CHAPTER 150 - SOUTH CAROLINA EDUCATION LOTTERY ACT
Title 59 - Education
CHAPTER 150.
SOUTH CAROLINA EDUCATION LOTTERY ACT
SECTION 59-150-10. Short title.
This chapter may be cited as the "South Carolina Education Lottery Act".
SECTION 59-150-20. Definitions.
As used in this chapter:
(1) "Administrative expenses" means operating expenses, excluding amounts set aside for prizes, regardless of whether the prizes are claimed, and excluding amounts held as a fidelity fund pursuant to Section 59-150-170.
(2) "Board" means the Board of Commissioners of the South Carolina Lottery Commission.
(3) "Commission" means the South Carolina Lottery Commission.
(4) "Educational purposes and programs" means educational expenses and scholarships as defined in Section 59-150-350(D).
(5) "Executive director" means the Executive Director of the South Carolina Lottery Commission or his designee.
(6) "Immediate family" means a person who is:
(a) a spouse;
(b) a child residing in the same household; or
(c) claimed as a dependent for income tax purposes.
(7) "Lottery", "lotteries", " lottery game", or "lottery games" means a game of chance approved by the General Assembly and operated pursuant to this chapter including, but not limited to, the lottery game categories of instant tickets, on-line lottery games and drawing numbers but excluding keno, pari- mutuel betting, and casino gambling as defined in this section. The operation of the lottery games excludes machines and lottery games, including video poker lottery games, prohibited by Sections 12-21-2710, 16-19-40, and 16-19-50. The access and use of an electronic or mechanical machine designed for a lottery game authorized pursuant to this chapter must be limited to a lottery retailer and his employees only in order to facilitate retail sales of lottery tickets, and such a machine must not dispense anything other than lottery tickets.
As used in this item, "casino gambling" means a location or business for the purpose of conducting unlawful gambling activities, but excluding the sale and purchase of lottery game tickets or shares; and "pari-mutuel betting" means a method or system of wagering on actual races including races involving horses or dogs at tracks and the distribution of winnings by pools.
(8) "Lottery retailer" means a person who sells lottery game tickets or shares on behalf of the South Carolina Lottery Commission pursuant to a contract.
(9) "Lottery vendor" means a person who provides or proposes to provide goods or services to the South Carolina Lottery Commission pursuant to a procurement contract, but does not include an employee of the commission, a lottery retailer, or a state agency or instrumentality of the State. The term includes a corporation whose shares are traded publicly and which is the parent company of the contracting party in a procurement contract.
(10) "Member" or "members" means a Commissioner or Commissioners of the Board of the South Carolina Lottery Commission.
(11) "Minority business" means a business which meets the definition of a socially and economically disadvantaged small business as described in Article 21, Chapter 35, Title 11, specifically a small business concern which:
(a) is at least fifty-one percent owned by one or more citizens of the United States who are determined to be socially and economically disadvantaged;
(b) in the case of a concern which is a corporation, at least fifty-one percent of all classes of voting stock of such corporation is owned by an individual determined to be socially and economically disadvantaged; or
(c) in the case of a concern which is a partnership, at least fifty-one percent of the partnership interest is owned by an individual or individuals determined to be socially and economically disadvantaged or whose management and daily business operations are controlled by individuals determined to be socially and economically disadvantaged. Those individuals must be involved in the daily management and operations of the business concerned.
"Small business" as used in this item means a business which meets the definition of a small business for purposes of the Small Business Administration, an agency of the United States.
(12) "Net proceeds" means all revenue derived from the sale of lottery game tickets or shares and all other monies derived from the lottery games, less operating expenses and prizes.
(13) "Operating expenses" means all costs of doing business including, but not limited to, prizes, commissions, and other compensation paid to a lottery retailer, advertising and marketing costs, rental fees, personnel costs, capital costs, depreciation of property and equipment, funds for compulsive gambling education and treatment, amounts held in or paid from a fidelity fund pursuant to Section 59-150-170, and other operating costs.
(14) "Person" means an individual, corporation, partnership, unincorporated association, or other legal entity.
(15) "Prize" means an award, gift, or anything of value regardless of whether there are conditions or restrictions attached to its receipt.
(16) "Proceeds" means all lottery revenue derived from the sale of lottery game tickets or shares and all other monies derived from the lottery or received by the commission.
(17) "Share" means an intangible interest in a lottery ticket, by way of assignment, contractual participation, or other claim or right.
(18) "Ticket" means tangible evidence issued by the South Carolina Lottery Commission to provide participation in a lottery game.
SECTION 59-150-30. Lottery Commission created; management performance audit.
(A) There is created a commission to be known as the South Carolina Lottery Commission, which is deemed to be a public commission and an instrumentality of the State. The commission and its employees are subject to the South Carolina Consolidated Procurement Code, South Carolina Administrative Procedures Act, South Carolina Ethics Reform Act, and South Carolina Freedom of Information Act. Venue for the commission is in Richland County.
(B) Beginning in December 2004 and every three years thereafter, or by the request of five members of the House of Representatives or five members of the Senate, the Legislative Audit Council shall conduct a management performance audit of the commission. The cost of this audit is an operating expense of the commission.
SECTION 59-150-40. Commission board; member requirements; appointment; terms; quorum; functions and procedure; general membership restrictions.
(A) The commission is governed by a board composed of nine members to be appointed as follows: three members must be appointed by the Governor, three members must be appointed by the President Pro Tempore of the Senate, and three members must be appointed by the Speaker of the House of Representatives.
(B) A member must:
(1) be a resident of the State of South Carolina;
(2) not have been convicted of a felony offense or bookmaking or other form of unlawful gambling. A background investigation must be conducted on each board nominee. The commission shall pay for the cost of the investigation and may contract with the State Law Enforcement Division (SLED) or appropriate federal agency for the performance of the investigation;
(3) meet the qualifications for electors as provided in Section 7-5-120; and
(4) not have been an elected public official, as provided in Section 24, Article III of the Constitution of this State and Section 2-1-100, for at least one year before appointment.
