June 10, 2003, Introduced by Senator BARCIA and referred to the Committee on Gaming and Casino Oversight.
A bill to amend 1972 PA 239, entitled
"McCauley-Traxler-Law-Bowman-McNeely lottery act,"
by amending the title and sections 3, 11, 23, and 32 (MCL 432.3,
432.11, 432.23, and 432.32), the title as amended by 1996 PA 95,
sections 3, 11, and 23 as amended by 1996 PA 167, and section 32
as amended by 1996 PA 13, and by adding a heading for article 1
and adding article 2.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 TITLE
2 An act to establish and operate a state lottery and to allow
3 state participation in certain lottery-related joint enterprises
4 with other sovereignties; to allow and regulate the operation of
5 video lottery games in this state; to create a bureau of state
6 lottery and to prescribe its powers and duties; to prescribe
7 certain powers and duties of other state departments and
1 agencies; to provide for the promulgation of rules; to license
2 and regulate certain lottery
sales agents and distributors,
3 manufacturers, and operators of video lottery machines and
4 related equipment; to create the state lottery fund and the state
5 video lottery gaming fund; to impose fees; to provide for the
6 distribution of lottery and video lottery revenues and earnings
7 for certain purposes; to provide for an appropriation; and to
8 provide for remedies and penalties.
9 ARTICLE 1
10 Sec. 3. As used in this act:
11 (a)
"Bureau" means the bureau of state lottery created by
12 this act in section 5.
13 (b)
"Commissioner" means the or "commissioner of
state
14 lottery" means the head of the bureau.
15 (c) "Joint
enterprise" means any a lottery activity in
16 which the bureau participates pursuant to a written agreement
17 between the state of Michigan
this state and any state,
18 territory, country, or other sovereignty as executed by the
19 commissioner. Joint
enterprise does not include the state a
20 lottery created pursuant
to under this act.
21 (d)
"Lottery" or "state lottery" means the a
lottery
22 created pursuant to under
this act and operated exclusively by
23 or under the exclusive control of the bureau of state lottery.
24 (e) "State lottery" means the lottery created under article
25 1.
26 Sec. 11. (1) The commissioner shall promulgate rules
27 pursuant to the
administrative procedures act of 1969, Act
1 No. 306 of the Public
Acts of 1969, being sections 24.201 to
2 24.328 of the Michigan
Compiled Laws 1969 PA 306, MCL
24.201 to
3 24.328, as necessary to implement this act.
4 (2) The rules authorized under this section may include any
5 of the following, subject to requirements and limitations
6 expressed in this act:
7 (a) The type of
lottery to be conducted. subject to section
8 9(2).
9 (b) The price of tickets or shares in the lottery.
10 (c) The number and size of the prizes on the winning tickets
11 or shares.
12 (d) The manner of selecting the winning tickets or shares.
13 (e) The manner of payment of prizes to the holders of winning
14 tickets or shares.
, subject to section 32.
15 (f) The frequency of the drawings or selections of winning
16 tickets or shares.
17 (g) Without limit as to number, the type or types of
18 locations at which
tickets or shares may be sold. subject to
19 section 23(10).
20 (h) The method to be used in selling tickets or shares,
21 except that a person's name shall not be printed on the tickets
22 or shares.
23 (i) The licensing of agents to sell tickets or shares, but a
24 person under the age of 18 shall not be licensed as an agent.
25 (j) The manner and amount of compensation to be paid licensed
26 sales agents necessary to provide for the adequate availability
27 of tickets or shares to prospective buyers and for the
1 convenience of the public.
2 (k) The apportionment of the total annual revenues accruing
3 from the sale of lottery tickets or shares and from all other
4 sources for the payment of prizes to the holders of winning
5 tickets or shares, for the payment of costs incurred in the
6 operation and administration of the lottery, including the
7 expenses of the bureau and the costs resulting from any contract
8 or contracts entered into for promotional, advertising,
9 consulting, or operational services or for the purchase or lease
10 of lottery equipment and materials, for the repayment of the
11 money appropriated to the state lottery fund, and for transfer to
12 the general fund.
