CHAPTER 348

FORMERLY

HOUSE BILL NO. 647

AS AMENDED BY HOUSE AMENDMENTS NO. 1, 2, 3, 4, 5, 8,

10, 11, 15 AND 16

AN ACT TO AMEND TITLE 29 OF THE DELAWARE CODE BY CREATING A NEW CHAPTER 89 ESTABLISHING A STATE-OPERATED LOTTERY, PROVIDING FOR A LOTTERY DIRECTOR AND HIS POWERS AND DUTIES, ESTABLISHING A STATE LOTTERY FUND AND PROVIDING A SUPPLEMENTARY APPROPRIATION FOR INITIATION.

Be it enacted by the General Assembly of the State of Delaware:

Section 1. Amend Title 29 of the Delaware Code, by creating a new Chapter 89 entitled "State Lottery" which shall read as follows:

"CHAPTER 89. STATE LOTTERY

§8901. Statement of purpose

It is the purpose of this Act to establish a State-operated lottery under the supervision of a Director who shall serve at the pleasure of the Governor and hold broad authority to administer the system in a manner which will produce the greatest income for the State.

§8902. Establishment of office

There is hereby established in the Executive Office of the Governor a State Lottery Office to be administered by a Director who shall be responsible for the operation of a State Lottery, the net proceeds of which shall be placed in the General Fund of the State.

§8903. Definitions

(a) 'Director' as used in this Chapter shall mean the Director of the State Lottery Office.

(b) 'Lottery or 'State Lottery' or 'system' shall mean the public gaming systems or games established and operated pursuant to this Act and including all types of lotteries.

(c) 'Office' shall mean the State Lottery Office established by this Act.

(d) 'State Lottery Fund' shall mean those monies derived from the sale of State Lottery tickets and deposited in the State account of that name and those funds appropriated for the startup costs of the system.

§8904. Appointment, qualifications, and salary of Director

(a) The State Lottery Office shall be administered and supervised by a Director who shall be a person qualified by business experience and training to supervise the operation of a public gaming system in a manner which will produce the greatest income for the State. The Director shall be appointed by the Governor by and with the consent of the majority of the members of the Senate and shall serve at the pleasure of the Governor.

(b) The qualifications of the person appointed as Director shall be as follows:

(1) Five or more years' experience as the head of an autonomous business or government agency, having broad authority and carrying the major responsibility, except that experience in a public utility or other monopolistic enterprise does not meet this requirement. There shall be positive evidence that the company was well-managed during the tenure of the prospective Director.

(2) Five or more years of additional experience in other managerial or direct line positions is required, preferably in marketing or production or financial areas.

(3) Shall be in good health, shall have a good reputation, particularly as a person of honesty and integrity, and shall be able to pass a thorough background investigation prior to appointment.

(4) He shall not hold political office in the government of the State of Delaware either by election or appointment while serving as Director, nor shall anyone who holds elected or appointed office in the government of the State of Delaware be appointed as Director until he has completed serving the full term to which he was elected or appointed. The Director shall hold a bachelor's degree from an accredited college or able to demonstrate through additional business experience equivalent knowledge of a theoretical nature, be a citizen of the United States, and must become a resident of the State of Delaware within 90 days of appointment.

(c) The Director shall serve on a full time basis and shall not be engaged in any other profession or occupation. The Director shall receive such salary as provided by law, but in no case shall it be less than $15,000 nor more than $25,000.

