00 SENATE BILL NO. 145 01 "An Act establishing a state lottery; and providing for an effective date." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 05 is amended by adding a new chapter to read: 04 Chapter 18. State Lottery. 05 Article 1. Administration. 06  Sec. 05.18.010. Creation of corporation. The Alaska State Lottery 07 Corporation is established for the purpose of generating revenue for the state. The 08 corporation is a public corporation and is an instrumentality of the state within the 09 Department of Revenue. 10  Sec. 05.18.020. Board of directors. (a) The powers of the corporation are 11 vested in the board of directors. The board consists of five members who qualify 12 under AS 39.05.100. The governor shall appoint each member. No more than three 13 of the five members may be members of the same political party. The governor shall 14 appoint one member to serve as chair of the board. 01  (b) Members serve staggered terms of five years. A vacancy on the board 02 does not impair the authority of the board to exercise the powers and perform the 03 duties of the corporation. 04  (c) A member of the board is entitled to per diem and travel allowances 05 authorized for members of boards and commissions under AS 39.20.180. 06  (d) A member of the board may not have a pecuniary interest in a contract or 07 agreement entered into by the corporation. 08  Sec. 05.18.030. Meetings. (a) The board shall meet at least quarterly at the 09 call of the chair, at the request of a majority of the members, or at a regularly 10 scheduled time set by the board. 11  (b) An action of the board is not binding unless taken at a meeting where three 12 or more of the members are present and vote in favor of the action. 13  Sec. 05.18.040. Duties and powers of board. (a) The board is responsible 14 for the management of the corporation but shall delegate certain powers and duties to 15 the executive director in accordance with AS 05.18.060 and 05.18.070. In managing 16 the corporation, the board shall 17  (1) be responsible for the management of the financial and legal 18 obligations of the corporation; 19  (2) generally manage the corporation on a self-sustaining basis for the 20 purpose of revenue generation; 21  (3) determine policy direction for the operation and administration of 22 the lottery; 23  (4) report to the governor and the legislature each quarter on the total 24 lottery revenue, prize disbursement, and other expenses for the preceding quarter; 25  (5) report to the governor and the legislature each year, including a full 26 and complete statement of lottery revenue, prize disbursement, and other expenses, and 27 make recommendations for changes to this chapter; 28  (6) report to the governor and the legislature as frequently as the board 29 determines necessary on conclusions from the analysis of the reaction of state residents 30 to the lottery and on matters that require changes in the law to prevent violations or 31 evasions of this chapter or to correct undesirable conditions in connection with the 01 operation or administration of the lottery; 02  (7) monitor the operation of the lottery throughout the state; and 03  (8) study and investigate the operation and administration of the lottery 04 laws of other states and of federal laws that affect the lottery. 05  (b) The board may do all things necessary and appropriate to exercise the 06 corporation's duties and powers under this chapter. 07  Sec. 05.18.050. Regulations. The board shall adopt regulations under 08 AS 44.62 (Administrative Procedure Act) to establish 09  (1) the type of lottery to be conducted; 10  (2) the price of lottery products; 11  (3) the numbers and sizes of the prizes for the winning lottery products; 12  (4) the manner of selecting the winning lottery products; 13  (5) the frequency of the drawings or selections of winning lottery 14 products; 15  (6) the type and number of locations where lottery products may be 16 sold; 17  (7) the method to be used in selling lottery products; 18  (8) the manner of payment of prizes to the holders of the winning 19 lottery products; 20  (9) the procedures for contracting with persons to be agents; 21  (10) the manner and amount of compensation to be paid agents; 22  (11) the prizes that an agent or an employee of the agent can award; 23 and 24  (12) other matters necessary or desirable to carry out this chapter, to 25 operate the lottery efficiently and economically, and to make the purchase of lottery 26 products and the distribution of prizes convenient. 27  Sec. 05.18.060. Executive director and employees. (a) The corporation shall 28 be under the immediate supervision and direction of an executive director who is 29 qualified by training and experience to direct the work of the corporation. The 30 governor shall appoint the director. The director may not engage in another profession 31 or occupation. 