13 (3) The commissioner may promulgate rules incorporating by
14 reference existing rules or regulations of any joint enterprise
15 as required as a condition for participation in that joint
16 enterprise. Any subsequent changes or additions to the rules or
17 regulations of the joint enterprise may be adopted by the
18 commissioner through the promulgation of a rule.
19 (4) This section is repealed if the Michigan supreme court
20 rules that sections 45 and 46 of the administrative procedures
21 act of 1969, Act No.
306 of the Public Acts of 1969, being
22 sections 24.245 and
24.246 of the Michigan Compiled Laws 1969
PA
23 306, MCL 24.245 and 24.246, are unconstitutional and a statute
24 requiring legislative review of administrative rules is not
25 enacted within 90 days after the Michigan supreme court ruling.
26 Nothing in this
subsection invalidates rules that have been
27 promulgated prior to
the effective date of the amendatory act
1 that added this
subsection. Rules promulgated
before April 17,
2 1996 are not invalidated by this subsection.
3 Sec. 23. (1) A The
commissioner shall not issue a license
4 as an agent to sell
lottery tickets or shares shall not be
5 issued to any person to engage in business exclusively as a
6 lottery sales agent. Before issuing a license to a person to act
7 as a lottery sales agent, the commissioner shall consider factors
8 such as the financial responsibility and security of the person
9 and his or her business or activity, the accessibility of his or
10 her place of business or activity to the public, the sufficiency
11 of existing licenses to serve the public convenience, and the
12 volume of expected sales.
13 (2) As used in this
section, "person" means an individual,
14 association,
corporation, club, trust, estate, society, company,
15 joint stock company,
receiver, trustee, referee, any other person
16 acting in a fiduciary
or representative capacity who is appointed
17 by a court, or any
combination of individuals. Person includes
18 any department,
commission, agency, or instrumentality of the
19 state, including any
county, city, village, or township and any
20 agency or instrumentality
thereof.
21 (2) (3) Notwithstanding
any other provision of law, a
22 person licensed pursuant
to this act may act as a lottery sales
23 agent may sell lottery tickets and shares. A person lawfully
24 engaged in nongovernmental business on state property may be
25 licensed as a lottery sales agent.
26 (3) (4) A
lottery sales agent license is not assignable or
27 transferable.
1 (4) (5) A
licensed lottery sales agent or his or her
2 employee may sell lottery tickets or shares only on the premises
3 stated in the license of
the lottery sales agent. Effective
4 July 1, 1996, a A
licensed lottery sales agent who violates this
5 subsection is, at the commissioner's discretion, subject to 1 or
6 more of the following:
7 (a) Probation for not more than 2 years.
8 (b) A fine of not more than $1,000.00.
9 (c) Removal of his or her lottery terminal.
10 (6) The commissioner
may issue temporary licenses upon
11 conditions as he or
she considers necessary for a term which
12 shall not extend
beyond 1 year after the effective date of this
13 act.
14 (5) (7) The
commissioner may require a bond from any a
15 licensed lottery sales
agent in an amount as provided in the
16 rules promulgated under this act.
17 (6) (8) A
licensed lottery sales agent shall display his or
18 her license or a copy thereof
of the license conspicuously in
19 accordance with the rules
promulgated under this act.
20 (7) (9) The
commissioner may suspend or revoke the license
21 of any a
lottery sales agent who violates this act or a rule
22 promulgated pursuant
to under this act.
23 (8) (10) For
purposes of terminal placement, the
24 commissioner shall take into account with equal emphasis both of
25 the following:
26 (a) The total instant game sales for the 3 months immediately
27 preceding a market evaluation.
1 (b) The need to maximize net lottery revenues from the total
2 number of terminals placed.
3 (9) As used in this section, "person" means an individual,
4 association, corporation, club, trust, estate, society, company,
5 joint stock company, receiver, trustee, referee, any other person
6 acting in a fiduciary or representative capacity who is appointed
7 by a court, or any combination of individuals. Person includes
8 any department, commission, agency, or instrumentality of the
9 state, including any county, city, village, or township and any
10 agency or instrumentality of a county, city, village, or
11 township.
