By L.A. Williams, Correspondent
Christian Action League
RALEIGH — Two of the most encouraging laws approved by the General Assembly this session — a ban on video sweepstakes and a bill to strengthen Alcohol Beverage Control — may be undermined by Gov. Bev Perdue who said last week she’s open to proposals to legalize video poker and still interested in privatizing parts of the ABC system.
“The state’s budget shortfall may be what is making the Governor more willing to consider any idea, even these bad ones, to generate more revenue,” said the Rev. Mark Creech, executive director of the Christian Action League. “Our prayer is that she stands by the promises she made earlier this year regarding ABC and that she will remember the corruption and heartache that video poker brought our state for many years before the ban and not try to take us down that road again.”
In a Feb. 26 letter to lawmakers, the Governor promised that before making any decision to privatize or sell off a piece of the ABC system, the state would first determine its worth. More importantly, she said she would “consider and evaluate the human costs that may be associated with a privatized system” including “whether there is a correlation between increases in consumption and a less restrictive system of distribution or sales.” She also vowed that any privatization plan would have to address “critical long-term investments in our people and our state” and not be used “to fill current or near-term budget shortfalls.”
The governor’s quest to determine the value of the ABC system led to the hiring of Chicago-based Valuation Research Corporation, which was expected to issue a report by May. But the firm’s work was halted after the Legislature’s Joint Study Commission on ABC put its focus on modernizing, rather than replacing, the current system.
“We suspended the work on the study while the General Assembly was in town because we didn’t want the information until we knew what the General Assembly was going to do,” said Mike Herring, chief administrator of the N.C. Alcohol Beverage Control Commission. He said now that VRC has been asked to resume work, a report is expected by the end of August.
The governor’s own Budget Reform and Accountability Commission, which had also scrutinized the ABC system, did not recommend privatization in its May report to the General Assembly either, but advocated policies to increase the accountability and transparency of local ABC board operations. The BRAC is expected to review the VRC findings for possible additional recommendations.
“The Modernization Bill that lawmakers just passed addresses concerns — high salaries, ethics questions, nepotism — that have arisen at a small minority of local boards,” said the Rev. Creech. “Instead of looking to sell off the system that has served our state well for nearly a century, we need to allow time for the new legislation to work. And many of the bill’s provisions don’t even take effect until October.”
Jon Carr, legislative counsel for the North Carolina Association of ABC Boards, said he expects boards to take a proactive approach to new standards being established rather than wait around for the Commission to intervene in their operations. Still, changes won’t happen overnight. It will take time for rules to be put in place and boards to be assessed for compliance. Some provisions allow as much as 18 months for boards to show improvement.
While Carr said he was not shocked by the governor’s comment that she may still pursue privatization, he said he was pleasantly surprised by the number and variety of folks who came to Raleigh to speak against privatization at the Joint Study Commission’s public hearings. More than 50 people representing healthcare, law enforcement, social services, local government and the faith community expressed concerns about the number of outlets where liquor is sold and how those sales are controlled.
Phil Mooring, chairman of the North Carolina Substance Abuse Prevention Providers Association, was among a number of health and human service advocates who told the committee that the misuse of alcohol — underage drinking, driving while impaired, alcohol abuse — is doing enough harm in North Carolina without the increased availability that privatization would bring.
“We are very surprised and disappointed that the issue of privatization has not gone away in light of the recommendations of the ABC Study Committee and overwhelming opposition by public health advocates, and not only public health advocates, who clearly understand the huge economic impact of alcohol abuse and alcoholism in North Carolina,” Mooring said this week. “Any potential revenue to the state through privatization would be severely offset by associated health cost needed to prevent and treat addictions.”
At the hearings, Carr reminded the committee that the General Assembly’s Program Evaluation Division, which assessed the ABC System in 2008 in comparison to other control states and to some license (open) states, did not recommend privatization for a number of reasons, not the least of which was an anticipated drop in revenue.
“In comparison to the 12 license states who are similar to North Carolina in that they limit sales of spirits to package stores (that are privately owned), North Carolina has the fewest retail outlets (except for Delaware, a much smaller state), receives the most public revenues/gallon, and has the lowest per capita consumption,” he said. The control system generated $259 million for state and local governments last year.
