

SECOND EXTRA SESSION 1996

H	1 

HOUSE BILL 60*

Short Title:  Education Lottery–1996.	(Public)

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Sponsors: Representatives Fitch, H. Hunter; Adams, Arnold, Crawford, Cunningham, Earle, Lemmond, McAllister, Michaux, Nichols, Oldham, Owens, Redwine, Richardson, Wainwright, Warner, and Womble.

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Referred to:  Rules.

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July 10, 1996

A BILL TO BE ENTITLED
AN ACT TO ESTABLISH A STATE LOTTERY TO PROVIDE FUNDS FOR EDUCATIONAL PURPOSES.
The General Assembly of North Carolina enacts:
Section 1.  The General Statutes are amended by adding a new Chapter to read:
"Chapter 143C.
"North Carolina State Lottery.
"ARTICLE 1.
"General Provisions and Definitions.
"§ 143C-101.  Citation.
This Chapter shall be known and may be cited as the North Carolina State Lottery Act.
"§ 143C-102.  Purpose and intent.
The General Assembly declares that the purpose and intent of this Chapter is to provide additional monies to benefit the public purposes described in this Chapter through the implementation of a State-operated lottery without the imposition of additional or increased taxes.  The lottery shall be initiated at the earliest practical time and it shall be operated to maximize new revenue to the State. That new revenue shall be raised in a manner consistent with the dignity of the State and the general welfare of the people, and in a manner consistent with effective business practices.
"§ 143C-103.  Laws not affected.
In the event of a conflict between the provisions of this Chapter and any other laws, including Article 37 of Chapter 14 of the General Statutes, the provisions of this Chapter shall govern.
"§ 143C-104.  Commission a self-supporting agency.
It is the intent of this Chapter that the Commission established by this Chapter shall be a self-supporting and revenue-raising agency of State government.
"§ 143C-105.  Public purposes to benefit from lottery.
The net revenues of the lottery shall be used to benefit the public purposes set forth in G.S. 143C-175.  It is the intent of this Chapter that the net revenues generated by the lottery established by this Chapter shall not supplant revenues already expended or projected to be expended for those public purposes and that lottery net revenues shall supplement rather than be used as substitute funds for the total amount of money allocated for those public purposes.
"§ 143C-106.  Allocation of revenues.
As nearly as practical, at least eighty-four percent (84%) of the total annual revenues from the sale of lottery tickets or shares, as described in this Chapter, shall be returned to the public in the form of prizes and net revenues benefiting the public purposes set forth in G.S. 143C-175.  As nearly as practical, at least fifty percent (50%) of the total annual revenues, as described in this Chapter, shall be returned to the public in the form of prizes as described in this Chapter.  Unclaimed prize money held by the Commission in the Lottery Fund, as described in this Chapter, may be used by the Commission to enhance prizes in other lottery games.  As nearly as practical, no more than sixteen percent (16%) of the total annual revenues as described in this Chapter shall be allocated for payment of expenses of the Commission as described in this Chapter.  To the extent that the expenses of the Commission are less than sixteen percent (16%) of total annual revenues, any surplus funds may be allocated to increase prize payments or may also be allocated to the benefit of the public purposes as described in this Chapter.
"§ 143C-107.  Definitions.
As used in this Chapter, unless the context requires otherwise:
(1)	'Commission' means the North Carolina State Lottery Commission.
(2)	'Commissioner' means one of the members of the Commission appointed pursuant to this Chapter to oversee the lottery.
(3)	'Director' means the person appointed by the Governor pursuant to this Chapter as the chief administrator of the Commission.
(4)	'Game' or 'Lottery game' means any procedure or game authorized by the Commission whereby prizes are distributed among persons who have paid, or unconditionally agreed to pay, for tickets or shares that provide the opportunity to win these prizes.
(5)	'Lottery' or 'State lottery' means any lottery game or series of games, established and operated pursuant to this Chapter and authorized by the Commission.
(6)	'Lottery contractor' means a person with whom the Commission has contracted for the purpose of providing goods or services to the Commission.
(7)	'Major procurement' means a procurement for a contract for (i) the printing of recyclable paper instant tickets or the provision of shares for use in any lottery game, (ii) any goods or services involving the receiving or recording of selections in any lottery game, (iii) any goods or services involving the determination or generation of winners in any lottery game, or (iv) any goods and services involving warehousing, telemarketing, and distribution of instant games.
(8)	'Person' means any natural person or corporation, limited liability company, trust, association, partnership, joint venture, subsidiary, or other business entity.
(9)	'Retailer', 'Lottery retailer' or 'Lottery game retailer' means a person  (i) who is licensed by the Commission to sell tickets or shares in lottery games to the public and (ii) with whom the Commission has contracted.
(10)	'Share' means any method of participation in a lottery game, other than by a ticket purchased on an equivalent basis with a ticket, whether presently contemplated or developed in the future.
(11)	'Ticket' means any tangible evidence issued by the Commission to prove participation in a lottery game.
(12)	'Vendor' or 'Lottery vendor' means any person who submits a bid, proposal, or offer as part of a procurement for a contract for goods or services for the Commission.
"§§ 143C-108 and 143C-109:  Reserved for future codification purposes.
"ARTICLE 2.
"North Carolina State Lottery Commission.
"§ 143C-110.  Creation of Commission.
There is created a North Carolina State Lottery Commission.
"§ 143C-111.  Commission membership; appointment; vacancies; removal.
(a)	The Commission shall consist of nine members, five of whom shall be appointed by the Governor, two of whom shall be appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, and two of whom shall be appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives.
(b)	Of the initial appointees of the Governor, two members shall serve a term of two years, two members shall serve a term of three years, and one shall serve a term of five years.  Of the initial appointees of the General Assembly upon the recommendation of the President Pro Tempore of the Senate, one member shall serve a term of three years, and one member shall serve a term of five years.  Of the initial appointees of the General Assembly upon the recommendation of the Speaker of the House of Representatives, one member shall serve a term of three years, and one member shall serve a term of five years.  All succeeding appointments shall be for terms of five years.
	(c)	All initial appointments shall be made within 30 days of the effective date of this Chapter.
	(d)	Vacancies shall be filled within 30 days of their occurrence by the appointing authority for the unexpired portion of the term in which they occur.
(e)	All appointments made by the General Assembly shall be made in accordance with the applicable sections of Article 16 of Chapter 120 of the General Statutes.
"§ 143C-112.  Qualifications of Commissioners.
(a)	At least one of the Commissioners appointed by the Governor shall have a minimum of five years' experience in law enforcement.
(b)	At least one of the Commissioners appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate shall be a certified public accountant.