(C) In making appointments to the board, the Governor, the President Pro Tempore of the Senate, and the Speaker of the House of Representatives, as appropriate, shall consider legal, financial, accounting, and marketing experience and race, gender, and other demographic factors to ensure nondiscrimination, inclusion, and representation of all segments of the State to the greatest extent possible.
(D) The members shall serve terms of three years, except that of the initial appointments the Governor shall appoint two members, each to serve a two-year term, and one member to serve a four-year term; the Speaker of the House of Representatives shall appoint three members, each to serve a two- year term, coterminous with the Speaker; and the President Pro Tempore of the Senate shall appoint three members, each to serve an initial four-year term. A vacancy that occurs on the board must be filled by appointment by the Governor, the President Pro Tempore of the Senate, or the Speaker of the House of Representatives, as appropriate, for the remainder of the unexpired term.
(E) A member shall not serve on the board if he is an officer or employee of the commission or if he has an immediate family member employed by the commission.
(F) A member of the board may receive per diem, subsistence, and mileage at the rate provided by law for members of state boards, committees, and commissions.
(G) The board shall elect from their membership officers of the board, including the chair.
(H) The board may delegate to any one or more of its members or to the executive director of the commission those powers and duties it considers proper.
(I) A majority of members in office or at least five members, whichever is greater, constitutes a quorum for the transaction of business and for the exercise of a power or function of the commission.
(J) Action may be taken and motions and resolutions adopted by the board at a board meeting by affirmative vote of a majority of present and voting board members. This subsection does not relieve the board from the requirements of the South Carolina Freedom of Information Act.
(K) A vacancy in the membership of the board does not impair the right of the members to exercise all the powers and perform all the duties of the board.
(L) A member of the board shall not contribute to or make independent expenditures relative to the campaign of a candidate for the General Assembly or a statewide constitutional office; to a political party, as defined in Section 8-13-1300(26); or to a committee, as defined in Section 8-13-1300(6). A member of the board who violates this section must be summarily dismissed.
(M) A member is appointed to the board for a term and may be removed from the board before the expiration of his term only as provided in Section 1-3-240(C).
SECTION 59-150-50. Duties of the board.
The board shall:
(1) approve, disapprove, amend, or modify the budget recommended by the executive director for the operation of the commission;
(2) approve, disapprove, amend, or modify the terms of procurements recommended by the executive director;
(3) hear appeals of hearings required by this chapter;
(4) promulgate regulations relating to the categories of lottery games and the conduct of lottery games pursuant to the Administrative Procedures Act and as specified in this chapter; and
(5) perform other functions specified by this chapter.
SECTION 59-150-60. Powers of the commission.
(A) The commission has all the powers necessary or convenient to carry out and effectuate the purposes and provisions of this chapter which are not in conflict with the Constitution and laws of this State and which generally are exercised by commissions engaged in entrepreneurial pursuits on behalf of the State including, but not limited to, the powers to:
(1) sue and be sued in contract and in tort and to complain and defend in all courts;
(2) adopt and alter a corporate seal and symbol;
(3) promulgate regulations pursuant to the Administrative Procedures Act and adopt policies and procedures for the regulation of its affairs and the conduct of its business; to elect and prescribe the duties of officers and employees of the commission; and to perform other matters as the commission may determine;
(4) procure or to provide self-insurance;
(5) hold copyrights, trademarks, and service marks and enforce its rights with respect to them;
(6) organize, initiate, supervise, and administer the operation of the lottery as provided by this chapter and regulations promulgated relating to the categories of lottery games and the conduct of the games pursuant to the Administrative Procedures Act and to this chapter;
(7) enter into written agreements with one or more other states or sovereigns for the operation, participation in marketing, and promotion of a joint lottery or joint lottery games, subject to the Administrative Procedures Act and this chapter; but such marketing and promotion is subject to the restrictions on advertising and promotion provided in item (18) of this section;
(8) conduct necessary or appropriate market research, which may include an analysis of the demographic characteristics of the players of the lottery game and an analysis of advertising, promotion, public relations, incentives, and other aspects of communication;
(9) acquire or lease real property and make improvements on it and acquire by lease or by purchase personal property including, but not limited to, computers; mechanical, electronic, and on-line equipment and terminals; and intangible property including, but not limited to, computer programs, systems, and software. To achieve cost savings and efficiency, the commission shall use the telecommunications network service of the Budget and Control Board's Office of Information Resources pursuant to Sections 1-11-430 and 11-35-1580 provided that the service is secure;
(10) administer oaths, take depositions, issue subpoenas, and compel the attendance of witnesses and the production of books, papers, documents, and other evidence relative to any investigation or proceeding conducted by the commission;
(11) appoint, select, or hire officers, agents, and employees, including professional and administrative staff, personnel, and hearing officers to conduct hearings required by this chapter, and to fix their compensation and pay their expenses. Notwithstanding any other provision of law, the commission has exclusive authority to contract for legal services. All employees of the commission are employees-at-will and are eligible for participation in the South Carolina Retirement System and may elect optional retirement program coverage in the same manner as provided in Section 9-20-10(2)(a), the State Health Insurance Group plans, and are encompassed by the South Carolina Tort Claims Act;
(12) make pension payments to the South Carolina Retirement System or other system approved by the State Retirement System and pay contributions to the Office of Insurance Services for dental and health plans on behalf of personnel or employees employed by the commission who qualify in the same manner as other state employees in the executive branch of government;
(13) select and contract with lottery vendors and lottery retailers;
(14) enter into contracts or agreements with state or other law enforcement agencies for the performance of law enforcement, background investigations, and security checks;
