SB 574 — Study Establish Gaming Comm/Sports Betting.

Article 21.

Boxing Advisory Commission.

Article 22.

Regulation of Boxing.

SECTION 1.(b) When recodifyingpursuant to this section, the Revisor is authorized to change all references to the North Carolina State Lottery Commission, State Bureau of Investigation, and Alcohol Law Enforcement Branch of the Department of Public Safety, as appropriate, to instead be references to the North Carolina Gaming Commission.

The Revisor may separate subsections of existing statutory sections into new sections and, when necessary to organize relevant law into its proper place in Chapter 18E of the General Statutes, as amended by this act, may rearrange sentences that currently appear within subsections.

The Revisor may *S574-v-2* General Assembly Of North Carolina Session 2019 modify statutory citations throughout the General Statutes, as appropriate, and may modify any references to statutory divisions, such as "Chapter," "Subchapter," "Article," "Part," "section," and "subsection";

adjust the order of lists of multiple statutes to maintain statutory order;

correct terms and conform names and titles changed by this act;

eliminate duplicative references to the Lottery Commission, State Bureau of Investigation, or Alcohol Law Enforcement Branch of the Department of Public Safety that result from the changes authorized by this section;

and make conforming changes to catch lines and references to catch lines.

The Revisor may also adjust subject and verb agreement and the placement of conjunctions.

The Revisor shall consult with the North Carolina State Lottery Commission, State Bureau of Investigation, and Alcohol Law Enforcement Branch of the Department of Public Safety on this recodification.

SECTION 2.

The General Statutes are amended by adding a new Chapter to read:

"Chapter 18E.

"Gaming.

"Article 1.

"Gaming Commission.

"§ 18E-100.

Gaming Commission established.

There is created the North Carolina Gaming Commission to establish and oversee the operation of gaming in this State.

The Commission shall be located in the Department of Commerce for budgetary purposes only;

otherwise, the Commission shall be an independent, self-supporting, and revenue-raising agency of the State.

The Commission shall reimburse other governmental entities that provide services to the Commission.

"§ 18E-101.

Reserved.

"§ 18E-102.

Definitions.

As used in this Chapter, unless the context requires otherwise:

(1) "Commission" means the North Carolina Gaming Commission.

(2) "Commissioner" means a member of the Commission.

(3) "Director" means the person selected by the Commission to be the chief administrator of the North Carolina Gaming Commission.

(4) "Person" means any natural person or corporation, limited liability company, trust, association, partnership, joint venture, subsidiary, or other business entity.

"§§ 18E-103 through 18E-111.

Reserved.

"§ 18E-112.

Commission membership;

appointment;

selection of chair;

vacancies;

removal;

meetings;

compensation.

(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 recommendationofthePresidentProTemporeoftheSenate,andtwoofwhomshallbeappointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives.

Commissioners may be removed by the appointing authority for cause.

(b) The Governor shall select the chair of the Commission from among its membership, who shall serve at the pleasure of the Governor.

(c) Of the initial appointees of the Governor, two members shall serve a term of one year, two members shall serve a term of two years, and one member shall serve a term of three years.

All succeeding appointments shall be for terms of four years.

Members shall not serve for more than two successive terms.

(d) Vacancies shall be filled by the appointing authority for the unexpired portion of the term in which that vacancy occurs.

(e) The Commission shall meet at least quarterlyupon the call of the chair.

A majority of the total membership of the Commission shall constitute a quorum.

(f) Members of the Commission shall receive per diem, subsistence, and travel as provided in G.S.

138-5 and G.S.

138-6.

Page 2 Senate Bill 574*-Second Edition General Assembly Of North Carolina Session 2019 "§ 18A-113.

Qualifications of Commissioners.

(a) Of the members of the Commission, the appointing authorities shall ensure that:

(1) At least one member shall have a minimum of five years' experience in law enforcement.

Notwithstanding subsection (c) of this section, a member serving in this slot may be an elected law enforcement official.