(c)	At least one of the Commissioners appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives shall have retail sales experience.
(d)	No person shall be appointed as a Commissioner who has been convicted of a felony.
"§ 143C-113.  Compensation and expenses.
(a)	Commissioners shall be compensated at the rate of one hundred dollars ($100.00) for each day engaged in Commission business.
(b)	Commissioners shall, in addition to daily compensation, be reimbursed for actual expenses incurred on Commission business, including necessary travel expenses.
"§ 143C-114.  Powers and duties of the Commission.
The Commission shall exercise all powers necessary to effectuate the purposes of this Chapter, including the adoption of rules pursuant to Chapter 150B of the General Statutes and the establishment of licensing and contracting requirements and procedures.
"§ 143C-115.  Annual selection of chairman.
The Commission shall annually select a chairman from its membership.
"§ 143C-116.  Meetings; records.
(a)	Meetings of the Commission shall be open and public in accordance with Article 33C of Chapter 143 of the General Statutes.
(b)	Records of the Commission shall be open and available to the public in accordance with the provisions of Chapter 132 of the General Statutes.
(c)	The Commission shall meet with the Director at least quarterly to make recommendations and set policy, to approve or reject reports of the Director, to adopt rules in accordance with Chapter 150B of the General Statutes, and to transact any other business that may properly be brought before it.  Meetings shall be held no more often than monthly, unless required by an emergency.
(d)	The chairman or a majority of the members of the Commission shall have the power to call special meetings of the Commission upon advance written notice to all of the members of the Commission and the Director.
"§ 143C-117.  Quorum; voting.
A majority of the total membership of the Commission constitutes a quorum.  All decisions of the Commission shall be made by a majority vote.
"§ 143C-118.  Reports.
The Commission shall make quarterly and annual reports on the operations of the Commission to the Governor, Attorney General, State Treasurer, and to the General Assembly.  The reports shall include full and complete statements of lottery revenues, prize disbursements, expenses, net revenues, and all other financial transactions involving lottery funds.
"§ 143C-119:  Reserved for future codification purposes.
"ARTICLE 3.
"North Carolina State Lottery Director.
"§ 143C-120.  Appointment and removal of Director.
The Governor shall appoint a Director within 30 days of the effective date of this Chapter.  The Director shall direct the operations of the Commission.  The Governor may remove the Director upon notification to the Commission.  The Director shall be exempt from the State Personnel Act.
"§ 143C-121.  Qualifications of the Director.
No person shall be appointed Director who has been convicted of a felony.
"§ 143C-122.  Salary.
During the first fiscal year of the operation of the Commission, the Director shall receive compensation as set by the Commission and approved by the Governor.  Thereafter the compensation of the Director shall be set by the General Assembly in the Current Operations Appropriations Act.  The Director shall render full-time attention to the duties of the office.
"§ 143C-123.  Duties and powers of the Director.
The Director shall perform all duties, exercise all powers, assume and discharge all responsibilities, and carry out and effect all purposes provided by this Chapter.  The Director shall act as the Secretary and Executive Officer of the Commission. The Director shall act in accordance with this Chapter, the rules adopted by the Commission, and under the guidance of the Commission.
"§ 143C-124.  Power to hire and procure services.
(a)	The Director shall hire, subject to the approval of the Commission, the professional, clerical, technical, and administrative personnel needed to carry out the provisions of this Chapter.  No person shall be employed by the Commission who has been convicted of a felony within the last 10 years.  Each person employed by the Commission shall execute an authorization to allow an investigation of the person's background.
(b)	The Director may, and is encouraged to, subject to the approval of the Commission, outsource all feasible operational tasks to two or more vendors for the purposes of limiting the number of State employees to essential policy-making positions.
"§ 143C-125.  Assistant directors.
The Director may appoint and prescribe the duties for up to four assistant directors.  The compensation of each assistant director shall be set by the Commission and shall not exceed the Director's compensation.  The Director may designate one of the assistant directors as the deputy director.
"§ 143C-126.  Assistant director for security.
(a)	One of the assistant directors, the assistant director for security, shall be responsible for a security division to assure the security, honesty, fairness, and integrity in the operation and administration of the Commission and lottery games, including an examination of the background of all prospective employees, lottery vendors, lottery contractors, and any other person required to be licensed by or who contract with the Commission.
(b)	The assistant director for security shall be qualified by training and experience including at least five years of law enforcement experience and knowledge and experience in computer security.
(c)	The assistant director for security may, in conjunction with the Director, confer with the Attorney General or the Attorney General's designee, to promote and ensure the security, honesty, fairness, and integrity of the operation and administration of the Commission.
(d)	The assistant director for security, in conjunction with the Director, shall report any alleged violation of law to the appropriate law enforcement authority for further investigation and action.
"§ 143C-127.  Criminal identification information available to Commission; law enforcement officer status.
(a)	Upon the request of the Director or the assistant director for security, the Attorney General and the Secretary of Crime Control and Public Safety shall furnish information that they have in their possession, including computerized or other information and data to the Director and the assistant director for security necessary to assure the security, honesty, fairness, and integrity in the operation and administration of the Commission and its licensees.
(b)	For the purpose of requesting and receiving this information, the Commission shall be considered to be a 'criminal justice agency' and its enforcement agents to be 'law enforcement officers'.
(c)	The Commission's enforcement agents shall have the same authority with respect to service and execution of arrest warrants and search warrants as is conferred on other law enforcement officers of this State.
"§ 143C-128.  Coordination with Commission.
The Director shall confer as frequently as necessary, but not less than quarterly, with the Commission on the operation and administration of the Commission.  The Director shall make available for inspection by the Commission all books, records, files, documents, and other information of the lottery and shall make recommendations for the improved operation and administration of the Commission and lottery games.
"§ 143C-129.  Study of lottery systems; recommendations for improvement.
The Director shall make an ongoing study of the operation and administration of other lotteries and commissions and lottery games that are in operation in other states and countries, of available literature on the subject of lotteries, of federal laws that may affect the operation of the Commission and lottery games, and of the reaction of the citizens of the State to existing or proposed features in lottery games.  The Director shall conduct this research in order to recommend improvements that will serve the purposes of this Chapter.  The Director may make recommendations to the Commission, to the Governor, and to the General Assembly on any matters concerning the secure, profitable, and efficient operation and administration of the Commission and of lottery games and the convenience of the purchasers of tickets and shares.
"§ 143C-130.  Accountability; books and records.
