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Sports-wagering bill advances to NC House chamber

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A revised bipartisan sports-wagering bill has advanced to the N.C. House after clearing two House committees with minimal comment Wednesday.

The House Finance and House Rules and Operations committees recommended both Senate Bill 688 and new companion Senate Bill 38 with minimal comment.

Both bills could be added to the House floor calendar for its 3:30 p.m. session.

In Finance, SB668 received a 13-3 vote, while SB38 received a 14-2 vote. A voice vote was taken on both bills in Rules and Operations.

By comparison, there was a significant amount of impassioned pushback from Reps. Pricey Harrison, D-Guilford, and Abe Jones, D-Wake, during Tuesday's House Judiciary 1 committee.

Judiciary 1 members voted 6-3, with one member abstaining, to approve both bills.

Senate primary sponsors of SB668 are Jim Perry of Lenoir County and Paul Lowe of Forsyth County. Lowe said Friday that “I feel like there is enough bipartisan support to get this bill passed.”

SB688 would allow North Carolinians to place bets on professional and collegiate sports with a select group of wagering operators.

During the Finance committee, bill sponsors clarified how a projected $50 million in net tax proceeds from sports wagering would be distributed, of which 60% would go to the General Fund, 30% to N.C. Major Events, Games and Attractions Fund. 

An amendment successfully added Wednesday to SB38 would provide about $5 million combined annually — 10% of net tax proceeds — to five historic black colleges and universities' athletic departments Elizabeth City State, Fayetteville State, N.C. A&T State, N.C. Central and Winston Salem State,. along with "low-wealth schools" UNC Asheville and UNC Pembroke./

Another $500,000 would be provided annually to the N.C. Parks and Recreation Authority for grants of $5,000 per county for youth sports development.

Harrison was successful Tuesday in getting two amendments approved: one removed other amateur sports, such as high school and youth club events, from wagering options; the other raised from $1 million to $2 million the funding for the N.C. Department of Health and Human Services toward gambling-addiction assistance.

Previously, some House Commerce committee members cited moral and ethical reasons to oppose what they consider a state-sponsored extension of gambling.

Harrison said she opposes allowing sports wagering on any college sports, and permitting wagering with a credit card. Her amendments that would remove those options were not allowed to be heard by Judiciary 1 chairman Ted Davis Jr., R-New Hanover.

“I am troubled about the opportunity for corruption ... that the social costs associate with gambling are significant,” Harrison said.

“We’re talking about $25 million to $50 million in potential revenue, but with hundreds of millions of dollars in social costs to North Carolina.”

Harrison said that “there has been incredibly hard work that’s gone into creating a bill that tries to accommodate a lot of concerns, but I would say falls short.

“If revenue is our motivating factor for the state, it’s really problematic to me.” Harrison said she was concerned that the level of advertising related to sports wagering would mushroom from the original intent the way that advertising the state Education Lottery has morphed in recent years.

Legislative staff said that interactive marketers are required to not target those under age 21, and policies would be similar to how the state Education Lottery is marketed to avoid those under age 21.

“I understand that a lot of this advertising takes place during sporting events that are broadcast or streamed,” Harrison said.

“How does one avoid targeting a person under 21? I don’t know how you do that when advertising during a sporting event.

“I would add that’s a bad sign when you note that lottery advertising was supposed to be just point of sale, and now they are all over the place,” Harrison said.

SB38 introduction

SB38 was subject to the gut-and-replace strategy Tuesday where several amendments particular to SB688 were inserted, rather than directly amending SB688.

The amendments contained in SB38 would be effective only if SB688 is signed into law.

Perry said the involvement of SB38 was necessary "to honor negotiated commitments made in SB688 and try to pass it as is."

"This isn't a partisan issue, but more of an individual issue where some are more comfortable and some are not."

Time appears to be fleeting for getting the bills to a House floor vote since they have two more House committee steps in Finance and in Rules and Operations.

House speaker Tim Moore, R-Cleveland, said the 2022 short session is expected to end by late June or early July if the 2022-23 state budget clears the legislature and is signed into law by Gov. Roy Cooper.