12 Sec. 32. (1) Before payment under this article of a prize
13 of $1,000.00 or more, the bureau shall determine whether the
14 department of treasury records show that a lottery winner has a
15 current liability to this state or a support arrearage. The
16 department of treasury shall provide the bureau with a list or
17 computer access to a compilation of persons known to the
18 department to have a current liability to this state, including a
19 delinquent accounts account
of amounts due and owing money
20 due to a court that have
has been assigned to the state for
21 collection, or a support arrearage. The information shall be
22 updated not less than once a month. If a liability to this state
23 or support arrearage is identified, the bureau shall ascertain
24 the amount owed from the
department of treasury and first apply
25 the amount of the prize
first to the a liability to the state
26 other than the amount
of any an assigned delinquent account of
27 amounts due and owing
money due to a court, next to
the a
1 support arrearage, and
next to the an assigned delinquent
2 accounts of amounts
due and owing account of money
due to a
3 court. , and
the The excess, if any, shall be paid to the
4 lottery winner.
5 (2) A lottery winner shall receive notice and an opportunity
6 for a hearing before the department of treasury or its designee
7 with respect to the liability to which the prize is to be applied
8 where under this section, if the liability has not
been reduced
9 to judgment or has not been finalized under statutory review
10 provisions of the statute under which the liability arose. The
11 notice shall be made given
by regular mail. The lottery winner
12 may request a hearing within 15 days of the date of the notice by
13 making a written request to the revenue commissioner.
14 (3) An amount Money
applied to pay a support arrearage
15 under this section shall be paid by the bureau to the department
16 of treasury which shall
pay the amount money to the office of
17 the friend of the court for the appropriate judicial circuit in
18 the same manner as
is prescribed for a payment pursuant to an
19 order of income withholding under section 9 of the support and
20 parenting time
enforcement act, Act No. 295 of the Public Acts
21 of 1982, being section
552.609 of the Michigan Compiled Laws
22 1982 PA 295, MCL 552.609.
23 (4) In regard to the information provided by the department
24 of treasury to the bureau under this section, the bureau is
25 subject to the confidentiality restrictions and penalties
26 provided in section
28(1)(f) and (2) of Act No. 122 of the
27 Public Acts of 1941,
being section 205.28 of the Michigan
1 Compiled Laws 1941 PA 122, MCL 205.28.
2 (5) Until October 1, 1995 each office of the friend of the
3 court may report to
the department of treasury the names of
4 persons who have a
current support arrearage. Beginning October
5 1, 1995 each The office of the friend of the court shall
report
6 to the office of child support the names of persons who have a
7 current support arrearage and the office of child support shall
8 provide that information to the department of treasury.
9 (6) As used in this section:
10 (a) "Office of the friend of the court" means an agency
11 created in section 3 of
the friend of the court act, Act No. 294
12 of the Public Acts of
1982, being section 552.503 of the Michigan
13 Compiled Laws 1982 PA 294, MCL 552.503.
14 (b)
"Support" means that term as defined in section 31 of
15 Act No. 294 of the
Public Acts of 1982, being section 552.531 of
16 the Michigan Compiled
Laws 2a of the friend of the
court act,
17 1982 PA 294, MCL 552.502a.
18 ARTICLE 2
19 Sec. 51. As used in this article:
20 (a) "Distributor" means an individual, partnership,
21 corporation, association, or other legal entity that distributes
22 or sells video lottery machines or associated equipment in this
23 state.
24 (b) "Manufacturer" means an individual, partnership,
25 corporation, association, or other legal entity that assembles or
26 produces video lottery machines or associated equipment for sale
27 or use in this state.
1 (c) "Net machine income" means the amount of money obtained
2 after subtracting credits paid out in cash from the amount of
3 money inserted into a video lottery machine.
4 (d) "Operator" means an individual, partnership, corporation,
5 association, or other legal entity that places video lottery
6 machines or associated equipment in a video lottery establishment
7 for public use in this state.