(15) enter into contracts on such terms and conditions as the commission may determine, except that the commission must not enter into an advertising or promotional contract pursuant to item (18) if the total contract amount includes a commission exceeding three percent of the contract amount; and except that the commission shall not enter into contracts to incur debt in its own name or enter into financing agreements with the State, agencies, or instrumentalities of the State, or with a commercial bank or credit provider; however, necessary start-up monies must be borrowed from the Insurance Reserve Fund of the Budget and Control Board, subject to the loan repayment terms of the Budget and Control Board, for effectuating its purpose, including payment of the initial expenses of initiation, administration, and operation of the commission and the lottery, if and only if sufficient start-up monies are not appropriated from the general fund;
(16) enter into contracts of any type on the terms and conditions the commission determines, except that it must not enter into a contract with an entity for the purpose of having that entity assume or otherwise undertake the organization and conduct of the lottery;
(17) establish and maintain banking relationships including, but not limited to, establishment of checking and savings accounts and lines of credit;
(18) advertise and promote the lottery and lottery games in a dignified manner befitting the State, but only in compliance with the same state and federal standards of truth in advertising which govern private advertisers engaged in interstate commerce and including the restrictions described in this item. The amount spent on advertising must not exceed 7.5 million dollars during the initial year of operation of the lottery. During the second and subsequent years of operation of the lottery, the amount spent on advertising must not exceed one percent of the previous year's gross sales. The board must establish an advertising policy to ensure that advertising content and practices do not target with the intent to exploit specific ethnic groups or economic classes of people, and that the content of the advertising is accurate and not misleading. Lottery advertising must not contain the name or picture of an elected official or state seal or its likeness. The board must review, at least quarterly, all past lottery advertising and proposed concepts for major media campaigns to ensure that the advertising did not and does not target with the intent to exploit specific ethnic groups or economic classes of people, and that the content is accurate and not misleading. The commission must promote fair and responsible play, including disclosure of the odds of winning, and must ensure that any advertising used does not exhort the public to bet by misrepresenting, directly or indirectly, a person's chance of winning a prize. The commission may use interviews, pictures, or statements from people who have won lottery prizes to show that prizes are won and awarded. If the board finds that advertising conflicts with these policies, the board must cause the cessation of that advertising. In addition, wherever lottery game tickets are sold, the commission must provide information regarding resources for persons with gambling problems. Wherever lottery game tickets are sold, a lottery retailer must post a conspicuous sign in a prominent location, inside the retailer's premises and adjacent to the point of sale, clearly warning of the dangers and risks of gambling and the odds of winning and the odds of losing;
(19) act as a lottery retailer, conduct promotions which involve the dispensing of lottery game tickets or shares, and establish and operate a sales facility to sell lottery game tickets or shares and related merchandise, except that the commission shall not establish, operate, or authorize a lottery sales facility at any state Welcome Center or state rest area; and
(20) promulgate regulations pursuant to the Administrative Procedures Act and this chapter and adopt and amend policies and procedures necessary to carry out and implement its powers and duties, organize and operate the commission, regulate the conduct of lottery games as defined in Section 59-150-20(7), and other matters necessary or desirable for the efficient and effective operation of the lottery for the convenience of the public.
(B) The powers enumerated in subsection (A) are cumulative of and in addition to those powers enumerated elsewhere in this chapter, and do not limit or restrict other powers of the commission.
(C) The commission is prohibited from distributing monies other than as prescribed by this chapter including, but not limited to, the prohibition of contributing to or making independent expenditures relative to the campaign of a candidate for the General Assembly or a statewide constitutional office; to a political party, as defined in Section 8-13-1300(26); or to a committee, as defined in Section 8-13-1300(6).
(D) The commission is not authorized to use any machine specifically prohibited by Sections 12-21-2710, 16-19-40, and 16-19-50.
(E) The commission is subject to the limitations upon, and exemptions from, liability and damages provided in the South Carolina Tort Claims Act.
(F) The commission shall not issue, sell, or authorize the sale of lottery tickets or shares at a location licensed to provide deferred presentment services pursuant to Chapter 39 of Title 34.
(G) The commission shall not enter into a contract for the purpose of influencing a political decision in connection with the operation of the lottery, and the commission must not employ, contract with, or otherwise authorize a lobbyist, as defined in Section 2-17-10(13), to engage in lobbying, as defined in Section 2-17-10(12), on behalf of the commission.
(H) The commission must not sell or give away tickets for promotional purposes.
SECTION 59-150-70. Temporary regulations; initial availability of tickets; alternate use for nonwinning tickets.
(A) Notwithstanding the provisions of this chapter, the commission has the authority to adopt temporary regulations to implement the provisions of this chapter, which must be consistent with the provisions of this chapter. These temporary regulations are not considered regulations as defined by the Administrative Procedures Act; however, these temporary regulations have the force and effect of law. The only lottery games that may be played pursuant to these temporary regulations are instant tickets and on- line lottery games. A multi-state lottery game must not be played under these temporary regulations, and may be implemented only when regulations have been promulgated and take effect pursuant to the Administrative Procedures Act. The commission must submit regulations for the implementation of this chapter as required in Sections 59-150-20, 59-150-30, 59-150-50, and 59-150-70 to the General Assembly for review in accordance with the Administrative Procedures Act by January 15, 2002.
(B) For purposes of this section, "temporary regulations" means regulations regarding the programs, policies, and procedures required to implement the provisions of this chapter.
(C) The temporary regulations authorized in this section are repealed on July 15, 2004, or on the effective date of regulations promulgated pursuant to the Administrative Procedures Act, whichever date occurs first. If regulations promulgated pursuant to the Administrative Procedures Act have not taken effect by July 15, 2004, the commission may promulgate the temporary regulations authorized by this section as emergency regulations pursuant to Section 1-23-130. For purposes of this subsection, the circumstances required for emergency regulations in Section 1-23-130(A) do not apply, but all other provisions of Section 1-23-130 are applicable.
