Section 1.
Enacts new Article 11, Video Gaming Terminals in GS Chapter 18C, providing as follows.
Part 1, General Provisions
Sets out and defines terms as they are used in Article 9. Defines video gaming terminal as a device operated under the authority of the North Carolina State Lottery Commission (Commission) that is exempt under GS 14-306.1A (setting out the types of machines and devices prohibited by law) and is any electronic computerized video game machine that, upon the insertion of cash or a lottery share, is available to play a video gaming game authorized by the Commission and which uses a video display and microprocessors in which, by chance, the player may receive free games or credits that can be redeemed for cash; excludes a device that directly dispenses coins, cash, or tokens. Defines video gaming games as electronically simulated games of chance that are displayed and played on permitted video gaming terminals and approved by the Commission. Defines Operator as a person licensed by the Commission who owns, leases, or otherwise controls a video gaming terminal for which a video gaming terminal permit has been issued by the Commission. Defines video gaming merchant (Merchant) as a person licensed by the Commission who also holds a valid ABC permit (as described), is not primarily in the business of offering video gaming terminals and with whom an operator has contracted to allow placement of video gaming terminals for wagering and payment of winnings and payment of cash prizes for video gaming games in accordance with this Article.
Requires, in GS 18C-1102 the Commission to determine that video gaming games are a type of lottery game in this State and requires licensing Operators and Merchants to operate video gaming games for play by the public. Deems the playing of video gaming games a share (any method of participation in a lottery game, other than by a ticket purchased on an equivalent basis with a ticket) for the purposes of GS Chapter 18C, exempt from GS 18C-131(c), which sets the minimum retail price of each ticket or share in any lottery game at 50¢. Requires playing to be only on video gaming terminals that have a valid video gaming terminal permit. Prevents video gaming terminals (Terminals) from being placed on property owned or controlled by a governmental entity. Requires Terminals and associated equipment to be connected to a central monitoring system at all times during play, and as otherwise determined by the Commission.
Authorizes each Operator to operate up to three Terminals per location, with the possibility of licensure for an additional three Terminals if benchmarks established by the Commission are met. Specifies that Terminals must comply with the four listed criteria, including that it be located in a building that is more than 1,000 feet away from a church, public school, and nonpublic school, unless the church or school locates within 1,000 feet of the merchant after it began using the premises for Terminals. Requires Operators to do the following in relation to their Terminals; (1) acquire Terminals and associated equipment from licensed Manufacturers and (2) contract with Merchants for placement of Terminals for play by the public, on a contract form prescribed by the Commission.
Requires the Commission, in GS 18C-1103, to determine play of video gaming games that address procedures for monitoring, collection, and remittance of net machine revenue from the games, in conformity with the following: (1) transfers no less than 32% of the total net machine revenues to the North Carolina Video Gaming Fund (Fund); (2) allocates 8% of the total net revenues for the Commission’s listed annual administrative and enforcement expenses; and (3) allocates 30% of the net machine revenues to operators and 30% to video gaming merchants.
Establishes the Fund in the State treasury in GS 18C-1104 that consists of the transfer of net machine revenues as described above, unclaimed prizes, licensing fees collected by the Commission, and any interest earned on those funds. Requires the NCGA to appropriate money in the Fund annually in the Appropriations Act based on estimates of net machine revenue from video gaming terminals to the Fund. Specifies that a security interest is not granted in any funds appropriated under GS 18C-1104.
Part 2. Licenses and Permits
Enacts GS 18C-1110, requiring a video gaming permit to be affixed to every Terminal prior to play, representing that the machine has been registered, inspected, and approved for operation. Requires the Commission to issue video gaming terminal permits based on the number of approved Terminals registered with the Commission, with the initial permit valid for two years, and each successive permit annually renewed thereafter.  Makes it illegal for anyone other than authorized Commission personnel to affix or remove a permit. Requires the terminal and associated equipment’s software and hardware to be compatible with the Commission's central monitoring system and requires the games installed on the video gaming terminal to be approved by the Commission before a permit may be issued. Terminals that do not display the permit are illegal and subject to confiscation.
Requires a license under GS 18C-1114 to manufacture, operate or serve, or place for play by the public any video gaming terminal. Sets out qualifications for licensure as well as disqualifications for licensure. Requires a background check of the applicant, including each partner, director, officer, and all stockholders of 5% or more of any business entity, except for institutional investors. Prohibits an Operator from giving anything of value, including a loan or a financing arrangement, to any Merchant as an incentive or inducement to locate video gaming terminals in a specific location. Requires the Commission to adopt additional rules governing the exchange of gifts, loans and other financing arrangements, gratuities, special discounts, favors, hospitality, or service between licensees. Allows licenses to be revoked for cause.
Prohibits advertising of video gaming games and Terminals, as specified in GS 18C-1115. Limits cash awards on individual wagers to $1,199. Provides signage and notice at each Terminal location, including information on gambling addiction. Specifies that all winnings are subject to State income tax.
