H. B. 2122

(By Delegate Webb)
[Introduced February 14, 2001; referred to the
Committee on Finance.]

A BILL to amend and reenact sections nine, ten and eleven, article twenty-two, chapter twenty-nine of the code of West Virginia, one thousand nine hundred thirty-one, as amended, all relating to the state lottery; providing restrictions on types of lottery games; increasing minimum age for playing lottery; prohibiting certain advertising; requiring lottery commission to develop signs warning of the dangers and risks of gambling and requiring lottery sales agents to post the signs; requiring commission to develop and implement an initiative to reduce sales dependence on low-income, less educated minorities and heavy players, including limiting advertising and the number of sales outlets in low-income areas; restricting the commission from issuing or renewing licenses in primarily residential areas; and requiring comprehensive gambling impact statement prior to considering new or expanded lottery games.

Be it enacted by the Legislature of West Virginia:
That sections nine, ten and eleven, article twenty-two, chapter twenty-nine of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted, all to read as follows:

ARTICLE 22. STATE LOTTERY ACT.

§29-22-9. Initiation and operation of lottery; restrictions; prohibited themes, games, machines or devices; distinguishing numbers; winner selection; public drawings; witnessing of results; testing and inspection of equipment; price of tickets; claim for and payment of prizes; invalid, counterfeit tickets; estimated prizes and odds of winning; participant bound by lottery rules and validation procedures; security procedures; additional games; electronic and computer systems.