01  (b) Subject to the approval of the board, the director may appoint deputies 02 required to carry out the functions and duties of the corporation. The director may 03 appoint professional, technical, and clerical employees necessary to perform the duties 04 of the corporation. 05  (c) The director and other employees of the corporation are in the exempt 06 service under AS 39.25.110. 07  (d) The corporation may not employ a person who has been convicted, 08 including conviction based on a guilty plea or plea of nolo contendere, of a felony or 09 of another crime if the other crime is substantially related to the qualifications, 10 functions, or duties of the employee. 11  Sec. 05.18.070. Duties of director. The director shall 12  (1) supervise the operation and administration of the lottery; 13  (2) act as secretary to the board; 14  (3) contract with agents to sell lottery products; 15  (4) meet at least quarterly with the board on the operation and 16 administration of the lottery; 17  (5) make available for inspection by the board, on request, all books, 18 records, files, and other information and documents of the corporation; 19  (6) advise the board and make recommendations to improve the 20 operation and administration of the lottery; 21  (7) suspend or revoke a contract issued under this chapter for a 22 violation of this chapter or the regulations adopted under this chapter; 23  (8) subject to the approval of the board, enter into contracts for the 24 operation and administration of the lottery, except that agent contracts are not subject 25 to the approval of the board; and 26  (9) provide each month to the board a full and complete statement of 27 the lottery revenue, prize disbursements, and other expenses for the preceding month. 28  Sec. 05.18.080. Subpoenas. (a) The director or the board may subpoena 29 witnesses and documents in a matter over which the corporation has jurisdiction, 30 control, or supervision. The director or the board may administer oaths and 31 affirmations to persons whose testimony is required. 01  (b) If a person fails to obey a subpoena, or if a person refuses to answer a 02 relevant question or to exhibit a document when ordered to do so by the director or 03 the board, the director or the board may apply to the superior court for an order 04 directing the person to comply with the subpoena or the order. The court may order 05 the person to comply. 06 Article 2. Lottery Retail Sales Agents. 07  Sec. 05.18.100. Lottery retail sales agents. (a) The director may contract 08 with persons on behalf of the corporation to be lottery retail sales agents. 09  (b) A lottery retail sales agent may 10  (1) sell lottery products; 11  (2) award prizes as allowed under regulations of the board; and 12  (3) hire employees to perform the services under (1) and (2) of this 13 subsection. 14  (c) An agent shall supervise each employee of the agent in the employee's 15 performance of the services under (b)(1) and (2) of this section. 16  Sec. 05.18.105. Qualifications for agent contracts. (a) A person who wishes 17 to contract with the corporation to be an agent shall apply on a form provided by the 18 corporation. The director may charge the applicant a fee to cover the costs of 19 processing the application and for checking the background of the applicant. 20  (b) Before contracting with an applicant to be an agent, the director shall 21 consider 22  (1) the financial responsibility and security of the applicant and the 23 applicant's business or activity; 24  (2) the accessibility of the applicant's place of business or activity to 25 the public; 26  (3) the ability of the applicant to promote the retail sale of lottery 27 products; 28  (4) the sufficiency of existing agent contracts to serve the public 29 convenience; 30  (5) the volume of expected sales; and 31  (6) other factors the director determines are relevant. 01  (c) The director may not contract with an applicant to be an agent if the 02 applicant 03  (1) is not a resident of the state or is not a corporation, partnership, or 04 association licensed to conduct business in the state; 05  (2) would be engaged in business exclusively as an agent; 06  (3) is an individual under the age of 18; or 07  (4) has been convicted of a felony or gambling misdemeanor, including 08 conviction based on a guilty plea or plea of nolo contendere. 09  Sec. 05.18.110. Duration of agent contracts. The director may contract with 10 an agent for a term of not more than two years, but may renew the contract. 11  Sec. 05.18.120. Revocation or suspension of agent contracts. (a) The 12 director shall suspend or cancel the contract of an agent who violates AS 05.18.330. 13  (b) The director may suspend or cancel the contract of an agent who violates 14 a regulation adopted under this chapter or a provision of this chapter other than 15 AS 05.18.330. 16  (c) The director shall conduct proceedings to suspend or cancel an agent 17 contract under AS 44.62 (Administrative Procedure Act). 