Document No. 2694
CHAPTER 44
Statutory
Authority: 2001 Act No.59
44-10 – 44-140.
Synopsis:
The
South Carolina Education Lottery Act (Act 59 of 2001) requires the South
Carolina Lottery Commission to promulgate regulations to carry out and
implement its powers and duties to regulate the conduct and operation of
lottery games. The proposed regulations
will provide the Commission with necessary policies and procedures to organize
and operate the Commission, regulate the conduct of lottery games, and address
other matters necessary and desirable for the efficient and effective operation
of the lottery for the public convenience.
Sections 44-10
through 44-130 address the purpose of the new regulations, its applicability,
requirements, and definitions.
44-10 Defines the meaning of words and terms used
throughout SCEL regulations.
44-20.10 Establishes general licensure
provisions. Authorizes
the Executive Director to issue lottery licenses. Requires an applicant to
file an application. Provides
that the issuance of a lottery license is a privilege which is subject to suspension, revocation,
or termination as provided in Section 59-150-150(B)(4).
44-20.20 Establishes that an applicant for a lottery
license may not be approved if: (1) the business is to be solely engaged in
the sale of lottery products; (2)
the gross revenues of the business from the sale of lottery tickets is more
than 60%; (3) the applicant is
under 21 years of age; (4) a
foreign corporation is not registered in South Carolina; or (5) the business is ineligible
pursuant to the Education Lottery Act or regulations or rules of SCEL.
44-20.30 Provides that a criminal background check must be performed
on certain applicants applying for retail lottery licenses, including
operational managers and employees of businesses selling lottery products.
44-20.40 Authorizes the Executive Director to license lottery
retailers for a period of time of not less than one year. For purposes of licensure, the Executive
Director shall consider the following:
(1) the moral character and reputation of the applicant; (2) the
financial responsibility of the applicant’s business; (3) the accessibility of
the applicant’s business to the public; (4) the number and sufficiency of
businesses selling lottery products; (5) the expected volume of lottery game
sales; (6) the security and efficient operation of the Lottery; (7) the
eligibility of the applicant to be licensed under the Act; (8) whether the applicant’s
application is truthful; (9) whether the applicant is current on his/her state
tax; and (10) whether the applicant owes an unpaid debt to SCEL.
44-20.50 Provides that licenses shall be renewed annually and
renewals may be staggered, but all applications for renewal must be returned to
SCEL 30 days prior to expiration. The
Executive Director may issue a license pending a final determination of
eligibility for licensure.
44-20.60 Provides the justification for the Executive Director to cancel, revoke,
suspend, terminate, or deny the renewal of a license as required by the
Act. Some of the reasons include: (1) selling a ticket at a price greater than
that authorized by the Commission; (2) selling a lottery ticket to a person
under 18 years of age; (3) accepting anything other than cash for a lottery
ticket; (4) transferring ticket stock without consent of SCEL; (5) selling
lottery tickets at a location that is not on the license certificate; (6)
material misrepresentation on an applicant’s application for licensure; (7)
failure to properly notify, report, or settle accounts with SCEL regarding
lottery tickets; (8) failure to display license and display material; and (9)
failure to report a conviction of any felony or a crime related to gambling
during the term of the license.
44-20.70 Provides that licenses may not be transferred and lottery
game tickets may only be sold by the retailer named on the license or his
employee or agent.
44-30 Authorizes the Executive Director to enter into a contract
with a lottery retailer for the sale of lottery tickets or refuse to renew or
license a retailer. A retailer may
appeal an adverse decision of the Executive Director regarding licensing to the
Commission and appeal an adverse decision of the Commission to the
Administrative Law Judge Division. SCEL
is also authorized to establish a weekly fee for online services to recoup some
of the cost of administering the online services and associated
telecommunication charges. No retailer
who sells only instant tickets may be charged an online fee.
44-40.10 Authorizes SCEL to select, operate, and contract for the operation of
instant games and establishes the criteria for instant games including types of
games, maximum cost of tickets, frequency of ticket drawings and additional
special prize drawings. The price of a
ticket shall not be more than $10.
Winning tickets are determined by matching or specified alignment of
numbers, digits, and symbols on the tickets.
The Commission shall determine the numerical frequency and prize amounts
for winning tickets. Also provides
procedures for claiming instant prizes are established and retailers are
required to pay prizes up to and including $500 during normal business hours. Prizes may be paid up to 90 days after the
end of the official game and retailers must return all unopened tickets for
each game within 30 days of the game ending.
SCEL has no obligation to grant credit for tickets not returned more
than 30 days after the official game ends.
44-40.20 Provides that an instant ticket must pass validation requirements to be
eligible for a prize. Some of the
requirements for validation include: (1)
the ticket must be issued as authorized by the Executive Director;(2) the
ticket may not be altered, mutilated, unreadable, reconstructed, or tampered
with; (3) the ticket is not counterfeit; (4) the ticket is not stolen; (5) the
ticket is complete and not blank or partially blank; and (6) the ticket passes
all additional confidential validation requirements. Once validated, a lottery retailer must
deface the ticket in a manner as prescribed by the Executive Director.
44-50.10 Authorizes SCEL to select, operate, and contract for the operation of online games and
establishes the criteria for instant games including types of games, maximum
cost of tickets, frequency of ticket drawings and additional special prize
drawings. The price of a ticket shall
not be less than $0.50. Also provides
procedures for claiming instant prizes are established and retailers are
required to pay prizes up to and including $500 during normal business
hours. Retailers may pay prizes in cash,
or business check, certified check, money order, or a combination thereof. Prizes may also be claimed by submitting a
winning ticket to SCEL for validation and payment. Prizes may be paid up to 180 days after the
drawing in which the prize was won.
44-50.20 Provides that the Executive Director shall determine the
location, times, and days of prize drawings, including the equipment to be used
to establish randomly selected winning combinations. Also, the Executive Director is required to
establish procedures governing the conduct of drawings for each online
game. This includes procedures to be
used when a mechanical failure occurs resulting in a foul called by the drawing
representative. The Executive Director
shall delay payment of all prizes if any evidence of tampering or fraud has
occurred until an investigation is completed and the drawing is certified.
