GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

S	1 

SENATE BILL 1122

Short Title:  Bingo Study Recommendations.	(Public)

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Sponsors: Senator Weinstein.

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Referred to:  Commerce.

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May 14, 1998

A BILL TO BE ENTITLED
AN ACT TO RECODIFY EXISTING BINGO STATUTES AND TO REGULATE COMMERCIAL BINGO.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 14-309.5 through G.S. 14-309.14 are repealed.
Section 2.  Part 2 of Article 37 of Chapter 14 of the General Statutes reads as rewritten:
"Part 2.  Bingo and Raffles.
"Subpart A.  Bingo, Generally.
"§ 14-309.14A.  Public policy for charitable and commercial bingo.
The General Assembly finds that charitable bingo provides a source of income to nonprofit organizations and that commercial bingo (formerly called 'beach bingo') provides a source of recreation and entertainment for a significant sector of North Carolina's citizens.
The purpose of the conduct of charitable bingo is to ensure a maximum availability of the net proceeds exclusively for application to the charitable, nonprofit causes and undertakings specified in this Part.
Commercial bingo serves as a form of recreation and entertainment for a significant sector of North Carolina's citizens.
The General Assembly finds and declares to be the public policy of this State that it is in the best interest of the public and of the charities conducting charitable bingo and persons engaged in the business of conducting commercial bingo games that this form of gaming should be subject to an effective and efficient system of strict control and regulation in order to promote the public confidence and trust in the regulatory process and the conduct of all forms of bingo.
"§ 14-309.14B.  North Carolina State Bingo Commission.  
(a)	There is created an independent, fee-supported, North Carolina State Bingo Commission to regulate all forms of bingo in this State.
The Commission shall consist of three members.  All members shall be residents of North Carolina.  The members shall be appointed as follows:
(1)	One member shall be appointed by the Governor for an initial term of three years.
(2)	One member shall be appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives for an initial term of two years, in accordance with G.S. 120-121.
(3)	One member shall be appointed by the General Assembly upon the recommendation of the President Pro-Tempore of the Senate for an initial term of one year, in accordance with G.S. 120-121.
Terms for all members of the Commission except for the initial appointments shall be for three years.
At the first meeting of the Board, the member appointed by the Governor shall preside and the Board shall elect a Chair from among the membership.  A member of the Commission may be removed from office by the Governor or by the appropriate recommending official, as the case may be, for cause.  Each member before entering upon the duties of a member shall take and subscribe an oath to perform the duties of the office faithfully, impartially, and justly to the best of the member's ability.  A record of these oaths shall be filed in the Department of the Secretary of State.
(b)	Vacancies. – Members shall serve until their successors are appointed and have been qualified.  Any vacancy in the membership of the Commission shall be filled in the same manner as the original appointment. Vacancies for members appointed by the General Assembly shall be filled in accordance with G.S. 120-122. A vacancy in the membership of the Commission other than by expiration of term shall be filled for the unexpired term only.
(c)	Meetings. – Meetings of the Commission shall be called by the Chair or by any two members of the Commission, and meetings shall be held at least quarterly. Any two members of the Commission shall constitute a quorum at any meeting. Action may be taken and motions and resolutions adopted by the Commission at any meeting by the affirmative vote of a majority of the members of the Commission present at a meeting at which a quorum exists. Any or all members may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all members participating may simultaneously hear each other during the meeting. A member participating in the meeting by this means is deemed to be present in person at the meeting.
(d)	Rule-Making Authority of the Commission. – The Commission shall have the exclusive authority to issue rules for the regulation of all bingo games in this State. The rules shall be issued pursuant to the provisions of Chapter 150B of the General Statutes and shall comply with the remaining sections of this Part.
(e)	Compensation. – None of the members of the Commission shall receive compensation for serving on the Commission. However, members of the Commission may be reimbursed for their expenses in accordance with the provisions of Chapter 138 of the General Statutes.