The Director shall make and keep books and records that accurately and fairly reflect each day's transactions, including the distribution of tickets or shares to lottery game retailers, receipt of funds, prize claims, prizes paid directly by the Commission, expenses, and all other financial transactions involving lottery funds necessary to permit preparation of daily financial statements in conformity with generally accepted accounting principles, in order to maintain daily accountability.
"§ 143C-131.  Monthly financial reports.
The Director shall make a monthly financial report to the Commission, to the Governor, to the State Controller, to the State Treasurer, and to the General Assembly.  The report shall include a statement of all lottery revenues, prize disbursements, expenses, net revenues, and all other financial transactions involving lottery funds for the preceding month.
"§ 143C-132.  Independent study of demographics of lottery players.
Within the first six months of sales of tickets or shares to the public, the Director shall engage an independent firm experienced in demographic analysis to conduct a special study of the demographic characteristics of the players of each lottery game, including their income, age, sex, education, and frequency of participation.  This report shall be presented to the Commission, to the Governor, and to the General Assembly.  Similar studies shall be conducted on a continuing, periodic basis.
"§ 143C-133.  Independent study of effectiveness of lottery communications.
(a)	Until the study required by this section is conducted and the results have been reviewed by the General Assembly, expenditures for advertising of the lottery shall not exceed four percent (4%) of all proceeds from the sales of lottery tickets or shares.
(b)	After the first full year of sales of tickets or shares to the public, the Director shall engage an independent firm experienced in the analysis of advertising, promotion, public relations, and other aspects of communications to conduct a special study of the effectiveness of the communications activities undertaken by the Commission and make recommendations to the Commission on the future conduct and future rate of expenditures for these activities.  This report shall be presented to the Commission, to the Governor, and to the General Assembly.
(c)	Similar studies shall be conducted on a continuing, periodic basis.
"§ 143C-134.  Independent audit of lottery security.
(a)	After the first full year of operation, the Director shall, in addition to all other security measures, engage an independent firm experienced in security procedures, including computer security and systems security, to conduct a continuing comprehensive study and evaluation of all aspects of security in the operation of the Commission and of lottery games. The study shall include:
(1)	Personnel security;
(2) 	Lottery game retailer security;
	(3)	Lottery contractor security;
	(4)	Security of manufacturing operations of lottery contractors;
	(5)	Security against ticket counterfeiting, alteration, and other means of fraudulently winning; security of drawings among entries or finalists;
	(6)	Computer security;
	(7)	Data communications security;
	(8)	Database security;
	(9)	Systems security;
	(10)	Commission premises and warehouse security;
	(11)	Security in distribution;
	(12)	Security involving validation and payment procedures;
	(13)	Security involving unclaimed prizes;
	(14)	Security aspects applicable to each particular lottery game;
	(15)	Security of drawings in games where winners are determined by drawings of numbers; and
	(16)	Any other aspects of security applicable to any particular lottery game and to the Commission and its operations.
(b)	The portion of the security audit report containing the overall evaluation of the Commission and of lottery games in terms of each aspect of security shall be presented to the Commission, to the Governor, and to the General Assembly.
(c)	The portion of the security audit report containing specific recommendations shall be confidential and shall be presented only to the Director, to the assistant director for security, and to the Commission.
(d)	Similar audits of security shall be conducted biennially thereafter.
"§§ 143C-135 through 143C-139:  Reserved for future codification purposes.
"ARTICLE 4.
"Operation of Lottery.
"§ 143C-140.  Initiation and operation of lottery.
The Commission shall initiate operation of lottery games at the earliest feasible and practical time but within 180 days of approval of the referendum.  The lottery games shall be initiated and shall continue to be operated so as to produce the maximum amount of net revenues to benefit the public purposes described in this Chapter consistent with the purposes stated in G.S. 143C-102.  Other departments, boards, commissions, and agencies of the State and their officers shall cooperate with the Commission to aid the Commission in fulfilling these objectives.
"§ 143C-141.  Types of lottery games.
(a)	Upon the recommendation of the Director, the Commission shall adopt rules, in the manner prescribed by Chapter 150B of the General Statutes, specifying the types of lottery games to be conducted by the Commission, including, but not limited to, instant lotteries, on-line games, games played on computer terminals or other devices, and other games traditional to the lottery; provided, however:
(1)	No lottery game shall use the theme of dog racing or horse racing;
(2)	No lottery game shall be based on the outcome of a particular sporting event or on the results of a series of sporting events;
(3)	In lottery games using tickets, each ticket in a particular game shall bear a unique number distinguishing it from every other ticket in that lottery game;
(4)	No name or photograph of a current elected official shall appear on the tickets of any lottery game; and
(5)	In games using electronic computer terminals or other devices to play lottery games, no coins or currency shall be dispensed to players from those electronic computer terminals or devices.
	(b)	The Commission may authorize the use of:
(1)	Any type of lottery game that has been conducted by any state government-operated lottery in the United States that will achieve the revenue objectives of the lottery consistent with the purposes stated in G.S. 143C-102 including, but not limited to:
a.	The sale of recyclable instant tickets or shares by electronic computer terminals or devices; or
b.	Any other type of lottery game; or
(2)	Any gaming technology that has been used by any state government-operated lottery in the United States that will achieve the revenue objectives of the lottery consistent with the purposes stated in G.S. 143C-102 including, but not limited to:
a.	Printed tickets and shares;
b.	Vending machines; or
c.	Electronic computer terminals or other devices to play lottery games that are connected by telephone lines or other electronic means with a computer system operated by the Commission.
"§ 143C-141.1.  Lottery advertising.
(a)	Upon the recommendation of the Director, the Commission shall adopt guidelines regarding the nature of lottery advertising.
The guidelines shall require:
(1)	Minimizing the appeal of the lottery to minors. In developing the guidelines, the Director and the Commission shall consider the possible impact of using cartoon characters and other figures that would particularly attract the attention of minors; and
(2)	The use of false, misleading, or deceptive information shall be prohibited.
(b)	The Commission shall provide, by rule, in the manner prescribed by Chapter 150B of the General Statutes, that:
(1)	In lottery games using tickets with preprinted winners, the overall estimated odds of winning prizes shall be printed on each ticket;
(2)	A detailed tabulation of the estimated number of prizes of each particular prize denomination that are expected to be awarded in each lottery game, or the estimated odds of winning these prizes, shall be available at the offices of the Commission at the time that lottery game is offered for sale to the public; and
(3)	All printed or point of sale advertising promoting the sale of lottery tickets for a particular game shall include the actual or estimated overall odds of winning the game.
"§ 143C-142.  Number and value of prizes.
Upon the recommendation of the Director, the Commission shall adopt rules as prescribed by Chapter 150B of the General Statutes that specify the number and value of prizes for winning tickets or shares in lottery games including cash prizes, merchandise prizes, prizes consisting of deferred payments or annuities, and prizes of tickets or shares in the same lottery game or other lottery games conducted by the Commission.
