[atlas:bill]

AN ACT Relating to authorizing video lottery games to provide a funding source for the new twenty-first century account; amending RCW 67.70.040, 67.70.200, and 67.70.230; adding new sections to chapter 67.70 RCW; adding a new section to chapter 28B.80 RCW; and providing an effective date.

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

NEW SECTION. Sec. 1. A new section is added to chapter 67.70 RCW to read as follows:

(1) The commission may initiate a game or games using video devices.

(2) In the approval and purchase of video lottery games, game terminals, and equipment, the commission and any game operator, distributor, retailer, or owner shall prefer goods or services that have been manufactured in this state if price, fitness, and quality are otherwise equal.

(3) The commission shall separately record and account for the costs and net proceeds of games operated under this section. At the time the state treasurer makes the quarterly transfer of net proceeds provided for under RCW 67.70.200, the commission shall certify to the treasurer the amount of the transfer which represents the net proceeds of games provided for in subsection (1) of this section.

(4) Video lottery terminals operated under authority of the commission are specifically exempted from the provisions of 15 U.S.C. Sec. 1172.

NEW SECTION. Sec. 2. A new section is added to chapter 67.70 RCW to read as follows:

(1) A video lottery game terminal that offers a video lottery game authorized by the director may not be placed for operation except on the premises of an establishment that has entered into contract with the director to provide video lottery game services. The terminal must be within the control of an employee of the video lottery game retailer.

(2) A video lottery game terminal that offers a video lottery game authorized by the director may not be placed for operation except on the premises of an establishment licensed by the state liquor control board to sell alcoholic beverages for consumption on the premises. A video lottery game terminal may not be placed in any part of the premises that is not restricted to persons of age twenty-one and older.

(3) The number of video lottery machines that may be placed on the premises described in subsection (2) of this section is limited as follows:

(a) For an establishment licensed by the state liquor control board to sell alcoholic beverages under RCW 66.24.330, no more than ten machines;

(b) For commercial operators licensed by the gambling commission under chapter 9.46 RCW to conduct social card games, no more than one hundred machines; and

(c) For an establishment or operator other than those specifically enumerated in this section, no more than five machines.

(4) The director may not allow licensees to operate more than five thousand terminals statewide.

Sec. 3. RCW 67.70.040 and 1994 c 218 s 4 are each amended to read as follows:

The commission shall have the power, and it shall be its duty:

(1) To promulgate such rules governing the establishment and operation of a state lottery as it deems necessary and desirable in order that such a lottery be initiated at the earliest feasible and practicable time, and in order that such lottery produce the maximum amount of net revenues for the state consonant with the dignity of the state and the general welfare of the people. Such rules shall include, but shall not be limited to, the following:

(a) The type of lottery to be conducted which may include the selling of tickets or shares. ((~~The use of electronic or mechanical devices or video terminals which allow for individual play against such devices or terminals shall be prohibited.~~)) Approval of the legislature shall be required before entering any agreement with other state lotteries to conduct shared games;

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

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

(e) The manner and time of payment of prizes to the holder of winning tickets or shares which, at the director's option, may be paid in lump sum amounts or installments over a period of years;

(f) The frequency of the drawings or selections of winning tickets or shares. With the exception of video lottery games as authorized under section 1 of this act, approval of the legislature is required before conducting any on-line game in which the drawing or selection of winning tickets occurs more frequently than once every twenty-four hours;

(g) Without limit as to number, the type or types of locations at which tickets or shares may be sold;

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

(i) The licensing of agents to sell or distribute tickets or shares, except that a person under the age of eighteen shall not be licensed as an agent;

(j) The manner and amount of compensation, if any, to be paid licensed sales agents necessary to provide for the adequate availability of tickets or shares to prospective buyers and for the convenience of the public;

(k) The apportionment of the total revenues accruing from the sale of lottery tickets or shares and from all other sources among: (i) The payment of prizes to the holders of winning tickets or shares, which shall not be less than forty-five percent of the gross annual revenue from such lottery, (ii) transfers to the lottery administrative account created by RCW 67.70.260, and (iii) transfer to the state's general fund. Transfers to the state general fund shall be made in compliance with RCW 43.01.050;

(l) Such other matters 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.

(2) To ensure that in each place authorized to sell lottery tickets or shares, on the back of the ticket or share, and in any advertising or promotion there shall be conspicuously displayed an estimate of the probability of purchasing a winning ticket.

(3) To amend, repeal, or supplement any such rules from time to time as it deems necessary or desirable.

(4) To advise and make recommendations to the director for the operation and administration of the lottery.