(D) In accordance with the Administrative Procedures Act, the board may promulgate regulations which must specify, but are not limited to:
(1) categories of lottery games as described in Section 59-150-20(7). The lottery games may include the selling of lottery game tickets or shares or the use of electronic or mechanical devices, except those electronic or mechanical devices prohibited by Section 59-150-20(7), and except that the game or activity in which the winner is selected must not be based upon the outcome of a football, basketball, baseball, or similar game or sports event;
(2) sale price of lottery game tickets or shares and the manner of sale except that all sales must be for cash only. Payment by checks, credit cards, charge cards, or other form of deferred payment and payment by debit card are prohibited;
(3) number and amount of prizes;
(4) method and location of selecting or validating winning lottery game tickets or shares;
(5) manner and time of payment of prizes, which may include lump sum payments or installments over a period of years;
(6) manner of payment of prizes by a lottery retailer to the holders of a winning lottery game ticket or share including, without limitation, provision for payment of prizes not exceeding six hundred dollars after deducting the price of the lottery game ticket or share and after performing validation procedures appropriate to the game and as specified by the board; the board may provide for a limited number of retailers who may pay prizes of up to five thousand dollars after performing validation procedures appropriate to the game and as specified by the board without regard to where the lottery game ticket or share was purchased;
(7) frequency of lottery games and drawings or selection of winning lottery game tickets or shares;
(8) means of conducting drawings, except that an elected or appointed official, other than the members of the board or its designee, must not preside or appear at a drawing;
(9) method to be used in selling lottery game tickets or shares, which may include the use of electronic or mechanical devices, but the devices must be placed on the premises of the lottery retailer in a location which is only accessible to the lottery retailer or his employees;
(10) manner and amount of compensation to a lottery retailer within the limits of this chapter; and
(11) other matters necessary or desirable toward ensuring the efficient and effective operation of lottery games as defined in Section 59-150-20(7), the continued entertainment and convenience of the public, and the integrity of the lottery.
(E) The commission shall have tickets available for purchase by the public no later than November 1, 2001, or as soon as practicable.
(F) If the board submits a regulation for a lottery game resulting in an instant winner, the board must consider instituting an additional lottery game that makes use of the nonwinning instant tickets on a monthly or other periodic basis, so as to encourage nonwinners to accumulate their tickets instead of disposing of them separately and creating unsightly litter.
SECTION 59-150-75. Authority to enter agreements for sale of multi-state lottery products; sale of tickets and products.
Notwithstanding any other provision of law, the South Carolina Lottery Commission may enter into a multi-state agreement for the sale of instant game tickets, online game tickets, and related multi- state lottery products including game shows and promotional products. Procedures for ticket sales and validation, prize redemption, and other details of the commission's participation in the multi-state lottery games must be governed by the terms of the agreement entered into by the commission. For purposes of this provision, the lottery games that may be subject to a multi-state participation agreement by the commission are those defined in Section 59-150-20(7). Further, the multi-state tickets and products may be sold only through a licensed lottery retailer, pursuant to Section 59-150-150, or through the commission.
SECTION 59-150-80. Executive director; internal auditor.
(A) The board shall appoint and provide for the compensation of an executive director which must not be based upon or a function of profitability or percentage of sales. The executive director must be an employee of the commission who directs the day-to-day operations and management of the commission and is vested with powers and duties specified by the board and by law. The executive director serves at the pleasure of the board.
(B) The board shall hire and provide for the compensation of an internal auditor and necessary staff who must be employees of the commission and who are vested with the powers and duties specified by the board and by law. The internal auditor shall report directly to the board.
SECTION 59-150-90. Executive director, duties and powers; prohibited campaign activities.
(A) The executive director of the commission shall direct and supervise all administrative and technical activities as provided for in this chapter, regulations promulgated pursuant to the Administrative Procedures Act, and policies and procedures adopted by the board. It is the duty of the executive director to oversee the initiation, and supervise and administer the operation of the lottery games as defined in Section 59-150-20(7); employ and direct necessary personnel; employ by contract and compensate necessary persons and firms, except that the contract must not be with an entity for the purpose of having that entity undertake the organization and conduct of the lottery; promote or provide for promotion of the lottery and functions related to the commission; prepare a budget for the approval of the board; require bond from a lottery retailer and a lottery vendor in amounts required by the board; report monthly to the board a full and complete statement of lottery revenues and expenses for the preceding thirteen months; and perform other duties generally associated with an executive director of a commission of an entrepreneurial nature.
(B) The executive director for good cause may suspend, revoke, or refuse to renew a contract entered into as provided by the provisions of this chapter or the regulations, policies, and procedures of the board.
(C) The executive director or his designee may conduct hearings and administer oaths to persons for the purpose of assuring the security or integrity of lottery operations or to determine the qualifications of or compliance by a lottery vendor and a lottery retailer.
(D) The executive director shall not contribute to or make independent expenditures relative to the campaign of a candidate for the General Assembly or a statewide constitutional office; to a political party, as defined in Section 8-13-1300(26); or to a committee, as defined in Section 8-13-1300(6). An executive director who violates this section must be summarily dismissed.
SECTION 59-150-100. Commission employees; personnel program and compensation; conflicting financial interests; background investigation; criminal record of applicants; bond requirement.
(A) The commission shall establish and maintain a personnel program for its employees and fix the compensation and terms of compensation of its employees.
(B) An employee of the commission or an immediate family member of an employee of the commission must not have a financial interest in a lottery vendor doing business or proposing to do business with the commission.
(C) An employee of the commission who has decision-making authority shall not participate in a decision involving a lottery retailer with whom the employee has an economic interest as defined in the South Carolina Ethics Reform Act.
(D) An employee of the commission who leaves his employment at the commission must not represent a lottery vendor or lottery retailer before the commission for a period of one year following termination of employment with the commission.
(E) A background investigation must be conducted on each applicant who has reached the final selection process before employment by the commission at the level of division director and above and at any level within any division of security and as otherwise required by the board. The commission shall pay for the actual cost of the investigations and may contract with SLED for the performance of the investigations. The results of a background investigation are not a record open to the public pursuant to the Freedom of Information Act.
(F) A person who has been convicted of a felony or bookmaking or other forms of unlawful gambling must not be employed by the commission.
(G) The commission shall bond commission employees who have access to commission funds or lottery revenue in an amount provided by the board and may bond other employees as necessary.
SECTION 59-150-110. Lottery Retailer Advisory Board.
