Report Title:

State Lottery; Education

Description:

Creates state lottery, Hawaii gaming control commission, and state lottery special fund. Provides for payment of winnings and operations. Reserves remainder to fund elementary to post-secondary education. Prohibits recipients of state financial assistance from buying lottery tickets.

HOUSE OF REPRESENTATIVES

H.B. NO.

3085

TWENTY-THIRD LEGISLATURE, 2006

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO A STATE LOTTERY FOR EDUCATION.

 

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

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

STATE LOTTERY FOR EDUCATION

§   -1 Title of chapter. This chapter may be cited as the "State Lottery for Education Act".

§   -2 Hawaii gaming control commission; members, appointment, compensation. (a) There is established the Hawaii gaming control commission which shall be a body corporate and a public instrumentality of the State, for the purpose of implementing this chapter. The commission shall be placed within the department of budget and finance for administrative purposes.

(b) The commission shall consist of five members to be appointed by the governor with the advice and consent of the senate under section 26-34. Of the five members, two shall be appointed from a list of nominees submitted by the president of the senate, and two shall be appointed from a list of nominees submitted by the speaker of the house of representatives. All appointments to the commission shall be made within sixty days of the effective date this Act. The members shall elect one from among them to be the chairperson. Each member shall have reasonable knowledge of the practice, procedure, and principles of lottery operations. Each member shall either be a resident of Hawaii or shall certify that the member will become a resident of Hawaii before taking office. At least one member shall be experienced in law enforcement and criminal investigation, at least one member shall be a certified public accountant experienced in accounting and auditing, and at least one member shall be an attorney licensed to practice law in Hawaii.

(c) No person shall be appointed a member or continue to be a member of the commission if:

(1) The person is an elected state official or a public employee;

(2) The person or the person's spouse, child, or parent is a member of the board of directors of, or a person financially interested in, any lottery operation subject to the jurisdiction of this commission; or

(3) The person is related to any other person within the second degree of consanguinity or affinity who is licensed by the commission pursuant to this chapter; or

(4) The person is not of good moral character or has been convicted of, or is under indictment for, a felony under the laws of Hawaii, any other state, or the United States.

(d) The term of office of a commission member shall be four years, except that the terms of office of the initial members appointed shall be staggered. No member shall serve more than two consecutive four-year terms. Vacancies in the commission shall be filled for the unexpired term in the same manner as the original appointments. The governor may remove or suspend any member of the commission after due notice and public hearing.

(e) Members shall:

(1) Serve part-time;

(2) Be paid compensation of $           for each day in the performance of official duties; and

(3) Be reimbursed for expenses, including travel expenses, incurred in the performance of official duties.

(f) Officers of the commission, including the chairperson, shall be selected by the members. The commission, subject to chapter 92, shall hold at least one meeting in each quarter of the State's fiscal year. Special meetings may be called by the chairperson or any three members upon seventy-two hours written notice to each member. Three members shall constitute a quorum, and a majority vote of the members present shall be required for any final determination by the commission. The commission shall keep a complete and accurate record of all its meetings.

(g) Before assuming the duties of office, each member of the commission shall take an oath that the member shall faithfully execute the duties of office according to the laws of the State and shall file and maintain with the director of finance a bond in the sum of $           with good and sufficient sureties. The cost of any bond for any member of the commission under this section shall be considered a part of the necessary expenses of the commission.

§   -3 Powers and duties of commission. (a) The commission shall operate a state lottery and in doing so shall determine:

(1) The types of lottery or lotteries to be conducted;

(2) The price or prices of tickets or shares in the lottery;

(3) The number and sizes of the prizes on the winning tickets or shares;

(4) The design of the tickets or shares to be used in the lottery; provided that each state lottery ticket or share shall have imprinted thereon the state seal and a serial number;

(5) The manner of selecting the winning tickets or shares;

(6) The manner of payment of prizes to the holders of winning tickets or shares;

(7) The frequency of the drawings or selections of winning tickets or shares;

(8) The type or types of locations at which tickets or shares may be sold;

(9) The method to be used in selling tickets or shares;

(10) The licensing agents to sell tickets or shares; provided that no person under the age of eighteen shall be licensed as an agent;

(11) The manner and amount of compensation, if any, to be paid licensed sales agents; and

(12) Any other matter necessary or desirable for the efficient and economical operation and administration of the lottery and for the convenience of the purchasers of tickets or shares and the holders of winning tickets or shares.

(b) The commission may adopt, and from time to time amend, rules under chapter 91 it deems necessary or desirable. The commission shall advise and make recommendations to the lottery director regarding the operation and administration of the lottery.

(c) The commission shall report monthly to the governor, the attorney general, and the legislature the total lottery revenues, prize disbursements, and other expenses for the preceding month and shall make an annual report to them that shall include a full and complete statement of lottery revenues, prize disbursements, and other expenses, including any recommendations that it may deem necessary or advisable. The commission shall report immediately to the governor and the legislature any matters that require changes in the laws of the State in order to prevent abuse and evasion of this chapter or rules of the commission or to rectify undesirable conditions in connection with the administration or operation of the state lottery.