However, Rep. Donny Lambeth, R-Forsyth, said there is a likelihood of the session resuming later this year.

Rep. Jon Hardister, R-Guilford, and a House sponsor of SB688, said Friday the SB38 strategy allows for "moving forward with establishing the policy and make adjustments at the same time, which would streamline the process.”

Mitch Kokai, senior policy analyst with conservative think tank John Locke Foundation, said Tuesday that SB38 is an example of "lawmakers approving measures that require a limited number of votes on a limited number of days."

"It’s not the most deliberative way to proceed, but it’s typical of the end-of-session process North Carolina has seen under Republicans and Democrats.”

Bill sweetener

One sweetener to SB688 is the establishment of the N.C. Major Events, Games and Attractions Fund from sports wagering proceeds, to be overseen by the state Commerce Department.

The goal, according to Perry, is to allow Commerce to enter into multiparty agreements with site selection organizations and local civic and government entities to provide grants to promote the attraction of major events to the state.

Although funds could be directed toward entertainment, musical, political and theatrical events, the main incentive would be to attract major sporting events, such as the Super Bowl, NCAA Final Four, a major PGA championship and special NASCAR events.

An example cited in SB38 is allowing for one temporary place of public accommodation for a professional golf tournament with more than 50,000 live spectators.

Commerce and the governor's office would be required to develop guidelines on which events would qualify for funding.

Lowe and Perry have emphasized SB668 could play a pivotal role for the state’s four highest-level professional teams — Carolina Panthers, Charlotte Hornets, Carolina Hurricanes and Charlotte FC — in terms of additional revenue to compete with rivals in states that have approved the forms of gambling permitted in SB688.

Sports wagering is legal in Tennessee and Virginia.

“We would go from getting no revenue from an illegal activity in this state to generating (up to $50 million) in annual revenue,” Saine said.

Saine told Raleigh TV station WRAL last week that if SB688 is signed into law, expanded sports wagering could begin in the fall.

“A lot of sports right at the end of the year, first of the year, so hopefully we’re there,” Saine said.

“Again, I’d hate to lose that revenue. But we’re not going to go too fast to where we can’t handle it.”

During the House Commerce meeting in November, Rep. Jason Saine, R-Lincoln, and House sponsor of SB668, said that “whether this bill rises or falls, this issue is still going to be out there the next session and the next session and the next session.”

One of the major planned changes in SB38 would be to allow on-premise sports lounges to include facilities that host NASCAR races (with minimum of 17,000 seats), facilities that host professional golf tournaments (with more than 50,000 live spectators anticipated to attend).

SB38 would allow parimutuel dog racing and horse racing wagering on events in other states, which has been an emphasis from Lowe. Perry said it would not allow for wagering on horse racing events held in North Carolina.

SB688 does not affect wagering in fantasy sports leagues, which are based on the accumulation of statistics by athletes and players.

SB688 would expand the authority of the N.C. Education Lottery Commission to oversee sports wagering, with 10 to 12 sports wagering operators allowed to accept bets.

The initial version of SB688 had the commission collect an 8% tax on the monthly adjusted gross revenue of the licensed gambling groups. Half of that revenue would be diverted to the N.C. Major Events, Games and Attractions Fund.

SB38 would increase that tax rate to 14%.

Each wagering operator would be required to be licensed, pay a $500,000 licensing fee and submit to a credit-history, tax-record and criminal background checks. The license would be good for up to five years.

SB38 would raise the licensing fee to $1 million. The renewal fee would jump from $100,000 to $1 million.

“It’s not an undertaking for the faint of heart,” Perry has said. “It does require a great deal of money in this space.”

Jones said that "just because the state can make revenue (from sports wagering) that we should do it," Jones said.

"I don't understand, frankly, what the drive is for it. People should examine themselves, their heart and head, that we need this money this way, taking advantage of addicts.

"It's very, very sad."

336-727-7376

@rcraverWSJ

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