(f)	Staff Assistance. – The Commission is to be fully funded from the license and other fees collected pursuant to this Part and may hire or contract with personnel necessary to regulate all forms of bingo and enforce the provisions of this Part using only the receipts from those fees.
(g)	Annual Budget. – The Commission shall submit an annual budget, through the Office of Budget and Management, for review and approval by the General Assembly.  The budget document shall include reports on all income, expenditures, and enforcement actions.
"§ 14-309.14C.  Definitions.
For purposes of this Part, the term:
(1)	'Bingo' means a specific game of chance played with individual cards having numbered squares ranging from one to 75, in which prizes are awarded on the basis of the pattern of positions of  randomly selected numbers on the cards conforming to a predetermined pattern (but shall not include 'instant bingo' which is a game of chance played by the selection of one or more prepackaged cards, with winners determined by the appearance of a preselected designation on the card).
(2)	'Bingo game' means the game that commences when the first number randomly drawn is announced and ends when the first winner announces that he or she has covered all of the numbers in the predetermined pattern on a card.  There shall be no combination of bingo games to increase the maximum per game awards authorized by this Part.
(3)	'Bingo session' means a continuous period of time in which bingo games are conducted.  A session may consist of between one and 150 bingo games and shall  include the intervals for rest, purchase of game cards, refreshment, and other related activities.
"Subpart B. Charitable Bingo.
"§ 14-309.14D.  Charitable bingo; purpose and regulation.
(a)	The purpose of the conduct of charitable bingo is to ensure a maximum availability of the net proceeds exclusively for application to the charitable, nonprofit causes and undertakings specified in this Part.
(b)	Charitable bingo shall be regulated:
(1)	To prevent the operation of bingo by professionals for profit.
(2)	To prevent the disguise of bingo and other game forms or promotional schemes.
(3)	To prevent participation by criminal and other undesirable elements.
(4)	To prevent the diversion of funds from the purposes required by this Part.
(c)	It is lawful for an exempt organization to conduct bingo games only in accordance with the provisions of this Part and in accordance with the rules of the Commission.
(d)	An exempt organization, for purposes of this Part, is one that meets all of the following requirements:
(1)	An organization that is exempt from taxation under either of the following:
a.	Sections 501(c)(3), 501(c)(4), 501(c)(8), 501(c)(10), 501(c)(19), or 501(d) of the Internal Revenue Code.
b.	Similar provisions of the General Statutes as a bona fide nonprofit charitable, civic, fraternal, patriotic, religious, or veterans' organization, volunteer fire department, or a volunteer rescue squad.
	If the organization has local branches or chapters, then the exempt organization is the local branch or chapter actually conducting the bingo games.
(2)	An organization that has been in continuous existence for one year in the county where the bingo games are actually conducted.
"§ 14-309.14E.  Charitable bingo; licensing procedure.
(a)	An exempt organization may not operate a bingo game at a location without a license.  An exempt organization shall apply to the Commission for a bingo license on a form prescribed by the Commission. The Commission shall charge license fees adequate to generate funds for the regulation of bingo and enforcement of the provisions of this Part but not to exceed three hundred dollars ($300.00) per license.  The Commission may issue annual and special licenses.  The fees collected shall be used by the Commission for the regulation of bingo and the enforcement of the provisions of this Part in accordance with the budget approved pursuant to G.S. 14-309.14B(g).
(b)	The annual license shall:
(1)	Expire on the anniversary of its issuance.
(2)	Be annually renewable only if the applicant:
a.	Pays the license fee.
b.	Files an annual audit with the Commission pursuant to G.S. 14-309.14M.
(c)	Each application and renewal application for an annual license shall contain all of the following information:
(1)	The name and address of the applicant and, if the applicant is a corporation, association, or other similar legal entity, the name and home address of each of the officers of the organization as well as the name and address of the directors, or other persons similarly situated, of the organization.
(2)	The name and home address of each of the members of the special bingo committee.