"§ 143C-143.  Method of determining winners.
(a)	Upon the recommendation of the Director, the Commission shall adopt rules, as prescribed by Chapter 150B of the General Statutes, that specify the method for determining winners in a lottery game; provided, that if a lottery game uses a drawing of winning numbers, a drawing among entries, or a drawing among finalists:
(1)	The drawings shall always be open to the public;
(2)	The drawings shall be witnessed by an independent certified public accountant;
(3)	Any equipment used in the drawings shall be inspected by the independent certified public accountant and an employee of the Commission both before and after the drawings; and
(4)	The drawings and inspections shall be recorded on both video and audio tape.
	(b)	The Commission may authorize the use of any existing or future methods or technologies for determining winners.
"§ 143C-144.  Sale price of tickets and shares.
Upon the recommendation of the Director, the Commission shall adopt rules, as prescribed by Chapter 150B of the General Statutes, specifying the retail sales price for tickets or shares for lottery games, provided:
(1)	No ticket or share shall be sold for more than the retail sales price established by the Commission; and
(2)	The minimum retail price of each ticket, share, or transaction in any lottery game shall be fifty cents (50¢), except to the extent of any discounts or promotions authorized by the Commission for a particular lottery game.
"§ 143C-145.  Validation and payment of prizes.
Upon the recommendation of the Director, the Commission shall adopt rules, as prescribed by Chapter 150B of the General Statutes, to establish a system of verifying the validity of tickets or shares claimed to win prizes and to effect payment of those prizes, provided:
(1)	For the convenience of the public, lottery retailers may be authorized by the Commission to pay winners of up to an amount appropriate to the lottery game involved, after performing validation procedures on their premises, and with the approval of the Director;
(2) 	No prize shall be paid to any person under the age of 18 years;
(3) 	No prize shall be paid arising from claimed tickets or shares that are stolen, counterfeit, altered, fraudulent, unissued, produced or issued in error, unreadable, not received or recorded by the Commission by the applicable deadlines, lacking in captions that conform and agree with the play symbols as appropriate to the lottery game involved, or not in compliance with any additional specific rules and public or confidential validation and security tests appropriate to the particular game involved;
	(4)	No particular prize in any lottery game shall be paid more than once, and in the event of a binding determination that more than one claimant is entitled to a particular prize, the sole remedy for these claimants is the award to each of them of a proportionate share in the prize;
	(5)	The Commission may specify that winners of five hundred and ninety-nine dollars ($599.00) or less may claim the prizes from either:
a.	The same lottery game retailer who sold the winning ticket or share;
b.	From any other lottery retailer; or
c.	Directly from the Commission;
	(6)	Holders of tickets or shares shall have the right to claim prizes for 120 days after the drawing or the end of the lottery game or play in which the prize was won.  The Commission may define shorter time periods for eligibility for entry into drawings involving entries or finalists.  If a valid claim is not made for a prize payable directly by the Commission within the applicable period, the unclaimed prize money may be used to increase prize payments for future games, or may revert to the North Carolina State Lottery Fund;
	(7)	After the expiration of the claim period for prizes for each lottery game, the Commission shall make available a detailed tabulation of the total number of prizes of each prize denomination that was actually claimed and paid directly by the Commission;
(8)	The right of any person to a prize shall not be assignable, except that payment of any prize may be paid to the estate of a deceased prizewinner or to a person designated pursuant to an appropriate judicial order.  The Director, Commission, and the State shall be discharged of all liability upon payment of a prize; and
(9)	No ticket or share in a lottery game shall be purchased by, and no prize shall be paid to, a member of the Commission, the Director, an assistant lottery director, or employee of the lottery, or to any spouse, parent, or child living in the same household as a person disqualified by this provision.
"§ 143C-146.  Lottery game-play rules and winner validation procedures.
(a)	All prizes contemplated in each lottery game by its prize structure for a given level of sales shall be paid to the players of the lottery game.  Conversely, in order to preserve the fiscal integrity of the lottery and to protect public funds, no prizes shall be paid that are invalid and not contemplated by the prize structure of the lottery game involved.  By purchasing a ticket or share in a lottery game, a player agrees to abide by, and be bound by, the game-play rules developed by the Director, and approved by the Commission, that apply to any particular lottery game involved.
(b)	An abbreviated form of the game-play rules may appear on tickets in lottery games using tickets.
(c)	All players acknowledge that the determination of whether the player is a winner is subject to the game-play rules and the winner validation procedures and confidential validation tests established by the Commission for the particular lottery game involved.
(d)	The game-play rules shall not be considered to be rules or regulations for the purpose of Chapter 150B of the General Statutes.
"§ 143C-147.  Distribution of tickets and shares.
(a)	Upon the recommendation of the Director, the Commission shall adopt rules, as prescribed by Chapter 150B of the General Statutes, specifying the manner of distribution, dissemination, or sale of lottery tickets or shares to lottery game retailers or directly to the public, and the incentives, if any, for any lottery employees, lottery vendors, lottery contractors, electronic computer terminal operators, or lottery retailers engaged in these activities.  Notwithstanding any other provisions of this Chapter, no lottery ticket or shares shall be sold or resold by any party except at the sales price or value established by the Commission, except as specifically authorized by the Commission.
(b)	The Commission may enter into agreements with other states for the operation and promotion of multistate lotteries consistent with the purposes set forth in G.S. 143C-102.  The claim period for prizes may vary if required by multistate agreements.
"§§ 143C-148 and 143C-149:  Reserved for future codification purposes.
"ARTICLE 5.
"Lottery Game Retailers.
"§ 143C-150.  Contracting with lottery game retailers.
Upon the recommendation of the Director, the Commission shall adopt rules, as prescribed by Chapter 150B of the General Statutes, specifying the terms and conditions for contracting with lottery game retailers to provide adequate and convenient availability of tickets or shares to prospective buyers of each lottery game.  The Commission may sell tickets and shares directly to the public or may distribute tickets or shares by any other method authorized by the Commission.
"§ 143C-151.  Selection of lottery game retailers.
(a)	The Director shall select as lottery game retailers those persons deemed by the Director best able to serve the public convenience and to promote the sale of tickets or shares.
(b)	No natural person under 21 years of age shall be a lottery game retailer.  This minimum age shall not prohibit employees of a retailer who are under 21 years of age from selling lottery tickets or shares during their employment.