8 (e) "Person" means an individual, association, partnership,
9 corporation, other business entity, club, trust, estate, society,
10 company, joint stock company, receiver, trustee, referee, any
11 other person acting in a fiduciary or representative capacity who
12 is appointed by a court, or a combination of individuals.
13 (f) "State video lottery gaming fund" means the state video
14 lottery gaming fund created in section 67.
15 (g) "Video lottery establishment" means a premises where
16 alcoholic liquor is sold for consumption on the premises by a
17 video lottery gaming agent that is licensed under this article
18 and is licensed under the Michigan liquor control code of 1998,
19 1998 PA 58, MCL 436.1101 to 436.2303, to sell alcoholic liquor
20 for consumption on the premises.
21 (h) "Video lottery gaming" means the conduct of games through
22 the use of video lottery machines.
23 (i) "Video lottery machine" means a computerized video game
24 accessible to a player by means of a video terminal that awards
25 credit that can be used for an extension of play or for a voucher
26 redeemable from a video lottery agent.
27 Sec. 52. (1) The commissioner shall establish and
1 administer video lottery gaming in this state at the earliest
2 feasible and practicable time. Video lottery gaming shall
3 produce the maximum amount of net revenue for this state
4 consonant with the general welfare of the people.
5 (2) Video lottery gaming shall be conducted only at a video
6 lottery establishment.
7 Sec. 53. The commissioner shall promulgate rules pursuant
8 to the administrative procedures act of 1969, 1969 PA 306, MCL
9 24.201 to 24.328, to implement this article, which shall include,
10 but not be limited to, all of the following:
11 (a) A system for licensing manufacturers, distributors,
12 operators, and video lottery agents.
13 (b) A system for registering video lottery machines.
14 (c) Standards of conduct for each type of licensee under this
15 article.
16 (d) Establishment of prize limits.
17 (e) Limits and standards for the import, export, and
18 transportation of video lottery machines in this state.
19 Sec. 55. The commissioner shall do both of the following:
20 (a) Supervise and administer the operation of video lottery
21 gaming in accordance with this article and the rules promulgated
22 under section 53.
23 (b) License persons to conduct video lottery gaming that the
24 commissioner considers will best serve the public and protect the
25 honesty and integrity of the video lottery gaming industry.
26 Sec. 57. (1) A video lottery gaming agent license shall
27 only be issued to a person that holds a license to sell alcoholic
1 liquor for consumption on the premises issued under the Michigan
2 liquor control code of 1998, 1998 PA 58, MCL 436.1101 to
3 436.2303.
4 (2) Before issuing a video lottery gaming agent license, the
5 commissioner shall consider the financial responsibility and
6 security of the applicant and the applicant's business or
7 activity and shall review the applicant's on-premises consumption
8 license history with the liquor control commission. The
9 commissioner may deny a license to a person if the commissioner
10 believes, based on the commissioner's consideration and review
11 under this subsection, that the applicant will compromise the
12 honesty or integrity of the video lottery gaming industry.
13 (3) A person lawfully engaged in nongovernmental business on
14 state property may be licensed as a video lottery agent.
15 (4) A video lottery agent license shall state the address of
16 the premises where the agent may conduct video lottery gaming. A
17 licensed video lottery agent or an employee of the video lottery
18 agent shall conduct video lottery gaming only on the premises
19 stated in the license.
20 (5) Before issuing or approving an assignment or transfer of
21 a manufacturer, distributor, or operator license, the
22 commissioner shall consider the financial responsibility and
23 security of the applicant and the applicant's business or
24 activity. The commissioner may deny a license to a person if the
25 commissioner believes, based on the commissioner's consideration
26 under this subsection, that the applicant will compromise the
27 honesty or integrity of the video lottery gaming industry.
1 (6) A person shall not be licensed as a manufacturer,
2 distributor, operator, or video lottery agent if that person has
3 a direct or indirect interest in another person that is licensed
4 as a manufacturer, distributor, operator, or video lottery agent
5 under this act.
6 (7) A person shall not be licensed as an operator if the
7 person is a wholesaler as that term is defined in section 113 of
8 the Michigan liquor control code of 1998, 1998 PA 58, MCL
9 436.1113.