(3)	A copy of the application for recognition of exemptions and a determination letter from the Internal Revenue Service and the Department of Revenue that indicates that the organization is an exempt organization and stating the section under which that exemption is granted; except that if the organization is a State or local branch, lodge, post, or chapter of a national organization, a copy of the determination letter for the national organization satisfies this requirement.
(4)	The location at which the applicant will conduct the bingo sessions.
(5)	If the premises at which the bingo sessions will be conducted are leased, a copy of the lease or rental agreement.
"§ 14-309.14F.  Charitable bingo; special bingo committee and paid personnel.
(a)	In order for an exempt organization to have members familiar with the contents of this Part and the rules issued by the Commission, the governing body of the exempt organization shall select, in the manner provided by the rules of the exempt organization, a special bingo committee of at least three members who shall be responsible for the organization's compliance with the relevant laws and rules.
(b)	In order to have an individual member of the exempt organization who is familiar with the operations of bingo present on the premises at all times when bingo is being played and who is responsible for the receiving, reporting, and depositing of all revenues received, the exempt organization may pay one member for conducting bingo sessions.
Any pay shall be:
(1)	On an hourly basis.
(2)	Only for the bingo sessions.
(3)	Not in excess of one and one-half (1 1/2) times the existing minimum wage in North Carolina.
A member paid pursuant to this subsection shall be a member in good standing of the exempt organization for at least one year before working at a bingo session and shall not be the lessor or an employee or agent of the lessor if the premises on which the sessions are being held are leased or rented.
(c)	No other person may be compensated for conducting a bingo game from funds derived from any activities occurring in, or simultaneously with, the playing of bingo, including funds derived from concessions.
(d)	An exempt organization shall not contract with any person for the purpose of conducting a bingo session.
"§ 14-309.14G.  Charitable bingo; location for bingo sessions.
(a)	Except as provided in G.S. 14-309.14I(d), an exempt organization may hold a bingo game only in or on property owned or leased by the organization directly, and not sublet, from the owner or bona fide property management agent.
(b)	The structure in which the bingo sessions are held shall be a permanent structure with approved plumbing for bathrooms and shall not be movable or temporary such as a tent or a lean-to.
(c)	The total monthly rent shall not exceed an amount equal to one and one-half percent (1 1/2%) of the total assessed ad valorem tax value of the portion of the building actually used for the bingo games and the value of the land, not to exceed two acres, on which the entire building is located.
(d)	The lease shall be for a period of not less than one year.
(e)	The building shall have been actually occupied and used by that organization on a regular basis for purposes other than bingo for at least six months before conducting the first bingo session.
(f)	Unless the exempt organization leases the property in accordance with this subsection, an exempt organization may conduct a bingo game only in or on property that is exempt from property taxes levied under Subchapter II of Chapter 105 of the General Statutes, or that is classified and not subject to any property taxes levied under Subchapter II of Chapter 105 of the General Statutes.
(g)	Conduct of a bingo game or raffle under this Part on such property shall not operate to defeat an exemption or classification under Subchapter II of Chapter 105 of the General Statutes.
"§ 14-309.14H.  Charitable bingo; equipment.
All equipment used by the exempt organization in conducting the bingo sessions shall be owned by the organization.
"§ 14-309.14I.  Charitable bingo; special licenses.
(a)	Special licenses may be issued by the Commission to an exempt organization that wants to conduct one or two bingo sessions per year.  The Commission may require any reasonable information needed to determine that the bingo session is conducted in accordance with the provisions of this Part and the applicable rules, but the Commission may not require more information than is required on the application for an annual license.
(b)	Applications shall be filed with the Commission at least 30 days before the scheduled date of the bingo session.
(c)	The fee for a special charitable bingo license shall be one hundred dollars ($100.00).
(d)	The exempt organization shall file with the Commission, no later than 30 days after the bingo session, a report, on the forms prescribed by the Commission, containing any reasonable information needed to determine that the bingo session was conducted in accordance with the provisions of this Part and the applicable rules.
