HF 88

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to the state lottery; regulating lottery
service businesses; proposing coding for new law in
Minnesota Statutes, chapter 349A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [349A.17] LOTTERY SERVICE BUSINESS.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin For purposes of this section:
new text end

new text begin (a) A "lottery service business" is a commercial enterprise
that for a fee or commission purchases lottery tickets on behalf
of customers or subscribers.
new text end

new text begin (b) "Division" means the Division of Alcohol and Gambling
Enforcement in the Department of Public Safety.
new text end

new text begin (c) "Commissioner" means the commissioner of public safety
acting through the division.
new text end

new text begin (d) "Disqualifying offense" means any felony, gross
misdemeanor, and any criminal offense involving fraud,
misrepresentation, or deceit.
new text end

new text begin Subd. 2. new text end

new text begin Registration required. new text end

new text begin (a) No person may
operate a lottery service business unless the business has
registered with the commissioner and the business's registration
is in effect. Registration is in effect for one year unless
suspended or revoked.
new text end

new text begin (b) Registration must be on a form that the commissioner
prescribes by rule. The form may require any information that
the commissioner determines is necessary to carry out the
purposes of this section. The form must contain a provision in
which the applicant for registration attests that no officer,
director, or employee of the business has been convicted of a
disqualifying offense. The form must contain a provision in
which the business agrees to comply with the provisions of this
section and provide access to the commissioner as required under
subdivision 9.
new text end

new text begin (c) Notwithstanding section 16A.1283, the commissioner
shall by rule provide for a fee for registration sufficient to
provide for the division's annual costs in administering this
section.
new text end

new text begin (d) The director may investigate all applicants for
registration under this subdivision to determine the accuracy of
the attestation under paragraph (b). The director may charge a
fee for such investigation and deposit the fee in the general
fund.
new text end

new text begin Subd. 3. new text end

new text begin Revocation of registration. new text end

new text begin (a) The
commissioner may revoke the registration of a lottery service
business if the commissioner finds that:
new text end

new text begin (1) the business made a materially false statement in its
application for registration;
new text end

new text begin (2) an officer, director, or employee of the business has
been convicted of a disqualifying offense;
new text end

new text begin (3) an officer, director, or employee of the business has
violated this section or another section of law governing
gambling or a rule or order of the commissioner, or has had a
license to conduct business revoked in Minnesota or another
jurisdiction;
new text end

new text begin (4) has engaged in any activity that adversely affects
public confidence in the lottery or the integrity of gaming, or
that defrauds the business's customers or subscribers.
new text end

new text begin (b) The commissioner may not take action under this
subdivision unless the commissioner has provided the business
with notice of intent to revoke together with the reasons for
the action and the effective date of the revocation. The notice
must provide the business with an opportunity for a public
hearing on the revocation before the director within 30 days of
the date on which the notice was sent. After the hearing the
director may revoke the registration. A revocation of
registration is a contested case under sections 14.57 to 14.69.
new text end

new text begin Subd. 4. new text end

new text begin Cease and desist order. new text end

new text begin Whenever it appears to
the commissioner that a lottery service business or an officer,
director, or employee thereof has engaged in any act or practice
constituting a violation of this chapter or any rule or order of
the commissioner, the commissioner may issue and cause to be
served upon the business, officer, director, or employee an
order requiring the person to cease and desist from violations
of this chapter or the commissioner's rule or order. The order
must give reasonable notice of the rights of the business or
person named in the order to request a hearing and must state
the reason for the entry of the order. Unless otherwise agreed
between the parties, a hearing shall be held not later than
seven days after the request for the hearing is received by the
commissioner after which and within 20 days after the receipt of
the administrative law judge's report and subsequent exceptions
and argument the commissioner shall issue an order vacating the
cease and desist order, modifying it, or making it permanent as
the facts require. If no hearing is requested within 30 days of
the service of the order, the order becomes final and remains in
effect until modified or vacated by the commissioner. All
hearings shall be conducted in accordance with the provisions of
chapter 14. If the business or person to whom a cease and
desist order is issued fails to appear at the hearing after
being duly notified, the business or person shall be deemed in
default, and the proceeding may be determined against the
business or person upon consideration of the cease and desist
order, the allegations of which may be deemed to be true.
new text end