44-50.30 Provides that a winning online ticket must meet all of the
following conditions to be validated:
(1) All printing on the ticket shall be present in its entirety, be
legible and correspond, using the computer validation file, to the combination
and date printed on the ticket. (2) The
ticket must be intact. (3) The ticket
shall not be altered, mutilated, unreadable, reconstructed, or tampered
with. (4) The ticket shall not be
counterfeit. (5) The ticket must have
been sold by a lottery retailer. (6) The
ticket shall not have been stolen or canceled.
(7) The ticket shall not have been previously paid. (8) The ticket shall pass all confidential
security checks
44-55 Provides that SCEL may enter into a multi-state agreement
for the sale of instant game tickets, online game tickets, and other such
related products including game shows and promotional products as authorized by
Section 59-150-59. Rules governing the
sales, validation and redemption of prizes shall be governed by the multi-state
agreement entered into on behalf of SCEL.
44-60 Requires that the Executive Director submit to the
Commission a draft of all online game rules.
The Commission may adopt or modify the online game rules as necessary
for the efficient and effective operation of the lottery.
44-70 Prohibits the award
of a prize to an individual who
is not 18 years of age and who has not completed and signed a claim form. In
the event that a group of people win a prize, the group must designate one
person to file the claim. No prize will
be paid by the lottery for a prize that is not claimed within the required
time. The lottery may deny awarding a
prize to a claimant if the ticket is printed or produced in error.
44-80 Authorizes
the Executive Director to make lawful payment on a claim to someone other than
the purchaser, if certain conditions exist.
SCEL may pay a claim to a court-appointed guardian, executor,
administrator, receiver, or other court-appointed assignees. The Executive Director may pay prizes to a
decedent’s estate or petition the court to determine the payee for a decedent.
44-90.10 Provides
that all retailers must make payments to SCEL for lottery sales by using
Electronic Funds Transfer (EFT). The
retailer must deposit proceeds from lottery sales into the special account as
required by SCEL. The Executive Director
may revise the times of deposit as necessary for the efficient operation of the
lottery.
44-90.20 Provides that a lottery retailer may have his license suspended for failing to
timely deposit funds into his or her EFT account for the payment of lottery
games. SCEL may assess the following
penalties: (1) for a first occurrence in
a twelve-month period shall be a written warning of the future consequence of
such actions; (2) for a second occurrence in a twelve-month period the Executive
Director shall suspend all lottery activity for up to seven days and assess a
fine of not less than $100 nor more than 10% of the average gross proceeds from
the last 10 weeks; (3) for a third occurrence in a twelve-month period the
Executive Director shall suspend all lottery activity for up to seven days and
assess a fine of not less than $300 nor more than 20% of the average gross
proceeds from the last 10 weeks. The
Executive Director may exercise discretion in determining whether the
provisions of this section have been violated.
44-90.30 Requires that SCEL create certain financial accounts for the efficient
operation of the lottery as required by the Act. Also provides for the use of such accounts
and requires that no less than 45% of the gross proceeds from the sale of
lottery games for the payment of prizes.
44-90.40 Authorizes
the Executive Director to require a retailer to post a bond or other
appropriate security as proof of financial responsibility. The Executive Director shall determine the
amount and the form of any required bond.
44-100 Individuals may be required to use identifying numbers on payments,
statements and transactions with SCEL.
44-110 Requires lottery retailers to provide information to
SCEL in a form prescribed by SCEL.
44-120 The Executive Director is responsible for providing certain daily, monthly and annual reports
as may be requested by the Commission.
44-130 Authorizes SCEL to enter into licensing agreements for the use of
trademarks or other copyrighted materials. SCEL may allow lottery
retailers to use and display the Lottery logo, trademark, and other advertising
materials without charge.
44-140 Provides that regulations may not be construed to allow any
lottery or lottery games prohibited by the Act.
Instructions: Add new R.44-10 through 44-140, South
Carolina Lottery Commission, to new Chapter 44.
Text:
44-10. Definitions.
A. “Act” means the
South Carolina Education Lottery Act (Act 59 of 2001).
B. “Applicant” means a corporation, partnership,
unincorporated association, or other legal entity.
C. “Bank” means and
includes all commercial banks, mutual savings banks, savings and loan
associations, credit unions, trust companies, and any other type or form of
banking institution organized under the authority of the State of South
Carolina or the United States of America whose principal place of business is
within the State of South Carolina and which is designated to perform banking
institution functions, activities, or service in connection with the operations
of SCEL for the deposit and handling of lottery funds, the accounting of the
funds and the safekeeping of records.
D. “Bar code
validation” means a system which allows any winning lottery ticket, printed
with computer readable bar codes, for a prize of up to $500, or other amount as
directed by the Commission, to be read electronically at any lottery retailer
location and paid by the retailer regardless of where the player purchased the
ticket.
E. “Certified Drawing”
means a number selection event about which SCEL and an independent certified
public accountant attest that the drawing equipment functioned properly and
that a random selection of a winning combination occurred.
F. “Commission” or “Board” means the South
Carolina Lottery Commission (SCEL) created by the Act, as and if amended.
G. “Depository” means
any entity, including a bank or state agency, performing activities or services
in connection with the operation of the SCEL for the deposit and handling of
lottery funds, the accounting for lottery funds, and the safekeeping of
tickets.
H. “Drawing” means the
procedure determined by the Commission to select the winning combination in
accordance with the game rules of the particular lottery game.
J. “Executive
Director” means the individual appointed by the Commission to initiate,
supervise, and administer the operation of SCEL games.
K. “Game” means any
individual or particular type of lottery authorized by the Commission pursuant
to the Act including but not limited to instant game tickets and online game
tickets.
L. “Instant Game” means
a game in which a ticket is purchased and upon removal of a latex covering or
other covering on the front of the ticket or the opening of the sealed ticket,
the ticket bearer determines his or her winnings, if any, which are payable
upon presentation to a lottery retailer or to SCEL for payment.
M. “Instant Ticket” means a printed card or slip purchased for
participation in an instant game.
N. “Lottery” or “SCEL”
means the South Carolina Lottery Commission, the Commissioners, and the
Executive Director which operates and administers the South Carolina Education
Lottery Act.
O. “Lottery Game” means
the public gaming system or games established and operated by SCEL.
P. “Lottery Retailer”
means any person licensed by SCEL to sell and dispense instant tickets and
materials or lottery games, not to include operation of electronic computer terminals
in lottery sales and dispensing, unless otherwise authorized.
Q. “Lottery Ticket” or
“Tickets” means tickets or other tangible evidence of participation used in
lottery games pursuant to the Act.