Sec. 4. RCW 67.70.200 and 1987 c 511 s 9 are each amended to read as follows:

The director, in his or her discretion, may require any or all lottery sales agents to deposit ((~~to the credit of the state lottery account~~)) in banks designated by the state treasurer, all moneys received by such agents from the sale of lottery tickets or shares, less the amount, if any, retained as compensation for the sale of the tickets or shares((~~, and~~)). Money from the sale of lottery tickets or shares for video lottery games shall be deposited to the credit of the video lottery game account. Money from the sales of lottery tickets or shares for all other games shall be deposited to the credit of the state lottery account. The director may also require lottery sales agents to file with the director or his or her designated agents, reports of their receipts and transactions in the sale of lottery tickets in such form and containing such information as he or she may require. The director may make such arrangements for any person, including a bank, to perform such functions, activities, or services in connection with the operation of the lottery as he or she may deem advisable pursuant to this chapter and the rules of the commission, and such functions, activities, or services shall constitute lawful functions, activities, and services of such person.

Sec. 5. RCW 67.70.230 and 1985 c 375 s 4 are each amended to read as follows:

(1) There is hereby created and established a separate account, to be known as the state lottery account. Such account shall be managed, maintained, and controlled by the commission and shall consist of all ((~~revenues received from the sale of lottery tickets or shares~~)) moneys credited to the account under RCW 67.70.200, and all other moneys credited or transferred thereto from any other fund or source pursuant to law. The account shall be a separate account outside the state treasury. No appropriation is required to permit expenditures and payment of obligations from the account.

(2) There is hereby created and established a separate account, to be known as the video lottery game account. Such account shall be managed, maintained, and controlled by the commission and shall consist of all moneys credited to the account under RCW 67.70.200 and all other moneys credited or transferred thereto from any other fund or source pursuant to law. The account shall be a separate account outside the state treasury. No appropriation is required to permit expenditures and payment of obligations from the account.

NEW SECTION. Sec. 6. A new section is added to chapter 67.70 RCW to read as follows:

Money in the video lottery game account shall be used only:

(1) For the payment of prizes to the holders of winning video lottery tickets or shares;

(2) For purposes of making deposits into the lottery administrative account created by RCW 67.70.260;

(3) For the purchase and promotion of video lottery games and game-related services;

(4) For the payment of agent compensation; and

(5) For purposes of making deposits into the student achievement fund and the new twenty-first century account created under section 7 of this act. The treasurer shall transfer money in the account not otherwise obligated under subsections (1) through (4) of this section, to these funds, as follows:

(a) For the student achievement fund, the treasurer shall transfer sufficient money, as available, from the video lottery game account to meet the per student state funding criterion for the maintenance and operation of K-12 education provided under RCW 43.135.045(3);

(b) For the new twenty-first century account, if the criterion under (a) of this subsection has been met, the treasurer shall transfer all remaining money in the video lottery game account.

NEW SECTION. Sec. 7. A new section is added to chapter 28B.80 RCW to read as follows:

(1) The new twenty-first century account is created in the state treasury. The account shall consist of all money transferred to the account under section 6 of this act and all other money credited or transferred from any other fund or source pursuant to law. Money in the account may be spent only after appropriation.

(2) Expenditures from the new twenty-first century account may not be used for any purpose except the following:

(a) To provide funding for the Washington promise scholarship program;

(b) To provide funding for state need grants;

(d) To fund other financial aid and assistance programs at institutions of higher education as defined in chapter 28B.10 RCW.

NEW SECTION. Sec. 8. A new section is added to chapter 67.70 RCW to read as follows:

(1) Upon the request of the commission or the director, the attorney general and the state patrol shall furnish to the director information that may assure security, integrity, honesty, and fairness in the operation and administration of video lottery games as the attorney general and the state patrol may have in their possession, including, but not limited to, manual or computerized information and data.

(2) In order to determine an applicant's suitability to enter into a contract with the lottery to operate video lottery games, each applicant shall be fingerprinted. The director shall submit to the United States department of justice-federal bureau of investigation, for the purpose of verifying the identity of the following persons and conducting national criminal history background checks, fingerprints of each person for whom section 9 of this act or an administrative rule of the commission requires disclosure of the person's name and address.

NEW SECTION. Sec. 9. A new section is added to chapter 67.70 RCW to read as follows:

(1) The commission shall adopt rules specifying the terms and conditions for contracting with video lottery game retailers to provide adequate and convenient availability of tickets or shares to prospective buyers of each video lottery game as appropriate for each game. The foregoing does not preclude the lottery from selling tickets or shares directly to the public.