Carr said the motivation to sell the ABC System likely comes from an anticipated high return based on licensing sales at substantially more than the current number of locations, but that with expansion of outlets comes the expansion of alcohol related problems.
“To get more tax revenue, there would have to be more sales,” he said. “But no one is calculating the cost to the government and the cost to society from those expanded sales.”
Already the cost of irresponsible alcohol use in North Carolina is estimated at $6.9 billion per year, according to the Bowles Center for Alcohol Studies. Research by the National Center on Addiction and Substance Abuse at Columbia University shows that alcohol abuse and addiction cost the nation more than cancer or obesity.
Mooring said it would be impossible to revert to state control if privatization of any part of the system is put into place.
“North Carolina is a great place to live, work and play. Let’s not turn our back on proven public health policy that keeps our children, families and communities healthier and safer,” he said.
The Rev. Creech said, “Right now we have 405 ABC stores, but with privatization, we would have an estimated 3,800-plus based on averages for license states. And increasing the number of outlets always drives up consumption.”
“We trust the governor will keep the health and welfare of our citizens as a top priority as she sets her agenda,” he added.
Keeping video poker and other illegal gambling at bay should also be part of that agenda, Creech said, commending lawmakers for approving a video sweepstakes ban before leaving Raleigh earlier this month. The governor signed the ban just before commenting that she would consider legalized video poker as long as the state had “some kind of concentrated, organized, unified system of regulation.”
“That’s the fallacy that we don’t need to fall for, the idea that this type of activity can be kept in check,” said the Rev. Creech. “Our state tried legalizing and regulating video poker in 1993 but the corruption, the illegal payouts and the gambling addiction led every sheriff’s office in the state to cry out for it to be stopped.”
Lawmakers began cracking down in 2000 and finally passed a ban six years later. Even so, the gaming industry has continually skirted the law, requiring more legislation this year to outlaw so-called “sweepstakes.”
“To think that that the gambling industry will suddenly submit to authority and work within parameters is unrealistic at best,” Creech said. “No amount of tax revenue could make up for the pain and suffering caused to obsessive gamblers and their families, not to mention the fact that all the money that has been going into the machines could have been spent at legitimate businesses.”
Rep. Ray Rapp (D-Haywood) said the Legislature’s Sweepstakes Ban, which takes effect Dec. 1, “sent a very simple, straightforward, clear message that video gambling, whether it be video poker or video sweepstakes, is illegal in our state.”
“We are trying to close the door on this illegal gambling once and for all in North Carolina,” Rapp said this week. “But I’m not naive enough to think that there won’t be legal challenges or new technical games that they will devise on Internet or that they won’t try to influence any conversation politically because of the way they will support or not support candidates in future elections.”
A report from the North Carolina Lottery estimated the state could generate as much as $350 million the first year of legalized video poker, but the report did not address the social and economic costs of gambling. Gaming industry representatives have told the media they will look for another loophole and that they want to keep alive discussion of potential legalization and regulation.
But for Rapp and many other lawmakers, there is nothing to discuss.
“We want this industry out of the state of North Carolina. That’s the beginning and end of this argument,” Rapp said. “When you look at the votes of 47-to-1 in the Senate and 86-to-27 in the House, these are not marginal votes. This is a clear statement.”
He said video poker opponents across the state should stay vigilant and keep the issue on the top of lawmakers’ minds. He also suggested they attend political forums in advance of November elections and ask candidates where they stand on the ban.
Take Christian Action: “We echo Rep. Rapp’s suggestions and urge CAL supporters to take the following action in regards to ABC privatization and video poker,” the Rev. Creech said.
1. Contact your local legislators and if they voted for the video sweepstakes ban (H-168), thank them and encourage them to keep fighting this battle. If they didn’t support the ban, tell them why you’re glad it was approved and ask them to keep video poker out of the state. Thank them for voting for the ABC Modernization Bill (H 1717) and encourage them to oppose any efforts to privatize.
2. Attend political forums and ask candidates their views on both these issues. You may also check public records on campaign contributions to find out if any candidates in your area are being supported by the video poker industry.