R. “Online Game” means
a lottery game in which a player pays a fee to a lottery retailer and selects a
combination of digits, numbers, or symbols, the type and amount of play, and
the drawing date, and receives a computer-generated ticket with those
selections printed on it.
S. “Online Terminal”
means the electronic computer terminal through which a lottery retailer enters
the combination of digits, numbers, or symbols selected by a player and by
which online tickets are generated and claims are validated.
T. “Online Ticket”
means a computer-generated ticket issued by a lottery retailer to a player as a
receipt for the combination of digits, numbers, or symbols a player has
selected.
U. “Person” means a
human being, association, corporation, club, trust, estate, society,
governmental entity, company, joint stock company, receiver, trustee, assignee,
referee, and anyone acting in a fiduciary or representative capacity, whether
appointed by a court or otherwise, and any combination of human beings.
V. “Prize” means any
award, financial or otherwise, awarded by the Commission.
W.“Ticket
Bearer” means the person who has signed the ticket or has possession of the
unsigned ticket.
X. “Ticket Number”
means the preprinted number found on the back of each ticket which identifies
that particular ticket as one (1) of a series of tickets.
Y. “Ticket Pack Number”
means the printed number or numbers appearing on the back of each ticket.
Z. “Unclaimed Prize”
means the prize on a winning ticket for which no claim is made within 180 days
after the drawing or winner selection event which made the ticket a winning
ticket.
AA. "Unclaimed
Prize Account" means the SCEL account to which unclaimed prizes are
transferred.
BB. “Validation”
means the process of determining whether an instant or online ticket presented
for payment is a winning ticket.
CC. “Validation Number”
means the multi-digit number found on the face of the ticket. There must be a validation number on each
ticket.
DD. “Winner of an instant
game” means the holder of an instant lottery ticket determined to have the
required match or the specific alignment of the play numbers, digits or symbols
or the required sum of the play numbers or digits in accordance with the game
rules for the specific game.
EE. “Winner
selection” means the drawing process used by SCEL to select the winning numbers
in online games with live drawings.
FF. “Winning Combination”
means numbers or symbols chosen during the drawing process used by SCEL to
select the winning numbers in online games with live drawings.
44-20.10. Licensing.
A. Pursuant to Section
59-150-40(H), the Commission delegates to the Executive Director the authority
to issue lottery retail sales licenses as provided in Section
59-150-150(A). Lottery retailers must
meet the security and integrity standards of the Commission, the statutory and
regulatory requirements for licensing, promote the sale of lottery games and
promote the best interest of the Lottery and
B. An applicant interested in obtaining a license
as a lottery retailer must submit an application with the Executive Director on
a form supplied for that purpose by the Executive Director. The retail sales application shall be
designed to solicit sufficient relevant information from an applicant to permit
the Executive Director to evaluate the applicant and the sales location as
required by the Education Lottery Act and regulations for issuance of a license
by the Commission.
C. The license issued for a lottery retail sales
location is a privilege and does not create a property interest and is not a
legal right. The license and lottery
retailer contract is subject to suspension, revocation or termination by the
Executive Director as provided in Section 59-150-150(B)(4). Upon demand, a lottery retail sales license
must be surrendered to the Executive Director.
44-20.20. Eligibility
for licensing.
A. An application for
licensure as a lottery retailer may not be approved if:
(1) the business is to be solely engaged in the sale of lottery
products;
(2) the annual gross revenue of the business from the sale of
lottery games or shares accounts for more than sixty percent (60%) of the
annual gross revenue of the business;
(3) the applicant is under the age of twenty-one (21);
(4) a foreign corporation is not currently registered to do
business within
(5) the business is ineligible pursuant to the Act or the
regulations or policies established by the Commission.
44-20.30. Background
Investigations for Licensing.
A. For purposes of the criminal background
investigation required by Sections 59-150-150(C) and 59-150-165(C), “the
operational manager” is the employee who has day-to-day operational management
responsibilities for the business or entity.
As provided in Section 59-150-165(C)(2), the
Commission finds and determines that the operational manager is one of the
appropriate employees on whom a criminal background investigation must be
conducted unless otherwise directed by the Commission. For purposes of retail sales licensing, the
operational manager is deemed to be the employee who is designated by the
applicant as the employee responsible and accountable for the overall
supervision of the lottery operation for the applicant that is seeking
licensure for one or more retail locations.
This employee must have decision-making authority for lottery
transactions, including but not limited to, the authority for placing ticket
orders with the Commission or the authority to designate the employees to
transact business with the Commission.
An applicant may elect to include an operational manager for each retail
location but is not required to do so.
The operational manager(s) must be designated on the retailer license
application.
B. In the case of an applicant doing business
as a sole proprietorship, the sole proprietor must undergo a background
investigation required by Section 59-150-165(C).
C. In addition to the criminal background
investigation provided for operational managers by Section 59-150-165(C)(2)(e), a criminal background investigation must be performed
on all principals of the person (applicant).
For purposes of this investigation unless otherwise specified by the
Commission, “principal” means:
(1) the directors and
officers of an association;
(2) all partners of a
partnership, limited partnership, or limited liability partnership;
(3) all members of a
limited liability company, or if the company is a manager-managed company, all
members and managers;
(4) all trustees of a
trust; and
(5) for a corporation, its
directors, officers, and stockholders with a ten percent or more direct or
beneficial interest or any person or entity that receives more than ten percent
of the net income.
D. If a corporation is a member of a controlled
group of corporations, as defined in 26 U.S.C. 1563, or a member of an
affiliated group of corporations, as defined in 26 U.S.C. 1504, and at least
one member of the group of corporations is a publicly-held corporation, only
the corporation which seeks the retailer contract pursuant to this chapter is
considered a principal for purposes of this chapter, along with its directors,
officers, and stockholders as described in subsection (C)(5) of this section.
(1) For purposes of this section, “publicly-held
corporation” means a corporation:
(a) whose shares are
traded on a national exchange; and
(b) whose total assets
at the end of the corporation's most recent fiscal quarter exceeded one billion
dollars.
E. The individuals identified in subsection (A)
of this section for each respective applicant must (1) be listed on the Retail
Sales Application and (2) undergo a background investigation conducted by the
South Carolina Law Enforcement Division.