(2) At least one member shall be a certified public accountant.

(3) At least one member shall have retail lottery sales experience as an owner or manager.

(4) At least one member shall have experience in treating gambling addiction.

(5) At least one member shall be an advocate for players.

(b) In making appointments to the Commission, the composition of the State with regard to geographic representation and gender, ethnic, racial, and age composition shall be considered.

(c) A member of the Commission may not hold an elective office or be a candidate for an elective office.

If any Commissioner takes any of the following actions, that Commissioner vacates office as a member of the Commission and the vacancy shall be filled as provided by G.S.

18E-112:

(1) Files a notice of candidacy under G.S.

163A-972 through G.S.

163A-978 or a petition under G.S.

163A-980.

(2) Is nominated to fill a vacancy among partynominees under G.S.

163A-987 or G.S.

163A-988.

(3) Files a petition as an unaffiliated candidate under G.S.

163A-1005.

(4) Files a declaration of intent as a write-in candidate under G.S.

163A-1006.

(5) Is nominated by party convention under G.S.

163A-953.

(d) No legislator, as defined in G.S.

163A-152 and G.S.

163A-254, or former legislator may serve on the Commission while in office or within 12 months after leaving office.

"§ 18E-114.

Reserved.

"§ 18E-115.

Meetings;

records.

(a) Meetings of the Commission shall be subject to Article 33C of Chapter 143 of the General Statutes.

A majority of the total membership of the Commission shall constitute a quorum.

No action may be taken except by a majority vote at a meeting at which a quorum is present.

(b) Records.

– Except as provided in this Chapter, records of the Commission shall be open and available to the public in accordance with Chapter 132 of the General Statutes.

Personnel records of the Commission are subject to Article 7 of Chapter 126 of the General Statutes.

"§ 18E-116.

Reserved.

"§ 18E-117.

Powers and duties of the Commission.

(a) The Commission shall have the following powers and duties:

(1) To regulate and oversee gaming, as authorized by the General Assembly.

(2) To prescribe the nature of gaming advertising which shall comply with the following:

a.

All advertising shall include resources for responsible gaming information.

b.

No advertising may intentionally target specific groups or economic classes.

c.

No advertising may be misleading, deceptive, or present any lottery game as a means of relieving any person's financial or personal difficulties.

d.

No advertising may have the primary purpose of inducing persons to participate in any gaming.

Senate Bill 574*-Second Edition Page 3 General Assembly Of North Carolina Session 2019 (3) To conduct a background investigation, including a criminal history record check, of applicants for the Director of the Commission, which may include a search of the State and National Repositories of Criminal Histories based on the fingerprints of applicants.

(4) To charge a fee, not to exceed the cost of the criminal record check, of the licensees and contractors.

(5) Tospecifytheauthority,compensation,androleoftheDirector,andtospecify the authority, selection, and role of the other employees of the Commission, in accordance with Article 3 of this Chapter.

(6) To approve and authorize the Director to enter into agreements with other states to operate and promote multistate gamingoperations consistent with the purposes set forth in this Chapter.

(7) To 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.

(8) To adopt rules necessary to carry out the provisions of this Chapter in accordance with Chapter 150B of the General Statutes.

(9) Any other powers necessary for the Commission to carry out its responsibilities under this Chapter.

(10) To study the feasibility of authorizing new gaming activities that the Commission deems appropriate.

(b) Article 15 of Chapter 143B of the General Statutesshall not applyto the Commission.

(c) The Commission shall have no authorityto regulate or oversee any gaming conducted pursuant to a compact entered into between the State and a federally recognized Indian tribe.

"§ 18E-118.

Reserved.

"§ 18E-119.

Reports.

TheCommission shallsendquarterlyandannual reportsontheoperations oftheCommission to the Governor, the State Treasurer, and the General Assembly.

The reports shall include complete statements of revenues, prize disbursements, expenses, net revenues, and all other financial transactions involving funds collected or disbursed under this Chapter, including the occurrence of any audit.

