The state Lottery Commission this morning agreed to a deal that would pave the way for vending machines that would sell instant games as well as Powerball tickets.

Currently, the lottery uses vending machines to sell instant tickets. The deal would allow the lottery to set up machines that would allow players to buy Powerball tickets as well as the games that draw three, four or five digits.

The machines are intended to help extend the lottery's presence into chain stores that have been reluctant to sell tickets. Stores such as CVS, Dollar General and Wal-Mart do not currently sell lottery tickets.

"They're asking to see a more convenient business model," said Lottery executive director Tom Shaheen.

Players who use the machines would have to insert a drivers license to prove they are 18. Shaheen said the machines dispense the same tickets that would otherwise be purchased behind a counter.

"These are not video machines. They're not interactive by any means," Shaheen told the commission Tuesday morning.

Buying the machines would have cost the state as much as $20 million. Instead the lottery will have them provided at no charge in exchange for extending by four years its contract with GTECH, the company that handles ticket printing and logistics for the state lottery.

More after the jump.

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Sometime this week, the state lottery will make its three-billionth dollar.

Tickets first went on sale in March 2006 and total sales will reach $3 billion later this week, lottery director Tom Shaheen said.

Only four other states have hit that figure within three years, Shaheen said.

Scratch off tickets have been selling well since the legislature allowed the state lottery to increase the amount of money paid out through the games. Powerball sales ebb and flow with big jackpots.

Shaheen was at the legislature Monday to greet lawmakers and to remind them that the lottery doesn't cost the state money — all of its operating expenses are funded by sales — and that in March, the lottery will make another transfer to education programs. At that time, the lottery's total transfer to education will reach $1 billion.

State lottery officials want to start advertising lottery tickets in Spanish.

There's a catch. The 2005 law that created the lottery states, "No advertising may intentionally target specific groups or economic classes."

So that leaves lottery officials trying to figure out how to market to Hispanics without targeting a specific group. Advertising has always been a sensitive issue for the lottery since critics don't want government encouraging people to gamble.

The lottery was created to raise money for education programs and Executive Director Tom Shaheen said there is a large untapped market. Out of 5,900 retailers, lottery officials figure that nearly 200 have a customer base in which at least half don't speak English.

So, Shaheen told lottery commission members Wednesday, he'd like permission to work up Spanish radio and print ads within the law.

"Thanks for throwing us into that briar patch," Commission chairman John McArthur joked.

The ads would not necessarily be translations of the English language ads already running. The lottery's marketing staff would ensure they are culturally relevant.

"I strongly feel it's an opportunity to for us," said Commission member Bridget-Anne Hampden. "It's recognizing the diversity of our state."

The commission told lottery staff to come back with a proposal on how they would propose to legally advertise in Spanish.

State lottery officials, who have enjoyed strong sales in a struggling economy, expect next year to be a bit tougher.

In a conference call with members of the Lottery Commission this morning, lottery director Tom Shaheen said he and the lottery staff project next year's ticket sales will be down slightly from the current year. Shaheen said officials anticipate selling $1.252 billion worth of lottery tickets in the next fiscal year. If that projection holds, it would be a $16 million dollar decrease from the current year's $1.268 billion budget.

"I believe this is a responsible number," Shaheen told commissioners.

The lottery is on track to meet its sales projections for this year, which would raise $386 million for education programs. If next years projections hold — and Shaheen said it's hard to predict in such a volatile economy — the lottery would raise $376 million for education.

This year, even with high gas prices, the lottery enjoyed strong sales. Today, the lottery will make its quarterly transfer for education programs. The figure will be a record for the two-year-old lottery: $99 million. 

Sometime this weekend, lottery sales for 2008 will hit $1 billion.

It's a milestone for the two-year-old lottery. Officials promised those kind of sales figures from day one, but this is the first year in which the lottery has broken the billion barrier.

Ticket sales are calculated at the end of the day and Thursday closed with $995,787,389, said Pam Walker, a spokeswoman for the state lottery. Friday sales may not break $4 million, but it is all but certain to happen sometime Saturday or Sunday, she said.

Sales have perked up since the governor and legislature agreed to let the lottery pay out more in prize money. Turns out, people don't want to buy lottery tickets unless they think they can win.

"We really have seen an increase," said John McArthur, chairman of the N.C. Lottery Commission.

McArthur said high gas prices have muted sales somewhat.

The lottery budgeted for $957 million in sales for fiscal 2008, which ends June 30.

State Lottery Commission chairman John McArthur said proposed 5 percent raises for lottery employees encourage a better-run state lottery.