10 (8) A distributor, operator, or video lottery agent license
11 shall only be issued to a person if 1 or more of the following
12 apply:
13 (a) The person is an individual who is a resident of this
14 state.
15 (b) The person is not an individual and has its principal
16 place of business in this state.
17 (c) Subject to approval by the commissioner, the person does
18 not qualify under subdivision (a) or (b) but the person has
19 conducted business in this state for at least 3 years before the
20 effective date of this article.
21 (9) The commissioner may require a bond from a person
22 licensed under this article in an amount established by rule
23 promulgated under section 53.
24 (10) Subject to consideration by the commissioner under
25 subsection (5), a manufacturer, distributor, or operator license
26 is assignable and transferable. A video lottery agent license is
27 assignable and transferable, but only to the extent that the
1 licensee's on-premises consumption license is transferable.
2 Sec. 59. The commissioner shall establish fees that shall
3 be paid to the bureau when a person applies for a manufacturer,
4 distributor, operator, or video lottery agent license. The
5 commissioner shall establish an annual fee for each license
6 issued that does not exceed the following:
7 (a) $5,000.00 for a manufacturer.
8 (b) $5,000.00 for a distributor.
9 (c) $2,500.00 and $50.00 per registered machine for an
10 operator.
11 (d) $100.00 for a video lottery agent.
12 Sec. 61. (1) The commissioner may contract for the
13 operation of video lottery gaming and the promotion of video
14 lottery gaming. The commissioner shall not contract for the
15 exclusive provision of video lottery machines, equipment, or
16 services in this state by a distributor, manufacturer, or
17 operator, but shall act to ensure competition in video lottery
18 gaming.
19 (2) A contract awarded or entered into by the commissioner
20 under this section shall not be assigned by its holder except
21 with the specific approval of the commissioner.
22 (3) A contract or portion of a contract for video lottery
23 machines, equipment, or related services made before the
24 effective date of this article by a manufacturer, distributor,
25 operator, or video lottery agent is void.
26 Sec. 63. (1) A video lottery agent shall display its
27 license or a copy of the license conspicuously in accordance with
1 rules promulgated under section 53.
2 (2) A video lottery agent shall only use machines and other
3 necessary related systems and service from distributors,
4 manufacturers, and operators licensed by the commissioner.
5 (3) A video lottery establishment shall not have more than 5
6 video lottery machines.
7 (4) Within 60 months of the effective date of this article,
8 the commissioner shall review the impact of the limits
9 established in subsection (3) based on use, revenue, and cost
10 efficiency and recommend to the legislature whether those limits
11 should be maintained.
12 (6) A manufacturer, distributor, or operator shall not aid or
13 assist a distributor, operator, or video lottery agent by gift or
14 loan of money, property, or other valuable thing or by giving a
15 premium or rebate. A distributor, operator, or video lottery
16 agent shall not accept a gift or loan of money, property, or
17 other valuable thing or a premium or rebate from a manufacturer,
18 distributor, or operator.
19 Sec. 65. (1) Net machine income shall be distributed as
20 follows:
21 Year 5 and
22 each year
23 Year 1 Year 2 Year 3 Year 4 thereafter
24 Manufacturer Share 0 0 0 0 0
25 Distributor Share 0 0 0 0 0
26 Operator Share 38.5% 38.0% 37.5% 37.0% 36.5%
27 Video Lottery Agent
28 Share 38.5% 38.0% 37.5% 37.0% 36.5%
1 State Share 23.0% 24.0% 25.0% 26.0% 27.0%
2 (2) The state share of net machine income under subsection
3 (1) shall be deposited in the state video lottery gaming fund.
4 Sec. 67. The "state video lottery gaming fund" is created
5 in the department of treasury. The state video lottery gaming
6 fund consists of the state's share of net machine income received
7 from video lottery gaming and all other money credited or
8 transferred to the fund from any other fund or source. The state
9 treasurer shall direct the investment of the fund. The state
10 treasurer shall credit to the fund interest and earnings from
11 fund investments.
