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STATE OF OKLAHOMA
1st Session of the 59th L egislature (2023)
HOUSE BILL 1800 By: Osburn
AS INTRODUCED
An Act relating to amusements and sports; amending 3A
O.S. 2021, Sections 712, 717, 724, and 733, which
relate to the Oklahoma Education Lottery Act;
modifying when background checks shall be conducted;
modifying requirement to display certificate of
authority; modifying when the Oklahoma Lottery
Commission submits report ; modifying who copy of
audit shall be transmitted to; providing that the
Commission submit estimate by certain date; modifying
documents that must be provided if receiving payment
of a certain amount; repealing 3A O.S. 2021, Sections
706, 713, as amended by Section 1, Chapter 359,
O.S.L. 2022 (3A O.S. Supp. 2022, Section 713), and
734, which relate to the Oklahoma Educati on Lottery
Act; and providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 3A O.S. 2021, Section 712, is
amended to read as follows:
Section 712. A. The executive director of the Oklahoma Lottery
Commission, with the approval of the board of trustees, shall employ
such personnel as may be nec essary to carry out the provi sions of
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this act and shall set the compen sation and terms of compensation of
such employees. All offices, positions, and personnel of the
Oklahoma Lottery Commission shall be in the unclassified service.
B. No employee of th e Commission shall have a financial
interest in any vendor doing busine ss or proposing to do business
with the Commission.
C. No employee of the Commission shall participate in any
decision involving a retailer with whom the employee has a financial
interest.
D. No employee of the Commission who leaves the employment of
the Commission may represent any vendor or lottery retailer before
the Commission for a period of two (2) years following termination
of employment with the Commission.
E. A background investigation shall be conducte d on each
applicant who has reached the fi nal selection process prior to
employment by the Commission at the level of division director and
above and at any level within any divi sion of security and as
otherwise required by the board of trustees of the Oklahoma Lottery
Commission. The Commission shall pay for the actual cost of the
investigations and shall contract with the Oklahoma State Bureau of
Investigation for the performan ce of the investigations and on every
active employee of the Commission on an annual basis. The results
of a background investigation shall not be considered a record open
to the public pursuant to the Oklahoma Open Records Act.
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F. No person who has been convicted of any felony or a
misdemeanor involving illegal gambli ng or involving moral turpitude
shall be employed by t he Commission, nor shall the Commission employ
a person who is awaiting sentencing on a plea of guilt or nolo
contendere to such a felony or misdemeanor .
G. The Commission shall bond Commission employees with access
to Commission funds or lottery revenue in an amount specified by the
board and may bond other employees as deemed necessary.
SECTION 2. AMENDATORY 3A O.S. 2021, Section 717, is
amended to read as follows:
Section 717. A. The people of this state recognize that to
conduct a successful lottery, the Oklahoma Lottery Commission must
develop and maintain a statewide network of lottery retailers that
will serve the public convenience and promote the sale of tickets or
shares and the playing of lottery games while ensuring t he integrity
of the lottery operations, games, and activities.
B. The Commission shall make every effort t o provide small
retailers a chance to participate in the sales of lottery tickets or
shares.
C. The Commission shall provide for compensation to lot tery
retailers in the form of commissions in an amount of not less than
two percent (2%) of gross sales and may provide for other forms of
compensation for services rendered in the sale or cashing of lottery
tickets or shares.
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D. The Commission shall issue a certificate of authority to
each person with whom it contracts as a retailer for purposes of
display for each location at which tickets or shares are offered for
sale. Every lottery retailer shall post and keep conspicuously
displayed in a location on the premises accessible to the public its
certificate of authority. No certificate of authority shall be
assignable or transferable.
E. The board of trustees of the Oklahoma Lottery Commission
shall develop a list of objective criteria upon which the
qualification of lottery retailers shall be based. Separate
criteria shall be developed to govern the select ion of retailers of
instant tickets. In developing these criteria, the board shall
consider such factors as the financial responsibility of the
applicant, security of the place of business or activity of the
applicant, accessibility to the public, integri ty, and reputation.