(e)	Any licensed exempt organization may donate or loan its equipment or use of its premises to an exempt organization with a special license provided that the donation or use is listed in the application for the special license for approval by the Commission.
"§ 14-309.14J.  Charitable bingo; limits on sessions.
(a)	No more than two bingo sessions per week shall be conducted by a licensed exempt organization.
(b)	No bingo session shall last more than five hours.
(c)	No two bingo sessions shall be held within a 12-hour period.
(d)	No more than two bingo sessions shall be conducted in any building, hall, or structure during any one calendar week, and if there are two bingo sessions, they shall be conducted by the same licensed exempt organization.
(e)	This section shall not apply to bingo games conducted at a fair or other exhibition conducted pursuant to Article 45 of Chapter 106 of the General Statutes.
"§ 14-309.14K.  Charitable bingo; limits on prizes.
(a)	If a licensed exempt organization conducts two bingo sessions during a calendar week:
(1)	The maximum prize in cash or merchandise that may be offered or paid for any one bingo game is seven hundred fifty dollars ($750.00).
(2)	The maximum aggregate amount of prizes, in cash or merchandise, that may be offered or paid at any one bingo session is two thousand dollars ($2,000).
(b)	If a licensed exempt organization conducts only one bingo session during a calendar week, then the maximum aggregate amount of prizes, in cash or merchandise, that may be offered or paid at that bingo session is three thousand dollars ($3,000).
(c)	This section shall not apply to bingo games conducted at a fair or other exhibition conducted pursuant to Article 45 of Chapter 106 of the General Statutes.
"§ 14-309.14L.  Charitable bingo; use of proceeds.
(a)	All funds received in connection with any bingo games shall be placed in a separate bank account.
(b)	No funds may be disbursed by the licensed exempt organization from this account except for any of the following:
(1)	Prizes for each bingo session.
(2)	Advertising.
(3)	Utilities.
(4)	Purchase of supplies and equipment.
(5)	Payment of taxes and license fees related to bingo.
(6)	The compensation authorized in G.S. 14-309.14F(b).
(7)	The purposes set forth in subsection (d) of this section.
(c)	All payments made pursuant to subsection (b) of this section shall be made by consecutively numbered checks.
(d)	Any net proceeds available in the account after payments made pursuant to subdivisions (1) through (6) of subsection (b) of this section shall inure to the exempt organization to be used for any of the following:
(1)	For religious, charitable, civic, scientific, testing, public safety, literary, or educational purposes.
(2)	For purchasing, constructing, maintaining, operating or using equipment or land, or a building or improvements to the building owned by and for the exempt organization and used for civic purposes or made available by the exempt organization for use by the general public from time to time.
(3)	For fostering amateur sports competition.
(4)	For the prevention of cruelty to children or animals.
(e)	No proceeds shall be used or expended for social functions for the members of the exempt organization.
"§ 14-309.14M.  Charitable bingo; audit and accounting.
(a)	An audit of the account required by G.S. 14-309.14L(a) shall be prepared annually for the period of January 1 through December 31 or otherwise as directed by the Commission.  The audit shall be prepared on a form approved by the Commission and shall include all the following information:
(1)	The number of bingo sessions conducted or sponsored by the licensed exempt organization.
(2)	The location, date, and prize for each bingo game.
(3)	The gross receipts for each bingo session.
(4)	The cost or amount of any prize given for each bingo game.
(5)	The amount paid in prizes at each bingo session.
(6)	The net proceeds inuring to the exempt organization.
(7)	The disbursements from the separate account and the purpose of those disbursements, including the date of each transaction and the name and address of each payee, other than prize winners.
(b)	Any person who shall willfully furnish, supply, or otherwise give false information in any audit or statement filed pursuant to this section shall be guilty of a Class 2 misdemeanor.
(c)	All books, papers, records, and documents relevant to determining whether an organization has acted or is acting in compliance with this section shall be open to inspection by the Commission, or its designee, or the local district attorney, or his or her designee, at reasonable times and during reasonable hours.
