THE ASSOCIATED PRESS Monday, April 30, 2007

RALEIGH

A legal challenge to the state lottery that centers on whether a portion of each ticket is a tax or a profit could derail the games, plaintiffs contend.

“It seems to be an open-and-shut case,” said Rep. Paul Stam, R-Wake, a party in the lawsuit and the House Republican leader. “We’re counting on the court to end it this year.”

Opening arguments before the N.C. Court of Appeals are scheduled for next month.

The plaintiffs, which also include the Wake County Taxpayers Association and the N.C. Family Policy Council, said that the lottery that was started in March 2006 is a tax and should have gone through the required legislative process for new taxes.

They have focused on the state’s practice of taking 35 percent of lottery ticket sales expected to total $350 million at the end of the fiscal year in June and devoting that money to education, which plaintiffs contend makes the money a tax.

The 35 percent is “assessed and allocated to fund a general public benefit: the educational needs of North Carolina’s children throughout the state,” plaintiffs argue.

A Wake County Superior Court judge has already disagreed with that argument, which resulted in the case going before the N.C. Court of Appeals.

If it is ruled a tax, then the creation of the lottery may have been illegal. (more…)