The board shall not consider political affiliation, activities, or
contributions to political committees or candidates for any p ublic
office. The criteria shall include, but not be limited to, the
following:
1. The applicant shall be current in filing all applicable tax
returns to the State of Oklahoma and in payment of all taxes,
interest, and penalties owed to the State of Okla homa, excluding
items under formal appeal pursuant to applicable statutes. An
applicant who has entered in to and is abiding by a payment agreement
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with the Oklahoma Tax Commission shall be deemed current in payment
of such taxes, penalties and interest. Notwithstanding the
provisions of Section 205 of Title 68 of the Oklahoma Statutes, the
Oklahoma Tax Commission shall provide this information to the
Commission;
2. No person, partnership, unincorporated association,
corporation, or other business entity or principal, officer or
director of a corporation or other business entity shall be selected
as a lottery retailer who:
a. has been convicted of or is awaiting sentencing on a
plea of guilt or nolo contendere to a criminal offense
related to the security or integrity of the lottery in
this or any other jurisdiction,
b. has been convicted of or is awaiting sent encing on a
plea of guilt or nolo contendere to any illegal
gambling activity, false statements, false swearing,
or perjury in this or any other juri sdiction or
convicted of or is awaiting sentencing on a plea of
guilt or nolo contendere to any crime punis hable by
more than one (1) year of imprisonment or a fine of
more than One Thousand Dollars ($1,000.00) or both,
unless the civil rights of the perso n have been
restored and at least five (5) years have elapsed from
the date of the completion of the senten ce without a
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subsequent conviction of a crime described in this
subparagraph,
c. has been found to have violated the provisions of the
Oklahoma Education Lottery Act or any rule, policy, or
procedure of the Commission unless either ten (10)
years have passed since the violation or the board
finds the violation both minor and unintentional in
nature,
d. is a vendor or any employee or agent of any vendor
doing business with the Commission,
e. resides in the same household as the executive
director, any board member, or any employee of the
Commission,
f. has made a statement of material fact to the
Commission knowing such statement to be false, or
g. is engaged exclusively in the business of selling
lottery tickets or shares. This subparagraph shall
not preclude the Commission from selling or giving
away lottery tickets or shares for promotional
purposes;
3. Persons applying to become lottery retailers sh all be
charged a uniform application fee for each lottery outlet;
4. Any lottery retailer contract execute d pursuant to this
section may, for good cause, be suspended, revoked, or terminated by
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the executive director or designee if the retailer is found t o have
violated any provisions of the Oklahoma Education Lottery Act or
objective criteria established by t he board. Review of such
activities shall be in accordance with the procedures outlined in
the Oklahoma Education Lottery Act and shall not be subje ct to the
Administrative Procedures Act; and
5. All lottery retailer contracts may be renewable annually i n
the discretion of the Commission unless sooner canceled or
terminated.
F. No certificate of authority to act as a lottery retailer
shall be issued to any applicant doing business or who holds a
license to do business as a pawnbroker, supervised lender, or
deferred deposit lender, also known as a payday lender, or whose
primary business is categorized as a check casher.
G. No lottery retailer or app licant to be a lottery retailer
shall pay, give, or make any economic opportunity, gift, loan,
gratuity, special discount, favor, hospitality, or service, to the
executive director, any board member, or any employee of the
Commission, or to any person rela ted to any such person within the
third degree of consanguinity or affinity.
SECTION 3. AMENDATORY 3A O.S. 2021, Section 724, is
amended to read as follows:
Section 724. A. Proceeds of any lottery prize shall be subject
to the Oklahoma state income tax.
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B. Attachments, garnishments, or executions authorized and
issued pursuant to law shall be withheld if timely served upon the
Oklahoma Lottery Commission. This subsection shall not apply to
payment of prizes by a retailer.
C. The Commission shall adopt policies and procedures to
establish a system of verifying the validity of tick ets or shares
claimed to win prizes and to effect payment of the prizes, except
that:
1. No prize, any portion of a prize, or any right of any person
to a prize awarded shall be assignable. Any prize or any portion of
a prize remaining unpaid at the deat h of a prize winner shall be
paid to the estate of the deceased prize winner or to the trustee of
a trust established by the deceased prize winner as s ettlor if a
copy of the trust document or instrument has been filed with the
Commission along with a nota rized letter of direction from the
settlor and no written notice of revocation has been received by the
Commission prior to the death of the settlor. Following the death
of a settlor and prior to any payment to a successor trustee, the
Commission shall obtain from the trustee a written agreement to
indemnify and hold the Commission harmless with respect to any
claims that may be asserted against the Com mission arising from
payment to or through the trust. Notwithstanding any other
provisions of this secti on, any person, pursuant to an appropriate
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judicial order, shall be paid the prize to which a winner is
entitled;
2. No prize shall be paid arising fr om claimed tickets that
are:
a. stolen, counterfeit, altered, fraudulent, unissued,
produced or issued in error, unreadable, not received,
or not recorded by the Commission within applicable
deadlines,
b. lacking in captions that conform and agree with the
play symbols as appropriate to the particular lottery
game involved, or
c. not in compliance with such a dditional public or
confidential validation and security tests of the
Commission appropriate to the particular lottery game
involved;
3. No particular prize in any lottery game shall be paid more
than once, and in the event of a determination that more th an one
claimant is entitled to a particular prize, the sole remedy of the
claimants is the award to each of them of an equal share in the
prize;
4. A holder of a winning cash ticket or share from a lottery
game shall claim a cash prize within one hundred eighty (180) days,
or for a multistate or multisovereign lottery game within one
hundred eighty (180) days, after the drawing in which the cash prize
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was won. In any Oklahoma lottery game in which the player may
determine instantly if the player has won o r lost, the player shall
claim a cash prize within ninety (90) days, or for a multistate
lottery game within one hundred eighty (180) days, after the e nd of
the lottery game. If a valid claim is not made for a cash prize
within the applicable period, the cash prize shall constitute an
unclaimed prize for purposes of the Oklahoma Education Lottery Act;
5. Any person or persons claiming a lottery prize e xceeding Six
Hundred Dollars ($600.00) shall provide the Commission with their
name, address, social secu rity number, and sufficient valid
identification as proof of the same prior to payment of the prize by
the Commission; and
6. Any person or persons cl aiming a lottery prize exceeding
Five Thousand Dollars ($5,000.00) shall provide the Commission with
their name, address, social security number, and sufficient valid
identification and proof of social security number prior to payment
of the prize by the C ommission; and
7. Any person or persons claiming a lottery prize exceeding Six
Hundred Dollars ($600.00) as a trust shall provide for each person
entitled to any portion of the prize their name, address, social
security number, and sufficient valid identi fication as proof of the
same and proof of social security number prior to payment of the
prize by the Commission except that such information specified in
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this paragraph shall be conf idential and not subject to the
provisions of the Oklahoma Open Records Act.
