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Law creating N.C. Lottery to be reviewed by state's Supreme Court

Sep 8, 2008, 2:59 pm

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North Carolina Lottery

North Carolina's highest court will decide whether the Legislature approved properly a bill that created the state's education lottery.

State Supreme Court justices scheduled oral arguments Monday in a lawsuit originally filed by taxpayers who sued state and elected officials.

At issue is whether 35 percent of the price of each lottery ticket constitutes a tax. If so, the state legislature violated the North Carolina Constitution when it approved the lottery in 2005 because it did not follow parliamentary proceedings set out in the Constitution to prevent taxes from being levied in haste.

If the legislature violated the state Constitution, the lottery may be forced to shut down.

Since the lottery was launched in March 2006, it has raised more than $725 million to pay for pre-school, class size-reduction, school construction and college scholarships, the lottery said in a news release in June.

Former state Supreme Court Justice Bob Orr and lawyer Jack Holtzman of N.C. Justice Center argued that each lottery ticket price includes a tax. Every lottery player has to pay it when he buys a ticket and the money goes to education, which is government function.

Special Deputy Attorney General Norma Harrell said that the prior cases and law on issues such as toll roads and other government fees show that the lottery is not a tax.

A three-judge panel of the N.C. Court of Appeals ruled in a 2-1 vote in March that the lottery is not a tax. Because the vote was split, the case moved to the Supreme Court for a final ruling.

Six of the seven Supreme Court justices heard the case. Justice Mark Martin recused himself. Justices don't have to give a reason for why they recuse themselves.

The plaintiffs have argued that the procedures used by House and Senate leaders to approve the legislation in 2005 violated the state constitution.

State attorneys counter the lottery bill was passed properly. The state Court of Appeals ruled six months ago in favor of the state in a split decision.

The justices won't rule from the bench. It may be months before there is a decision.

If the taxpayers win the case, the Legislature may have to revote the lottery into law. 

The North Carolina Supreme Court will decide if lawmakers acted properly when they created the state's lottery.
The North Carolina Supreme Court will decide if lawmakers acted properly when they created the state's lottery.

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