§8905. Powers and duties of the Director

(a) The Director shall have the power and it shall be his duty to operate and administer the State Lottery and to promulgate such rules and regulations governing the establishment and operation of the Lottery as he deems necessary and desirable in order that the Lottery be initiated at the earliest feasible time and in order that the system shall produce the maximum amount of net revenues consonant with the dignity of the State and the general welfare of the people. The rules shall provide for all matters necessary or desirable for the efficient and economical operation and administration of the system and for the convenience of the purchasers of lottery tickets and the holders of winning tickets, including, but not limited to, the following:

(1) the type and number of games to be conducted;

(2) the price, or prices, of tickets for any game;

(3) the numbers and sizes of the prizes on the winning tickets;

(4) the manner of selecting the winning tickets;

(5) the manner of payment of prizes to the holders of winning tickets;

(6) the frequency of the drawings or selections of winning tickets;

(7) the number and types of locations at which tickets may be sold;

(8) the method to be used in selling tickets;

(9) the licensing of agents to sell tickets, provided that no person under the age of eighteen shall be licensed as an agent;

(10) the manner and amount of compensation, if any, to be paid to licensed sales agents necessary to provide for the adequate availability of tickets to prospective buyers and for the convenience of the public;

(11) the apportionment of the total revenues accruing from the sale of tickets and from all other sources among (i) the payment of prizes to the holders of winning tickets, (ii) the payment of costs incurred in the operation and administration of the State Lottery system, including the expenses of the Office and the costs resulting from any contract or contracts entered into for promotional, advertising, or operational services or for the purchase or lease of gaming equipment and materials, (iii) the repayment of the monies appropriated to the State Lottery Fund pursuant to Section 3 of this Act, and (iv) the payment of earnings to the General Fund of the State; provided, however, that no less than thirty percent of the total revenues accruing from the sale of tickets or shares shall be dedicated to subclause (iv) above.

(0) such other matters necessary or desirable for the efficient and economical operation and administration of the game and for the convenience of the purchasers of tickets and the holders of winning tickets.

(b) The Director shall also have the power and it shall be his duty to:

(1) Appoint such deputy directors as may be required to carry out the functions and duties of the Office. Each deputy director shall have had three years management experience in in areas pertinent to his prospective responsibilities and an additional three years of experience in the same field.

(2) Within the limit of the funds made available in Section 3 and proceeding from the sale of lottery tickets, appoint such professional, technical, and clerical assistants and employees as may be necessary to perform the duties imposed upon the Office by this Act.

(3) In accordance with the provisions of this Act, to license as agents to sell lottery tickets persons who will best serve, by location or accessibility, the public convenience and promote the sale of lottery tickets. The Director may require a bond from every agent so licensed in such amount as he deems necessary. Every licensed agent shall prominently display his license or a copy thereof.

(0) Enter into contracts for the operation of any game or part thereof and into contracts for the promotion of the game or games. This authorization is to be construed to include, but not be limited to, contracting with any racing or other sporting association to conduct sporting events within any racetrack or sports field in the State the outcome of which shall determine the winners of a State game or, as an alternative, to affiliate the determination of the winners of a game with any racing or sporting event held within or without the State. All contracts for other than professional services in an amount greater than $2,000 shall be awarded to the lowest responsible bidder in the manner prescribed by State bidding laws. No contract awarded or entered into by the Director may be assigned by the holder thereof except by specific approval of the Director.

(1) Make arrangements for any person or organization, including banks, to perform such functions, activities, or services in connection with the operation of the system as he may deem advisable.

(2) Suspend or revoke any license issued pursuant to this Act or the rules and regulations promulgated hereunder.

(3) To certify and report monthly to the State Treasurer the total lottery revenues, prize disbursements, and other expenses for the preceding month, and to make an annual report to the Governor and the General Assembly, which report shall include a full and complete statement of revenues, prize disbursements and other expenses and recommendations for such changes in this chapter as he deems necessary or desirable.

(4) To report immediately to the Governor and members of the General Assembly any matters which shall require immediate changes in the laws of the State in order to prevent abuses and evasions of this Act or the rules and regulations promulgated hereunder or to rectify undesirable conditions in connection with the administration or operation of the gaming system. Such a report shall be disclosed to the public immediately upon issuance.