(c)	In the selection of a lottery game retailer, the Director or the Commission shall consider:
(1)	Financial responsibility;
(2)	Accessibility of the place of business or activity to the public;
(3)	Security of the premises;
(4)	Integrity;
(5)	Reputation;
(6)	The sufficiency of existing lottery game retailers for any particular lottery game to serve the public convenience; and
(7)	The projected volume of sales for the lottery game involved.
(d)	No contract with any lottery game retailer shall be entered into if the retailer has been convicted of a felony or a gambling-related offense in any state or federal court of the United States within 10 years of entering into the contract.
	(e)  No person shall be a lottery game retailer who is engaged exclusively in the business of selling lottery tickets or shares or operating electronic computer terminals or other devices solely for entertainment.
(f)	A person lawfully engaged in nongovernmental business on State property or an owner or lessee of premises on which alcoholic beverages are sold may be selected as a lottery game retailer.
(g)	A civic or fraternal organization may be selected as a lottery game retailer.
(h)	Political subdivisions or their agencies or departments may be selected as lottery game retailers for sales from their premises.
(i)	The Director may contract with lottery retailers on a permanent, seasonal, or temporary basis.
(j)	The Commission may establish and require payment by each lottery game retailer of an initial fee or an annual fee, or both, to maintain the contract to be a lottery game retailer.
(k)	Lottery retailers may contract with any person approved or authorized by the Commission who provides goods or services that facilitate the sale of lottery tickets or shares.
"§ 143C-152.  Nonassignability.
The contract to act as a lottery game retailer is not assignable or transferable.
"§ 143C-153.  Termination of a contract with a lottery game retailer.
The Director or Commission may terminate a contract with a lottery game retailer under the provisions for termination included in the contract.  These provisions for termination shall include the knowing sale of tickets or shares to any person under the age of 18 years.
"§ 143C-154.  Compensation for lottery game retailers.
(a)	Upon the recommendation of the Director, the Commission shall adopt rules, as prescribed by Chapter 150B of the General Statutes, determining the payment of compensation to lottery game retailers for their sales of lottery tickets or shares.
(b)	The amount of compensation paid to lottery game retailers for their sales of lottery tickets or shares shall be five percent (5%) of the retail price of the tickets or shares for each lottery game.  The Commission may authorize an incentive bonus of up to two percent (2%) based on attainment of sales volume or other objectives specified by the Director for each lottery game.
(c)	In cases of a lottery game retailer whose rental payments for premises are contractually computed on the basis of a percentage of retail sales, and where the computation of retail sales is not explicitly defined to include sales of tickets or shares in a lottery game, the compensation received by the lottery game retailer from the lottery shall be deemed to be the amount of the retail sale for the purposes of this contractual computation.
"§ 143C-155.  Sales to persons under the age of 18.
(a)	No tickets or shares in lottery games shall be sold to persons under the age of 18 years.  Selling tickets or shares to a person under the age of 18 years shall be a Class 1 misdemeanor.
(b)	To prevent the sale of lottery tickets or shares to persons under the required age, the Commission shall issue rules prescribing the procedures to be followed by lottery retailers in determining the age of potential lottery purchasers.
(c)	It shall be a defense to violation of subsection (a) of this section if the retailer:
(1)	Shows that the purchaser produced a drivers license, a special identification card issued under G.S. 20-37.7, a military identification card, or a passport, showing his age to be at least the required age for purchase and bearing a physical description of the person named on the card reasonably describing the purchaser; or
(2)	Produces evidence of other facts that reasonably indicated at the time of sale that the purchaser was at least the required age.
(d)	Nothing in this Article shall be construed to prevent any person 18 years or older from giving or assigning lawfully purchased lottery tickets or shares to another person of any age.
"§ 143C-156.  Payment of prize won by person under the age of 18.
(a)	If the person entitled to a prize for any winning ticket or share is a minor, and the prize is less than five thousand dollars ($5,000), the Director may direct payment of the prize by delivery of a check or draft payable to the order of the minor to an adult member of that minor's family or to that minor's legal guardian.
(b)	If the person entitled to a prize or any winning ticket is a minor, and the prize is five thousand dollars ($5,000) or more, the Director may direct payment to that minor by depositing the amount of the prize in any insured depository institution to the credit of an adult member of that minor's family or the legal guardian of the minor, as custodian for that minor.
"§ 143C-157.  Display of certificate of authority.
No lottery tickets or shares shall be sold by a lottery game retailer unless the retailer conspicuously displays a certificate of authority, signed by the Director, to sell lottery tickets or shares.
"§ 143C-158.  Bonding.
The Director may require an appropriate bond from any lottery game retailer or may purchase blanket bonds covering the activities of selected or all lottery game retailers.
"§ 143C-159.  Lottery game retailer accounting; payments.
(a)	The Director shall establish procedures that shall be used by lottery game retailers to account for all tickets or shares that they sell to the public and to account for all funds they  receive from the public for the tickets or shares.
	(b)	No payment by lottery game retailers to the Commission for tickets or shares shall be in cash.  All payments shall be in the form of checks, bank drafts, electronic fund transfers, or other recorded financial instruments as approved by the Director.
"ARTICLE 6.
"Lottery Vendors and Lottery Contractors.
"§ 143C-160.  Procurements.
(a)	Notwithstanding other provisions of law, the Director is encouraged to purchase or lease goods or services or combinations of goods and services needed to effectuate the purposes of this Chapter.
(b)	The Director shall not contract with any single private party or nongovernmental entity for the administration of the Commission established by this Chapter; however, this subsection shall not encourage procurements that integrate such functions as lottery game design, supply of goods and services, and advertising.
(c)	In all procurements, the Director and Commission shall act to promote the objective of maximizing net revenues for the benefit of the public purposes described in this Chapter.
"§ 143C-161.  Contracts.
(a)	The Director may directly solicit proposals or enter into contracts for the purchase or lease of goods or services to effectuate the purposes of this Chapter.
(b)	In awarding contracts in response to solicitations for proposals, the Director shall award the contracts to the responsible vendor submitting the best proposal that the Director determines maximizes the benefits to the State.
(c)	In all procurement decisions, the Director or the Commission, if the Commission chooses to make the decision, shall take into account the particularly sensitive nature of the Commission and lottery games and shall consider the competence, quality of product, experience, and timely performance of the vendors in order to promote and ensure security, honesty, fairness, and integrity in the operation and administration of the Commission and lottery games and the objective of maximizing net revenues for the benefit of the public purposes described in this Chapter.
(d)	The Director may engage an independent firm experienced in evaluating government procurement proposals to aid in the evaluation of proposals made to the Commission.