18  Sec. 05.18.130. Compensation of agents. (a) The director shall establish the 19 levels of compensation for agents. The director may establish bonus or incentive 20 awards. 21  (b) When establishing the compensation for agents, the director shall consider 22  (1) the time and the cost of overhead necessary to make the lottery 23 products available at convenient times and for sufficient hours to accommodate the 24 public; 25  (2) the time necessary for an agent to keep adequate records of the 26 sales of lottery products and to prepare the deposits and reports required under 27 AS 05.18.140; 28  (3) other criteria the director considers relevant. 29  Sec. 05.18.140. Deposit of receipts and reports. (a) An agent shall deposit 30 to the credit of the state in a bank designated by the director all money received by 31 the agent from the sale of lottery products. 01  (b) An agent shall file with the director on a form provided by the corporation 02 a report of the receipts and transactions in the sale of lottery products. A report 03 required under this subsection shall be filed once every two weeks. 04  (c) The director may impose a service charge on an agent if the payor bank 05 dishonors 06  (1) a check that is deposited to the credit of the state by the agent; or 07  (2) an electronic transfer of funds to the state lottery account from the 08 account of the agent for money received from the sale of lottery products. 09  (d) The director may charge an agent with interest on money that is not paid 10 to the state within 10 days after the due date and may impose an additional service 11 charge in an amount to cover administrative costs if the debt is referred for collection. 12  (e) The amount, including interest or service charge, owed to the corporation 13 by an agent is a lien on the property of the agent at the time that the corporation files 14 a claim of lien in the recorder's office of the recording district of the principal place 15 of business of the agent. 16  Sec. 05.18.150. Bond. (a) An applicant for an agent contract shall, at the 17 time of application under AS 05.18.105, file with the corporation and maintain during 18 the term of an agent contract a bond running to the state with a corporate surety 19 qualified to do business in the state. The amount of the bond shall be determined by 20 the board. 21  (b) The bond required by this section remains in effect until cancelled by 22 action of the surety, the principal, or the corporation. 23  (c) The state or another person may not bring an action on the bond more than 24 three years after cancellation of the bond. 25 Article 3. Prizes. 26  Sec. 05.18.200. Assignment of prizes. A person may not assign a right to a 27 prize. A prize may be paid to a person other than the prize winner under a court 28 order, to the estate of a deceased prize winner, or to the Department of Revenue to 29 satisfy a judgment. The state is discharged of all further liability when a prize has 30 been paid under this section. 31  Sec. 05.18.210. Payment of prizes to persons under 18 years.  (a) If a 01 person entitled to a prize is under the age of 18 years and if the prize is $5,000 or less, 02 the director may deliver the prize to an adult member of the minor's family, or to a 03 guardian of the minor, in the form of a check or draft payable to the order of the 04 minor. If the prize is more than $5,000, the director may deliver the prize by depositing the amount of the prize in 05 a financial institution to the credit of an adult member 06 of the minor's family, or a guardian of the minor, as custodian for the minor. The 07 person named as custodian has the same duties and powers as a person designated as 08 a custodian under AS 13.46. 09  (b) The state is discharged of all further liability after payment of a prize to 10 a minor under this section. 11  (c) In this section, the terms "financial institution" and "member of the minor's 12 family" have the meanings given in AS 13.46.990. 13  Sec. 05.18.220. Unclaimed prize money. The director shall retain unclaimed 14 prize money for the person entitled to it for one year after the prize is awarded. If the 15 winner does not claim the prize money within the year, the corporation shall return the 16 money and accrued interest to the state lottery fund. 17 Article 4. Miscellaneous Provisions. 18  Sec. 05.18.300. Lottery education account and appropriations. There is 19 created in the general fund the lottery education account. The account consists of the 20 proceeds received from the sale of lottery products and all other money credited or 21 transferred to the account. The commissioner of administration shall separately 22 account for money deposited in the account. The annual estimated balance in the 23 account may be appropriated by the legislature to make appropriations to support 24 education in the state. 25  Sec. 05.18.310. Audit. The board shall have an audit of the books and 26 accounts of the corporation performed at least once in each year by certified public 27 accountants. The board may have special audits performed at any time on its own 28 motion or at the request of the director. The board shall file a copy of each audit with 29 the commissioner of revenue and the legislature. 