Caps the fee that may be charged for a license application for renewal at $250 and allows charging the cost of the criminal and financial record check in GS 18C-1120. Sets the fee schedule for the actual licenses as follows: $150,000 for Manufacturers ($100,000 to renew); $250,000 for Operators, plus $150 per Terminal in each location ($100,000 to renew, plus the same Terminal fee); and $1,500 per retail location for Merchants ($1,000 per location to renew). Allows license to be transferred or assigned. Initial licenses are good for two years, renewals for one year.
Specifies, in GS 18C-1122, that a Manufacturer, Merchant, or Operator or any affiliate company, employee, beneficiary, stockholder, officer, director, member, partner, or immediate family member of a manufacturer, is ineligible for a license under the Article other than the one held. Sets out requirements to be met when contracting for a central monitoring system. Requires the Commission to strive to have no less than five manufacturers licensed and no less than 12 operators licensed in the State at all times.
Sets out duties of video gaming license holders including reporting and recording keeping requirements in GS 18C-1124.
Part 3. Video Gaming Terminals
Requires Terminals to have a terminal permit and be placed with a video gaming merchant for play in GS 18C-1130. Requires Operators to provide the Commission with the location of each Terminal and information on the merchants where the Terminals are located. Requires game software to be certified by an independent testing lab. Prohibits the Commission from limiting licensure or connection to the central monitoring system to one type of gaming Terminal, one manufacturer, or one operator.
Requires the Commission to contract for a central monitoring system from a supplier of central monitoring systems in GS 18C-1132. Sets out requirements for the central monitoring system.
Specifies that no person can sell a share for play of a Terminal to a person under the age 21 nor can a person under age 21 purchase a share for play of a Terminal or otherwise play a Terminal in GS 18C-1134. Prohibits Terminals from allowing more than the amount set by the Commission to be played in a single wager. Requires the odds of winning to be posted on or near each terminal. Requires the Commission to establish a voluntary exclusion program for any individual to voluntarily exclude themselves from playing video gaming games in GS 18C-1135. Specifies that the voluntary exclusion program is confidential and exempt from State public records law. Only authorizes licensees to share such information with its agents and affiliates in other states to exclude individuals participating in the voluntary exclusion program.
Requires a person transporting a Terminal from one gaming merchant’s establishment to another location, to give written notice to the Commission before transporting the Terminal in GS 18C-1136.
Part 4. Enforcement
Gives the Commission sole regulatory and administrative authority of this Article. Tasks the Department of Public Safety (DPS), Alcohol Law Enforcement Division (ALE), and local law enforcement (collectively, the enforcing agencies) with providing criminal enforcement. Provides for coordination and notice to the other enforcing agencies by the Commission. Gives the Commission and other enforcing agencies authority to investigate the establishment of a video gaming merchant, operator, or a manufacturer to make inspections in GS 18C-1141. Provides for inspection reports. Makes refusal by a licensee, or their employee, to permit officers to enter the premises to make an inspection a cause for action against the licensee, including license revocation or suspension.  Requires access to surveillance footage upon request, Authorizes inspections at any time it reasonably appears someone is on premises.
Sets forth several criminal offenses for violations of the act in GS 18C-1142, including providing that unless a different punishment is expressly stated elsewhere, a violation of the Article is a Class 1 misdemeanor. Authorizes the Commission to terminate any licenses issued under GS Chapter 18C upon conviction of any crime under the Chapter or GS Chapter 14. Makes it unlawful under GS 18C-1143 for a licensee or any employee of the licensee to knowingly allow any of the following conduct to occur on the premises: (1) any violation of GS Chapter 18C; (2) any violation GS Chapter 14 or 90; or (3) any other unlawful act. Also makes it unlawful for a licensee to fail to superintend the business for which a license is issued in person or through an employee of the licensee.
Effective December 1, 2025.
Section 2.
Makes conforming changes to GS 18C-103, GS 18C-113, GS 18C-114, GS 18C-120, and GS 18C-161.
Effective December 1, 2025.
Section 3.
Prohibits a lottery retailer, licensee or applicant to be a licensee under GS Chapter 18C, a lottery contractor or potential contractor, or lottery supplier (the Gifters) from paying, giving, or making any economic opportunity, gift, loan, gratuity, special discount, favor, hospitality, or service, having an aggregate value not exceeding $100 to the Director of the North Carolina State Lottery (Director), to any Commission member or employee, or to any member of the immediate family residing in the same household as one of these individuals (collectively the Recipients); prevents the Receivers from taking any gifts having an aggregate value not exceeding $100 from a Gifter. Repeals GS 18C-143(e) (gift giving prohibitions-licensees) and GS 18C-151(f)(gift giving prohibitions-contractors).
Effective December 1, 2025.
Section 4.