(9) To carry on a continuous study and investigation of the system (i) for the purpose of ascertaining any defects in this Act or in the rules and regulations issued hereunder by reason whereof any abuses in the administration and operation of the Lottery or any evasion of this Act or the rules and regulations may arise or be practiced; (ii) for the purpose of formulating recommendations for changes in this Act and the rules and regulations promulgated hereunder to prevent such abuses and evasions; (iii) to guard against the use of this Act to benefit organized gambling and crime or criminals in any manner whatsoever, and (iv) to insure that this law and the rules and regulations shall be in such form and be so administered as to serve the true purpose of this Act.

(10) To make a continuous study and investigation of (i) the operation and administration of similar laws which may be in effect in other states and countries, (ii) any literature on the subject which from time to time may be published or available, (iii) any federal laws which may affect the operation of the lottery, and (iv) the reaction of Delaware citizens to existing and potential features of the games with a view to recommending or effecting changes that will tend to serve the purposes of this Act.

(11) Make available to the State Auditor or his representative such information as may be required to perform an annual audit as prescribed in Title 29, Chapter 29 of the Delaware Code.

(0) Establish State-operated sales offices, without limit as to number or location, as he shall deem suitable and economical in order to make lottery tickets more available to the public, which official shall be operated solely from funds generated by the lotteries permitted by this Chapter.

§8906. Lottery sales agents; qualifications; prohibitions

(a) No license as an agent to sell lottery tickets shall be issued to any person to engage in business exclusively as a lottery ticket sales agent except those persons hired to staff the State Lottery Office or a State-operated sales office. Before issuing a license to an agent, the Director shall consider such factors as (1) the financial responsibility and security of the person and his business or activity, (2) the accessibility of his place of business or activity to the public, (3) the sufficiency of existing licenses to serve the public convenience, and (4) the volume of expected sales.

(b) If the Director shall find that the experience, character, and general fitness of the applicant are such that the participation of such a person as a lottery ticket sales agent will be consistent with the public interest, convenience, and the purposes of this Act, he shall thereupon grant a license.

For the purposes of this Section, the term 'person' shall be construed to mean and shall include an individual, association, corporation, club, trust, estate, society, company, joint-stock company, receiver, trustee, assignee, referee, or any other person acting in a fiduciary or representative capacity, whether appointed by a court or otherwise, and any combination of individuals. 'Person' shall also be construed to mean and include all departments, commissions, agencies and instrumentalities of the State, including counties and municipalities and agencies and instrumentalities thereof.

§8907. Authorization of lottery ticket sales agents

Notwithstanding any other provision of law, any person licensed as provided in this Act is hereby authorized and empowered to act as a lottery ticket sales agent.

§8908. Non-assignability of prizes

No right of any person to a prize or a portion of a prize shall be assignable, except that payment of any prize may be made to the estate of a deceased prize winner and except that any person pursuant to an appropriate judicial order may be paid the prize, or portion thereof, to which the winner is entitled. The Director shall be discharged of all further liability upon payment of a prize pursuant to this section.

§8909. Restrictions on ticket sales; penalties

(a) No person shall sell a ticket at a price greater than that fixed by rule or regulation of the Director. No person other than a licensed lottery sales agent shall sell lottery tickets or shares, except that nothing in this section shall be construed to prevent any person from giving lottery tickets to another as a gift or bonus.

(b) Any person convicted of violating this section shall be guilty of a misdemeanor and upon conviction thereof shall be sentenced to pay a fine not exceeding five hundred dollars.

§8910. Sales to certain persons prohibited; penalties

(a) No ticket shall be sold to any person under the age of eighteen years but this shall not be deemed to prohibit the purchase of a ticket for the purpose of making a gift by a person eighteen years of age or older to person less than that age. Any person convicted of violating this section shall be guilty of a misdemeanor.

(b) No ticket shall be purchased by and no prize received by or awarded to any officer or employee of the State Lottery Office or the Division of Central Data Processing or any spouse, child, brother, sister, or parent of any of the foregoing persons. Any person convicted of violating this section shall forfeit any prize monies so obtained and shall be sentenced to not less than one year in jail and pay a fine of no less than $5,000.