(A) The Governor shall appoint a Lottery Retailer Advisory Board to be composed of ten lottery retailers, representing the broadest possible spectrum of geographical, racial, gender, and business characteristics of a lottery retailer. The Governor also shall appoint the chairman of the advisory board. The function of the advisory board is to advise the lottery board on retail aspects of the lottery and to present the concerns of lottery retailers throughout the State. The advisory board may establish a consumer representatives committee to help provide additional insight on other aspects of lottery retail sales.
(B) Members appointed to the advisory board serve terms of two years, except that four of the initial lottery retailer appointees serve initial terms of one year and five serve initial terms of two years. The chairman of the advisory board serves coterminous with the Governor.
(C) The advisory board shall establish its own rules and internal operating procedures. Members of the advisory board serve without compensation or the per diem, subsistence, or mileage provided by law for members of state boards, committees, and commissions. The advisory board may report in writing at any time to the board of commissioners or to the oversight committee. The board of commissioners may invite the advisory board to make an oral presentation to the commissioners at regular meetings of the board.
SECTION 59-150-120. Assistance to small and minority businesses; annual report.
The commission shall provide training programs and other educational activities to enable small and minority businesses to compete for contracts on an equal basis. The board shall monitor the results of small and minority business participation and shall report the results of small and minority business participation to the State Human Affairs Commission on at least an annual basis pursuant to Section 1-13-110.
SECTION 59-150-130. Lottery vendors; background investigation; disclosure; vendor noncompliance; criminal record; restrictions; contingency contracts.
(A) In coordination with the State Law Enforcement Division, the commission shall investigate the financial responsibility, security, and integrity of a lottery vendor who is a finalist in submitting a bid, proposal, or offer as part of a procurement. To defray a portion of the expense of this investigation, each lottery vendor finalist shall submit a certified check for five thousand dollars to the commission. This sum must be placed in an escrow account from which SLED must be paid to conduct the investigation pursuant to this section. If five thousand dollars is not sufficient to complete the investigation, the commission shall require the lottery vendor finalist to remit additional funds. Any funds remaining in the escrow account after the investigation is complete must be returned to the lottery vendor finalist. At the time of submitting the bid, proposal, or offer to the commission, the commission shall require disclosure of the:
(1) lottery vendor's name and address and, as applicable, the names and addresses of the following, if the lottery vendor is:
(a) a corporation, the officers and directors and each stockholder in the corporation, except that in the case of owners of equity securities of a publicly-traded corporation, the names and addresses of only those known to the corporation to own beneficially five percent or more of the securities must be disclosed;
(b) a trust, the trustee, and all persons entitled to receive income or benefits from the trust;
(c) an association, the members, officers, and directors; and
(d) a partnership or joint venture, all of the general partners, limited partners, or joint venturers;
(2) states and jurisdictions in which the lottery vendor does business and the nature of the business for each such state or jurisdiction;
(3) states and jurisdictions in which the lottery vendor has contracts to supply gaming goods or services including, but not limited to, lottery goods and services, and the nature of the goods or services involved for each state or jurisdiction;
(4) states and jurisdictions in which the lottery vendor has applied for, sought renewal of, received, been denied, or had revoked, or has issuance pending of, a lottery or gaming license of any kind or had fines or penalties assessed to his license, contract, or operation and the disposition of each in each state or jurisdiction. If a lottery or gaming license or contract has been revoked or has not been renewed or a lottery or gaming license or application has been denied or is pending and has remained pending for more than six months, all of the facts and circumstances underlying the failure to receive a license must be disclosed;
(5) details of a finding or any plea, conviction, or adjudication of guilt in a state or federal court of the lottery vendor for a felony or other criminal offense other than a traffic violation;
(6) details of any bankruptcy, insolvency, reorganization, or corporate or individual purchase or takeover of another corporation, including bonded indebtedness, or pending litigation of the lottery vendor;
(7) contributions made to or independent expenditures relative to the campaign of a candidate for the General Assembly or statewide constitutional office, to any political party, as defined in Section 8-13-1300(26), or to a committee, as defined in Section 8-13-1300(6), for the twelve-month period before the application and up to the date of disqualification of the applicant or the awarding of the contract, whichever occurs first; and
(8) additional information the commission determines appropriate for the procurement involved. If at least twenty percent of the cost of a lottery vendor's contract is subcontracted, the lottery vendor shall disclose all of the information required by this section for the subcontractor as if the subcontractor were itself a lottery vendor.
(B) A lottery procurement contract must not be entered into with a lottery vendor who has not complied with the disclosure requirements described in subsection (A), and a contract with a noncomplying lottery vendor is voidable at the option of the commission. The commission may terminate a contract with a lottery vendor who does not comply with the requirements for periodically updating the disclosures during the time specified in the contract. The provisions of this section must be construed broadly and liberally to achieve the ends of full disclosure of all information necessary to allow for a full and complete evaluation by the commission of the competence, integrity, background, and character of a lottery vendor for procurements.
(C) A procurement contract must not be entered into with a lottery vendor if he or it has:
(1) been convicted of a felony related to the security or integrity of the lottery in this or another jurisdiction;
(2) been convicted of unlawful gambling activity, false statements, false swearing, or perjury in this or another jurisdiction; or
(3) been found to have violated the provisions of this chapter or a regulation of the commission, unless either ten years have passed since the violation or the board finds the violation both minor and unintentional in nature.
(D) A procurement contract must not be entered into with a lottery vendor if the lottery vendor has an ownership interest in an entity that supplied consultation services under contract to the commission regarding the request for proposals pertaining to those particular goods or services.
(E) A lottery vendor or applicant for a procurement contract must not pay, give, or otherwise make available anything of value in violation of provisions of the South Carolina Ethics Reform Act. A violation of the act is subject to the provisions of Sections 11-35-4220 and 11-35-4230.
(F) A lottery vendor who has entered into the competitive solicitation process for a procurement contract or who has been awarded a procurement contract with the commission shall not contribute, for a period of twelve months before entering into the procurement process, except that during the first twelve months the period must be from the date of enactment, and during the term of the contract, to or make independent expenditures relative to the campaign of a candidate for the General Assembly or a statewide constitutional office; to a political party, as defined in Section 8-13-1300(26); or to a committee, as defined in Section 8-13-1300(6).
