NC’s election ended. Then gambling money showed up in campaign reports, complaint says

Donors across the video gambling industry gave North Carolina lawmakers nearly $900,000 between 2019 and 2022, according to a new complaint filed with state election officials that alleges some of the contributions may have violated campaign finance laws.

Ahead of lawmakers briefly considering legislation to legalize and regulate video gambling in 2021, before it stalled, and then hearing a similar bill in a committee earlier this month, donors gave $885,000 to elected officials and candidates that included legislative leaders of both parties, the complaint filed Tuesday by veteran government accountability advocate Bob Hall shows.

In some cases, campaign committees for top GOP lawmakers such as House Speaker Tim Moore and Senate leader Phil Berger received contributions of varying amounts from many of the same donors, all on the same day.

The complaint notes that many of those donors are members of the N.C. Coin Operators Association, an industry group founded in 2019, and alleges that members and companies affiliated with the NCCOA “conspired to deliver unprecedented sums to key state legislators in a coordinated manner that (1) apparently violated their obligation to form a political committee and (2) circumvented the contribution limits and reporting requirements imposed on a PAC.”

By not registering as a PAC, Hall alleges, the donors avoided having to disclose their fundraising activity, and skirted limits on when and how much money a PAC can give. The individual amounts given to lawmakers each fall under the $5,600 contribution limit currently in place, but if treated as a bundle given by donors who collectively should’ve registered as a PAC, add up to “well over” the limit, the complaint states.

Efforts to reach representatives for NCCOA by phone and email on Tuesday afternoon were unsuccessful.

Many of the donations were also made late in the election cycle, either in late October or November — after the date when the final campaign disclosure report before the election was due — or after the election, according to the complaint. The complaint states that $230,660, more than a quarter of the total $885,000 given since 2019, was “logged in” after Oct. 25, 2022.

“Because these contributions were not disclosed until January 2023, it was impossible for the media or public to take note of their size and frequency before the election,” Hall, the former longtime executive director of Democracy NC, states in the complaint.

The complaint, addressed to State Board of Elections Executive Director Karen Brinson Bell, comes as lawmakers try to revive the bill that failed in 2021, with a new version of the legislation which would legalize video gambling in North Carolina and regulate the industry through the state lottery commission.

Opposition and support to video gambling bill

The proposal to legalize and regulate video gambling machines was filed in April by GOP Rep. Harry Warren of Rowan County. Warren presented the bill to the House Commerce Committee last week, where it was heard for discussion only. Groups opposed to gambling told lawmakers they were staunchly opposed to the bill. Some industry representatives, on the other hand, expressed their support.

The N.C. Sheriffs’ Association, which has opposed video gambling due to the crime that illegally operated sweepstakes parlors and other businesses attract, said it has no position on legalizing and regulating video gambling machines under the lottery commission, but is opposed to the bill in its current form due to concerns about how the new law would be enforced.

Eddie Caldwell, the association’s executive vice president and general counsel, said in an email last week that the NCSA will be seeking amendments to the bill to address questions including whether local law enforcement officers will have jurisdiction to enforce the law, and how many machines would be allowed in one place.

Caldwell also said the bill should be revised to allow law enforcement to track and search the permits issued by the lottery commission, in order to “ensure that the correct video gaming terminals are at the correct location.”

State lawmakers have been trying to regulate video gambling for decades, Warren said during last week’s committee meeting. He and other supporters of the bill argued that without action from lawmakers, the illegally operated video gambling market would continue to thrive, due to demand that hasn’t gone away despite efforts by the General Assembly to crack down on the machines.

“The real reason these things flourish is because people play them,” Warren said. “If there were no money in it, they would not be in business.”

Opponents of the bill said they were skeptical of Warren’s contention that regulating the industry through inspection and licensing under the supervision of the lottery commission would significantly reduce the number of machines. Hall said the same in his complaint.

“Based on the experience in other states and our own history, it is fanciful to believe that legalizing the video poker industry will substantially reduce its presence or number of machines, alter its addictive harm on customers and their communities, or end its entanglement in political and social corruption,” Hall wrote.

If the bill moves forward, it’ll have to be brought back before the same committee for a vote, then advance to other committees it would need to pass before a vote on the House floor.