(a) The commission shall initiate operation of the state lottery on a continuous basis at the earliest feasible and practical time, first initiating operation of the preprinted instant winner type lottery. The lottery shall be initiated and shall continue to be operated so as to produce the maximum amount of net revenues to benefit the public purpose described in this article consonant with the public good. Other state government departments, boards, commissions, agencies and their officers shall cooperate with the lottery commission so as to aid the lottery commission in fulfilling these objectives.
(b) The commission shall promulgate rules and regulations specifying the types of lottery games to be conducted by the lottery, Provided except that:
(1) No lottery may use the results of any amateur or professional sporting event, dog race or horse race to determine the winner.
(2) Electronic video lottery systems must include a central site system of monitoring the lottery terminals utilizing an on-line or dial-up inquiry.
(3) In a lottery utilizing a ticket, each ticket shall bear a unique number distinguishing it from each other ticket.
(4) No lottery utilizing using a machine may use machines which dispense coins or currency.
(5) A lottery game which utilizes uses an electronic computer and a video screen to operate a lottery game and communicate the results thereof of the game, such as the game "Travel", and which does not utilize use an interactive electronic terminal device allowing input by an individual player, may only be made available by the commission in:
(A) Private clubs licensed in accordance with the provisions of article seven, chapter sixty of this code;
(B) Retail licensees licensed in accordance with the provisions of article three-a of said chapter sixty; and
(C) In the facilities of class A licensees which are licensed in accordance with the provisions of section nine, article sixteen, chapter eleven of this code, in which facility at least seventy-five percent of the nonintoxicating beer sold by the class A licensee in the preceding year was sold for consumption on the premises: Provided, That if sales information is not available for the preceding year, the commission in its discretion may base any issuance or denial of an annual license upon a reasonable projection of the volume of sales of nonintoxicating beer for consumption on the premises as a percentage of the total sales of nonintoxicating beer.
(6) Selection of the winner must be predicted totally on chance.
(7) Any drawings or winner selections shall be held in public and witnessed by an independent accountant designated by the director for such purposes.
(8) All lottery equipment and materials shall be regularly inspected and tested, before and after any drawings or winner selections, by independent qualified technicians.
(9) The director shall establish the price for each lottery and determine the method of selecting winners and the manner of payment of prizes, including providing for payment by the purchase of annuities for prizes payable in installments.
(10) All claims for prizes shall be examined and no prize shall may be paid as a result of altered, stolen or counterfeit tickets or materials, or which fail to meet validation rules or regulations established for a lottery. No prize shall may be paid more than once, and, in the event of a binding determination by the commission that more than one person is entitled to a particular prize, the sole remedy of the claimants shall be is the award to each of them of an equal share in the single prize.
(11) A detailed tabulation of the estimated number of prizes of each particular prize denomination that are expected to be awarded in each lottery, or the estimated odds of winning such the prizes shall be printed on any lottery ticket, where feasible, or in descriptive materials, and shall be available at the offices of the commission.
(12) No prizes shall may be paid which are invalid and not contemplated by the prize structure of the lottery involved.
(13) By purchasing a ticket or participation in a lottery, a participant agrees to abide by, and be bound by, the lottery rules which apply to the lottery or game play involved. An abbreviated form of such the rules may appear on tickets and shall appear on descriptive materials and shall be available at the offices of the commission. A participant in a lottery agrees that the determination of whether the participant is a valid winner is subject to the lottery or game play rules and the winner validation tests established by the commission. The determination of the winner by the commission shall be final and binding upon all participants in a lottery and shall is not be subject to review or appeal.
(14) The commission shall institute such security procedures as it deems it considers necessary to ensure the honesty and integrity of the winner selection process for each lottery. All such security and validation procedures and techniques shall be, and remain, confidential, and shall are not be subject to any discovery procedure in any civil judicial, administrative or other proceeding, nor subject to the provisions of article one, chapter twenty-nine-b of the this code. of West Virginia, one thousand nine hundred thirty-one, as amended
(15) Beginning on the first day of January, two thousand two, no instant lottery game may be based on a simulation of live card or casino type games.
(c) The commission shall proceed with operation of such additional lottery games, including the implementation of games utilizing a variety of existing or future technological advances at the earliest feasible date. The commission may operate lottery games utilizing electronic computers and electronic computer terminal devices and systems, which systems must include a central site system of monitoring the lottery terminals utilizing direct communication systems, or other technological advances and procedures, ensuring honesty and integrity in the operation of the lottery.
(d) After the first day of May, two thousand one, the commission may not adopt aggressive advertising strategies, or enter into any contract for advertising services that target people in impoverished areas or youth.
(e) The commission shall develop a variety of signs that warn of the dangers and risks of gambling. After the first day of September, two thousand one, the commission shall make available the signs to all licensed lottery sales agents. The agents are required to post a sufficient number of the signs so that the signs may be easily seen by persons playing a lottery game.
(f) The commission shall develop and implement an initiative that attempts to reduce sales dependence on low-income, less educated minorities and heavy players, which shall include, but not be limited to, limiting advertising and the number of sales outlets in low-income areas.
(g) The commission shall, prior to considering the introduction of new lottery games or the significant expansion of lottery games existing on the first day of September, two thousand one, provide for the preparation of a comprehensive gambling impact statement. The statement must be prepared by a qualified independent research organization and must encompass, to the extent possible, the social, economic and regional effects of the proposed new game.
§29-22-10. Licensed lottery sales agents; restrictions; annual license and fee; factors; application; bond; age; nonassignable license; organizations qualified; commissions; display of license; geographic
distribution; monopoly prohibited; lottery
retailers; preprinted instant type lottery tickets;
fee; certificate of authority; security; bond.
(a) The commission shall propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine-a of this code, for the licensing of lottery sales agents for the sale and dispensing of lottery tickets, materials and lottery games, and the operations of electronic computer terminals therefor for the games, subject to the following:
(1) The commission shall issue its annual license to the lottery sales agents for each lottery outlet and for such a fee as is established by the commission to cover its costs thereof in issuing the license, but not to exceed one thousand dollars. Application for licensing as a lottery sales agent shall be on forms to be prescribed and furnished by the director.
(2) No licensee may engage in business exclusively as a lottery sales agent.
(3) The commission shall ensure geographic distribution of lottery sales agents throughout the state.
(4) Before issuance of a license to an applicant, the commission shall consider factors such as the financial responsibility, security, background, accessibility of the place of business or activity to the public, public convenience and the volume of expected sales.
(5) No person under the age of twenty-one may be licensed as an agent. No licensed agent may employ any person under the age of eighteen for sales or dispensing of lottery tickets or materials or operation of a lottery terminal.
(6) A license is valid only for the premises stated thereon on the license.
(7) The director may issue a temporary license when determined necessary.
(8) A license is not assignable or transferable.
(9) Before a license is issued, an agent shall be bonded for an amount and in the form and manner to be determined by the director, or shall provide such other security, in an amount, form and manner determined by the director, as will ensure the performance of the agent's duties and responsibilities as a licensed lottery agent or the indemnification of the commission.
(10) The commission may issue licenses to any legitimate business, organization, person or entity, including, but not limited to, civic or fraternal organizations; parks and recreation commissions or similar authorities; senior citizen centers, state-owned stores, persons lawfully engaged in nongovernmental business on state property, persons lawfully engaged in the sale of alcoholic beverages; political subdivisions or their agencies or departments, state agencies, commission-operated agencies; persons licensed under the provisions of article twenty-three, chapter nineteen of this code, and religious, charitable or seasonal businesses.
(11) Licensed lottery sales agents shall receive six and one quarter percent of gross sales as commission for the performance of their duties: Provided, That a portion of the commission not to exceed one and one quarter percent of gross sales may be paid from unclaimed prize moneys accumulated under section sixteen of this article. In addition, the commission may promulgate a bonus-incentive plan as additional compensation not to exceed one percent of annual gross sales. The method and time of payment shall be determined by the commission.
(12) Licensed lottery sales agents shall prominently display the license on the premises where lottery sales are made.
(13) No person or entity or subsidiary, agent or subcontractor thereof of the person or entity may receive or hold more than twenty-five percent of the licenses to act as licensed lottery sales agent in any one county or municipality nor more than five percent of the licenses issued throughout this state: Provided, That the limitations of twenty-five percent and five percent in this subdivision do not apply if it is determined by the commission that there are not a sufficient number of qualified applicants for licenses to comply with these requirements.
(14) Notwithstanding any provision of this article to the contrary, after the first day of May, two thousand one, the commission may not issue or renew a license for a lottery sales agent whose place of business is in any area that is primarily residential.
(b) The commission shall propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine-a of this code, specifying the terms and conditions for contracting with lottery retailers for sale of preprinted instant type lottery tickets and may provide for the dispensing of such the tickets through machines and devices. Tickets may be sold or dispensed in any public or private store, operation or organization, without limitation. The commission may establish an annual fee not to exceed fifty dollars for such the persons, per location or site, and shall issue a certificate of authority to act as a lottery retailer to such the persons. The commission shall establish procedures to ensure the security, honesty and integrity of the lottery and distribution system. The commission shall establish the method of payment, commission structure, methods of payment of winners, including payment in merchandise and tickets, and may require prepayment by lottery retailers, require bond or security for payment and require deposit of receipts in accounts established therefor. Retailers shall prominently display the certificate of authority issued by the commission on the premises where lottery sales are made.

