A BILL TO BE ENTITLED
AN ACT TO clarify felonious possession of electronic sweepstakes machines or devices.
The General Assembly of North Carolina enacts:
SECTION 1.(a)  G.S. 14‑297 reads as rewritten:
"§ 14‑297.  Allowing electronic sweepstakes machines or devices, gaming tables, illegal punchboards or slot machines on premises.
(a)	If any person shall knowingly suffer to be opened, kept or used in the person's house or on any part of the premises occupied therewith, any of the gaming tables prohibited by G.S. 14‑289 through 14‑300 or any illegal punchboard or illegal slot machine, that person shall forfeit and pay to any one who will sue therefor two hundred dollars ($200.00), and shall also be guilty of a Class 2 misdemeanor.
(b)	Except as provided in subsection (c) of this section, if any person shall knowingly suffer to be opened or used in or on any part of any premises owned or controlled by that person more than four electronic machines or devices, as defined by G.S. 14‑306.4, that person shall forfeit all electronic machines or devices on the premises. Any such premises with four or less electronic machines or devices must be more than 100 feet from any other electronic machines or devices. For any such premises, each electronic machine or device must operate autonomously. Any person who violates a provision of this subsection shall be guilty of a Class 2 misdemeanor.
(c)	It shall not be a violation of subsection (b) of this section for any person to, prior to January 1, 2020, knowingly suffer to be opened or used 25 or fewer electronic machines or devices, as defined by G.S. 14‑306.4, located in or on any part of any premises owned or controlled by that person. Such person may continue to use 25 or fewer electronic machines or devices after January 1, 2020, located at the premises owned or controlled by that person provided the person complies with Article 2E of Chapter 105 of the General Statutes and does not divide, subdivide, partition, lease, or sublease those premises as a means to open or use additional electronic machines or devices. Any person who violates a provision of this subsection shall be guilty of (i) a Class 1 misdemeanor for the first offense, (ii) a Class H felony for the second offense, and (iii) a Class G felony for a third or subsequent offense.
(d)	Any person who knowingly suffers to be opened or used an electronic machine or device authorized under this section that does not display the permit sticker required under G.S. 105‑113.120, or displays an expired permit sticker shall be subject to a penalty of up to one thousand dollars ($1,000) per violation and that machine or device may be seized or disabled by a law enforcement officer."
SECTION 1.(b)  This section becomes effective October 1, 2019, and applies to offenses committed on or after that date.
SECTION 2.  G.S. 14‑306.4 reads as rewritten:
"§ 14‑306.4.  Electronic machines and devices for sweepstakes prohibited.
(a)	Definitions. – For the purposes of this section, the following definitions apply:
(1)	"Electronic machine or device" means a mechanically, electrically or electronically operated machine or device, that is owned, leased or otherwise possessed by a sweepstakes sponsor or promoter, or any of the sweepstakes sponsor's or promoter's partners, affiliates, subsidiaries or contractors, that is intended to be used by a sweepstakes entrant, that uses energy, and that is capable of displaying information on a screen or other mechanism. This section is applicable to an electronic machine or device whether or not:
a.	It is server‑based.
b.	It uses a simulated game terminal as a representation of the prizes associated with the results of the sweepstakes entries.
c.	It utilizes software such that the simulated game influences or determines the winning or value of the prize.
d.	It selects prizes from a predetermined finite pool of entries.
e.	It utilizes a mechanism that reveals the content of a predetermined sweepstakes entry.
f.	It predetermines the prize results and stores those results for delivery at the time the sweepstakes entry results are revealed.
g.	It utilizes software to create a game result.
h.	It requires deposit of any money, coin, or token, or the use of any credit card, debit card, prepaid card, or any other method of payment to activate the electronic machine or device.
i.	It requires direct payment into the electronic machine or device, or remote activation of the electronic machine or device.
j.	It requires purchase of a related product.
k.	The related product, if any, has legitimate value.
l.	It reveals the prize incrementally, even though it may not influence if a prize is awarded or the value of any prize awarded.
m.	It determines and associates the prize with an entry or entries at the time the sweepstakes is entered.
n.	It is a slot machine or other form of electrical, mechanical, or computer game.
o.	It is a single‑player or multiplayer game.
p.	It is a single terminal or multiple terminals.