If
the headquarters of the corporation or other business entity listed in
subsection (A) is not located in
F. The Executive Director is granted the
discretion to exercise judgment, consistent with the intent of these
regulations, to determine which individuals should undergo a criminal
background investigation when a combination of business entities or sub
entities are organized or arranged in such a way as to not precisely conform with the provisions of subsection (C) or (D). The Executive Director, upon information or
belief, may require additional background or follow-up investigative work to be
conducted when, in his or her discretion, the integrity or security of the
Lottery warrants such action.
44-20.40. Issuance of licenses.
A. Upon receipt, review
and investigation of an application and applicant background, the Executive
Director may issue a lottery retail sales license for the sale of lottery games
in accordance with the Act and these regulations for a period of time not less
than a year. The Executive Director
shall license only those retail sales locations which will best serve the
public interest and public trust in the lottery and promote the sale of lottery
games. The Executive Director shall
consider the following factors for licensure and renewal:
(1) The moral
character and reputation of the applicant;
(2) The financial
responsibility and security of the applicant’s business or activity;
(3) The
accessibility of the public to the licensed premises proposed by the applicant;
(4) The number and
sufficiency of existing licenses to serve the public interest;
(5) The expected
volume of lottery game sales;
(6) The security
and efficient operation of the Lottery;
(7) Whether the
applicant is ineligible under any provisions of the Education Lottery Act;
(8) Whether the applicant has provided false or
misleading information or has misrepresented information regarding
qualifications or fitness for licensure;
(9) Whether the
applicant is currently licensed to do business within the State of South
Carolina and whether the applicant is current in state tax payments and the
filing of state tax returns; and
(10) Whether any person listed on the application
owes an unpaid debt to the Lottery.
44.20.50. License term and renewal, fees.
A. Every holder of a
license shall renew the license annually.
Renewal applications shall be returned to SCEL thirty (30) days prior to
the expiration of the license to be considered a timely application. The Executive Director may revise the
established renewal dates to allow renewals to be staggered on a monthly basis.
B. Pending a final
resolution of any question arising in respect to a licensing decision, the
Executive Director may issue a license subject to any terms and conditions he or
she considers appropriate.
44-20.60. Revocation; grounds for removal or
suspension of license or non-renewal of license.
A. If, at any time
after issuance of a license, it is determined by the Executive Director that a
lottery retailer no longer meets the standards for licensure, the Executive
Director or his designee may cancel, suspend, revoke, terminate or deny renewal
of a license or contract, upon giving notice to the lottery retailer. The suspension shall remain in effect until
the reason for suspension has been abated or cured, or in the alternative, the
Executive Director may revoke the license.
B. If the lottery
retailer fails to observe and comply with the procedures and regulations of the
Commission or with the provisions of the Act, or orders or instructions of the
Executive Director, the license and/or contract may be canceled, suspended,
revoked or terminated.
C. Additional grounds
for suspension or revocation of license:
(1) The Executive
Director may suspend or revoke the license of a lottery retailer who does not
comply with the Act and all rules, conditions, standards and other policies
adopted, promulgated or issued under the Act, by the Commission or the
Executive Director.
(2) The Commission
or Executive Director may suspend or revoke the license of any lottery retailer
who violates one of the following prohibitions:
(a) Selling
a ticket at a price greater than or less than that stated by the Commission.
(b) Selling
a ticket at a location or premises different than that shown on the license
certificate.
(c) Permitting
the sale of tickets by someone other than the retailer’s employees or agents.
(d) Selling
a ticket to a person under eighteen (18) years of age.
(e) Inviting,
soliciting, demanding, or offering or accepting any payment, contribution,
favor, or other consideration to influence the award, renewal or retention of a
license, directly or indirectly, on behalf of himself or herself or another
corporation.
(f) Accepting
anything other than cash for the sale of a ticket.
(g) Transferring
ticket stock, used for online terminals, between stores unless prior written
consent is granted by the Executive Director or his or her designee.
(h) Transferring
instant tickets between individual stores unless prior written consent is
granted by the Executive Director or his or her designee.
(i) Selling any lottery ticket, lottery
chance or lottery product unless the game being sold is approved by the
Commission.
D. The Executive
Director may suspend the license or suspend operation or revoke the license of
a retail sales location(s) of a lottery retailer for any of the following:
(1) Material misrepresentation in connection with
his or her application for a license, in any of his or her reports, or to any
person in connection with a lottery transaction;
(2) Engaging in the
sale of lottery tickets as his or her sole business, occupation or activity;
(3) Failure to take
adequate security precautions for the safe handling of tickets, lottery
materials or ticket sales proceeds due from the lottery retailer's ticket
sales;
(4) Failure to
regularly, promptly and accurately settle the accounts of his or her lottery
transactions and pay the amounts due from the lottery retailer's ticket sales;
(5) Failure to notify
the Executive Director of any change in ownership ten days prior to any
proposed change in ownership;
(6) Failure to open
his or her books or records for reasonable inspection by the Commission, the
Executive Director or his or her designee during normal business hours;
(7) Failure to
display his or her license or required advertising and display material;
(8) Failed to make
a report of a violation of the Act, these regulations, the policies or
procedures required by the Commission or the Executive Director; or
(9) Failure to
report a conviction of any felony or a crime related to theft or gambling,
during the term of his or her license.
If a lottery retailer is convicted of a felony or a gambling-related
offense, the lottery retailer shall within fourteen (14) days, notify the
Executive Director, in writing, of the conviction and the offense. For purposes of this section, a lottery
retailer includes the operational manager or an individual or person who holds
an ownership interest requiring a criminal background investigation as provided
in R.44-30.
44-20.70. License transfers prohibited.
A. No license may be
transferred or assigned.
B. Lottery games may be
sold only by the lottery retailer named on the license or by an employee or
agent of the retailer named on the license and only at the location named on
the lottery retailer license.
44-30.
Contract.
A. The Executive
Director shall enter into a contract for each approved lottery retail sales
location. The contract shall set out the
duties, responsibilities, and obligations pertaining to the parties to the
contract. The contract shall continue in
effect during the period in which the retailer complies with applicable
statutes, rules, fee requirements, and any other duties or requirements under
the terms of the contract, the Act or these regulations.
B. A party to a retail
contract pursuant to the Act, which is aggrieved by an action of the Executive
Director or his or her designee must receive notice of a right to a hearing and
be afforded a hearing within sixty (60) days of the date of notice. An appeal of the Executive Director’s
decision is to the Commission and then to the Administrative Law Judge
Division.