"§ 14-309.14N.  Charitable bingo; public sessions.
Any licensed exempt organization operating a bingo session that is open to persons other than members of the exempt organization, their spouses, and their children shall make that bingo session open to the general public.
"Subpart C.  Commercial Bingo.
"§ 14-309.14O. Commercial Bingo; regulation.
The purpose for the regulation of commercial bingo is to promote the public confidence and trust in the regulatory process and the conduct of this form of bingo.  Commercial Bingo shall be regulated to ensure the integrity and honesty of this form of entertainment and recreation serving a significant sector of North Carolina's citizens.
"§ 14-309.14P.  Commercial bingo; licensing procedure.
(a)	A commercial bingo business may not operate a bingo game without a license.  A commercial bingo business shall apply to the Commission, on a form provided by the Commission, for a bingo license for each location at which bingo sessions will be conducted.  The Commission shall charge annual license fees adequate to generate funds for the regulation of bingo and the enforcement of the provisions of this Part, but not to exceed five hundred dollars ($500.00) per license.  The Commission may issue annual and special commercial bingo licenses.  The fees collected shall be used by the Commission for the regulation of bingo and the enforcement of the provisions of this Part in accordance with the budget approved pursuant to G.S. 14-309.14B(g).
(b)	The annual license shall:
(1)	Expire on the anniversary of its issuance.
(2)	Be annually renewable only if the applicant:
a.	Pays the license fee.
b.	Files an annual audit with the Commission pursuant to G.S. 14-309.14U.
c.	Has complied with all local and state regulations for the operation of this type of business.
(c)	Each application and renewal application for an annual license shall contain all of the following information:
(1)	The name and address of the applicant, and if the applicant is a corporation, association, or other similar legal entity, the name and home address of each of the officers of the applicant as well as the names and addresses of the directors, or other persons similarly situated, of the applicant.
(2)	The name and address of a formally designated natural person who shall serve as the applicant's agent for any actions related to the enforcement of this Part.
(3)	If the applicant is a corporation, association, or other similar legal entity, a copy of the applicant's articles of incorporation and bylaws or similar documents under which the applicant operates.
(4)	The location at which the applicant will conduct the bingo sessions.
(5)	The days of the week and times at which the applicant will conduct the bingo sessions.
"§ 14-309.14Q.  Commercial bingo; designated agent.
In order for the commercial bingo operator to have a natural person who shall be:
(1)	Familiar with the operation of commercial bingo;
(2)	Responsible for receiving, disbursing, and reporting all of the revenues; and
(3)	Responsible for compliance with this Part and the rules governing the conduct of commercial bingo,
the governing body of the applicant, if the applicant is a corporation, association, or other similar legal entity, shall by formal action appoint a natural person who shall serve as the applicant's agent for any actions related to the enforcement of this Part.
"§ 14-309.14R.  Commercial bingo; location for bingo sessions.
The commercial bingo applicant may hold commercial bingo sessions only at the location listed in the application and listed on the issued license.  The structure in which the bingo sessions are held shall be a permanent structure with approved plumbing for bathrooms and shall not be movable or temporary such as a tent or a lean-to.  The location at which commercial bingo sessions are held shall meet all applicable zoning and occupancy statutes, ordinances, and regulations.
"§ 14-309.14S.  Commercial bingo; special licenses.
(a)	Special licenses may be issued by the Commission to commercial bingo operators that want to conduct one or two bingo sessions per year.  The Commission may require any reasonable information needed to determine that the bingo session is conducted in accordance with the provisions of this Part and the applicable rules, but the Commission may not require more information that is required on the application for an annual license.
(b)	Applications shall be filed with the Commission at least 30 days before the scheduled date of the bingo session.
(c)	The fee for the special commercial bingo license shall be one hundred dollars ($100.00).