D. No prize shall be paid upon a ticket or share purchased or
sold in violation of the Oklahoma Education Lottery Act. Any such
prize shall constitute an unclaimed prize for pur poses of the
Oklahoma Education Lottery Act.
E. The Commission is disch arged of all liability upon payment
of a prize.
F. No ticket or share shall be purchased by and no prize shall
be paid to any member of the board of trustees of the Oklahoma
Lottery Commission, any officer or employee of the Commission, or to
any spouse, child, brother, sister, or parent residing as a member
of the same household in the principal place of residence of any
such person. No ticket or share shall be purchased by and no pr ize
shall be paid to any officer, employee, agent, or subcontractor of
any vendor or to any spouse, child, brother, sister, or parent
residing as a member of the same household in the principal place of
residence of any such person if the officer, employee , agent, or
subcontractor has access to confidential information which m ay
compromise the integrity of the lottery.
G. Unclaimed prize money shall not constitute net lottery
proceeds. The first Seven Hundred Fifty Thousand Dollars
($750,000.00) of unclai med prize money accruing annually shall be
transferred to the Department of Mental Health and Substance Abuse
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Services for the treatment of compulsive gambling disorder and
educational programs related to such disorder. All other unclaimed
prize money shall be added to the pool from which future prizes are
to be awarded or used for special prize promotions.
SECTION 4. AMENDATORY 3A O.S. 2021, Section 733, is
amended to read as follows:
Section 733. To ensure the financial integrity of t he lottery,
the Oklahoma Lottery Commission through its board of trustees shall:
1. Submit quarterly and an annual reports report to the
Governor, State Auditor and Inspector, Oklahoma State Bureau of
Investigation, and Attorney General, and the oversight commit tee
created by Section 734 of this title, disclosing the total lottery
revenues, prize disbursements, operating expenses, and
administrative expen ses of the Commission during the reporting
period. The annual report shall additionally describe the
organizational structure of the Commission and summarize the
functions performed by each org anizational division within the
Commission;
2. Adopt a system of internal audits;
3. Maintain weekly or more frequent records of lottery
transactions, including the distr ibution of tickets or shares to
retailers, revenues receiv ed, claims for prizes, pri zes paid,
prizes forfeited, and other financial transactions of the
Commission;
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4. Contract with a certified public accountant or firm for an
annual financial audit of th e Commission. The certified public
accountant or firm sha ll have no financial inter est in any vendor
with whom the Commission is under contract. The certified public
accountant or firm shall present an audit report not later than
seven (7) months after t he end of the fiscal year. The certified
public accountant or firm shall evaluate t he internal auditing
controls in effect during the audit perio d. The cost of this annual
financial audit shall be an operating expense of the Commission.
The State Auditor and Inspector may at any time conduct an audit of
any phase of the operations of the Commission at the expense of the
Commission and shall recei ve a copy of the annual independent
financial audit. A copy of any audit performed by the certified
public accountant or firm or the State Auditor and Inspector shall
be transmitted to the Gove rnor, the President Pro Tempore of the
Senate, and the Speaker of the House of Representatives, and the
State Auditor and Inspector , and the cochairs of the oversight
committee created in Section 734 of this title ;
5. Submit to the Office of Management an d Enterprise Services
and the State Auditor and Inspector by June 30 of each year a copy
of the annual operating budget for the Commission for the next
fiscal year. This a nnual operating budget shall be approved by the
board and be on such forms as prescr ibed by the Office of Management
and Enterprise Services; and
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6. For informational purposes only, submit Submit to the Office
of Management and Enterprise Services on September 1 by October 1 of
each year a proposed operating budget for the Commission for the
succeeding fiscal year. The budget proposal shall also be
accompanied by an estimate of the net proceeds to be deposited into
the Oklahoma Education Lottery Trust Fun d during the succeeding
fiscal year. The budget estimate shall be on such forms as
prescribed by the Office of Management and Enterprise Services .
SECTION 5. REPEALER 3A O.S. 2021, Section 706, is hereby
repealed.
SECTION 6. REPEALER 3A O.S. 2021, Section 713, as
amended by Section 1, Chapter 359, O.S.L. 2022 (3A O.S. Supp. 2022,
Section 713), is hereby repealed.
SECTION 7. REPEALER 3A O.S. 2021, Section 734, is hereby
repealed.
SECTION 8. This act shall become effective November 1, 2023.
59-1-5596 CMA 01/10/23