C. As provided in the lottery retailer contract,
a lottery retailer shall pay a weekly
fee for each dedicated telephone line provided by SCEL to partially defray and
recoup the cost of the telephone line and associated telecommunication charges.
D. SCEL
may not charge an online service fee to a retailer who sells only instant tickets.
44-40.10. Instant games.
A. The Commission
authorizes the Executive Director to select, operate, and contract to and for
the operation of instant games which meet the criteria generally set forth in
this section.
(1) Instant game
criteria.
(a) The
price of an instant game ticket shall not be more than ten dollars ($10.00)
unless otherwise approved by the Commission.
(b) Winners
of an instant game are determined by the matching or specified alignment of the
play numbers, digits and symbols on the tickets. The ticket bearer shall notify SCEL of the
win and submit the winning ticket as specified by the Executive Director. The winning ticket shall be validated by SCEL
through the use of the validation number and any other means as specified by the
Commission.
(c) The
instant game shall be designed to pay out prizes in amounts on a numerical
frequency to be determined by SCEL.
(d) The
duration of ticket sales for an instant game shall be determined by SCEL. The start date and closing date of the
instant game shall be publicly announced.
(e) The
frequency and determination of a winner in any instant game shall be determined
by SCEL in specific game rules.
(f) At
SCEL's discretion, an instant game may include a
special prize drawing or drawings that make use of the nonwinning
instant tickets, so as to encourage nonwinners to
accumulate their tickets instead of disposing of them. SCEL shall establish procedures for the
additional games.
B. Procedures for
claiming instant prizes:
(1) A claimant may present the winning ticket for
a prize not exceeding five hundred dollars ($500) to any lottery retailer or
mail the signed ticket to SCEL for payment.
If the lottery retailer validates the claim as a valid winner, the
lottery retailer must make payment of the amount due the claimant. Prizes shall be paid during the normal business
hours of lottery retailer. If the
lottery retailer cannot validate the claim, the claimant shall fill out a SCEL
claim form and present or mail the completed form, together with the disputed
ticket to SCEL. A check shall be
forwarded to the claimant in payment of the amount due if the claim is
validated. In the event that the claim
is not validated, the claimant shall be promptly notified that the claim is
denied.
(2) The claimant of
a prize of more than five hundred dollars ($500) shall complete a claim form
and mail or present the form together with the winning ticket to SCEL. Upon validation, a check shall be forwarded
to the claimant in payment of the amount due.
SCEL will deduct from the amount due any applicable federal and state
income tax withholdings and any withholding required by Section
59-150-330. In the event that the claim
is not validated, the claim shall be denied and the claimant shall be promptly notified that the claim is denied.
(3) Any ticket not
passing all the validation checks is invalid and ineligible for payment as a
prize. The Executive Director may,
solely at his or her option, replace an invalid ticket with an unplayed ticket or tickets of equivalent sales price from
any other current game or issue a refund of the sales price. If a defective ticket is purchased, the only
responsibility or liability of SCEL is the replacement of the defective ticket
with another unplayed ticket or tickets of equivalent
sale price from any other current game.
(4) A lottery
retailer may pay prizes in cash or by business check, certified check, money
order or a combination thereof. A
lottery retailer that pays a prize with a check which is dishonored, in
addition to full payment of the amount of the check and all nonsufficient
funds charges and any other legitimate banking charge, may be subject to
suspension or revocation of its license.
SCEL may not impose a monetary fine against a retailer who issues a
check or other negotiable instrument that is dishonored for the payment of a
prize.
C. Official end of
game.
(1) SCEL shall
announce the official end of each instant game.
A ticket may be validated for prize payment up to ninety (90) days after
the official end of game. In order to
participate in a special prize drawing, a player shall redeem a ticket which
qualifies for entry into that special prize drawing within the time limits
governing the conduct of that specific game.
(2) A lottery retailer
may continue to sell tickets for each instant game up to ninety (90) days after
the official end of that game.
(3) A lottery
retailer may return to SCEL full or partial packs of unsold lottery tickets for
each game within thirty (30) days of the official end of that game in order to
receive credit from SCEL as provided for in the retailers’ contract. Partial pack returns shall be allowed when a
retailer closes a business, changes ownership, or other criteria approved by
the Executive Director. The Lottery has no obligation to grant credit for
tickets returned more than thirty (30) days after the last day that a ticket
may be sold.
44-40.20. Instant ticket validation requirements.
A. Any instant ticket
not passing all the validation requirements in this subsection and the specific
validation requirements contained in the rules for its specific game is invalid
and ineligible for any prize. (1) To be a valid lottery instant game ticket, an instant ticket
shall meet all of the following validation requirements:
(a) The
instant ticket was issued by the Executive Director in an authorized manner;
(b) The
instant ticket is not to be altered, mutilated, unreadable, reconstructed, or
tampered with in any manner;
(c) The
instant ticket is not counterfeit in whole or in part;
(d) The instant ticket is not stolen nor appears
in any list of omitted instant tickets on file with SCEL;
(e) The
instant ticket is complete and not blank or partially blank, miscut, misregistered, defective,
or printed or produced in error;
(f) The
instant ticket has the correct number of play symbols and exactly one (1)
caption under each of the rub-off spots, exactly one legend (1) pack-ticket
number, exactly one legend (1) verification code, exactly one legend (1)
validation number and exactly one legend (1) readable bar code. The symbols must be present in their
entirety, legible, right-side up, and not reversed in any manner;
(g) The validation number of an apparent winning
ticket appears on SCEL’s official list of validation
numbers of winning instant tickets; and an instant ticket with that validation
number has not been previously paid; and,
(h) The
instant ticket passes all additional confidential validation requirements
established by the Executive Director.
B. Any instant ticket
not passing all the validation requirements in this section and the specific
validation requirements contained in the rules for its specific game is invalid
and ineligible for any prize.
C. Once validated, a
lottery retailer must deface the instant ticket in the manner prescribed by the
Executive Director or his designee.
44-50.10. Online games.
A. The Commission
authorizes the Executive Director to select, operate, and contract for the
operation of online games which meet the criteria generally set forth in this
subsection.
(1) The base price
of an online ticket shall not be less than fifty cents ($0.50).
(2) The manner and
frequency of drawings may vary with the type of online games.
(3) The times,
locations, and drawing procedures shall be determined by the Executive
Director.