(G) A lottery vendor must not enter into a contract for the purpose of influencing a political decision in connection with the operation of the lottery, and a lottery vendor must not employ, contract with, or otherwise authorize a lobbyist, as defined in Section 2-17-10(13), to engage in lobbying, as defined in Section 2-17-10(12), on behalf of the lottery vendor for the purpose of influencing a political decision in connection with the operation of the lottery.
(H) A lottery vendor shall disclose, upon written inquiry, the amount of any commission, referral fee, finder's fee, consulting fee, or contingency fee paid in connection with obtaining the contract and the name of the person to whom the monies were paid.
(I)(1) The prohibitions and restrictions described in subsections (F) and (G) specifically apply to a lottery vendor as defined in Section 59-150-20(9), except as provided in item (2) of this subsection, and its employees, members of its board, and holders of an interest in it of more than ten percent, and their immediate family members, as defined in Section 59-150-20(6).
(2) The prohibitions and restrictions described in subsection (F) do not apply to a lottery vendor that is a federally-chartered or insured financial institution that provides only usual and customary banking services as a lottery vendor, but do apply to the vendor's employees and their immediate family members who are involved on a day-to-day basis in providing the goods or services that are the subject of the contract with the commission.
(J) The commission is prohibited from contracting with a lottery vendor if the fee or commission payable in connection with the service or product is contingent, in whole or in part, upon performance of lottery sales or other lottery profitability measure.
SECTION 59-150-140. Lottery vendor performance bond; residency; public official ownership interest; resident vendor preference.
(A) At the execution of the contract with the commission, a lottery vendor shall post a performance bond or letter of credit from a bank or credit provider acceptable to the commission in an amount determined by the commission for that particular bid or contract. Instead of the bond, a lottery vendor, to assure the faithful performance of its obligations, may deposit and maintain with the commission securities that are interest bearing or accruing and that are rated in one of the three highest classifications by an established nationally recognized investment rating service. Securities eligible pursuant to this section are limited to:
(1) certificates of deposit issued by solvent banks or savings associations which are organized and existing under the laws of this State or under the laws of the United States and are approved by the commission;
(2) United States bonds, notes, and bills for which the full faith and credit of the government of the United States is pledged for the payment of principal and interest; and
(3) corporate bonds approved by the commission. The corporation that issued the bonds must not be an affiliate or subsidiary of the depositor. The securities must be held in trust and must have at all times a market value equal at least to the full amount estimated to be paid annually to the lottery vendor under contract.
(B) Each lottery vendor must be qualified to do business in this State and shall file appropriate tax returns as provided by the laws of this State. All contracts pursuant to this section are governed by the laws of this State.
(C) A contract must not be let with a lottery vendor in which a public official has an ownership interest unless the letting of the contract complies with Section 8-13-775.
(D) Procurement contracts must be handled in accordance with the South Carolina Consolidated Procurement Code.
(E) In all contracts entered into in connection with this chapter, the resident lottery vendor preference provided in Section 11-35-1524 must apply to procurements made by the commission, except that the following additional provisions apply:
(1) the preference also must apply to the procurement of services, as defined in Section 11-35-310(29), and advertising;
(2) with respect to the procurement of services or advertising, the definition of the term "resident lottery vendor" must be modified as provided in this item. Section 11-35-1524(B)(6)(c) does not apply to a lottery vendor providing services or advertising. Instead of Section 11-35-1524(B)(6)(c), the lottery vendor shall provide services or advertising which are representative of the general type of services or advertising on which the bid is submitted;
(3) with respect to the procurement of services or advertising, instead of providing the certifications provided in Section 11-35-1524(C), the lottery vendor shall certify in writing in the bid:
(a) that he is a resident of the State;
(b) the services or advertising is available; and
(c) the cost of the services or advertising is not unreasonable.
SECTION 59-150-150. Lottery retailers; statewide network; criteria for selection; criminal background investigation.
(A) The commission shall develop and maintain a statewide network of lottery retailers to serve the public convenience and promote the sale of tickets or shares and the playing of lottery games as defined in Section 59-150-20(7) while ensuring the integrity of the lottery operations, games, and activities. The commission also shall provide a small retailer a chance to participate in the sales of lottery tickets or shares; provide for compensation to a lottery retailer in the form of commissions in an amount of not less than seven percent of gross proceeds; and issue a license to each person with whom it contracts as a lottery retailer for purposes of display. Each lottery retailer shall post and display conspicuously its license. A license is not assignable or transferable.
(B) The board shall develop a list of objective criteria upon which the qualification of a lottery retailer must be based. Separate criteria must be developed to govern the selection of a lottery retailer of instant tickets and an on-line lottery retailer. In developing these criteria, the board shall consider factors such as the applicant's financial responsibility, integrity, and reputation, and the security of the applicant's place of business or activity, and accessibility to the public. The board shall not consider political affiliation or activities or monetary contributions to political organizations or candidates for public office. The criteria must include, but is not limited to, the following:
(1) The applicant must be current in filing all applicable tax returns to the State of South Carolina and in payment of all taxes, interest, and penalties owed to the State of South Carolina, excluding items under formal appeal pursuant to applicable statutes. The Department of Revenue shall provide this information to the commission.
(2) A person, partnership, unincorporated association, corporation, or other business entity must not be selected as a lottery retailer if he or it:
(a) has been convicted of a criminal offense related to the security or integrity of the lottery in this or another jurisdiction;
(b) has been convicted of unlawful gambling activity, false statements, false swearing, or perjury in this or another jurisdiction or convicted of a crime punishable by more than one year of imprisonment or a fine of more than one thousand dollars, or both, unless the person's civil rights have been restored and at least five years have elapsed from the date of the completion of the sentence without a subsequent conviction of a crime described in this subitem;
(c) has been found to have violated the provisions of this chapter or a regulation, policy, or procedure of the commission, unless either ten years have passed since the violation or the board finds the violation both minor and unintentional in nature;
(d) is a lottery vendor or an employee or agent of a lottery vendor doing business with the commission;
(e) resides in the same household as an officer of the commission;
(f) has made a statement of material fact to the commission knowing the statement is false;
(g) has a business of selling lottery tickets or shares that accounts for more than sixty percent annually of its gross revenues. The Department of Revenue shall provide data concerning a lottery retailer's gross revenues to assist the commission in verifying compliance with this provision. The commission must not sell or give away lottery tickets or shares as a lottery retailer, as provided in Section 59-150-210; and
(h) has not attained the age of twenty-one years, except that this age restriction applies only to the lottery retailer or lottery retailer applicant and not to a bona fide employee of the lottery retailer;
(3) A person applying to become a lottery retailer must be charged a uniform application fee for each lottery outlet. A lottery retailer who participates in on-line lottery games must be charged a uniform application fee for each on-line outlet.