(d) The commission shall carry on a continuous study and investigation of the lottery throughout the State in order to:

(1) Ascertain any defects in this chapter or in the rules whereby any abuse in the administration and operation of the lottery or any evasion of this chapter or rules may arise;

(2) Formulate recommendations for changes in this chapter and the rules to prevent abuses and evasions; and

(3) Guard against the use of this chapter and rules for carrying on organized gambling and criminal activities.

(e) The commission shall make a continuous study and investigation of the operation and administration of similar laws in other states or countries, of any literature on the subject that from time to time may be published or available, of any federal laws that may affect the operation of the lottery, and of the reaction of citizens of the State to existing and potential features of the lottery, with a view toward recommending or effecting changes that will better serve and implement the purposes of this chapter.

(f) The commission may issue subpoenas to compel the attendance of witnesses and the production of documents, papers, books, records, and other evidence before it in any matter over which it has jurisdiction, control, or supervision. The commission may administer oaths and affirmations to persons whose testimony is required.

§   -4 State lottery special fund established; authorized disbursements. There is established the state lottery special fund within the state treasury into which shall be deposited all revenues received from the sale of lottery tickets or shares and all other moneys credited or transferred to the fund from any other fund or source pursuant to law. Revenues from the state lottery special fund shall be expended only for the following purposes:

(1) For the payment of prizes to the holders of winning lottery tickets or shares that in any case shall be no less than          per cent of the total revenues accruing from the sale of lottery tickets;

(2) For the expenses of the commission in administering and operating the lottery, including the costs resulting from any contract or contracts entered into for promotional, advertising, or operational services, or for the purchase or lease of lottery equipment and materials, which in no case shall exceed          per cent of the total revenues accruing from the sale of lottery tickets; and

(3) The balance of the fund shall be used to support improvements and enhancements for educational purposes and programs in the State's public elementary, intermediate, and high schools and the University of Hawaii; provided that these funds shall be used to supplement and not supplant existing resources of the department of education and the University of Hawaii for educational purposes.

§   -5 Lottery director; duties. (a) The commission, shall appoint without regard to chapter 76 a lottery director of the state lottery who shall serve at the pleasure of the commission and shall receive a salary not to exceed $           to be determined by the commission. The lottery director shall supervise and administer the operation of the lottery under this chapter and any rules adopted.

(b) The lottery director, subject to the approval of the commission, shall appoint any other professional, technical, and clerical assistants, and employees that may be necessary; provided that the assistants and employees shall not be subject to chapter 76.

(c) The lottery director shall:

(1) Act as secretary and executive officer of the commission;

(2) Confer regularly as necessary or desirable and not less than once every month with the commission on the operation and administration of the lottery;

(3) Make available for inspection by the commission, upon request, all books, records, files, and other information, and documents of the commission;

(4) Advise the commission and recommend matters that the lottery director deems necessary and advisable to improve the operation and administration of the lottery;

(5) License, as agents to sell lottery tickets, persons who, in the lottery director's opinion, will best serve the public convenience and promote the sale of tickets or shares. Every licensed agent shall prominently display the license or a copy thereof;

(6) Require a bond from every licensed agent in an amount that may be provided in the rules of the commission;

(7) Suspend or revoke any license for violation of this chapter or of the rules adopted hereunder;

(8) Subject to the approval of the commission and the applicable laws relating to public contracts, enter into contracts for the operation of the lottery and into contracts for the promotion of the lottery; provided that no contract awarded or entered into shall be assigned by the holder thereof except with the specific approval of the commission; and

(9) Certify to the commission each month a full and complete statement of lottery revenues, prize disbursements, and other expenses for the preceding month.

§   -6 Contractual arrangements. The lottery director may:

(1) Make contractual arrangements with any person, including a bank, to perform functions, activities, or services in connection with the operation of the lottery that the lottery director deems advisable pursuant to the rules of the commission for the deposit, handling, and disbursements of lottery funds, tickets, and materials; and

(2) Permit agents to deduct from the proceeds of sales of lottery tickets the agreed amount of reimbursement and compensation for services rendered.

For purposes of this section, the term "bank" includes all banks, banking associations, savings banks, cooperative banks, credit unions, trust companies, financial services loan companies, and any other type or form of banking institution organized under the authority of the State or of the United States whose principal place of business is within the State. All contracts and any negotiations shall be public records.

§   -7 Agents; license required; direct sales by commission to public. (a) No person, other than fraternal, veterans', or charitable organizations, shall be licensed as an agent to sell lottery tickets or shares if the person engages in business exclusively as a lottery sales agent. Before issuing a license, the lottery director shall consider:

(1) The financial responsibility and security of each applicant for a license;

(2) The applicant's business or activity;

(3) The accessibility of the applicant's place of business or activity to the public;

(4) The sufficiency of existing licenses to serve the public convenience; and

(5) The volume of expected sales.