(d)	The commercial bingo operator shall file with the Commission, no later than 30 days after the bingo session, a report, on the forms prescribed by the Commission, containing any reasonable information needed to determine that the bingo session was conducted in accordance with the provisions of this Part and the applicable rules.
"§ 14-309.14T.  Commercial bingo; limitations on sessions and prizes.
(a)	Commercial bingo sessions may be conducted only on days and at locations and at times approved by the Commission and listed on the license.
(b)	The maximum prize in cash or merchandise that may be offered or paid for any one bingo game is twenty dollars ($20.00).
(c)	No commercial bingo game may be held in conjunction with any of the following:
(1)	Any other lawful bingo game.
(2)	Any promotional bingo game.
(3)	Any offering of an opportunity to obtain anything of value, whether for valuable consideration or not.
(d)	No commercial bingo game may offer any free bingo games as a promotion, for prizes or otherwise.
"§ 14-309.14U.  Commercial bingo; audit and accounting.
(a)	An audit as required by G.S. 14-309.14P(b)(2)b. shall be prepared annually for the period of January 1 through December 31 or otherwise as directed by the Commission.  The audit shall be prepared on a form approved by the Commission and shall include all of the following information:
(1)	The location, date, number of bingo games, and total prizes awarded at each bingo session.
(2)	The monthly total gross receipts for each bingo session.
(3)	The monthly net return profit to the applicant.
(4)	A copy of the most recent federal and North Carolina income tax forms and attached schedules  filed by the applicant.
(b)	Any person who shall willfully furnish, supply, or otherwise give false information in any audit or statement filed pursuant to this section shall be guilty of a Class 2 misdemeanor.
(c)	All books, papers, records, and documents relevant to determining whether an organization has acted or is acting in compliance with this section shall be open to inspection by the law enforcement agency or its designee, or the district attorney or his designee, or the Commission at reasonable times and during reasonable hours.
"§ 14-309.14V.  Public sessions.
All commercial bingo sessions shall be open to the general public.
"Subpart D. Enforcement.
"§ 14-309.14W.  Violations.
(a)	Civil Penalties. – The Commission may:
(1)	Upon a finding of probable cause that a violation of any provision of this Part, or the rules issued pursuant to this Part, has occurred, seize the violator's license for a period of up to 30 days before holding a fact-finding hearing on the alleged violation.
(2)	Issue an order against a licensee or other person who willfully violates any provision of this Article, imposing a civil penalty of up to one thousand dollars ($1,000) for any single violation of any provision of this Part, or the rules issued pursuant to this Part.
	   No order under this subsection may be entered without prior notice and an opportunity for a contested case hearing conducted pursuant to Article 3 of Chapter 150B of the General Statutes.
(b)	Criminal Penalties. –
(1)	A willful violation of any provision of this Part, except for G.S. 14-309.14K(a) or (b) or G.S. 14-309.14T(b) or (c), shall constitute a Class 2 misdemeanor.
(2)	A willful violation of G.S. 14-309.14K(a) or (b) or G.S. 14-309.14T(b) or (c), shall constitute a Class I felony.
The Commission may refer any available evidence concerning violations of this Part to the proper district attorney, who may, with or without a reference, institute the appropriate criminal proceedings.
(c)	Injunction. – Whenever it appears to the Commission that a person has engaged or is about to engage in an act constituting a violation of any provision of this Part or any rule or order issued pursuant to this Part, the Commission may in its discretion bring an action in any court of competent jurisdiction to enjoin those acts or practices and to enforce compliance with this Part or any rule or order issued pursuant to this Part.
(d)	Enforcement. – For purposes of enforcing this Part, any law enforcement agents hired by the Commission or under contract with the Commission to enforce this Part have statewide jurisdiction. These law enforcement agents may assist local and State law enforcement agencies in their investigations and may initiate and carry out, in coordination with local and State law enforcement agencies, investigations of violations of this Part. These law enforcement agents have all the powers and authority of law enforcement officers when executing arrest warrants."
"Subpart E. Raffles."
Section 3.  This act is effective when it becomes law.