§8911. Jurisdiction in Superior Court

The Superior Court shall have exclusive jurisdiction of offenses under this Chapter.

§8912. Disposition of unclaimed prize money

Unclaimed prize money for the prize on a winning ticket shall be retained by the Director for the person entitled thereto for one year after the drawing or event in which the prize was won. If no claim is made for said money within such year, the prize money shall be paid to the State General Fund.

§8913. Prizes to minors

If the person entitled to a prize or any winning ticket is under the age of fourteen years, the Director may direct payment of the prize by delivery to an adult member of the minor's family or a guardian of the minor a check or a draft payable to the order of the minor. The Director shall be discharged of all liability upon payment of a prize to a minor pursuant to this section.

§8914. Transfer of funds and transaction records between agents and the State

The Director may, at his discretion, require any or all lottery ticket sales agents to deposit to the credit of the State Lottery Fund in banks designated by the Director all or part of the monies received by such agents from the sale of lottery tickets and to file with the Director or his designated agents reports of their receipts and transactions in the sale of lottery tickets in such form and containing such information as he may require. The Director or his representative shall make such arrangements with any licensed sales agent.

§8915. State Lottery Fund and Operating Budget

(a) All monies received from the sale of lottery tickets shall be accounted for to the State Treasurer and placed into a special account known as the State Lottery Fund. From the fund, the Director shall first pay for the operation and administration of the lottery as authorized in this Act and thereafter shall pay as prizes not less than forty-five percent of the total amount of tickets which have been sold. Total of such payments for operation and administration of the Lottery shall not exceed twenty percent of the total amount of tickets which have been sold. The remaining monies shall accumulate in the State Lottery Fund on a monthly basis and each month's accumulation shall be placed into the General Fund of the State.

(b) The Director shall submit a proposed annual budget for operating and administrative expenses to be paid from the fund to the Budget Director. This proposed budget shall be considered by the Budget Director, the Governor, the Controller General, and the General Assembly in the same manner as if the operating and administrative expenses were to be appropriated from the General Fund in accordance with the provisions of Chapter 63, Title 29, Delaware Code; and all general provisions of the Delaware Code applicable to the appropriation and expenditure of monies from the General Fund shall apply.

§8916. Post-audit of accounts and transactions of office

The State Auditor shall conduct a yearly post-audit of all accounts and transactions of the State Lottery Office. The cost of the audit shall be paid out of the State Lottery Fund monies designated for payment of operating expenses.

§8917. Exemption of lottery prizes from State and local taxation

No State or local taxes of any kind whatsoever shall be imposed upon the proceeds from a prize awarded by the State Lottery.

§8918. Repeal of inconsistent laws

All laws or ordinances or parts of laws or ordinances inconsistent with the provisions of this Act are repealed to the extent of their inconsistency.

Section 2. If any provision of this Act or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of this Act which can be given without the invalid provision or application, and to this end, all the provisions of this Act are declared to be severable.

Section 3. There is hereby appropriated to the State Lottery Fund the sum of $400,000 for the purposes of establishing and operating the State Lottery system. These funds shall be repaid to the General Fund as specified in Section 1 of this Act.

Section 4. The Governor shall appoint the Director of the State Lottery Office no later than forty-five days following the date on which he affixes his signature to this Act.

Section 5. Chapter 224, Vol. 58, Laws of Delaware, is hereby amended by adding thereto a new Section 4 which shall read as follows:

"Section 4. Any monies appropriated to the Delaware Lottery Study Committee remaining unexpended as of March 31, 1974, shall revert to the General Fund of the State of Delaware."

Section 6. Amend Section 5903 of Chapter 59, Title 29 of the Delaware Code, by adding a new paragraph (21) to read as follows:

"(21) All members, employees and agents of the Delaware State Lottery".

Approved May 31, 1974.