(b) No person licensed by the lottery director to deal in, purchase, or promote lottery tickets pursuant to this chapter or any rules shall be subject to prosecution under part III of chapter 712 for setting up and promoting a lottery or for any other incidental crime, or for selling or possessing lottery tickets, shares, or materials for the lottery.

(c) Any three persons objecting to the issuance of a license, or any person applying for and being denied a license, may request and be granted a public hearing by the commission under chapter 91. No such license shall be issued except after a hearing under chapter 91 and unless four members of the commission approve the issue of the license.

(d) No federal, state, or county employee, or member of the employee's immediate family, shall sell or be issued a license to sell lottery tickets. No person shall use a position in public service or a position of private employment in any manner so as to encourage the sale of tickets. No employer shall set up a payroll deduction plan for the purchase of lottery tickets by the employer's employees.

(e) Nothing in this section or any other section of this chapter shall be construed to prohibit the commission from designating certain of its agents and employees to sell lottery tickets directly to the public; provided that none of those employees shall receive any remuneration or commission for a sale; and provided further that no lottery ticket shall be sold to persons committed to any state correctional facility or state hospital.

§   -8 Assignment of right to prize prohibited; exceptions; liability of commission and lottery director. No right of any person to a prize shall be assignable, except that:

(1) Payment of any prize may be made to the estate of a deceased prize winner;

(2) Any person pursuant to an appropriate judicial order may be paid the prize to which the winner is entitled; and

(3) The commission, by rules adopted pursuant to section    -3, may permit assignment of prizes for purposes of paying estate and transfer taxes or to a trust the beneficiaries of which are the prize winner's mother, father, children, grandchildren, brothers, sisters, or spouse.

Neither the commission nor the lottery director shall be liable for the payment of a prize pursuant to this section.

§   -9 Certain persons ineligible to participate in lottery. No ticket or share shall be purchased by, and no prize shall be paid to, any:

(1) Member or employee of the commission;

(2) Spouse, child, brother, sister, or parent residing as a member of the same household in the principal place of abode of any member or employee of the commission; or

(3) Recipient of public assistance from the State, including medical assistance or food stamps.

§   -10 Disposition of unclaimed prize money. Unclaimed prize money for the prize on a winning ticket or share shall be retained by the lottery director for the person entitled to the prize for one year after the drawing in which the prize was won. If no claim is made for the money within that year, the prize money shall be allocated in the same manner as lottery revenues are allocated.

§   -11 Payment of prize to minor; lottery director discharged from liability, when. If the person entitled to a prize or any winning ticket is under the age of eighteen years and the prize is less than $          , the lottery director may direct payment of the prize by delivery to an adult member of the minor's family or to a guardian of the minor of a check or draft payable to the order of the minor. If the person entitled to a prize or any winning ticket is under the age of eighteen years and the prize is $           or more, the lottery director may direct payment to the minor by depositing the amount of the prize in any bank to the credit of an adult member of the minor's family or to a guardian of the minor as custodian for the minor. The lottery director shall be discharged of all further liability upon payment of a prize to a minor pursuant to this section.

§   -12 Certain sales prohibited; penalty. No person shall sell a ticket or share at a price greater than that fixed by the commission. 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 or shares to another as a gift. No ticket or share shall be sold to any person under age eighteen; provided that a person eighteen years of age or older may purchase a ticket or share for the purpose of making a gift to a person under age eighteen. Any person who violates this section shall be guilty of a petty misdemeanor.

§   -13 Alteration, forgery, and counterfeiting of lottery tickets; penalty. Any person, with intent to defraud, who falsely makes, alters, forges, utters, passes, or counterfeits a state lottery ticket or share shall be guilty of a class C felony.

§   -14 Offenses and penalties. (a) Any person who impersonates a member or employee of the state lottery commission shall be guilty of a misdemeanor.

(b) Any person who promises or engages another person to secure a license to sell lottery tickets or shares, or to secure employment with the state lottery commission for money, property, or services, shall be guilty of a class C felony; and in event of conviction, shall be incapable of holding any office of honor, trust, or profit for the State."

SECTION 2. Section 712-1220, Hawaii Revised Statutes, is amended by amending the definition of "gambling" to read:

"(4) "Gambling". A person engages in gambling if [he] the person stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under [his] the person's control or influence, upon an agreement or understanding that [he] the person or someone else will receive something of value in the event of a certain outcome. Gambling does not include [bona]:

(a) Bona fide business transactions valid under the law of contracts, including but not limited to contracts for the purchase or sale at a future date of securities or commodities[, and agreements];

(b) Agreements to compensate for loss caused by the happening of chance, including but not limited to contracts of indemnity or guaranty and life, health, or accident insurance[.]; or

(c) The state lottery as established by chapter    ."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:

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