B. A ticket bearer
entitled to a prize shall submit the winning ticket for validation. The winning ticket shall be validated as
required by the Executive Director.
C. An online game may
include a special prize drawing which will stimulate the broad variety of games
offered by the Lottery.
D. Procedures for
claiming online prizes are as follows:
(1) For a game
prize that does not exceed five hundred dollars ($500.00), the claimant shall
present the ticket within one hundred eighty (180) days of the drawing to a
lottery retailer or to SCEL for payment.
(2) If the claim is
presented to a lottery retailer, the lottery retailer shall validate the
claim. If the ticket is determined to be
a winning ticket, the lottery retailer shall make payment of the amount due the
claimant. If the lottery retailer cannot
validate the claim, the claimant may obtain and complete a claim form and
submit it with the disputed ticket to SCEL by mail or in person. Upon determination that the ticket is a
winning ticket, SCEL shall present or mail a check to the claimant in payment
of the amount due. Prizes shall be paid
during all normal business hours of the lottery retailer, provided, the online
system is operational and claims can be validated. If the ticket is
determined to be a nonwinning ticket, the claim shall
be denied and the claimant shall be promptly notified. Nonwinning tickets
shall not be returned to the claimant.
E. If the claim is
presented to SCEL, the claimant shall complete a claim form, as provided by the
Executive Director, and submit it with the winning ticket to SCEL by mail or in
person. Upon determination that the
ticket is a winning ticket, SCEL shall present or mail a check to the claimant
in payment of the amount due, less any applicable federal and state income tax
withholdings and less any withholding required by Section 59-150-330. If the ticket is determined to be a nonwinning ticket, the claim shall be denied and the
claimant shall be promptly notified. Nonwinning tickets shall not be returned to the claimant.
F. To claim an online
prize of more than five hundred dollars ($500), within the limit of one hundred
eighty (180) days after the date of the drawing, the claimant shall obtain and
complete a claim form, as provided by the Executive Director, and submit it
with the winning ticket to SCEL by mail or in person. Upon determination that the ticket is a
winning ticket, SCEL shall present or mail a check to the claimant in payment
of the amount due, less any applicable federal and state income tax
withholdings and any withholdings required by Section 59-150-330. If the ticket is determined to be a nonwinning ticket, the claim shall be denied and the
claimant shall be promptly notified. Nonwinning tickets shall not be returned to the claimant.
G. A lottery retailer
may pay prizes in cash or by business check, certified check, money order or a
combination thereof. A lottery retailer
that pays a prize with a check which is dishonored, in addition to full payment
of the amount of the check and all nonsufficient
funds charges and any other legitimate banking charge, may be subject to
suspension or revocation of its license.
SCEL may not impose a monetary fine against a retailer who issues a
check or other negotiable instrument that is dishonored for the payment of a
prize.
44-50.20. Drawing and end of sales prior to drawings.
A. Prize drawings shall
be conducted in a location and at days and times designated by the Executive Director.
B. The Executive
Director shall announce the time for the end of sales prior to the drawings for
each type of online game. Lottery
retailers shall not process orders for online tickets for that drawing after
the time established by the Executive Director.
C. The Executive
Director shall designate the type of equipment to be used, shall establish
procedures to randomly select the winning combinations for each type of online
game, and shall require the presence of an independent accountant or other
suitable individual to witness all pre- and post-drawing tests, and the drawing
or winner selection.
D. The Executive Director or his designee shall
test the equipment used to determine the winning combination prior to and after
each drawing to assure proper operation and lack of tampering or fraud. Drawings shall not be certified until all
validation checks are completed. No
prizes shall be paid until after the drawing is certified.
E. All online drawings shall be broadcast live on
television provided the facilities for broadcasts are available and
operational.
F. The Executive
Director shall establish procedures governing the conduct of drawings for each
type of online game. The procedures
shall include provisions for deviations which include but are not limited
to:
(1) A drawing
equipment malfunction before validation of the winning combination;
(2) A video and/or
audio malfunction during the taping of the drawing;
(3) A fouled
drawing;
(4) A delayed
drawing; or
(5) Other
equipment, facility and/or personnel difficulties.
G. The drawing shall be completed under SCEL
supervision whenever a deviation occurs.
The drawing shall be video taped for later broadcast, if broadcast time
is available. The drawing shall be
certified and the deviation documented on the certification form. The winning combination shall be provided to
the media for dissemination to the public.
H. If, during any live-broadcast drawing for a
game, a mechanical failure or operator error causes an interruption in the
selection of all digits or symbols, a "Foul" shall be called by
SCEL. Any digit or symbol drawn prior to
a "Foul" being called shall stand and be declared official after
passing lottery validation tests.
I. The Executive
Director shall delay payment of all prizes if any evidence exists, or there are
grounds for suspicion, that tampering or fraud has occurred. Payment shall be made after an investigation
is completed and the drawing certified.
If the drawing is not certified, another drawing shall be conducted to
determine the actual winner.
44-50.30. On-line ticket validation requirements.
A. To be a valid
winning online ticket, all of the following conditions shall be met:
(1) All printing on
the ticket shall be present in its entirety, be legible, and correspond, using
the computer validation file, to the combination and date printed on the
ticket. The ticket is not valid unless the ticket number and other information
are recorded in the SCEL computer and transaction master file;
(2) The ticket
shall be intact;
(3) The ticket
shall not be altered, mutilated, unreadable, reconstructed, or tampered with in
any manner;
(4) The ticket
shall not be counterfeit or an exact duplicate of another winning ticket;
(5) The ticket
shall have been issued by an authorized lottery retailer in an authorized
manner;
(6) The ticket
shall not have been stolen or canceled;
(7) The ticket
shall not have been previously paid; and
(8) The ticket
shall pass all other confidential security checks of SCEL.
B. Any ticket failing
any validation requirements is invalid and ineligible for a prize.
C. The Executive
Director may replace an invalid online ticket with an online ticket for a
future drawing of the same game. The
Executive Director may pay the prize for a ticket that is partially mutilated
or is not intact if the online ticket can still be validated by the other
validation requirements, at his or her discretion.
D. In the event a
defective online ticket is purchased, the only responsibility or liability of
SCEL or the lottery retailer is the replacement of the defective online ticket
with another online ticket for a future drawing of the same game.
44-55. Multi-State online games.