The House proposed Wednesday limiting the lottery employees' raises to that of other state employees. Other state employees would get across-the-board raises of 2.75 percent or $1,100, which ever is greater. The state lottery employees receive merit-based raises and the commission approved a budget that would allow for an average 5 percent raise.

McArthur said the lottery was created by the legislature and it can do what it wishes, but he said he would recommend keeping the raises as the lottery proposed.

"Making individual merit salary determinations based on employee performance is a part of trying to increase lottery revenue by trying to manage it as a business," McArthur said.

Pam Medlin Whitaker of Greensboro has been appointed to the N.C. Lottery Commission.

Gov. Mike Easley picked Whitaker, president of Key Resources, a Greensboro-based temp agency, to replace Linda Carlisle, a former Greensboro banker and office supply company owner.

Carlisle finished her term and choose not to seek another, said Pam Walker, a spokeswoman for the state lottery.

Whitaker is a member of the UNC at Greensboro Board of Visitors, the Greensboro College Board of Trustees, and the Preservation Greensboro Executive Board, according to a news release. Whitaker received the Greensboro Small Business Person of the Year in 2000, the Women in Business Award for Triad North Carolina in 2000, and the U.S. Chamber of Commerce Blue Chip Award in 2001. She attended Southern Guilford High School and UNC at Greensboro.

The lottery sure would like to have its tickets available at Wal-Mart, Sam's Club, Costco, Rite Aid and other large retailers.

And the retailers have told the lottery that they would like the extra money that tickets would bring. But the retailers are not crazy about having employees sell or keep an eye on tickets, lottery director Tom Shaheen told the Lottery Commission Thursday.

"Our corporate account staff has been pounding their heads into the ground for the past two years trying to get these accounts," Shaheen said.

The commission gave the sales reps a tool Wednesday that might help seal the deal. The commissioners approved spending up to $2.4 million on "lottery to go" machines, vending machines that can sell scratch-off as well as Powerball, Pick 3 and Cash 5 tickets.

The machines are built and sold by GTECH Holdings of Rhode Island, which has a contract to run the state's lottery games.

Shaheen said the lottery wouldn't buy or lease the machines unless a major retailer says they want them. But having the commission's approval to get the machines might help sales reps close the deal, he said.

Turns out, writing a budget for the lottery is a little bit like playing its games.

Commissioners approved a $1.27 billion budget Wednesday that relies on state residents to keep buying more tickets than ever, despite a slumping economy — a sort of game of budgetary chance. The final budget size reflects how much the lottery hopes to make in ticket sales. 

After debating the final number, commissioners picked $1.27 billion because that's how much they'd have to sell in order to be able to turn over $386 million to education programs. In other words, they started with how much profit they wanted to make and worked backwards from there.

Lottery executive director Tom Shaheen said Wednesday that the lottery had originally planned a much larger budget, but started scaling it back as ticket sales began to falter a bit this month. The lottery had enjoyed a 27 percent boost in sales thanks to higher prize payouts in the last five months.

The new budget, a 32 percent increase over the current year's budget banks on that trend continuing.

Commission member Max Cogburn argued for even more conservative estimates, saying that high gas and food prices will limit what people want to spend on luxuries like lottery tickets.

"At some point, people are going to go with bread and milk instead of lottery tickets," Cogburn said. 

Former N.C. lottery commissioner Kevin Geddings will appeal his case further, his lawyer said Tuesday, a day after a three-judge panel of a federal appeals court upheld Geddings' public corruption conviction.

Geddings will appeal his case to the full nine judges on the United States Circuit Court of Appeals for the fourth district, based in Richmond, Va., according to Jonathan Edelstein, his lawyer, reports Mark Johnson.

"There are several issues of importance in this appeal that have been the subject of a judicial conversation all over the country," said Edelstein, of New York, "in terms of limiting the scope of honest services fraud."

Geddings was convicted in 2006 of a federal charge of depriving the public of his honest services. He concealed that he had done thousands of dollars worth of work for a lottery vendor when he accepted a seat on the state lottery commission in 2005. He did not disclose the work for Scientific Games on his state ethics form.

He is serving a four-year sentence at a federal prison camp in Jessup, Ga. On Monday, a three-judge panel from the fourth circuit rejected arguments that Edelstein made before them in February that the honest services law was being interpreted too broadly. He emphasized that Geddings did not try to profit from his lottery commission post and that he did no work for the
company after joining the commission.

The next step for Geddings is to ask all nine of the fourth circuit's judges to hear the case, which Edelstein said he would do. Another lawyer in the case, Gene Matthews of Columbia, S.C., spoke with Geddings, who asked for the further appeal, Edelstein said.

"If necessary," he said, "we may end up going (to the Supreme Court of the United States)."