(e)	Before a contract for a major procurement is awarded, the assistant director for security shall conduct an investigation of:
	(1)	The vendor to whom the contract is to be awarded;
	(2)	Any parent or subsidiary corporation of the vendor to whom the contract is to be awarded;
	(3)	All shareholders with a five percent (5%) or more interest in the vendor or parent or subsidiary corporation of the vendor to whom the contract is to be awarded; and
	(4)	All officers and directors of the vendor or parent or subsidiary corporation of the vendor to whom the contract is to be awarded.
(f)	All contract awards made by the Director are made subject to the approval of the Commission.
(g)	No contract shall be awarded to any person convicted of a felony or any gambling offense in any state or federal court of the United States within 10 years of entering into the contract.
(h)	The Commission may by rule designate classes of contracts other than major procurements that do not require approval of the Commission.
"§ 143C-162.  Lottery vendor disclosures for major procurements.
(a)	Upon the recommendation of the Director, the Commission shall adopt rules, as prescribed by Chapter 150B of the General Statutes, to provide for disclosures by vendors submitting bids, proposals, or offers as part of a major procurement to ensure that the vendors provide all the information necessary to allow for a full and complete evaluation by the Director and Commission of the competence, integrity, background, and character of the lottery vendors.
(b)	The rules shall require that all lottery vendors submit to the assistant director for security any appropriate investigation authorizations needed to facilitate these investigations.
"§ 143C-163.  Compliance with applicable laws.
Each lottery contractor shall perform its contract consistent with the laws of this State, federal law, and laws of the state or states in which the lottery contractor is performing or producing, in whole or in part, any of the goods or services contracted for.
"§ 143C-164.  Performance bond.
(a)	Each lottery contractor in a major procurement shall, at the time of executing the contract with the Director, post an appropriate bond or letter of credit with the Director, in an amount as deemed necessary by the Commission for that particular bid or contract.
(b)	The Commission may issue a rule allowing the Director to decrease the bond or letter of credit requirement for a major procurement if the Director determines that the decrease will result in a cost savings to the Commission while still providing adequate protection against nonperformance.
(c)	In lieu of a bond or letter of credit, a contractor may, to assure the faithful performance of its obligations, deposit and maintain with the Director securities that are interest-bearing or accruing that, with the exception of those specified in subdivision (1) or (2) of this subsection, are rated in one of the four highest classifications by an established nationally recognized investment rating service.  Securities eligible under this subsection are limited to the following:
(1)	Certificates of deposit issued by solvent banks and savings associations organized and existing under North Carolina law or under the laws of the United States and having their principal place of business in North Carolina.
(2)	United States bonds and bills for which the full faith and credit of the government of the United States is pledged for the payment of principal and interest.
(3)	General obligation bonds and notes of any political subdivision of the State.
(4)	Corporate bonds of a corporation that is not an affiliate or subsidiary of the depositor.
Securities shall be held in trust and shall, at all times, have a market value at least equal to the full amount estimated to be paid annually to the contractor under contract.
"§§ 143C-165 through 143C-169:  Reserved for future codification purposes.
"ARTICLE 7.
"North Carolina State Lottery Fund.
"§ 143C-170.  North Carolina State Lottery Fund.
An enterprise fund to be known as the 'North Carolina State Lottery Fund' is created within the State treasury.  The North Carolina State Lottery Fund is continuously appropriated to the Commission for the purposes of operating the Commission and the lottery games.
"§ 143C-171.  Types of income to the North Carolina State Lottery Fund.
The North Carolina State Lottery Fund shall receive the following monies:
	(1)	All proceeds from the sale of lottery tickets or shares;
	(2)	The funds for initial start-up costs provided by the State; and
	(3)	All other monies credited to the Commission from any source.
"§ 143C-172.  Types of disbursements from the North Carolina State Lottery Fund.
Disbursements shall be made from the North Carolina State Lottery Fund for any of the following purposes:
	(1)	The payment of prizes to the holders of valid winning lottery tickets or shares;
	(2)	Expenses of the Commission, including initial start-up costs; and
(3)	Transfer of funds from the North Carolina State Lottery Fund pursuant to G. S. 143C-175.
"§ 143C-173.  Prize payments of the lottery.
(a)	As nearly as practical, at least fifty percent (50%) of the total projected revenue as computed on a year-round basis for the total of all lottery games, accruing from the sales of all lottery tickets or shares from lottery games shall be allocated for payment of prizes for lottery games.
(b)	The Commission may allocate a larger percentage of the total projected revenue for a lottery game to prizes if it concludes that the total annual net revenues from the lottery game will be enhanced by that prize percentage.
"§ 143C-174.  Expenses of the lottery.
(a)	Expenses of the lottery may include:
	(1)	The costs incurred in the operation and administration of the Commission, including initial start-up costs;
(2)	The costs resulting from any contracts entered into for the purchase or lease of goods or services required by the Commission;
(3)	The compensation paid to lottery game retailers;
(4)	The cost of supplies, materials, tickets, independent studies, data transmission, advertising, promotion, incentives, public relations, communications, bonding for lottery game retailers, printing, and distribution of tickets and shares;
(5)	The costs of reimbursing other governmental entities for services provided to the Commission; and
(6)	The costs for any other goods and services needed to accomplish the purposes of this Chapter.
(b)	As nearly as practical, no more than sixteen percent (16%) of the total annual revenues accruing from the sale of all lottery tickets and shares from all lottery games shall be expended for the payment of expenses of the Commission.
"§ 143C-175.  Transfer of net revenues.
(a)	The funds remaining in the North Carolina State Lottery Fund after receipt of all revenues to the North Carolina State Lottery Fund and after accrual of all obligations of the Commission for prizes and expenses shall be deemed to be the net revenues of the North Carolina State Lottery Fund.
(b)	The remaining net income of the North Carolina State Lottery Fund shall be transferred as follows:
(1)	Up to fifty percent (50%) of the net revenues of the North Carolina State Lottery Fund shall be transferred, annually, to the Board of Governors of The University of North Carolina and to the Department of Community Colleges to be used for Education Improvement Scholarships at the constituent institutions of The University of North Carolina, private institutions of higher education, and at the State's community colleges.
(2)	The State Treasurer shall transfer, annually,  one million dollars ($1,000,000) to each local school administrative unit for Capital Outlay projects for educational facilities.
(3)	The balance of the Lottery Fund shall be transferred to each local school administrative unit, on an average daily membership basis, as a block grant for nonsalary uses to be determined by the local board of education.
If sufficient funds are not available in any fiscal year to provide full grants to local school administrative units as provided in subdivision (2)	of this subsection, grants shall be reduced proportionally to provide that all local school administrative units receive equal grants.
"§ 143C-175.1.  Education Improvement Scholarship Task Force.