(2)	"Enter" or "entry" means the act or process by which a person becomes eligible to receive any prize offered in a sweepstakes.
(3)	"Entertaining display" means visual information, capable of being seen by a sweepstakes entrant, that takes the form of actual game play, or simulated game play, such as, by way of illustration and not exclusion:
a.	A video poker game or any other kind of video playing card game.
b.	A video bingo game.
c.	A video craps game.
d.	A video keno game.
e.	A video lotto game.
f.	Eight liner.
g.	Pot‑of‑gold.
h.	A video game based on or involving the random or chance matching of different pictures, words, numbers, or symbols not dependent on the skill or dexterity of the player.
i.	Any other video game not dependent on skill or dexterity at the moment of revealing a prize as the result of an entry into a sweepstakes.
j.	It is a fish game or any other multiplayer or multistation video game.
(4)	"Prize" means any gift, award, gratuity, good, service, credit, or anything else of value, which may be transferred to a person, whether possession of the prize is actually transferred, or placed on an account or other record as evidence of the intent to transfer the prize.
(5)	"Sweepstakes" means any game, advertising scheme or plan, or other promotion, which, with or without payment of any consideration, a person may enter to win or become eligible to receive any prize, the determination of which is based upon chance.
(b)	Notwithstanding any other provision of this Part, it shall be unlawful for any person to operate, or place into operation, an electronic machine or device to do either of the following:
(1)	Conduct a sweepstakes through the use of an entertaining display, including the entry process or the reveal of a prize.
(2)	Promote a sweepstakes that is conducted through the use of an entertaining display, including the entry process or the reveal of a prize.
(c)	It is the intent of this section to prohibit any mechanism that seeks to avoid application of this section through the use of any subterfuge or pretense whatsoever.
(d)	Nothing in this section shall be construed to make illegal any activity which is lawfully conducted on Indian lands pursuant to, and in accordance with, an approved Tribal‑State Gaming Compact applicable to that Tribe as provided in G.S. 147‑12(14) and G.S. 71A‑8.
(e)	Each violation of this section shall be considered a separate offense.
(f)	Any person who violates this section is guilty of a Class 1 misdemeanor for the first offense and is guilty of a Class H felony for a second offense and a Class G felony for a third or subsequent offense.
(g)	This section shall not apply to any video game based on or involving the random or chance matching of different pictures, words, numbers, or symbols that involves the skill or dexterity of the player if the electronic machine or device uses a certified valid sweepstakes system. A certified valid sweepstakes system includes certification of both the sweepstakes game software as well as the functionality of the sweepstakes promotion. The certification must be accompanied with a unique certification number issued by a laboratory certified by the International Organization for Standardization and the certification must have been issued on or before January 1, 2020. Any modifications to certified sweepstakes software systems must be recertified by a laboratory prior to being operated in this State. The game manufacturer must display in the software the unique certification number issued by a laboratory certified by the International Organization for Standardization. Such electronic machine or device must have a method to secure and verify the software."
SECTION 3.(a)  Chapter 105 of the General Statutes is amended by adding a new Article to read:
"Article 2E.
"Electronic Sweepstakes.
"§ 105‑113.120.  Excise tax on electronic machines or devices.
(a)	Tax. – An annual excise tax at the rate of two hundred fifty dollars ($250.00) is levied on each certified electronic machine or device, as defined in G.S. 14‑306.4, operated in this State. The amount due is payable by January 1 of each year. The full amount of tax applies to an electronic sweepstakes device that operates during any portion of a calendar year. The Secretary must issue stamps to affix to each electronic sweepstakes device to indicate payment as required by this Article. The stamp must be displayed conspicuously on the electronic sweepstakes device and it must clearly indicate the year for which the tax is paid. Upon payment of the tax, the Secretary shall issue a stamp for each electronic sweepstakes device for which payment is received.
(b)	Applicability. – The tax imposed by this Article is applicable to any electronic machine or device without regard to any of the following:
(1)	How the machine or device is activated.
(2)	How the machine or device is programmed for operation.
(3)	How the machine or device determines and associates the prize with an entry or entries at the time the sweepstakes is entered."
SECTION 3.(b)  This section becomes effective January 1, 2020, and applies to an electronic machine or device operated in this State on or after that date.
SECTION 4.  Except as otherwise provided, this act becomes effective December 1, 2019.