A. SCEL may enter into
a multi-state agreement for the sale of instant game tickets, online game
tickets, and other such related products including game shows and promotional
products as authorized by Section 59-150-59.
Rules governing the sales, validation and redemption of prizes shall be
governed by the multi-state agreement entered into on behalf of SCEL.
44-60. Game rules.
A. The Executive
Director shall provide Commission members with draft copies of any additional
game rules prior to the beginning of the online games. The Commission may adopt or modify the
proposed rules as may be necessary for the efficient and effective operation of
the online games.
44-70. Claiming prizes.
A. A claim shall be
entered in the name of a single natural person.
A guardian may claim a prize if the ticket was received as a gift. No claim
may be paid to an individual who is not eighteen (18) years of age. Groups,
family units, organizations, clubs or other organizations shall designate one
individual in whose name the claim is to be entered.
B. Unless otherwise
provided in the rules for a specific type of game, a claimant shall sign the
back of the ticket and complete and sign a claim form provided by the Executive
Director. The claimant shall submit the
claim form and claimant's ticket to SCEL in accordance with the instructions as
stated on the claim form and on the back of the ticket. If there is a difference or conflict in the
name appearing on the ticket and the claim form, the name which appears on the
ticket controls.
C. The claimant, by
submitting the claim, agrees to discharge the State, SCEL, its officials,
officers and employees of all further liability upon payment of the prize.
D. A prize must be
claimed within the time limits prescribed by the Executive Director.
E. The Executive
Director or Commission may deny awarding a prize to a claimant if the ticket is
printed or produced in error.
F. The Executive
Director's decisions and judgments in respect to the determination of a winning
ticket or any dispute arising from the payment or awarding of prizes are final,
subject to an appeal to the Commission.
G. Unless the rules or procedures for any
specific game provide otherwise, SCEL shall have the authority to designate any
game be paid in periodic payments. Any
prize not designated to be paid in periodic payments by the player or SCEL will
be paid in a lump sum less that portion paid to the federal and state
government for withholding tax purposes.
No schedule of prize payments shall exceed twenty (20) years. To provide periodic prize payments, SCEL may
purchase annuities from annuity sellers, securities from the
44-80. Assigning
the right to claim a prize.
A. No person entitled
to a prize may assign the right to claim it, except:
(1) That payment of
a prize may be made to any legal representative, including, but not limited to,
guardians, executors, administrators, receivers, or other court-appointed
assignees;
(2) For the purpose
of paying federal, state or local tax; or to satisfy executions, judgments, or
orders or other processes legitimately obtained from federal or state courts;
or
(3) Transfers of
remaining lottery annuity prize payments may be assigned as authorized by the
Executive Director.
B. In the event that
there is a dispute or it appears that a dispute may occur relative to any
prize, the Commission or Executive Director may refrain from making payment of
the prize pending a final determination of the dispute by the Commission or by
a court of competent jurisdiction.
C. A ticket that has
been legally issued by a lottery retailer is a bearer instrument until
signed. The person who signs the ticket
is considered the bearer of the ticket.
D. All prizes shall be
paid within a reasonable time after the claims are verified by the Executive
Director and a winner is determined in a manner approved by SCEL. The date of the first installment payment of
each prize to be paid in installment payments shall be the date the prize event
is validated and certified. Subsequent
installment payments shall be made annually from the date of the event in
accordance with the type of prize awarded.
E. The Executive
Director may, at any time, delay any payment in order to review a change in
circumstance relative to the prize awarded, the payee, the claim, or any other
matter that may have come to the Executive Director's attention. All delayed payments shall be brought
up-to-date immediately upon the Executive Director's confirmation and continue
to be paid on each originally scheduled payment date thereafter. If any prize is payable for the life of the
claimant, only an individual may claim that prize, and if the individual is
claiming on behalf of a group, a corporation, or the like, the life of the
claim shall not exceed twenty (20) years.
F. All prizes or
portions of prizes which remain unpaid at the time of a prize winner's death
are payable to the prize winner's estate.
G. The Executive
Director may rely wholly on the presentment of certified copies of a court's
appointment of an administrator or executor, guardian, conservator or any other
evidence of a person entitled to the payment of any prize winnings then due.
H. The payment to the
estate of a deceased owner of any prize winnings by the Executive Director
absolves the Commission, Executive Director and employees of the agency of any
further liability for payment of the prize winnings. The Executive Director need not look to pay
the prize winnings beyond the estate or appointed representative.
I. The Commission or
Executive Director may petition any court of competent jurisdiction to request
a determination of the payee for payment of any prize winnings which are or may
become due the estate of a deceased winner or a winner under a disability
because of minority, mental deficiency, or physical or mental incapacity.
J. Whenever the winner of a lottery prize is also
a lottery retailer, or is an owner or officer of a partnership or corporation
that is a lottery retailer, the Executive Director may offset any debt due SCEL
against the amount of the prize due to the winner of the prize.
44-90.10. Financial
administration and procedures for
collection of the proceeds of lottery games.
A. All lottery retailers are required to make
weekly payment for sales using the Electronic Funds Transfer (EFT) system
through a dedicated bank account. The
lottery retailer is required to establish an account for this purpose with a
financial institution participating in the Automated Clearing House (ACH)
Network. All amounts due must be
deposited to the designated bank account in accordance with Section
59-150-190(B). Partial deposits or
payments are not permitted and have no effect in reducing the lottery
retailer’s liability to SCEL.
B. The lottery retailer will receive a weekly
notice from SCEL or through such reporting system or equipment as SCEL may
designate, indicating the amount due to SCEL from the lottery retailer. Before 2:00 PM on every Wednesday, or should
a banking holiday or other bank closing occur on Wednesday, before 2:00 PM on
the immediately following Thursday, the retailer must deposit funds, equal to
the amount due to SCEL. Funds must be
transferred to SCEL from this account each week. If the balance for the preceding week is a
credit due, the amount of the credit due must be transferred to the account of
the lottery retailer by SCEL in the following week. The Executive Director may revise or amend
the times for making deposits required by this item, upon reasonable notice to
the lottery retailer, when it is necessary for the efficient operation of SCEL.
C. SCEL shall not sell or deliver any lottery
games or other products to the lottery retailer if the lottery retailer is
delinquent in any payment.
D. When a lottery retailer indicates an intent to discontinue the sale of lottery products, any
amount owed SCEL by the lottery retailer becomes due immediately, and the
lottery retailer shall deposit the amount due in accordance with subsection (B)
above.