30  Sec. 05.18.320. Prohibited acts. (a) A person may not 31  (1) act as an agent or sell a lottery product unless the person has a 01 contract with the corporation to be an agent or is an employee of an agent and sells 02 lottery products or awards lottery prizes under the supervision of the agent; 03  (2) sell a lottery product at a price greater than that fixed by the 04 corporation; or 05  (3) sell or offer to sell a lottery product to a person under the age of 06 18. 07  (b) An agent, the governor, or an officer, employee, or contractor of the 08 corporation may not directly or through another person purchase a lottery product or 09 receive a lottery prize. 10  (c) An agent may not withhold funds owed to the lottery. 11  (d) This section does not prohibit a person from giving a lottery product to 12 another person of any age. 13  Sec. 05.18.330. Assignment of contracts. A person that enters into a contract 14 under this chapter may not assign the contract without the approval of the board. 15  Sec. 05.18.340. Penalty. A person that with criminal negligence violates 16 AS 05.18.140 - 05.18.200, 05.18.320, or 05.18.330 is guilty of a class C felony. In 17 this section, "criminal negligence" has the meaning given in AS 11.81.900. 18  Sec. 05.18.350. Statement of odds. A lottery product must indicate the odds 19 of winning a prize in the particular lottery game represented by the lottery product. 20  Sec. 05.18.360. Applicability of other laws. Except for AS 11, no other law 21 regarding the sale of lottery products or the administration of a lottery applies to the 22 sale of lottery products under this chapter. 23 Article 5. General Provisions. 24  Sec. 05.18.900. Definitions. In this chapter, unless the context requires 25 otherwise, 26  (1) "agent" means a person who has contracted with the corporation to 27 be a lottery retail sales agent under this chapter; 28  (2) "agent contract" means a contract under AS 08.18.100 between the 29 state and a person for the person to be an agent; 30  (3) "board" means the board of directors of the corporation; 31  (4) "corporation" means the Alaska State Lottery Corporation; 01  (5) "director" means the executive director of the corporation; 02  (6) "lottery" or "state lottery" means the lottery established and 03 operated under this chapter; 04  (7) "lottery product" means a ticket, receipt, card, or other item, except 05 a lottery prize, received by a person from an agent or an employee of an agent as 06 evidence of participation in the lottery; 07  (8) "operation and administration" includes accounting, sales, 08 promotion, and security; 09  (9) "person" has the meaning given in AS 01.10.060 and also includes 10 an estate, receiver, trustee, assignee, referee, or other person acting in a fiduciary or 11 representative capacity, whether appointed by a court or otherwise, and a department, 12 commission, agency, or instrumentality of the state, including municipalities and the 13 agencies and instrumentalities of them. 14  * Sec. 2. AS 36.30.015(e) is amended to read: 15  (e) The board of directors of the Alaska Railroad Corporation , Alaska State 16 Lottery Corporation,  and [THE BOARD OF DIRECTORS OF] the Alaska Aerospace 17 Development Corporation shall adopt procedures to govern the procurement of 18 supplies, services, professional services, and construction. The procedures must be 19 substantially equivalent to the procedures prescribed in this chapter and in regulations 20 adopted under this chapter. Notwithstanding the other provisions of this subsection, 21 the Alaska Railroad Corporation , Alaska State Lottery Corporation, and the Alaska 22 Aerospace Development Corporation shall comply with AS 36.30.170(b), and, when 23 the Department of Transportation and Public Facilities authorizes the Alaska Railroad 24 Corporation to perform construction work instead of the Department of Transportation 25 and Public Facilities, the Alaska Railroad Corporation shall use competitive sealed 26 bidding or competitive sealed proposals under AS 36.30.100 - 36.30.270 to procure the 27 supplies, services, professional services, and construction services necessary for the 28 work and, to ensure the state obtains the lowest cost for the project, may submit a bid 29 or proposal for the work. 30  * Sec. 3. AS 36.30.050(c) is amended to read: 31  (c) The lists may be used by the chief procurement officer or an agency when 01 issuing invitations to bid or requests for proposals under this chapter. The lists may 02 be used by the legislative council, the court system,  the Alaska State Lottery 03 Corporation,  and the Alaska Railroad Corporation. 04  * Sec. 4. AS 39.25.110(11) is amended by adding a new subparagraph to read: 05  (G) Alaska State Lottery Corporation; 06 * Sec. 5. This Act takes effect immediately under AS 01.10.070(c).