Chapter 0326 - 442R - C Ver of HB2381

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 5-504, Arizona Revised Statutes, is amended to read:

5-5045-504. Commission; director; powers and duties; definitions

A. The commission shall meet with the director not less than once each quarter to make recommendations and set policy, receive reports from the director and transact other business properly brought before the commission.

B. The commission shall oversee a state lottery to produce the maximum amount of net revenue consonant with the dignity of the state. To achieve these ends, the commission shall authorize the director to adopt rules in accordance with title 41, chapter 6. Rules adopted by the director may include provisions relating to the following:

1. Subject to the approval of the commission, the types of lottery games and the types of game play-styles to be conducted.

2. The method of selecting the winning tickets or shares for noncomputerized on-line games, except that no method may be used which, in whole or in part, depends on the results of a dog race, or a horse race or any sporting event.

3. The manner of payment of prizes to the holders of winning tickets or shares including, without limitation, providing for payment by the purchase of annuities in the case of prizes payable in installments, except that the commission staff shall examine claims and may not pay any prize based on altered, stolen or counterfeit tickets or based on any tickets which fail to meet established validation requirements, including rules stated on the ticket or in the published game rules, and confidential validation tests applied consistently by the commission staff. No particular prize in a lottery game may be paid more than once, and in the event of a binding determination that more than one person is entitled to a particular prize, the sole remedy of the claimants is the award to each of them of an equal portion of the single prize.

4. The method to be used in selling tickets or shares, except that no elected official's name may be printed on such tickets or shares. The overall estimated odds of winning some prize or some cash prize, as appropriate, in a given game shall be printed on each ticket or share.

5. The licensing of agents to sell tickets or shares, except that a person under the age of eighteen shall not be licensed as an agent.

6. The manner and amount of compensation to be paid licensed sales agents necessary to provide for the adequate availability of tickets or shares to prospective buyers and for the convenience of the public, including, without limitation, provision for variable compensation based on sales volume.

7. Matters necessary or desirable for the efficient and economical operation and administration of the lottery and for the convenience of the purchasers of tickets or shares and the holders of winning tickets or shares.

C. The commission shall authorize the director to issue orders and shall approve orders issued by the director for the necessary operation of the lottery. Orders issued under this subsection may include provisions relating to the following:

1. The prices of tickets or shares in lottery games.

2. The themes, game play-styles, and names of lottery games and definitions of symbols and other characters used in lottery games, except that each ticket or share in a lottery game shall bear a unique distinguishable serial number.

3. The sale of tickets or shares at a discount for promotional purposes.

4. The prize structure of lottery games, including the number and size of prizes available. Available prizes may include free tickets in lottery games and merchandise prizes.

5. The frequency of drawings, if any, or other selections of winning tickets or shares, except that:

(a) All drawings shall be open to the public.

(b) The actual selection of winning tickets or shares may not be performed by an employee or member of the commission.

6. Requirements for eligibility for participation in grand drawings or other runoff drawings, including requirements for the submission of evidence of eligibility within a shorter period than that provided for claims by section 5-518.

7. Incentive and bonus programs designed to increase sales of lottery tickets or shares and to produce the maximum amount of net revenue for this state.

D. Notwithstanding title 41, chapter 6 and subsection B of this section, the director, subject to the approval of the commission, may establish a policy, procedure or practice that relates to an existing on‑line game or a new on-line game which is the same type and has the same type of game play-style as an on-line game currently being conducted by the lottery or may modify an existing rule for an existing on-line game or a new on‑line game which is the same type and has the same type of game play-style as an on-line game currently being conducted by the lottery, including establishing or modifying the matrix for an on-line game by giving notice of the establishment or modification at least thirty days before the effective date of the establishment or modification.

E. Employees of the lottery, except employees who are involved in sales that require the employees to handle property that produces revenue for the lottery, are subject to title 41, chapter 4, articles 5 and 6. Employees who are involved in these sales activities are subject to personnel rules adopted by the commission. When adopting these personnel rules, the commission shall provide due process protections for the sales employees while taking into consideration the security and integrity necessary for the operation of the lottery.

