Lottery Lawsuit Proceeds

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Lottery Lawsuit Clears First Major Hurdle

Special Report - February 16, 2006
A Wake County Superior Court Judge has denied the state’s motion to dismiss a lawsuit that could put a stop to the lottery in North Carolina. Instead, Wake County Superior Court Judge Henry W. Hight, Jr. issued an order calling for a full hearing on the merits of the case on March 20—just 10 days before scratch-off lottery tickets are scheduled to start selling. Judge Hight, who heard initial arguments in the case on February 13, denied a motion by the plaintiffs for a preliminary injunction to halt any further action by the North Carolina State Lottery Commission until a final ruling in the case is reached. At the same time, he denied the state’s request to throw out the lawsuit altogether. This means that the Lottery Commission will be able to continue working to establish a lottery in North Carolina while the case proceeds in court.

Former N.C. Supreme Court Justice Robert Orr, who heads up the N.C. Institute for Constitutional Law, filed the lawsuit on behalf of the plaintiffs, which include the North Carolina Family Policy Council, the Wake County Taxpayers Association, the North Carolina Common Sense Foundation, North Carolina Fair Share, State Senator Eddie Goodall (R-Mecklenburg), State Representative Paul Stam (R-Wake) and three private citizens. Norma Harrell, an attorney from the State Attorney General’s office is representing the defendants, which include the State, the Lottery Commission and its Commissioners, the Executive Director of the Lottery Tom Shaheen, Governor Mike Easley, and State Treasurer Richard Moore.

The lawsuit does not challenge the lottery on a policy basis, but instead takes issue with the manner in which the bill was passed by the North Carolina General Assembly. A provision in the North Carolina Constitution—Article II, Section 23—requires that “revenue bills,” or bills that (1) raise money on the credit of the state, (2) pledge the faith of the state for the payment of any debt, or (3) impose any tax upon the people of the state, must be voted on two separate days in both the N.C. House and N.C. Senate and that the “yeas” and “nays” on those votes be recorded in official legislative records. This provision exists because the authors of the Constitution deemed the imposition of taxes upon the people of the state and the extension of credit of the state such significant acts that they demand a higher level of scrutiny and deliberation. Neither party in the case disputes that this procedure was not followed when the legislature passed the lottery bill, House Bill 1023, last year. However, the plaintiffs argue that the lottery meets the definition of a revenue bill, and that the General Assembly violated Article II, Section 23 when they did not treat HB 1023 accordingly. They also claim that lawmakers violated another constitutional provision—Article V, Section 7—when they authorized a loan of $10 million from the state treasury to the Lottery Commission in the Lottery Act.

For an in-depth explanation of this legal challenge download our policy paper Lottery Lawsuit: Insuring the Integrity of the Legislative Process.