(2)(a) The director shall, pursuant to this chapter, and the rules of the commission, select as video lottery game retailers persons deemed to best serve the public convenience and promote the sale of tickets or shares. No person under the age of eighteen shall be a video lottery game retailer. In the selection of a video lottery game retailer, the director shall consider factors such as financial responsibility, integrity, reputation, accessibility of the place of business or activity to the public, security of the premises, the sufficiency of existing video lottery game retailers for any particular video lottery game to serve the public convenience, and the projected volume of sales for the video lottery game involved.

(b) Prior to the execution of any contract with a video lottery game retailer, the video lottery game retailer shall disclose to the lottery the names and addresses of the following:

(i) If the video lottery game retailer is a corporation, but not a private club as described under chapter 66.24 RCW, the officers, directors, and each stockholder in the corporation except that, in the case of stockholders of publicly held equity securities of a publicly traded corporation, only the names and addresses of those known to the corporation to beneficially own five percent or more of the securities need be disclosed;

(ii) If the video lottery game retailer is a trust, the trustee and all persons entitled to receive income or benefit from the trust;

(iii) If the video lottery game retailer is an association, but not a private club as described in chapter 66.24 RCW, the members, officers, and directors;

(iv) If the video lottery game retailer is a subsidiary, but not a private club as described in chapter 66.24 RCW, the officers, directors, and each stockholder of the parent corporation except that, in the case of stockholders of publicly held equity securities of a publicly traded corporation, only the names and addresses of those known to the corporation to beneficially own five percent or more of the securities need be disclosed;

(v) If the video lottery game retailer is a partnership or joint venture, all of the general partners, limited partners, or joint venturers;

(vi) If the parent company, general partner, limited partner, or joint venturer of any video lottery game retailer is itself a corporation, trust association, subsidiary, partnership, or joint venturer, then all of the information required in this section shall be disclosed for the other entity as if it were itself a video lottery game retailer to the end that full disclosure of ultimate ownership be achieved;

(vii) If any member, eighteen years of age or older, of the immediate family of any video lottery game retailer, or any member, eighteen years of age or older, of the immediate family of any individual whose name is required to be disclosed under this subsection (2)(b), is involved in the video lottery game retailer's business in any capacity, then all of the information required in this section shall be disclosed for the immediate family member as if the family member were a video lottery game retailer;

(viii) If the video lottery game retailer is a private club as described in chapter 66.24 RCW, the treasurer, officers, directors, and trustees who oversee or direct the operation of the food, beverage, video lottery, or other gambling-related activities of the private club and each manager in charge of the food, beverage, video lottery, or other gambling-related activities of the private club.

(c) The director may require full disclosure of any immediate family member of any video lottery game retailer who is involved in the video lottery game retailer's business as if the family member were a video lottery game retailer if the director has just cause to believe the family member may be a threat to the integrity, honesty, fairness, or security of the lottery and its games.

(d) The commission may refuse to grant a video lottery game retail contract to any video lottery game retailer or any natural person whose name is required to be disclosed under (b) of this subsection, who has been convicted of violating any gambling laws of this state, general or local, or has been convicted at any time of any crime. The lottery may require payment by each video lottery game retailer to the lottery of an initial nonrefundable application fee or an annual fee, or both, to maintain the contract to be a video lottery game retailer.

(e) No person shall be a video lottery game retailer who is engaged exclusively in the business of selling video lottery tickets or shares. A person lawfully engaged in nongovernmental business on state or political subdivision property or an owner or lessee of a premises which lawfully sells alcoholic beverages may be selected as a video lottery game retailer. State agencies, except for the state lottery, political subdivisions, or their agencies or departments may not be selected as a video lottery game retailer. The director may contract with video lottery game retailers on a permanent, seasonal, or temporary basis.

(3) The authority to act as a video lottery game retailer shall not be assignable or transferable.

(4) The director may terminate a contract with a video lottery game retailer for reasons of termination, as provided in the contract, which may include, but not be limited to, the knowing sale of video lottery tickets or shares to any person under the age of eighteen years.

(5) Notwithstanding subsection (4) of this section, when a video lottery game retail contract requires the video lottery game retailer to maintain a minimum weekly sales average, the video lottery game retailer may avoid termination of the contract for failure to meet the minimum weekly sales average by agreeing, prior to termination, to pay the state lottery the difference between the actual weekly cost incurred by the lottery to maintain the contract and the weekly proceeds that are collected by the lottery from the sales of that video lottery game retailer, less expenses that are dedicated by statute, rule, or contract to other purposes. The director may not terminate the contract of a video lottery game retailer for failure to meet a minimum weekly sales average unless the director first allows the video lottery game retailer an opportunity to make the payment described in this subsection.

NEW SECTION. Sec. 10. This act takes effect July 1, 2002.