F. The commission shall maintain and make the following information available for public inspection at its offices during regular business hours:

1. A detailed listing of the estimated number of prizes of each particular denomination expected to be awarded in any instant game currently on sale.

2. After the end of the claim period prescribed by section 5-518, a listing of the total number of tickets or shares sold and the number of prizes of each particular denomination awarded in each lottery game.

3. Definitions of all play symbols and other characters used in each lottery game and instructions on how to play and how to win each lottery game.

G. Any information that is maintained by the commission and that would assist a person in locating or identifying a winning ticket or share or that would otherwise compromise the integrity of any lottery game is deemed confidential and is not subject to public inspection.

H. The commission shall, in addition to other games authorized by this article, establish two special games for each year to be conducted concurrently with other lottery games authorized under subsection B of this section. The monies for prizes, for operating expenses and for payment to the commerce and economic development commission fund, as provided in section 5-522, subsection A, paragraph 2, shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system. The monies shall be derived from the revenues of the special games, and monies for prizes do not become an expense to the lottery commission's annual appropriation as provided in section 5-505, subsection D and section 5‑522, subsection H. Monies saved from the revenues of the special games, by reason of operating efficiencies, shall become other revenue of the lottery commission and revert to the state general fund.

I. The commission may, in addition to other games authorized by this article, establish multistate lottery games to be conducted concurrently with other lottery games authorized under subsections B and H of this section. The monies for prizes, for operating expenses and for payment to the local transportation assistance fund, as provided in section 28‑8101, and the state general fund shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system. The monies shall be derived from the revenues of multistate lottery games.

j. the commission or director shall not establish or operate any on‑line or electronic keno game or any game played on the internet.

k. the director shall print, in a prominent location on each lottery ticket or share, a statement that help is available if a person has a problem with gambling and a toll free telephone number where problem gambling assistance is available. the director shall require all licensed agents to post a sign with the same statement and the same telephone number at the point of sale as prescribed and supplied by the director. the requirements of this subsection apply to tickets and shareS printed after the effective date of this act.

J. l. For the purposes of this section:

1. "Game play-style" means the process or procedure that a player must follow to determine if a lottery ticket or share is a winning ticket or share.

2. "Matrix" means the odds of winning a prize and the prize payout amounts in a given game.

Sec. 2. Section 5-506, Arizona Revised Statutes, is amended to read:

5-5065-506. Powers and duties of director

In addition to other powers and duties prescribed in this chapter, the director shall:

1. Supervise and administer the operation of the lottery in accordance with this chapter and the rules adopted under this chapter, subject to the continuous duty to take into account the particularly sensitive and responsible nature of the commission's functions.

2. enforce this chapter and the rules adopted under this chapter. the director shall accept allegations of any violations of the laws of this state or rules pertaining to the conduct of the lottery.

2. 3. Pursuant to this chapter and the rules adopted by the commission, license as agents to sell lottery tickets such persons as will best serve the public convenience and promote the sale of tickets or shares.

3. 4. Hire such professional, clerical, technical and administrative personnel as may be necessary to carry out this chapter. The director shall conduct background checks of prospective employees, and, in all employment decisions, shall take into account the particularly sensitive and responsible nature of the operation of the state lottery.

4. 5. Act as secretary and executive officer of the commission.

5. 6. Confer regularly as necessary or desirable and not less than once every quarter with the commission on the operation and administration of the lottery.

6. 7. Make available for inspection by the commission, upon request, all books, records, files and other information and documents of the commission.

7. 8. Advise the commission and recommend matters as are necessary and advisable to improve the operation and administration of the lottery.

8. 9. Suspend or revoke any license issued pursuant to this chapter or the rules adopted pursuant to this chapter, subject to appeal to the commission.

10. within thirty days after receiving an allegation of a violation of the laws of this state or rules pertaining to the conduct of the lottery by a licensed agent and evidence substantiating the allegation, determine whether the agent has violated the rules or if a criminal investigation is warranted.5-506

Sec. 3. Section 5-512, Arizona Revised Statutes, is amended to read:

5-5125-512. Licenses to sell tickets or shares; fee; conditions; definitions

A. A license as an agent to sell lottery tickets or shares shall not be issued to any person to engage in business exclusively as a lottery sales agent. Before issuing a license as a lottery sales agent to any person the director shall consider factors such as the financial responsibility and security of the person and the nature of the person's business activity, the person's background and reputation in the community, the accessibility of the person's place of business or activity to the public, the accessibility of existing licensees to serve the public convenience and the volume of expected sales.