(4) A lottery retailer contract executed pursuant to this chapter may be suspended, revoked, or terminated for good cause by the executive director or his designee if the lottery retailer is found to have violated a provision of this chapter or the regulations subject to the Administrative Procedures Act.
(5) Lottery retailer contracts may be renewable annually at the discretion of the commission, unless sooner canceled or terminated.
(6) A lottery retailer or lottery retailer applicant shall not pay, give, or otherwise make available anything of value to a member of the board of directors of the commission in violation of provisions of the South Carolina Ethics Reform Act.
(C) An applicant must undergo a criminal background investigation performed in accordance with Section 59-150-165.
SECTION 59-150-160. Transfer of lottery retailer contract; lottery goods and services contracts and ticket sales restrictions.
(A) A lottery retailer contract is not transferable or assignable. A lottery retailer shall not contract with a person for lottery goods or services except with the approval of the board.
(B) Lottery game tickets and shares must be sold only by the lottery retailer named on the lottery retailer certificate.
SECTION 59-150-165. State and national criminal background investigation.
(A) Any person required to undergo a background investigation pursuant to this chapter must undergo both a state and national criminal history background investigation as a part of the required investigation. Any person required to undergo a background investigation may be required to supply fingerprints, along with other personal identifying information, for submission to the Federal Bureau of Investigation (FBI) through the State Law Enforcement Division (SLED). The commission is authorized to use SLED and FBI criminal history records for the screening of persons required to undergo background investigations.
(B) This section applies to persons described in Sections 59-150-40(B)(2), 59-150-100(E), 59-150-130(A), and 59-150-150(C).
(C)(1) In the case of an investigation of a person, as defined in Section 59-150-20(14), other than an individual, the required background investigations may be performed on any or all principals of the person, as determined by the commission.
(2) For purposes of this section, "principal" means:
(a) the directors and officers of an association;
(b) all partners of a partnership, limited partnership, or limited liability partnership;
(c) all members of a limited liability company, or if the company is a manager-managed company, all members and managers;
(d) for a corporation, its directors, officers, and stockholders with a ten percent or more direct or beneficial interest or any person or entity that receives more than ten percent of the net income; and
(e) an employee who has day-to-day operational management responsibilities for the business or entity.
(3)(a) If a corporation is a member of a controlled group of corporations, as defined in 26 U.S.C. 1563, or a member of an affiliated group of corporations, as defined in 26 U.S.C. 1504, and at least one member of the group of corporations is a publicly-held corporation, only the corporation which seeks the vendor or retailer contract pursuant to this chapter is considered a principal for purposes of this chapter, along with its directors, officers, and stockholders as described in subitem (2)(d).
(b) For purposes of subitem (a) of this item, "publicly-held corporation" means a corporation:
(i) whose shares are traded on a national exchange; and
(ii) whose total assets at the end of the corporation's most recent fiscal quarter exceeded one billion dollars.
(D) SLED must collect, retain, expend, and carry forward fees associated with conducting criminal history investigations to offset the cost of performing the investigations. In the case of vendors, the fee for the criminal background investigation must be included in the fee imposed pursuant to Section 59-150-130(A).
SECTION 59-150-170. Fidelity fund; reserve account; lottery retailer bond; deposit of securities with commission.
(A) The commission shall establish a fidelity fund separate from all other funds and shall assess each lottery retailer a one-time fee not to exceed one hundred dollars for each sales location. Monies deposited into the fund may be used to cover losses the commission may experience due to nonfeasance, misfeasance, or malfeasance of a lottery retailer. The monies may be invested by the commission pursuant to state investment practices. All earnings attributable to the investments accrue to the fund. In addition, the funds may be used to purchase blanket bonds covering the commission against losses from all lottery retailers. At the end of each fiscal year, the commission shall pay to the Education Lottery Account any amount in the fidelity fund which exceeds five hundred thousand dollars, and the funds paid must be treated as net proceeds from the lottery.
(B) A reserve account may be established as a general operating expense to cover amounts considered uncollectible from a lottery retailer. The commission shall establish procedures for minimizing losses that may be experienced by reason of nonfeasance, misfeasance, or malfeasance of a lottery retailer, and shall exercise and exhaust all available options in the procedures before amounts are written off to this account.
(C) The commission may require a lottery retailer to post an appropriate bond, as determined by the commission, using an insurance company acceptable to the commission. The amount must not exceed the applicable district sales average of lottery game tickets for two billing periods.
(D)(1) In its discretion, the commission may allow a lottery retailer to deposit and maintain with the commission securities that are interest bearing or accruing. Securities eligible pursuant to this item are limited to:
(a) certificates of deposit issued by solvent banks or savings associations organized and existing under the laws of this State or under the laws of the United States;
(b) United States bonds, notes, and bills for which the full faith and credit of the United States is pledged for the payment of principal and interest; and
(c) federal agency securities by an agency or instrumentality of the United States government.
(2) The securities must be held in trust in the name of the commission.
SECTION 59-150-180. Lottery retail contract; cancellation, suspension, revocation, termination; hearing; appeal bond.
