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Groups Take Lottery Challenge to Supreme Court

Posted March 18, 2008
Updated March 19, 2008

N.C. Education Lottery
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— The state Court of Appeals on Tuesday rejected claims that the North Carolina Education Lottery was created illegally three years ago.

A split decision in the ruling allowed lottery opponents to appeal the decision to the state Supreme Court.

After a lottery bill was rushed through the General Assembly in August 2005, passing the Senate on a day when some lawmakers who would have voted against it were absent, opponents sued to block the lottery. They maintained that, under state law, the bill needed to go through three hearings on separate days because it raised revenue for the state.

Appellate Judges James Wynn and Robert Hunter ruled that the lottery legislation wasn't a revenue bill because it doesn't commit state funds to paying lottery winners or create a tax that state residents must pay.

"A consumer chooses to purchase a ticket that promises only the possibility of winning a cash prize in return. There is no guarantee of payment or any investment made; the lottery ticket is a simple purchased good that represents the possibility of payment. As such, the State is not 'pledging' its faith or credit for a debt it definitively owes," Wynn wrote in the ruling.

But Appeals Judge Ann Marie Calabria disagreed, ruling that the lottery bill should have gone through three days of readings in the General Assembly before being sent to Gov. Mike Easley for approval.

"Rather than focusing on the voluntary nature of purchasing a lottery ticket, the focus must be on the purpose behind the fee," Calabria wrote in her dissent. "The purpose of the lottery is to raise revenues for North Carolina's education fund. As such, the revenues raised are not incidental to the game nor reasonably related to the maintenance and operation of the game, but are central to the game's purpose; therefore the revenues from the lottery are taxes."

The Wake County Taxpayers Association, the North Carolina Family Policy Council and several individuals, including state Rep. Paul Stam, R-Wake, are plaintiffs in the case. They are represented by the North Carolina Institute for Constitutional Law.

“After careful consideration of the Court of Appeals decision, we are compelled to take this case to the Supreme Court. The importance of adherence to constitutional mandates is simply too great to let the Court of Appeals decision stand without a review by our state’s highest court,” Jeanette Doran, senior staff attorney at NCICL, said in a statement.

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  • PCguy Mar 19, 2008

    If we DO keep the lottery, we need to dump Powerball (PB.) It's only a 30% payout ('NC only' games have a 50% payout otherwise.) IMHO, we should have a big jackpot lottery like it, but just for NC. How much of our money just went out of state with the $276,000,000 (ahem) jackpot? I'd much rather have a $2,000,000 jackpot with 1:1,000,000 odds than PB with 1:80,000,000 odds.
    Dumping PB, the winner would more than likely be from NC, providing not only the revenues generated from sales, but also the income tax on winnings.

  • fedupwithitall Mar 19, 2008

    originalintent: wanted to clarify two things.

    1) The composition of the basket is adjusted periodically to reflect changes in spending habits, for example, the addition of internet services. See my other response below for more on this.

    2) Research has shown that the CPI actually overstates the inflation rate to the average consumer. Remember, inflation does not impact all consumers the same, it varies depending on spending habits.

  • fedupwithitall Mar 19, 2008

    originalintent: not sure what the consumer basket composition has to do with the lottery, but anytime someone tries to replace your steak with a hamburger, yes, you are getting hosed. However, I am not sure that the BLS did that (the Bureau of Labor Statistics determines the basket, not the Federal Reserve, which is now headed by Bernanke, not Greenspan). What the BLS does do occasionally is change the percentage of the basket that is comprised of a particular item. For instance, one month, gas is 1.8% of the basket, the next month it is 1.7%. They say they do this to try to reflect changing spending habits of consumers (there is not perfect basket mix, because all consumers have different purchasing trends). Speculation has arisen, however, that this is done intentionally to control the stated inflation rate. Not too sure how much the CPI could actually be manipulated by changing a few percentages around.

  • Dr. Dataclerk Mar 19, 2008

    Its a good choice or bad choice that a person makes. Why be so concerned what choice a person makes. Shouldn't you out there be concern for what choice good or bad you might make. Thats our problem trying to tell someone else what to do, when we should be telling ourselves. Playing the lottery is the person's business. You do not ever have to play. But somewhere you are getting a benefit from it. :)

  • original intent Mar 19, 2008

    I still say the Feds are hosing us...did Greenspan not replace steak with hamburger in said "basket"?? I have read several articles the writers stated that Real inflation and CPI was skewed by the fed "manipulating" the stats..We have been told inflation was a "tame" 2-3-4 %.....While it is really anywhere from 7% on up to double digits...and most employers these days don't give COLAS(but our elected(FED) officials give themselves one almost every year!!!)

  • fedupwithitall Mar 18, 2008

    foetine: the lottery absolutely is not welfare, it is a game of chance paid for by all who play. Anyone can win the lottery, regardless of their economic situation.

  • fedupwithitall Mar 18, 2008

    foetine - "Scratch and Win is a gateway drug to serious gambling problems. But the media won't explore it because they make enough cash off the lottery that it buys their silence."

    Do you have any statistics or info to support 1) that Scratch and Win leads to serious gambling problems and 2) the amount of cash received by the media industry from the lottery?

    If I had to guess, you do not have anything to support either of these claims.

  • fedupwithitall Mar 18, 2008

    foetine - "Admit it that the lottery is a hand out - you just have to pitch in that dollar to take everybody else's money"

    I also wanted to address this ridiculous argument that you made. No, the lottery is not a handout it. The lottery is a game of chance that every player has to pay for.

    Do you actually believe that these pitiful arguments would be accepted by anyone?

  • poohperson2000 Mar 18, 2008

    I told you I do not play the lottery. Could careless who does, let them have their fun. I prefer to get something in return for my money, therefore I do not gamble. Everything in life is based on the choices we make as people. No one forces us to be fat, smokers, gamblers, or alcoholics.. We make these choices on our own. Not having a lottery is not going to stop people from gambling just like prohibition did not keep people from drinking. I am done arguing my point, but seriously we have bigger problems in life if we blame our the consequences of our own decisions on others. If you choose to gamble that is your choice and there is no one to blame but yourself.

  • foetine Mar 18, 2008

    You don't think that the lottery is not a form of welfare? That's a hand out since you're taking money that you didn't earn. You just got lucky. Admit it that the lottery is a hand out - you just have to pitch in that dollar to take everybody else's money.

    Who called you a "lier"? And how am I really supposed to know you don't have a gambling problem? You're anonymous person on the internet. The guy who was the first lottery commissioner was sent to prison because he swore he wasn't a liar.

    People who smoke cigarette kill people when they throw lit cigarettes out the window and cause major forrest fires that kill fireman who have to fight them. Or did those firefighters die because they were drunks? You gonna call up those forest fire victims' widows and tell their husbands deaths had nothing to do with lit cigarettes thrown out the window?

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