§29-22-11. Prohibited acts; restrictions on sales agents and retailers; unauthorized sales; sales to minors; gifts to minors; prizes to commission officers and staff prohibited; criminal penalties for prohibited acts.

(a) No person may sell lottery tickets or materials unless authorized by the commission to so act. No person may perform the functions of a licensed lottery sales agent unless licensed by the commission. No person may perform the functions of a lottery retailer unless authorized therefor by the commission. No person may sell a lottery ticket or material at a price greater than that established by the commission; except, that nothing in this section may be construed to prevent prevents any person from giving a lottery ticket or material to another as a gift or bonus. No person other than a licensed lottery sales agent or an employee thereof of the agent while acting within the scope of such employment, shall may sell lottery tickets, and then only on the premises stated on the license.
(b) No ticket shall may be sold to any person under the age of eighteen twenty-one years. This section does not prohibit the purchase of a ticket by a person eighteen twenty-one years of age or older for the purpose of making the ticket a gift to a person less than that age.
(c) No ticket may be purchased by and no prizes received by or awarded to any officers or employees of the commission or any member of their immediate household.
(d) Any person who violates the provisions of this section is guilty of a misdemeanor and, upon conviction thereof, shall be fined not less than fifty dollars nor more than five hundred dollars, or imprisoned confined in the county or regional jail not more than one year, or both fined and imprisoned.


NOTE: The purpose of this bill is to implement several recommendations of the National Gambling Study Commission. The bill would provide restrictions on certain types of lottery games; increase the minimum age for playing the lottery to twenty-one; prohibit certain advertising; require the Lottery Commission to develop signs warning of the dangers and risks of gambling and require lottery sales agents to post the signs; require the Commission to develop and implement an initiative to reduce sales dependence on low-income, less educated minorities and heavy players, including limiting advertising and the number of sales outlets in low-income areas; restrict the Commission from issuing or renewing licenses in primarily residential areas; and require a comprehensive gambling impact statement prior to considering new or expanded lottery games.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.