A study commissioned by the North Carolina Education Lottery commission includes a commercial casino in Pinehurst as part of a recommended plan to generate millions in new state tax revenue through the expansion of legalized gambling.
The state General Assembly in 2019 requested a third-party evaluation of the costs and revenues that might be associated with authorizing and regulating sports betting, including on-site wagering at horse steeplechases, and the creation of an oversight commission specific to gambling.
The legislation also called for inquiry into the feasibility of the state authorizing new forms of gambling.
The resulting study from the Pennsylvania-based Spectrum Gaming group dated March 16, 2020 was handed over to the legislature last April. That study went public this week after investigative reporters with WRAL obtained it through a public records request to the state.
“Last year the legislature tasked our commission to do a study on potential revenues for North Carolina as it pertains not only to the lottery but expanding into sports betting, sports gaming and so forth,” said Nick Picerno, a former Moore County commissioner and current member of the N.C. Education Lottery commission.
“Our task was just to get that done. As a commission we have not really done a whole lot with the study other than hand it to the General Assembly for them to look over and see how they might want to pursue expanding gaming in North Carolina.”
There’s been little to no response in the state legislature since. State Rep. Jamie Boles, who represents Moore County in the General Assembly, said that he was “as shocked as anyone else” to learn that the study mentions Pinehurst as a possible casino location.
Boles said that he’s reaching out to Pinehurst Resort leaders to get their take on the recommendations, but that currently he isn’t interested in as broad an expansion of gambling outlined in the study.
Current authorized forms of gambling are limited to the state education lottery, gaming at a pair of casinos in Western North Carolina on land owned by the Eastern Band of Cherokee Indians, and as of 2019 nonprofit fundraising events featuring casino-style games and alcohol. A third casino operated by the Catawba Indian Nation is now in the works in Kings Mountain outside of Charlotte.
The Spectrum study determined that the legalization of commercial casinos, which would compete with the tribal resorts for in-state patrons, would generate about $2.2 billion in annual revenue after a few years. About $493 million of that would end up in state coffers through an effective casino tax rate of 18 to 20 percent.
Since the study was performed, participation in the lottery has risen to record levels. Picerno said that the current year’s lottery revenues are 25 percent higher than budgeted, and scratch-off sales are averaging around $9 million a day.
More than half of lottery proceeds are paid out in prizes, and about 25 percent is returned to the state to fund public education. Proceeds to the state have increased each year since the lottery’s inception.
Recommendations say that North Carolina could reasonably accommodate nine additional commercial casinos outside the Cherokee tribe’s exclusivity zone, including around 19,000 slot machines and 650 tables.
Siting recommendations, based on the number of slot machines relative to population in cities around the United States, include three casinos in Charlotte, two in the Raleigh-Durham area, and one each in Asheville, Pinehurst, Wilmington and Winston-Salem.
Those calculations excluded cities like Las Vegas and Atlantic City, New Jersey and focused on cities where gaming serves as a means for economic development.
But maintaining Moore County “as a premier golf destination” played into the inclusion of Pinehurst in the proposal. The study sites other golfing destinations, including The Greenbrier in West Virginia, as resorts that have added casinos to diversify their offerings.
The lottery commission did not have input into the study, its methodology or siting recommendations.
“My opinion, I have nothing to back it up other than Pinehurst is a major attraction in North Carolina because of the golf industry and U.S. Opens are going to be coming as part of a regular rotation ... I think all of that is probably how we got included,” Picerno said.
A casino in Pinehurst with 700 slot machines and 25 table games could generate about $77 million once it’s fully up and running, resulting in $15.3 million in state tax revenue.
The study’s authors based their revenue projections on the assumptions that commercial casinos would be the only addition to the state’s existing gambling landscape, and that the state would take action to curb the many forms of illegal gambling widespread across North Carolina.
The study also offered projections for the potential legalization of video poker, which it says would be more lucrative than commercial casinos at $2.5 billion in economic activity — and taxed at a higher rate that equates to $745 million in new state tax revenue.
Discussions on whether to expand legal gambling, and how, are now up to the General Assembly. The study also deals with the potential to either place the lottery commission in charge of regulating any additional gambling activity or to establish another organization.
“The legislature would have to expand the role of the lottery commission if they want us as the commission to be the oversight,” said Picerno. “They may create a new commission, and if they do the talk has been basically to transform us into that commission, but all of it's just speculation right now.”