Rep. Bill Dunn, a Tennessee Republican, said it is too early to predict if voters will approve the referendum, which will appear on the ballot in November 2002. A similar referendum passed last year in South Carolina.
If Tennessee were to implement a lottery, Dunn said a large portion of the money raised likely would go towards college scholarships.
Like some N.C. legislators, Dunn said several Tennessee lawmakers have argued that neighboring states like Georgia that already have lotteries are luring money away from the state.
A lottery in Tennessee would completely surround North Carolina by states that permit lotteries.
In his first State of the State address on Monday, Gov. Mike Easley advocated a lottery in North Carolina, pointing to the millions of dollars in revenue North Carolina is losing to neighboring states.
Some N.C. legislators have said voters in the state should have the chance to decide whether to join their neighbors in rolling the dice with a referendum.
"If the people of North Carolina vote on it and don't think it's wise, I respect their decision," said Rep. Bill Owens, D-Camden, sponsor of a bill to put a lottery referendum on the ballot in North Carolina in May 2002.
Owens said Tennessee's actions will only improve the chances of a lottery referendum passing in North Carolina. "If we don't pass it, it's just more money thrown out of North Carolina."
He added that if North Carolina does not implement a lottery, the governor's office has estimated that the lost revenue could reach as high as a $500 million.