HB-5790, As Passed House, December 2, 2004

SUBSTITUTE FOR

HOUSE BILL NO. 5790

                                                                             A bill to amend 1972 PA 239, entitled                                             

"McCauley-Traxler-Law-Bowman-McNeely lottery act,"                          

by amending sections 23, 41, and 43 (MCL 432.23, 432.41, and                

432.43), section 23 as amended by 2004 PA 272 and sections 41 and           

43 as amended by 1997 PA 72.                                                

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1       Sec. 23.  (1) The commissioner shall not issue a license to                 

2   a person to engage in business exclusively as a lottery sales               

3   agent.  Before issuing a lottery sales license, the commissioner            

4   shall consider factors such as the financial responsibility and             

5   security of the person and his or her business or activity, the             

6   accessibility of his or her place of business or activity to the            

7   public, the sufficiency of existing licenses to serve the public            

8   convenience, and the volume of expected sales.                              

9   (2) If the commissioner issues a type of license to persons                 

1   who hold class C licenses or authorizes persons who hold class C            

2   licenses to conduct a type of lottery, the commissioner shall               

3   issue the same type of license to veterans' organizations that              

4   hold club licenses or shall authorize veterans' organizations               

5   that hold club licenses to conduct the same type of lottery.                

6   This subsection does not exempt a veterans' organization that               

7   applies for or holds a lottery sales agent's license from the               

8   requirements of this act and rules promulgated under this act.

9   (3)  (2)  Beginning  the effective date of the amendatory act               

10  that added subsection (12) July 23, 2004, the commissioner shall           

11  issue an initial or renewal lottery sales license not later than            

12  90 days after the applicant files a completed application.                  

13  Receipt of the application is considered the date the application           

14  is received by any agency or department of this state.  If the              

15  application is determined to be incomplete by the commissioner,             

16  the commissioner shall notify the applicant in writing, or make             

17  information electronically available, within 30 days after                  

18  receipt of the incomplete application, describing the deficiency            

19  and requesting the additional information.  The 90-day period is            

20  tolled upon notification by the commissioner of a deficiency                

21  until the date the requested information is received by the                 

22  commissioner.  The determination of the completeness of an                  

23  application does not operate as an approval of the application              

24  for the license and does not confer eligibility of an applicant             

25  determined otherwise ineligible for issuance of a license.                  

26  (4)  (3)  If the commissioner fails to issue or deny a                      

27  lottery sales license within the time required by this section,             

1   the commissioner shall return the license fee and shall reduce              

2   the license fee for the applicant's next renewal application, if            

3   any, by 15%.  The failure to issue a lottery sales license within           

4   the time required under this section does not allow the                     

5   commissioner to otherwise delay the processing of the                       

6   application, and that application, upon completion, shall be                

7   placed in sequence with other completed applications received at            

8   that same time.  The commissioner shall not discriminate against            

9   an applicant in the processing of the application based upon the            

10  fact that the license fee was refunded or discounted under this             

11  subsection.                                                                 

12  (5)  (4)  Beginning October 1, 2005, the commissioner shall                 

13  submit a report by December 1 of each year to the standing                  

14  committees and appropriations subcommittees of the senate and               

15  house of representatives concerned with gaming issues.  The                 

16  commissioner shall include all of the following information in              

17  the report concerning the preceding fiscal year:                            

18      (a) The number of initial and renewal applications the                      

19  commissioner received and completed within the 90-day time period           

20  described in subsection  (2) (3).                                          

21      (b) The number of applications denied.                                      

22      (c) The number of applicants not issued a license within the                

23  90-day time period and the amount of money returned to licensees            

24  and applicants under subsection  (3) (4).                                  

25  (6)  (5)  Notwithstanding any other provision of law, a                     

26  person licensed as a lottery sales agent may sell lottery tickets           

27  and shares.  A person lawfully engaged in nongovernmental                   

1   business on state property may be licensed as a lottery sales               

2   agent.                                                                      

3   (7)  (6)  A lottery sales license is not assignable or                      

4   transferable.                                                               

5   (8)  (7)  A licensed agent or his or her employee may sell                  

6   lottery tickets or shares only on the premises stated in the                

7   lottery sales license.  A licensed agent who violates this                  

8   subsection is, at the commissioner's discretion, subject to 1 or            

9   more of the following:                                                      

10      (a) Probation for not more than 2 years.                                    

11      (b) A fine of not more than $1,000.00.                                      

12      (c) Removal of his or her lottery terminal.                                 

13  (9)  (8)  The commissioner may require a bond from a licensed               

14  agent in an amount provided in rules promulgated under this act.            