(a)	There is created an Education Improvement Scholarship Task Force which shall consist of the Governor, or his designated representative, the Lieutenant Governor, or his designated representative, the President of The University of North Carolina, the President of the North Carolina Community College System, the Chairman of the State Board of Education, three Senators appointed by the President Pro Tempore of the Senate and three Representatives appointed by the Speaker of the House of Representatives.
(b)	The Education Improvement Scholarship Task Force shall study programs providing scholarships based solely on academic achievement in other states and shall report the results of this study, along with the legislation necessary to implement the program in North Carolina required by G.S. 143C-175(b)(1).  The Education Improvement Scholarship Task Force shall consider scholarship program options including:
(1)	Full tuition scholarships to all students who received a high school diploma  or its equivalent from high schools in this State with an 'A' or 'A/B' average who attend any of the constituent institutions of The University of North Carolina or a community college.
(2)	Grants of one thousand dollars ($1,000) per year to all students who have received a high school diploma or its equivalent in this State with an 'A' or 'A/B' average who attend any private university or college.
(3)	Scholarships not based on need.  The Task Force shall recommend a program providing for full scholarships for otherwise qualifying students whose family income is one hundred thousand dollars ($100,000) or less.  Scholarships could be reduced as family income increases above one hundred thousand dollars ($100,000) so that otherwise qualifying students whose family income exceeds one hundred fifty thousand dollars ($150,000) could receive a scholarship of one thousand dollars ($1,000) per year.
(c)	The Task Force shall also provide to the General Assembly a plan, should sufficient funds become available, to expand the scholarship program to supplement existing scholarship programs for needy students or to expand the coverage of the program to all students receiving a diploma or its equivalent from a high school in North Carolina.
(d)	The University of North Carolina shall provide the Task Force with administrative and expert assistance in accomplishing the study and in the preparation of implementing legislation required by this section.
(e)	The Task Force's report shall be submitted to the Speaker of the House of Representatives and the President Pro Tempore of the Senate no later than the first day of the next regular session of the General Assembly immediately following the effective date of this Chapter.
"§ 143C-175.2.  Funds for Capital Outlay projects.
Funds for Capital Outlay projects for educational facilities may be used by the local school administrative units for:
(1)	Construction of school buildings or retirement of bonds previously issued for the construction of school buildings;
(2)	Elementary, middle, and high school instructional technology including hardware, software, or networking;
(3)	Technology centers for training teachers and administrators how to incorporate technology into the curriculum; and
(4)	Equipment necessary to provide safe schools including video surveillance equipment for school buildings and school buses, radio communications equipment, emergency call-back intercom systems in all classrooms, exterior lighting, fencing, and metal detectors.
"§ 143C-175.3.  Educational block grants.
The educational block grants to local school administrative units shall not be used for personnel purposes.
"§ 143C-176.  Intergovernmental reimbursements for services.
It is the intent of this Chapter that the Commission shall be a self-supporting agency of State government.  The Commission shall reimburse, at a reasonable rate, all other governmental entities for services necessary to effectuate the purposes of this Chapter provided by those governmental entities to the Commission.
"§ 143C-177.  Audits.
The State Auditor shall conduct annual postaudits of all accounts and transactions of the Commission and any other special postaudits the State Auditor deems to be necessary.  The State Auditor or the Auditor's agents conducting an audit may examine any records of the Commission, its distributing agencies, lottery contractors, lottery game retailers, and any other person licensed by the Commission.
"§§ 143C-178 and 143C-179:  Reserved for future codification purposes.
"ARTICLE 8.
"Miscellaneous.
"§ 143C-180.  Taxes.
No sales taxes shall be imposed on the sale of lottery tickets or shares of lottery games established by this Chapter.
"§ 143C-181.  Preemption of local regulation.
All matters relating to the operation of the Commission and lottery games established by this Chapter shall be governed solely by the provisions of this Chapter and shall be free from regulation or legislation by local governments, including cities and counties.
"§ 143C-182.  Lawful activity.
Any other State or local law, ordinance, or regulation providing any penalty, disability, restriction, regulation, or prohibition for the manufacture, transportation, storage, distribution, advertising, possession, or sale of any lottery tickets or shares or for the operation of any lottery game shall not apply to the operation of the Commission or lottery games established by this Chapter."
Sec. 2.  G.S. 147-69.2(a) is amended by adding one new subdivision to read:
"(17a)	The North Carolina State Lottery Fund."
Sec. 3.  G.S. 105-134.5(b) reads as rewritten:
"(b)	Nonresidents.  For nonresident individuals, the term 'North Carolina taxable income' means taxable income as calculated under the Code, adjusted as provided in G.S. 105-134.6 and G.S. 105-134.7, multiplied by a fraction the denominator of which is the taxpayer's gross income as calculated under the Code, adjusted as provided in G.S. 105-134.6 and G.S. 105-134.7, and the numerator of which is the amount of that gross income, as adjusted, that is derived from North Carolina sources and is attributable to the ownership of any interest in real or tangible personal property in this State, is derived from a business, trade, profession, or occupation carried on in this State, or is derived from gambling activities carried on in this State."
Sec. 4.  G.S. 105-163.1(15) reads as rewritten:
"(15)	Wages. – The term has the same meaning as in section 3401 of the Code except it does not include remuneration paid by a farmer for services performed on the farmer's farm in producing or harvesting agricultural products or in transporting the agricultural products to market.  The term also includes proceeds from gambling activities as defined in section 3402 of the Code."
Sec. 5.  (a)	G.S. 14-289 reads as rewritten:
"§ 14-289.  Advertising lotteries.
Except as provided in Chapter 143C of the General Statutes or in connection with a lawful raffle as provided in Part 2 of this Article, if anyone by writing or printing or by circular or letter or in any other way, advertises or publishes an account of a lottery, whether within or without this State, stating how, when or where the same is to be or has been drawn, or what are the prizes therein or any of them, or the price of a ticket or any share or interest therein, or where or how it may be obtained, he shall be guilty of a Class 2 misdemeanor."
(b)	G.S. 14-290 reads as rewritten:
"§ 14-290.  Dealing in lotteries.
Except as provided in Chapter 143C of the General Statutes or in connection with a lawful raffle as provided in Part 2 of this Article, if any person shall open, set on foot, carry on, promote, make or draw, publicly or privately, a lottery, by whatever name, style or title the same may be denominated or known; or if any person shall, by such way and means, expose or set to sale any house, real estate, goods, chattels, cash, written evidence of debt, certificates of claims or any other thing of value whatsoever, every person so offending shall be guilty of a Class 2 misdemeanor which may include a fine not to exceed two thousand dollars ($2,000).  Any person who engages in disposing of any species of property whatsoever, including money and evidences of debt, or in any manner distributes gifts or prizes upon tickets, bottle crowns, bottle caps, seals on containers, other devices or certificates sold for that purpose, shall be held liable to prosecution under this section.  Any person who shall have in his possession any tickets, certificates or orders used in the operation of any lottery shall be held liable under this section, and the mere possession of such tickets shall be prima facie evidence of the violation of this section."