new text begin Subd. 5. new text end

new text begin Required statements. new text end

new text begin All print advertising in
any medium published by or on behalf of a lottery service
business, and all print communications intended to solicit
members, including internet solicitations, for each lottery pool
or subscription service offered, must contain a clear and
prominent statement which lists the cost of a lottery ticket
provided through the lottery service business compared with the
actual costs of a lottery ticket purchased from a lottery
retailer. Before a required statement may be published, the
format, font size, placement, clarity, and prominence of a
required statement must be approved by the commissioner. In
each instance when a lottery service business changes its costs
such that the per lottery ticket price changes, the business
must submit a draft of the required statement for approval by
the commissioner. The business's per-ticket price for tickets
purchased for a pool must be calculated by multiplying the
member costs paid to a lottery service business by the number of
persons in the pool and dividing the product by the total number
of lottery tickets purchased on behalf of the lottery pool. The
per-ticket price for a lottery ticket purchased from a lottery
retailer is the price set for that ticket by the director.
new text end

new text begin (b) All advertising and solicitation described in paragraph
(a) must contain the following statement in clear and readable
type: "This business is not affiliated with and is not an agent
of the Minnesota State Lottery. The Minnesota State Lottery is
not responsible for paying any prize to any person other than
the possessor of a winning ticket."
new text end

new text begin Subd. 6. new text end

new text begin Prohibitions. new text end

new text begin (a) A lottery service business
may not accept any form of payment for any service it offers
other than cash, check, or money order.
new text end

new text begin (b) A lottery service business may not accept as a customer
or subscriber any person under age 18, or make a payment of
lottery winnings to a person under age 18.
new text end

new text begin (c) A lottery service business and any officer, director,
or employee of the business may not have any stake or own any
shares in any lottery pool it creates for customers or
subscribers.
new text end

new text begin Subd. 7. new text end

new text begin Lottery prize account. new text end

new text begin A lottery service
business must deposit all money received as winnings from
lottery tickets bought for or on behalf of customers or
subscribers into a lottery prize account that it maintains
separately from all other accounts of the business. The
business may expend money from the account, including interest
thereon, only to pay winnings to customers or subscribers and to
make payments required under subdivision 8.
new text end

new text begin Subd. 8. new text end

new text begin Unclaimed prizes. new text end

new text begin (a) A lottery service
business must make all good-faith efforts to distribute money in
its lottery prize account to customers and subscribers entitled
thereto.
new text end

new text begin (b) Any money deposited in the lottery prize account that
has not been distributed to customers or subscribers as winnings
within one year after the date of deposit becomes an unclaimed
prize. A lottery service business must transmit all unclaimed
prizes, including all interest earned thereon while the prize
was in the lottery prize account, to the commissioner within ten
days of the prize becoming unclaimed. The commissioner shall
deposit all payments under this subdivision in the general fund.
new text end

new text begin Subd. 9. new text end

new text begin Books and records; audit. new text end

new text begin A lottery service
business must keep a complete set of books of account,
correspondence, and all other records necessary to show fully
the lottery service business's lottery transactions. The
commissioner and all employees of the Department of Public
Safety shall have access to these materials at any time. The
commissioner may require a lottery service business to furnish
information the commissioner deems necessary to carry out the
purposes of this section and any other law relating to
gambling. The commissioner may require an audit to be made of
the books, accounts, and records of a lottery service business,
select an auditor to perform the audit, and require the lottery
service business to pay the costs of the audit. The auditor
selected to perform the audit has the same right of access to
the books, accounts, correspondence, and records of the business
as the commissioner.
new text end

new text begin Subd. 10. new text end

new text begin Violation. new text end

new text begin A violation of subdivisions 2,
paragraph (a); 5; 6, paragraphs (a) and (c); 7; 8; or 9; or of
an order issued under subdivision 4, is a gross misdemeanor. A
violation of subdivision 6, paragraph (b), is a misdemeanor.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2005.
new text end