"§ 18E-120.

Reserved.

"§ 18E-121.

Audits.

(a) The State Auditor shall conduct annual audits of all accounts and transactions of the Commission and any other special postaudits the State Auditor considers to be necessary.

(b) Biennially, at the beginning of the calendar year, the Commission shall engage an independent firm experienced in security procedures, including computer security and systems security, to conduct a comprehensive study and evaluation of all aspects of security in the operation of the Commission.

At a minimum, such a security assessment should include a review of network vulnerability, application vulnerability, application code review, wireless security, security policy and processes, security/privacy program management, technology infrastructure and security controls, security organization and governance, and operational effectiveness.

(c) 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.

(d) The portion of the security audit report containing specific recommendations shall be confidential, shall be presented only to the Director and to the Commission, and shall be exempt from Chapter 132 of the General Statutes.

The Commission may hear the report of such an audit, discuss, and take action on any recommendations to address that audit under G.S.

143-318.11(a)(1).

Page 4 Senate Bill 574*-Second Edition General Assembly Of North Carolina Session 2019 (e) Biennially, at the end of the fiscal year, in addition to the audits required by this section, the Commission shall engage an independent auditing firm that has experience in evaluating the operation of lotteries to perform an audit of the lottery as operated under Subchapter II of this Chapter.

The results shall be presented to the Commission, to the Governor, and to the General Assembly.

(f) In addition to the other audits required by this section, the Commission may engage an independent auditing firm that has experience in evaluating the operation of various gaming activities to perform an audit of various games under this Chapter.

"§§ 18E-122 through 18E-124.

Reserved.

"§ 18E-125.

Enforcement.

(a) The Commission may apply to the superior court for an injunction to restrain any person from violating the provisions of this Chapter or its rules.

Actions under this section may be brought in Wake County or the county where the licensee maintains its principal place of business or the county where the alleged acts occurred.

(b) Whenever the Commission has reasonable cause to believe that a violation of any of the provisions of this Chapter may have occurred, the Commission may, upon its own motion or upon complaint of any person, investigate to determine whether a violation has occurred.

(c) At any time during normal business hours, the Commission or the Department of Public Safety, Alcohol Law Enforcement Branch, may inspect an establishment of a licensee.

The inspection may include the examination of records, equipment, and proceeds related to the operation.

"Article 2.

"North Carolina Gaming Commission Employees.

"§ 18E-201.

Selection of the Director;

powers and duties.

(a) The Commission shall select a Director to operate and administer the functions of the Commission and to serve as the Secretary of the Commission.

Except as to the provisions of Article 6 and Article 7 of Chapter 126 of the General Statutes, the Director shall be exempt from the North Carolina Human Resources Act.

(b) The Director shall have the following powers and duties, under the supervision of the Commission:

(1) To provide for the reporting of payment of prizes to State and federal tax authorities and for the withholding of State and federal income taxes from lottery game prizes as provided in State and federal law.

(2) To conduct a background investigation, including a criminal history record check, of applicants for employment with the Commission, licensees, and contractors, whichmayincludeasearchoftheStateandNational Repositories of Criminal Histories based on the fingerprints of applicants.

(3) To set the salaries of all Commission employees, subject to the approval of the Commission.

Except for the provisions of Article 6 and Article 7 of Chapter 126 of the General Statutes, all employees of the Commission shall be exempt from the North Carolina Human Resources Act.

(4) To enter into contracts upon approval by the Commission.

(5) To provide for the security and accuracy in the operation and administration of the Commission, including examining the background of all prospective employees, licensees, and contractors.

(6) To coordinate and collaborate with the appropriate law enforcement authorities regarding investigations of violations of the laws relating to the functions of the Commission and make reports to the Commission regarding those investigations.

(7) To confer with the Commission on the operation and administration of the lottery under Subchapter II of this Chapter and make available for inspection Senate Bill 574*-Second Edition Page 5 General Assembly Of North Carolina Session 2019 bythe Commission all books, records, files, documents, and otherinformation of the lottery.