(c)	G.S. 14-291 reads as rewritten:
"§ 14-291.  Selling lottery tickets and acting as agent for lotteries.
Except as provided in Chapter 143C of the General Statutes or in connection with a lawful raffle as provided in Part 2 of this Article, if any person shall sell, barter or otherwise dispose of any lottery ticket or order for any number of shares in any lottery, or shall in anywise be concerned in such lottery, by acting as agent in the State for or on behalf of any such lottery, to be drawn or paid either out of or within the State, such person shall be guilty of a Class 2 misdemeanor."
(d)	G.S. 14-291.1 reads as rewritten:
"§ 14-291.1.  Selling 'numbers' tickets; possession prima facie evidence of violation.
Except as provided in Chapter 143C of the General Statutes or in connection with a lawful raffle as provided in Part 2 of this Article, if any person shall sell, barter or cause to be sold or bartered, any ticket, token, certificate or order for any number or shares in any lottery, commonly known as the numbers or butter and egg lottery, or lotteries of similar character, to be drawn or paid within or without the State, such person shall be guilty of a Class 2 misdemeanor.  Any person who shall have in his possession any tickets, tokens, certificates or orders used in the operation of any such lottery shall be guilty under this section, and the possession of such tickets shall be prima facie evidence of the violation of this section."
(e) G.S. 14-292 reads as rewritten:
"§ 14-292.  Gambling.
Except as provided in Chapter 143C of the General Statutes or in Part 2 of this Article, any person or organization that operates any game of chance or any person who plays at or bets on any game of chance at which any money, property or other thing of value is bet, whether the same be in stake or not, shall be guilty of a Class 2 misdemeanor."
(f)  G.S. 14-293 reads as rewritten:
"§ 14-293.  Allowing gambling in houses of public entertainment; penalty.
Except as provided in Chapter 143C of the General Statutes, if any keeper of an ordinary or other house of entertainment, or of a house wherein alcoholic beverages are retailed, shall knowingly suffer any game, at which money or property, or anything of value, is bet, whether the same be in stake or not, to be played in any such house, or in any part of the premises occupied therewith; or shall furnish persons so playing or betting either on said premises or elsewhere with drink or other thing for their comfort or subsistence during the time of play, he shall be guilty of a Class 2 misdemeanor.  Any person who shall be convicted under this section shall, upon such conviction, forfeit his license to do any of the businesses mentioned in this section, and shall be forever debarred from doing any of such businesses in this State.  The court shall embody in its judgment that such person has forfeited his license, and no board of county commissioners, board of town commissioners or board of aldermen shall thereafter have power or authority to grant to such convicted person or his agent a license to do any of the businesses mentioned herein."
(g)  G.S. 14-299 reads as rewritten:
"§ 14-299.  Property exhibited by gamblers to be seized; disposition of same.
Except as provided in Chapter 143C of the General Statutes, all moneys or other property or thing of value exhibited for the purpose of alluring persons to bet on any game, or used in the conduct of any such game, including any motor vehicle used in the conduct of a lottery within the purview of G.S. 14-291.1, shall be liable to be seized by any court of competent jurisdiction or by any person acting under its warrant. Moneys so seized shall be turned over to and paid to the treasurer of the county wherein they are seized, and placed in the general fund of the county. Any property seized which is used for and is suitable only for gambling shall be destroyed, and all other property so seized shall be sold in the manner provided for the sale of personal property by execution, and the proceeds derived from said sale shall (after deducting the expenses of keeping the property and the costs of the sale and after paying, according to their priorities all known prior, bona fide liens which were created without the lienor having knowledge or notice that the motor vehicle or other property was being used or to be used in connection with the conduct of such game or lottery) be turned over and paid to the treasurer of the county wherein the property was seized, to be placed by said treasurer in the general fund of the county."
Sec. 6.  Chapter 14 of the General Statutes is amended by adding the following new section to read:
"§ 14-309.2.  Part does not apply to North Carolina State Lottery.
The provisions of this Part shall not apply to the North Carolina State Lottery established in Chapter 143C of the General Statutes."
Sec. 7.  G.S. 120-123 is amended by adding a new subdivision at the end to read:
"(60)	The North Carolina State Lottery Commission, as established by Chapter 143C of the General Statutes."
Sec. 8.  G.S. 150B-2(8a) is amended by adding a new subpart to read:
"k.	Procedures, instructions, game-play rules, and validation procedures and tests for a specific lottery game."
Sec. 9.  Nothing in this act shall be construed to obligate the General Assembly to make additional appropriations to implement the provisions of this act.
Sec. 10.  The North Carolina State Lottery Commission shall determine an estimate of the initial working capital and submit that estimate to the the Office of State Budget and Management for approval.  After approval is granted by the Office of State Budget and Management, and with the written approval of the State Treasurer, the State Controller shall advance the approved funds by internal borrowing from other available State funds.  The terms and conditions of the temporary loan or loans shall be determined by the Office of State Budget and Management.
Sec. 11.  The question of whether North Carolina should have a State lottery shall be submitted to the qualified voters of the State at a referendum on the question held at the next statewide primary, general, or special election.  The referendum shall be held in accordance with Chapter 163 of the General Statutes.  The form of the ballot for the referendum is:
"[ ]	FOR a State lottery.
[ ]	AGAINST a State lottery."
Sec. 12.  If a State lottery is approved by the qualified voters of this State in the referendum held under Section 11 of this act, the costs to the State Board of Elections and the county boards of elections for conducting the referendum are considered expenses of the lottery; the State Lottery Commission shall reimburse the State Board of Elections and the county boards of elections for these costs from the Lottery Fund.
If a State lottery is not approved by the qualified voters of this State in the referendum held under Section 11 of this act, the State Board of Elections and the county boards of elections may seek reimbursement from the General Assembly for their costs incurred in conducting the referendum.
Sec. 13.  Sections 11, 12, and 13 of this act are effective upon ratification.  If a State lottery is approved by the qualified voters of this State in the referendum held under Section 11 of this act, then Sections 1 through 10 of this act become effective when the results of the referendum are certified by the State Board of Elections.  If a State lottery is not approved, Sections 1 through 10 do not become effective.