44-90.20. Collection
and enforcement of non-sufficient funds, past due accounts, or Delinquent
Accounts.
A. SCEL may suspend lottery activity by any
lottery retailer by causing any equipment or other property provided or
acquired for specific and exclusive use in lottery operations to be
mechanically or electronically disabled, or otherwise rendered useless, as well
as by other means provided for by law or regulation, and by discontinuing the
sale or delivery of any lottery products, or any other service or function, to
the lottery retailer.
B. When a lottery retailer fails to deposit
funds as required by R.44-90.10(B), and the related EFT transaction is rejected
by the lottery retailer’s financial institution, the Executive Director shall
convey a written warning informing the lottery retailer of the future
consequence of such action. The
Executive Director shall suspend all lottery activity by the lottery retailer
and/or shall assess a fee against the lottery retailer, or any of these, in
accordance with the following schedule:
(1) As to the first occurrence within any
twelve-month period, the Executive Director shall convey to the lottery
retailer a written warning of the future consequence of such action.
(2) As
to the second occurrence in any twelve-month period, the Executive Director
shall suspend all lottery activity for a period of up to seven (7) days, and
shall assess against the lottery retailer a fine of not less than one hundred
dollars ($100) nor more than ten percent (10%) of the average gross proceeds
from lottery sales over the last ten (10) weeks for the retail location.
(3) As to the third occurrence in any twelve-month
period, the Executive Director shall suspend all lottery activity for a period
of up to thirty (30) days, and shall assess against the lottery retailer a fine
of not less than three hundred dollars ($300) nor more than twenty percent
(20%) of the average gross proceeds from lottery sales over the last ten (10)
weeks for the retail location.
(4) As to the fourth occurrence in any period, the
Executive Director shall revoke any license, or other privilege or authority
issued to the lottery retailer by the Executive Director, forthwith.
C. The Executive Director may require a lottery
retailer to make payment of any past due or delinquent amount by certified
check or wire transfer.
D. In determining whether the provisions of the
section have been violated, the Executive Director may exercise discretion as
he or she deems appropriate so long as the integrity and security of the
Lottery is maintained.
E. The SCEL/lottery retailer relationship
contemplates that the lottery retailer will establish and maintain an automated
clearing house (ACH) account to facilitate the lottery retailer’s payments to
SCEL. The lottery retailer’s depository
institution has no liability for the lottery retailer’s failure to remit or
deposit as instructed by SCEL. SCEL has no
requirement to instruct the lottery retailer’s depository bank in the specification
of service charges, bank statement production schedules, or any other aspect of
the retailer/depository institution relationship.
44-90.30. Financial
accounts.
A. Education
Lottery Account - The Executive Director shall implement through the State
Treasurer’s Office an Education Lottery Account in accordance with applicable
provisions of state law, and any applicable rules.
B. Prize Disbursement Account - The Executive
Director shall establish a Prize Disbursement Account, in a private banking institution,
which shall permit the immediate payment of lottery prizes, by check, to the
winners.
(1) As nearly as
practical, the total expenditures from the Prize Disbursement Account combined
with any prizes paid by the lottery retailers, shall be no less than forty-five
percent (45%) of gross amount received from the sale of lottery games.
(2) Access to the account for
purposes of drawing checks shall be limited to those persons expressly
authorized by the Executive Director to operate secure check writing machines
and who are provided security keys and computer keys for their operation
incident to their official duties.
(3) All checks
issued from the Prize Disbursement Account shall prominently display the logo
of the Lottery.
(4) Checks in payment
of prizes drawn upon the Prize Disbursement Account may be issued under the
signature of the Executive Director, his or her designee, or the authorized
facsimile of his or her signature.
(5) The agency
shall settle lottery retailer accounts no less frequently than weekly, unless
the Executive Director specifies a different time.
(6) The Executive
Director may make payments from the Prize Disbursement Account to lottery
retailers for purposes of refund or credit for unsold tickets, other ticket
sales adjustments or instant game account adjustments.
44-90.40. Bonds.
A. The Executive Director may require a bond,
securities, or an irrevocable letter of credit from a lottery retailer in an
amount determined by the Executive Director consistent with the financial
stability of the retailer, to avoid monetary loss to the state because of the
activities of a lottery retailer. The
bond must be on an approved form through a company authorized to do business in
this state and approved by the Executive Director. If securities are deposited or an irrevocable
letter of credit filed, the securities or letter of credit must be of a type or
in a form approved by the Executive Director.
44-100. Supplying
of identifying numbers.
A
person required to make a payment, statement, or other document to SCEL shall
include in such payment, statement, or other document such identifying numbers
as may be prescribed by the Executive Director for securing proper
identification of such person.
44-110. Forms.
Lottery retailers shall file with the lottery, or its
designated representatives, reports of the lottery retailer’s receipts and
transactions in the sale of lottery games on a form or in a manner as the
Executive Director may require.
44-120. Reports.
The Executive Director may prepare such daily, monthly, and
annual reports as may be necessary for the efficient and effective operation of
the lottery, including but not limited to, the number of lottery retailers
licensed; the number of new licenses applied for; the number of retail licenses
suspended, revoked, or canceled; and such other information and reports as the
Commission may request. The Executive
Director shall provide to the Commission any such reports periodically as may be
requested or appropriate to fully inform the Commission regarding licensure
activity.
44-130. Use of
Lottery trademarks.
A. Lottery retailers may use, and display the
Lottery Logo, trademark, and other advertising materials without charge to the
user or compensation to SCEL for its use.
B. Any use of the
Lottery Logo or other trademarked or copyright materials, other intellectual
property, or copy in advertising or production of consumer articles requires a
prior written request and execution of the Retailer Contract.
C The Executive Director
may exercise supervision over the quality of the materials produced under
trademark licensing agreement, and may require as a condition to continuation
of the license, changes in quality of the goods or material produced.
D. The Commission and
Executive Director may at any time terminate an agreement to license in the
event that the licensee fails to meet the requirement of the agreement, or in
the event that the continuation of the license is not considered to be in the
best interest of SCEL or of the State of
44-140. Games prohibited.
A. Nothing in these
regulations may be construed to allow any lottery or lottery games prohibited
by Sections 59-150-20(7),
Preliminary
Fiscal Impact Statement:
There will be no increased costs to the State
or its political subdivisions.