(8) To enter into agreements with other states to operate and promote multistate lotteries consistent with the purposes set forth in Subchapter II of this Chapter and upon the approval of the Commission.

(9) To study the functions of the Commission, and gaming, and to collect demographic and other information concerning those matters and make recommendations to improve operations and administration to the Commission, to the Governor, and to the General Assembly.

(10) To provide monthly financial reports to the Commission.

"§ 18E-202.

Reserved.

"§ 18E-203.

Employees of the Commission.

All of the following apply to the Director and all other employees of the Commission:

(1) No employee of the Commission mayhave a financial interest in any licensee or contractor, other than an interest as part of a mutual fund.

(2) No employee of the Commission with decision-making authority shall participate in anydecision involving the licensee or contractor with whom the employee has a financial interest.

(3) No employee of the Commission who leaves the employment of the Commission mayrepresent any licensee or contractor before the Commission for a period of one year following termination of employment with the Commission.

(4) No employee of the Commission who leaves the employment of the Commission may represent any lottery contractor, potential contractor, or retailer, as defined in Subchapter II of this Chapter, before the Commission for a period of one year following termination of employment with the Commission.

(5) A background investigation shall be conducted on each applicant for employment with the Commission.

(6) The Commission shall bond all employees with access to Commission funds or revenue or security.

"§ 18E-204.

Reserved.

"§ 18E-205.

Gifts.

(a) No Commissioner, the Director, any employee of the Commission, or a member of the immediate family residing in the same household as any of these individuals may accept any economic opportunity, gift, loan, gratuity, special discount, favor, hospitality, or service, excluding food and beverages having an aggregate value not exceeding one hundred dollars ($100.00) in any calendar year from any person regulated by this Chapter.

(b) This section shall be supplemental to Subchapter II of Chapter 163A of the General Statutes." SECTION 3.(a) G.S.

18C-110 is repealed.

SECTION 3.(b) G.S.

18C-111 is repealed.

SECTION 3.(c) G.S.

18C-112 is repealed.

SECTION 3.(d) G.S.

18C-113(a), (b), and (c) are repealed.

SECTION 3.(e) G.S.

18C-115(a) is repealed.

SECTION 3.(f) G.S.

18C-114 is repealed.

SECTION 3.(g) G.S.

18C-120 is repealed.

SECTION 3.(h) G.S.

18C-122 is repealed.

SECTION 4.

18B-500(b)90-270.90(4) reads as rewritten:

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(1)Physical Examinetherapy anydoes restrictionsnot oninclude suchthe activitiesapplication of roentgen rays or radioactive materials, surgery, manipulation of the spine unless prescribed by a physician licensed to practice medicine in thisNorth State.Carolina, the practice of chiropractic, as defined by G.S.

(2)90-143, Examineor themedical effectsdiagnosis of authorizingdisease." suchSECTION activities2. on existing tribal games in this State, if any.

(3)This Investigateact thebecomes positiveeffective andOctober negative1, impacts2019. of authorizing such activities in this State, including whether any additional resources may be needed for assistance to those with gambling addictions.

(4)*S574-v-1* Examination of potential revenues and expenditures for the State, if such activities are authorized.

(5) Recommendations of types of regulation of such activities, including any to protect players.

(6) Examine whether gambling losses should be eligible for deduction on State income tax filings.

(7) Any other matters the North Carolina Gaming Commission deems relevant.

SECTION 5.(b) The North Carolina Gaming Commission shall report its findings, together with anyproposed legislation, to the Joint Legislative Oversight Committee on the State Lottery on or before February 15, 2020.

SECTION 6.

Except as otherwise specifically provided in this act, each enumerated commission, board, or other function of State government transferred to the North Carolina Gaming Commission, as created in this act, is a continuation of the former entity for purposes of succession to all the rights, powers, duties, and obligations of the former.