15  (10)  (9)  A licensed agent shall display his or her license                

16  or a copy of the license conspicuously in accordance with rules             

17  promulgated under this act.                                                 

18  (11)  (10)  The commissioner may suspend or revoke the                      

19  license of an agent who violates this act or a rule promulgated             

20  under this act.                                                             

21  (12)  (11)  For purposes of terminal placement, the                         

22  commissioner shall take into account with equal emphasis both of            

23  the following:                                                              

24      (a) The total instant game sales for the 3 months immediately               

25  preceding a market evaluation.                                              

26      (b) The need to maximize net lottery revenues from the total                

27  number of terminals placed.                                                 

1   (13)  (12)  As used in this section:                                        

2   (a) "Class C license" means a license to sell at retail beer,               

3   wine, mixed spirit drink, and spirits for consumption on the                

4   premises under the liquor control code of 1998, 1998 PA 58, MCL             

5   436.1101 to 436.2303.                                                       

6       (b) "Club license" means a license issued under section 532                 

7   of the liquor control code of 1998, 1998 PA 58, MCL 436.1532.

8   (c)  (a)  "Completed application" means an application                      

9   complete on its face and submitted with any applicable licensing            

10  fees and any other information, records, approval, security, or             

11  similar item required by law or rule from a local unit of                   

12  government, a federal agency, or a private entity but not from              

13  another department or agency of this state.                                 

14  (d)  (b)  "Person" means an individual, association,                        

15  corporation, club, trust, estate, society, company, joint stock             

16  company, receiver, trustee, referee, or other person acting in a            

17  fiduciary or representative capacity who is appointed by a court,           

18  or any combination of individuals.  Person includes a department,           

19  commission, agency, or instrumentality of the state, including a            

20  county, city, village, or township and an agency or                         

21  instrumentality of the county, city, village, or township.                  

22  (e) "Veterans' organization" means an organization in this                  

23  state, or a branch, lodge, or chapter in this state of a state              

24  organization or of a national organization chartered by the                 

25  congress of the United States, that is organized not for                    

26  pecuniary profit and whose members were members of the armed                

27  services or forces of the United States.

1       Sec. 41.  (1) A special fund to be known as the "state                      

2   lottery fund" is created in the department of treasury.  Except             

3   as provided in subsection (3), the state lottery fund consists of           

4   all revenues received from the sale of state lottery tickets or             

5   shares and all other money credited or transferred to the fund              

6   from any other fund or sources pursuant to law including interest           

7   earnings on common cash attributable to the state lottery fund.             

8   Revenue derived from the sale of tickets or shares of any joint             

9   enterprise shall be treated in the manner provided for in the               

10  joint enterprise participation agreement executed by the                    

11  commissioner.  The commissioner shall deposit net revenue from              

12  any joint enterprise in the state lottery fund.  Earnings                   

13  resulting from installment payment of any lottery prizes shall be           

14  used for payment of prizes to lottery winners and the prize                 

15  structure formulated pursuant to sections 11 and 12 shall be                

16  established accordingly.                                                    

17      (2) The investment authority of the state treasurer with                    

18  regard to the state lottery fund shall be the same as his or her            

19  investment authority with regard to retirement system funds.  To            

20  assure a continuing availability of money with which to pay state           

21  lottery prize installments and to compensate for variations in              

22  the yield on investments, every 6 months the commissioner and the           

23  state treasurer shall review the status of the installment prize            

24  investments and shall agree on an amount to be restricted out of            

25  the total revenues of the state lottery fund as a reserve against           

26  a drop in yield.  If the commissioner and the state treasurer               

27  fail to agree on the amount to be reserved, the matter shall be             

House Bill No. 5790 (H-2) as amended December 2, 2004

1   referred to the state administrative board for a decision on the            

2   amount to be reserved.                                                      

3       (3) Except as provided in  subsection (4) subsections (4)                  

4   and (5), after the payment of prizes to the holders of winning              

5   state lottery tickets or shares or the payment pursuant to                  

6   section 32 of the liabilities to this state of holders of winning           

7   state lottery tickets or shares, and the payment of the                     

8   reasonable expenses of the bureau in its operation of the                   

9   lottery, the net revenue in the state lottery fund and any money            

10  or interest generated by the state lottery fund and share of                

11  common cash shall be deposited in the state school aid fund and             

12  shall be distributed as provided by law.                                    

13      (4) Ten percent of each year's state lottery advertising                    

14  budget but not to exceed $1,000,000.00 shall be deposited in the            

15  compulsive gaming prevention fund created in section 3 of the               

16  compulsive gaming prevention act, 1997 PA 70, MCL 432.253.                  

17  (5) Thirty percent of the revenue from lottery games                        

18  conducted by veterans' organizations under section 23(2) shall be           

19  deposited in the Michigan veterans' trust fund established in               

20  section 37 of article IX of the state constitution of 1963[.     

21                                                                              

22                                        ]  The balance of the                 

23  revenue from lottery games conducted by veterans' organizations             

24  under section 23(2) shall be deposited in the state school aid              

25  fund.

26      Sec. 43.  Subject to section 41(1), the money in the state                  

27  lottery fund is appropriated only for the payment of prizes to              

1   the holders of winning state lottery tickets or shares, for the             

2   payment pursuant to section 32 of the liabilities to this state             

3   of holders of winning state lottery tickets or shares, for                  

4   reasonable expenses of the bureau in its operation of the state             

5   lottery, for deposit in the compulsive gaming prevention fund as            

6   provided in section 41(4), for deposit in the Michigan veterans'            

7   trust fund as provided in section 41(5), and for deposit in the             

8   state school aid fund as provided in section 41(3) and (5).