12 Sec. 69. All fees and money collected by the commissioner
13 or bureau under this article shall be paid into the state video
14 lottery gaming fund. All necessary expenses incurred by the
15 bureau in the administration and enforcement of this article and
16 in the initiation, implementation, and ongoing operation of video
17 lottery gaming shall be paid from the state video lottery gaming
18 fund. The amount of these necessary expenses shall not exceed
19 the amount of money received from the fees collected under this
20 article. At the end of each fiscal year, all money, including
21 interest, in the state video lottery gaming fund that is
22 attributable to fees collected under this article but that has
23 not been expended under this section shall be deposited in the
24 general fund.
25 Sec. 71. (1) The commissioner may suspend or revoke a
26 license issued under this article if the licensee or an officer,
27 director, agent, member, or employee of the licensee violates
1 this article or a rule promulgated under this article.
2 (2) A proceeding to suspend or revoke a license issued under
3 this article is a contested case governed by the administrative
4 procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328. The
5 commissioner may suspend a license issued under this article for
6 a period not to exceed 60 days pending any prosecution,
7 investigation, or public hearing.
8 (3) On petition of the commissioner and after a hearing, the
9 circuit court may issue a subpoena to compel the attendance of a
10 witness or the production of documents, papers, books, records,
11 and other evidence before it in a matter over which it has
12 jurisdiction, control, or supervision. A person subpoenaed to
13 attend a proceeding or hearing who fails to obey the subpoena
14 without reasonable cause, or a person who appears at a proceeding
15 or hearing but refuses, without lawful cause, to be examined, to
16 answer a legal or pertinent question, or to exhibit a book,
17 account, record, or other document when ordered to do so by the
18 court may be held in contempt of court and punished accordingly.
19 Sec. 73. (1) A person licensed under this article whose
20 license is revoked because of a violation of this article or a
21 rule promulgated under this article is ineligible for a license
22 under this article for 1 year after the revocation.
23 (2) If a license issued under this article is suspended, in
24 addition to other penalties which may be imposed, the
25 commissioner may declare the violator ineligible to conduct video
26 lottery gaming under this article for not more than 1 year.
27 (3) A person licensed under this article shall return its
1 license to the commissioner on or before the effective date of a
2 suspension or revocation of the license. Whether returned or
3 not, a license is not valid beyond the effective date of
4 suspension or revocation.
5 Sec. 75. (1) The commissioner shall immediately report to
6 the governor, the state treasurer, and the legislature anything
7 that requires an immediate change in the laws of this state to
8 prevent an abuse or evasion of this article or rules promulgated
9 under this article or to rectify undesirable conditions in video
10 lottery gaming.
11 (2) The commissioner shall make a continuous study and
12 investigation of video lottery gaming to do all of the
13 following:
14 (a) Ascertain defects in this article or in the rules
15 promulgated under this article that allow abuses in video lottery
16 gaming or evasion of this article or the rules.
17 (b) Formulate recommendations for changes in this article and
18 the rules promulgated under this article.
19 (c) Guard against the use of this article and the rules
20 promulgated under this article as a cloak for conducting
21 organized crime.
22 (d) Ensure that this article and the rules promulgated under
23 this article are in a form and are administered to serve the
24 purposes of this article.
25 (3) The commissioner shall make a continuous study and
26 investigation of laws similar to this article in other states or
27 countries, literature on the subject, federal laws that may
1 affect video lottery gaming, and the reaction of citizens to
2 existing and potential features of video lottery gaming to
3 recommend or effect changes that will serve the purposes of this
4 article.
5 Sec. 77. Any other law providing a penalty or disability
6 for video lottery gaming or acts done in connection with video
7 lottery gaming does not apply to video lottery gaming conducted
8 under this article.
9 Sec. 79. A person who willfully violates this article is
10 guilty of a misdemeanor punishable by a fine of not more than
11 $1,000.00 or imprisonment for not more than 6 months, or both.
12 Enacting section 1. This amendatory act does not take
13 effect unless Senate Bill No. 563
14 of the 92nd Legislature is enacted
15 into law.