Where the former entities are referred to by law, contract, or other document in their former name, the North Carolina Gaming Commission, as created in this act, is charged with exercising the functions of the former named entity.

SECTION 7.

No action or proceeding pending on August 31, 2019, brought by or against the North Carolina Lottery Commission, the State Bureau of Investigation, the Alcohol Law Enforcement Branch of the Department of Public Safety, or the Boxing Advisory Commission shall be affected by any provision of this act, but the same may be prosecuted or defended in the name of the North Carolina Gaming Commission, as created in this act.

In these actions and proceedings, the North Carolina Gaming Commission or its Executive Director, as appropriate, shall be substituted as a party upon proper application to the courts or other administrative or quasi-judicial bodies.

Any business or other matter undertaken or commanded by any State program or office or contract transferred by this act to the North Carolina Gaming Commission pertaining to orconnectedwith thefunctions, powers,obligations, andduties set forth herein, whichis pending on August 31, 2019, may be conducted and completed by the North Carolina Gaming Commission in the same manner and under the same terms and conditions and with the same effect as if conducted and completed by the original program, office, or commissioners or directors thereof.

SECTION 8.

The consolidation provided for under this act shall not affect any ongoing investigation or audit.

Prosecutions for offenses or violations committed before August 31, 2019, are not abated or affected by this act, and the statutes that would be applicable but for this act remain applicable to those prosecutions.

SECTION 9.

Rules, forms, policies, procedures, and guidance adopted by the North Carolina Lottery Commission, the State Bureau of Investigation, the Alcohol Law Enforcement Branch of the Department of Public Safety, or the Boxing Advisory Commission shall remain in effect until amended or repealed by the North Carolina Gaming Commission.

Senate Bill 574*-Second Edition Page 7 General Assembly Of North Carolina Session 2019 SECTION 10.

The authority, powers, duties and functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds, including the functions ofbudgetingand purchasing,oftheNorthCarolina LotteryCommission aretransferred to the North Carolina Gaming Commission, as created in this act.

The authority, powers, duties and functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds, including the functions of budgeting and purchasing, of the bingo and raffle functions of the State Bureau of Investigation are transferred to the North Carolina Gaming Commission, as created in this act.

The authority, powers, duties and functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds, including the functions of budgeting and purchasing, of the boxing regulatory functions of the Alcohol Law Enforcement Branch of the Department of Public Safety and the Boxing Advisory Commission are transferred to the North Carolina Gaming Commission, as created in this act.

The Director of the Budget shall resolve any disputes arising out of this transfer.

SECTION 11.

The appropriations and resources of the North Carolina Lottery Commission, including any office space, are transferred to the North Carolina Gaming Commission, and the transfer shall have all the elements of a Type I transfer under G.S.

143A-6.

SECTION 12.

The members of the North Carolina Lottery Commission, as appointed pursuant to G.S.

18C-111, shall operate as the North Carolina Gaming Commission until the Governor and the General Assembly have appointed the membership of the North Carolina Gaming Commission as provided in this act.

SECTION 13.

The appropriations and resources of the bingo and raffle functions of the State Bureau of Investigation are transferred to the North Carolina Gaming Commission, and the transfer shall have all the elements of a Type I transfer under G.S.

143A-6.

SECTION 14.

The appropriations and resources of the boxing regulatory functions of the Alcohol Law Enforcement Branch of the Department of Public Safety and the Boxing Advisory Commission are transferred to the North Carolina Gaming Commission, and the transfers shall have all the elements of a Type I transfer under G.S.

143A-6.

SECTION 15.

The North Carolina Gaming Commission shall report to the Joint Legislative Commission on Governmental Operations and the Joint Legislative Lottery Oversight Committee on or before April 1, 2020, and again on or before March 1, 2021, as to recommendations for statutory changes necessary to further implement this consolidation.

SECTION 16.

This act becomes effective September 1, 2019.

Page 8 Senate Bill 574*-Second Edition