B. A person lawfully engaged in nongovernmental business on state property may be licensed as a lottery sales agent.

C. The director may establish by rule and collect a fee for a license issued pursuant to this section.

D. A license is not assignable or transferrable.

E. A licensed agent or licensed agent's employee may sell lottery tickets or shares only on the premises stated in the license of the agent.

F. The director may purchase a blanket bond covering the activities of licensed agents.

G. A licensed agent shall display the licensed agent's license or a copy of the license conspicuously in accordance with the rules prescribed by the director.

H. If a licensed agent sells lottery tickets or shares on leased premises and all or part of the agent's rental payments are based on the total volume of sales made at the premises, the compensation paid by the state lottery commission to the agent for the sale of tickets and shares is the amount of the sale for the purposes of determining the agent's rental payments. This subsection does not apply if the lease agreement expressly provides that the total volume of sales made at the premises includes sales of lottery tickets or shares.

i. by march 31, 2001, the commission shall adopt rules to establish penalties for a licensed agent who violates section 5-515 or 5‑515.01. the penalty for a subsequent violation within any twelve month period shall be more severe than the penalty for a prior violation.

J. The director shall not require a licensed agent, as a condition of securing or continuing to hold a license to sell or to sell lottery tickets or shares to the public, to sell such tickets or shares through or by the use of a self service vending machine at the licensed agent's premises.

K. for the purposes of this section, acts or omissions of an employee at the premises of a licensed agent or sales of tickets or shares by vending machine in violation of section 5-515 or 5-515.01 shall be deemed acts or omissions of the licensed agent only at the premises where the acts, omissions or sales occurred.

I. L. As used in For the purposes of this section, :

1. "Person" means an individual, association, corporation, club, trust, estate, society, company, joint stock company, receiver, trustee or referee, any other person acting in a fiduciary or representative capacity who is appointed by a court, or any combination of individuals. Person includes any department, commission, agency or instrumentality of this state, including any county, city or town and any agency or instrumentality of this state or of a county, city or town.

2. "premises" means the physical location and address listed on the license of the licensed agent where lottery tickets or shares may be sold.5-512

Sec. 4. Section 5-515, Arizona Revised Statutes, is amended to read:

5-5155-515. Sales of tickets or shares to underage persons; violation; classification

A. It is unlawful for a person to sell or offer to sell a lottery ticket or share to any person under the age of eighteen years of age. This section does not prohibit the purchase of a ticket or share for the purpose of making a gift by a person eighteen years of age or older to a person less than eighteen years of age.

B. A person who violates this section is guilty of a class 3 misdemeanor.5-515

Sec. 5. Title 5, chapter 5, article 1, Arizona Revised Statutes, is amended by adding sections 5-515.01 and 5-515.02, to read:

5-515.015-515.01. Sale to persons using state issued electronic benefits transfer cards; violation; classification

A. it is unlawful for a licensed agent to sell a lottery ticket or share to a person who uses either a public assistance voucher issued by any public entity or an electronic benefits transfer card issued by the department of economic security to purchase the ticket or share.

b. it is unlawful for a licensed agent to sell a lottery ticket or share during the same transaction in which a person uses either a public assistance voucher issued by any public entity or an electronic benefits transfer card issued by the department of economic security.

c. a person who violates this section is guilty of a class 3 misdemeanor.5-515.01

5-515.025-515.02. Purchase of lottery tickets or shares by minors or persons under twenty-one years of age; penalty

A. Until June 1, 2003, it is unlawful for a person under eighteen years of age to purchase a lottery ticket or share. Beginning on June 1, 2003, it is unlawful for a person under twenty‑one years of age to purchase a lottery ticket or share.

B. Until June 1, 2003, a person under eighteen years of age who knowingly purchases a lottery ticket or share is guilty of a petty offense. Beginning on June 1, 2003, it is unlawful for a person under twenty‑one years of age to purchase a lottery ticket or share.5-515.02