HOUSE BILL REPORT

HB 26

BYRepresentatives Wang, Patrick, Sayan, Fisch, Walker, H. Sommers and R. King; by request of  Washington State Lottery

Changing provisions relating to the lottery.

House Committe on Commerce & Labor

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (10)

     Signed by Representatives Wang, Chair; Cole, Vice Chair; Fisch, Fisher, R. King, O'Brien, Patrick, Sayan, C. Smith and Walker.

Minority Report:     Do not pass.  (1)

     Signed by Representative Sanders.

House Staff:Joan Elgee (786-7166)

AS REPORTED BY COMMITTEE ON COMMERCE & LABOR JANUARY 19, 1987

BACKGROUND:

The legislature established the state lottery in 1982.  A five member Commission, appointed by the Governor with the consent of the Senate, is responsible for adopting rules governing the establishment and operation of the lottery.  A director, also appointed by the Governor, supervises and administers the operation of the lottery, including the licensing of agents.

Not less than 45 percent of the gross annual revenue from the lottery must be paid out in prizes.  Prizes unclaimed after a 180 day claim period are to be used for additional prizes.  In 1985, the legislature amended the original requirement that administrative costs shall not exceed 15 percent of the gross annual revenue to provide for appropriation of administrative costs.  The lottery transferred $72.2 million to the general fund in fiscal year 1986, and $273 million in the first four fiscal years of operation.

The enabling legislation provided for automatic termination of the lottery in five years (July 1, 1987) unless extended by law, and mandated a study by the legislative budget committee to evaluate the effectiveness of the chapter.  The LBC recommended that the lottery be continued as a state agency and that any reenabling legislation contain specific legislative intent on the state's participation in any multi-state lottery.

SUMMARY:

SUBSTITUTE BILL:  The lottery is reauthorized for an additional five years, until July 1, 1992, and the Legislative Budget Committee shall again evaluate the effectiveness of the chapter.

Approval of the legislature is required before the Commission may enter any agreement with other state lotteries to conduct shared games.

A person under eighteen directly purchasing a ticket is guilty of a misdemeanor.

The requirement that the lottery pay out not less than 45 percent of the gross annual revenue in prizes is changed to a requirement that the lottery offer 45 percent in prizes.  Prizes remaining unclaimed after the claim period are to be either transferred to the general fund or used for prizes, as the lottery determines will maximize general fund revenues.

Technical changes are also made.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  Two changes relating to prizes are made:  the 45 percent requirement is changed from a pay out to an offer requirement and the direction to the lottery to use unclaimed prizes to maximize general fund revenues is added.  The termination date is added and a housekeeping change made.

Effective Date:The bill contains an emergency clause and takes effect immediately.

Revenue:   This bill has a revenue impact.

Fiscal Note:    Not requested.

House Committee ‑ Testified For:     Jerry McLaughlin, Legislative Budget Committee; Evelyn Sun and Scott Milne, Washington State Lottery; and Ted Burton, City of Seattle.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     The lottery has operated well and has produced greater revenue to the state than was anticipated.  Market research indicates Washington citizens overwhelmingly support the existence of the lottery.

House Committee - Testimony Against: None Presented.