(A) A retail contract executed by the commission pursuant to this chapter must specify the reasons for which the contract may be canceled, suspended, revoked, or terminated by the commission including, but not be limited to:
(1) a violation of this chapter, a regulation, or a policy or procedure of the commission;
(2) failure to account accurately or timely for lottery game tickets, lottery games, revenues, or prizes as required by the commission;
(3) fraud, deceit, or misrepresentation;
(4) insufficient sales;
(5) conduct prejudicial to public confidence in the lottery;
(6) filing for or placement in bankruptcy or receivership of the lottery retailer;
(7) a material change, as determined in the sole discretion of the commission, in a matter considered material by the commission in executing the contract with the lottery retailer; or
(8) failure to meet any of the objective criteria established by the commission pursuant to this chapter.
(B) If cancellation, denial, revocation, suspension, or rejection of renewal of a lottery retailer contract is in the best interest of the lottery, the public welfare, or the State of South Carolina, the executive director or his designee, in his discretion, may cancel, suspend, revoke, or terminate, after notice and a right to a hearing, a contract issued pursuant to this chapter. A hearing must be held within sixty days of notice of cancellation, suspension, revocation, or termination and conducted by the executive director or his designee. A party to the contract aggrieved by the decision of the executive director or his designee may appeal the adverse decision to the board, and then to the Administrative Law Judge Division, pursuant to the Administrative Procedures Act.
(C) If a party files an action to appeal the final decision of the board pursuant to subsection (B) and seeks to enjoin the implementation, termination, or performance of a contract, he must post a bond payable to the State in an amount determined by the trier of fact to be sufficient to compensate the State for its losses including, but not limited to, reasonable attorney's fees and court costs resulting from the delay, if the party does not prevail in its appeal.
SECTION 59-150-190. Lottery ticket sale proceeds; retailer fiduciary duty; retailer deposit; commission priority; retailer payment.
(A) All proceeds from the sale of the lottery game tickets or shares constitute a trust fund until paid to the commission either directly or through the commission's authorized collection representative. A lottery retailer and officers of a lottery retailer's business have a fiduciary duty to preserve and account for lottery proceeds, and a lottery retailer is personally liable for all proceeds. Proceeds include unsold instant tickets received by a lottery retailer and cash proceeds of the sale of lottery products, net of allowable sales commissions and credit for lottery prizes sold or paid to winners by a lottery retailer. Sales proceeds and unused instant tickets must be delivered to the commission or its authorized collection representative upon demand.
(B) The commission shall require a lottery retailer to place all lottery proceeds due the commission in accounts in institutions insured by the Federal Deposit Insurance Corporation (FDIC) no later than the close of the next banking day after the date of their collection by the lottery retailer until the date they are paid over to the commission. At the time of the deposit, lottery proceeds are considered the property of the commission, and a lottery retailer is personally liable for those proceeds due the commission. The commission may require a lottery retailer to establish a single separate electronic funds transfer account where available for the purpose of receiving monies from ticket or share sales, making payments to the commission, and receiving payments for the commission. Unless otherwise authorized in writing by the commission, each lottery retailer shall establish a separate bank account for lottery proceeds which must be kept separate and apart from all other funds and assets, and must not be commingled with any other funds or assets. A lottery retailer, upon the deposit of lottery proceeds in excess of insurance coverage by the FDIC, shall furnish an indemnity bond from a responsible surety company authorized to do business in this State in an amount sufficient to protect the State against loss in the event of insolvency or liquidation of the institution or for another cause. A lottery retailer, instead of the indemnity bond, may pledge as collateral for the deposits, obligations of the United States, obligations fully guaranteed both as to principal and interest by the United States, obligations of the Federal National Mortgage Association, the Federal Home Loan Bank, Federal Farm Credit Bank, the Federal Home Loan Mortgage Corporation, or general obligations of this State or a political subdivision of it. The State Treasurer shall exercise prudence in accepting the securities listed as collateral. The surety or collateral must be filed with the State Treasurer at time of deposit.
(C) Proceeds from the sale of lottery game tickets or shares received by a lottery retailer who becomes insolvent or dies insolvent, are due the commission from the person or his estate in preference over all debts or demands.
(D) A lottery retailer is not required to pay for lottery tickets or shares until the tickets or shares have been activated by the commission.
SECTION 59-150-200. Lottery retailer rental payments.
If a lottery retailer's rental payments for the business premises are contractually computed, in whole or in part, on the basis of a percentage of retail sales and the computation of retail sales is not defined explicitly to include sales of lottery game tickets or shares in a state operated or state managed lottery, only the compensation received by the lottery retailer from the commission may be considered the amount of the lottery retail sale for purposes of computing the rental payment.
SECTION 59-150-210. Lottery tickets and shares; pricing; promotional use; location of sale; age restriction; sale on election day; sale on campus.
(A) A person shall not sell a lottery game ticket or share at a price other than that established by the commission. A person, other than a duly certified lottery retailer, shall not sell lottery game tickets, but a person may purchase lawfully lottery game tickets or shares and make a gift of the lottery game tickets or shares to another. The commission may designate certain agents and employees to sell lottery game tickets or shares directly to the public.
(B) Lottery game tickets or shares shall not be purchased and given by merchants as a means of promoting goods or services to customers or prospective customers, except as approved in writing by the commission.
(C) A lottery retailer shall not sell a lottery game ticket or share except from the locations listed in the lottery retailer's contract and as evidenced by the lottery retailer's certificate of authorization unless the commission authorizes, in writing, a temporary location not listed in the lottery retailer's contract.
(D) Lottery game tickets or shares must not be sold to persons under eighteen years of age, but a person eighteen years of age or older may purchase lawfully lottery game tickets or shares and make a gift to a person of any age. If a minor lawfully receives a winning lottery game ticket, the commission may direct payment of proceeds of a lottery prize in an amount not exceeding two thousand five hundred dollars to the parent or guardian of the minor without court approval and without appointment of a conservator. In the case of a lottery prize greater than two thousand five hundred dollars and not exceeding twenty-five thousand dollars, payment must be made in accordance with the procedures outlined in Section 62-5-103 as they relate to distribution. In the case of a prize in an amount greater than twenty-five thousand dollars, payment must be made to a duly appointed conservator to be held for the benefit of the minor, pursuant to Section 62-