Enacts Article 2F to GS Chapter 105, enacting an unauthorized gaming machine tax, to levy an excise tax to generate revenue for State and local law enforcement agencies and for the General Fund. Specifies that nothing in the new article may in any manner provide immunity from criminal prosecution for a person who possess an illegal gaming machine.  Defines operator and unauthorized gaming machine.  Levies an excise tax on each unauthorized gaming machine at a rate of $10,000 per machine in GS 105-113.152. Provides for a process for payment of taxes by Operators. Directs the Secretary of Revenue (Secretary) to affix unauthorized gaming machines to indicate payment of the tax. Provides for Operators to report taxes payable to the Secretary as provided. Upon payment of the tax, directs the Secretary to issue stamps in an amount equal to the amount of the tax paid. Specifies that taxes may be paid, and stamps may be issued either by mail or in person. Provides for a process for the Secretary to impose assessments against an Operator to which a stamp has not been affixed, including notices, interest, and penalties in GS 105-113.154. Specifies, in GS 105-113.155, that information obtained by the Department of Revenue (DOR) in the course of administering the tax imposed by this Article, including information on whether DOR has issued a revenue stamp to a person, is confidential tax information. Prevents the information obtained by DOR from being used as evidence by a prosecutor in a criminal prosecution of the taxpayer for an offense related to the possession or operation of the unauthorized gaming machine.
Establishes the Unauthorized Gaming Machine Tax Account (Account) as a special nonreverting account under GS 105-113.156 with the proceeds of the tax levied under the Article to the Account. Directs the Secretary to distribute 75% of the unencumbered tax proceeds in the Account that were collected by assessment to the State or local law enforcement agency that conducted the investigation of an operator that led to the assessment and to credit the remainder to the General Fund. Directs that if more than one State or local law enforcement agency conducted the investigation, the Secretary must determine the equitable share for each agency based on the contribution each agency made to the investigation. Directs that refunds for taxes already be paid be drawn from the Account. Requires that funds provided for State and local law enforcement agencies under GS 105-113.153 should be used for expenses incurred by the agency for enforcing the laws of this State and carrying out other duties set by law. Specifies that those funds supplement and do not supplant local or State funding received by the law enforcement agency. Effective December 1, 2025, and applies to taxes due on unauthorized gaming machines on or after that date.
Section 5.-Section 7.
Amends GS 14-306.1A (types of machines and devices prohibited by law) to specify that it should not be construed to make illegal any activity conducted pursuant to GS Chapter 18’s Article 11. Amends GS 14-306.4 (electronic machines and devices for sweepstakes) to specify that it should not be construed to make illegal any activity conducted pursuant to GS Chapter 18’s Article 11. Makes conforming change to GS 105-259(b)(33)(secrecy required of officials).  Effective December 1, 2025.
Section 8.
Requires the court to order that an order pay reasonable costs of storage and disposal incurred by the seizing law enforcement agency when illegal gaming items are validly seized under GS 14-298. Specifies that if the item was seized for use as evidence in a criminal action or proceeding against the owner of the item, upon any plea of guilty or nolo contendere in that action or proceeding by the owner of the item, the court must order the owner to pay the reasonable costs of storage and disposal incurred by the seizing law enforcement agency. Subjects any motor vehicle used to transport any video game machine prohibited by GS 14-306 or GS 14-306.1A, or any electronic machine or device prohibited by GS 14-306.4 to seizure under GS 14-299. Specifies that each game console, play station, or other access point allowing a person to operate a slot machine constitutes a separate machine or device under GS 14-306 (definition of slot machine or device). Effective December 1, 2025, and applies to offenses committed on or after that date.
Section 9.
Directs the Commission to use sufficient funds from the Fund to cover its initial operating expenses to implement Article 9 of GS Chapter 18C, as enacted by the act, except that the total amount borrowed by the Commission cannot exceed $14 million. Provides for transfer of specified amounts of the funds for grants to local law enforcement agencies to combat illegal gaming, to be awarded upon recommendation by the Governor's Crime Commission; and the remainder to be available for expenditure for the purposes set forth in this act without further action by the General Assembly. Requires repayment of the funds within 24 months after the act’s effective date.
Section 10.
Provides for allocation of $2 million in each fiscal year from machine revenue to the specified six institutions of higher education for improving graduation rates and student success or sustainability in GS 18C-1103. Requires each institution to submit an annual report to the specified NCGA committee on its use of funds, as specified. Effective July 1, 2027, and applies to transfers made on or after that date.
Section 11.
Requires the Commission to identify a date upon which video gaming terminal play is authorized in this State and do all of the following at least 90 days in advance of that date: (1) publish that date in the North Carolina Registry and (2) report that date to the Joint Lottery Oversight Committee. Authorizes the Commission to (1) adopt rules that facilitate the licensure authorized in this act and (2) accept and issue applications for licensure prior to the date published in the North Carolina Registry of the date identified by the Commission.
Section 12.
Authorizes the Commission to initiate requests for proposal for the central monitoring system prior to December 1, 2025, but cannot award contracts prior to that date.

Statutes affected:
Filed: 18C-103, 18C-113, 18C-114, 18C-120, 18C-161, 18C-143, 18C-151, 14-306.1A, 14-306.4, 105-259, 14-298, 14-299, 14-306, 18C-1103
Edition 1: 18C-103, 18C-113, 18C-114, 18C-120, 18C-161, 18C-143, 18C-151, 14-306.1A, 14-306.4, 105-259, 14-298, 14-299, 14-306, 18C-1103