1| STATE OF OKLAHOMA |
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2| 1st Session of the 59th Legislature (2023) |
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3|HOUSE BILL 1800 By: Osburn |
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5| |
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6| AS INTRODUCED |
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7| An Act relating to amusements and sports; amending 3A |
| O.S. 2021, Sections 712, 717, 724, and 733, which |
8| relate to the Oklahoma Education Lottery Act; |
| modifying when background checks shall be conducted; |
9| modifying requirement to display certificate of |
| authority; modifying when the Oklahoma Lottery |
10| Commission submits report; modifying who copy of |
| audit shall be transmitted to; providing that the |
11| Commission submit estimate by certain date; modifying |
| documents that must be provided if receiving payment |
12| of a certain amount; repealing 3A O.S. 2021, Sections |
| 706, 713, as amended by Section 1, Chapter 359, |
13| O.S.L. 2022 (3A O.S. Supp. 2022, Section 713), and |
| 734, which relate to the Oklahoma Education Lottery |
14| Act; and providing an effective date. |
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20|BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA: |
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21| SECTION 1. AMENDATORY 3A O.S. 2021, Section 712, is |
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22|amended to read as follows: |
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23| Section 712. A. The executive director of the Oklahoma Lottery |
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24|Commission, with the approval of the board of trustees, shall employ |
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1|such personnel as may be necessary to carry out the provisions of |
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2|this act and shall set the compensation and terms of compensation of |
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3|such employees. All offices, positions, and personnel of the |
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4|Oklahoma Lottery Commission shall be in the unclassified service. |
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5| B. No employee of the Commission shall have a financial |
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6|interest in any vendor doing business or proposing to do business |
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7|with the Commission. |
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8| C. No employee of the Commission shall participate in any |
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9|decision involving a retailer with whom the employee has a financial |
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10|interest. |
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11| D. No employee of the Commission who leaves the employment of |
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12|the Commission may represent any vendor or lottery retailer before |
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13|the Commission for a period of two (2) years following termination |
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14|of employment with the Commission. |
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15| E. A background investigation shall be conducted on each |
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16|applicant who has reached the final selection process prior to |
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17|employment by the Commission at the level of division director and |
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18|above and at any level within any division of security and as |
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19|otherwise required by the board of trustees of the Oklahoma Lottery |
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20|Commission. The Commission shall pay for the actual cost of the |
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21|investigations and shall contract with the Oklahoma State Bureau of |
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22|Investigation for the performance of the investigations and on every |
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23|active employee of the Commission on an annual basis. The results |
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1|of a background investigation shall not be considered a record open |
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2|to the public pursuant to the Oklahoma Open Records Act. |
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3| F. No person who has been convicted of any felony or a |
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4|misdemeanor involving illegal gambling or involving moral turpitude |
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5|shall be employed by the Commission, nor shall the Commission employ |
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6|a person who is awaiting sentencing on a plea of guilt or nolo |
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7|contendere to such a felony or misdemeanor. |
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8| G. The Commission shall bond Commission employees with access |
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9|to Commission funds or lottery revenue in an amount specified by the |
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10|board and may bond other employees as deemed necessary. |
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11| SECTION 2. AMENDATORY 3A O.S. 2021, Section 717, is |
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12|amended to read as follows: |
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13| Section 717. A. The people of this state recognize that to |
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14|conduct a successful lottery, the Oklahoma Lottery Commission must |
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15|develop and maintain a statewide network of lottery retailers that |
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16|will serve the public convenience and promote the sale of tickets or |
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17|shares and the playing of lottery games while ensuring the integrity |
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18|of the lottery operations, games, and activities. |
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19| B. The Commission shall make every effort to provide small |
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20|retailers a chance to participate in the sales of lottery tickets or |
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21|shares. |
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22| C. The Commission shall provide for compensation to lottery |
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23|retailers in the form of commissions in an amount of not less than |
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24|two percent (2%) of gross sales and may provide for other forms of |
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1|compensation for services rendered in the sale or cashing of lottery |
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2|tickets or shares. |
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3| D. The Commission shall issue a certificate of authority to |
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4|each person with whom it contracts as a retailer for purposes of |
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5|display for each location at which tickets or shares are offered for |
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6|sale. Every lottery retailer shall post and keep conspicuously |
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7|displayed in a location on the premises accessible to the public its |
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8|certificate of authority. No certificate of authority shall be |
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9|assignable or transferable. |
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10| E. The board of trustees of the Oklahoma Lottery Commission |
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11|shall develop a list of objective criteria upon which the |
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12|qualification of lottery retailers shall be based. Separate |
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13|criteria shall be developed to govern the selection of retailers of |
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14|instant tickets. In developing these criteria, the board shall |
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15|consider such factors as the financial responsibility of the |
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16|applicant, security of the place of business or activity of the |
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17|applicant, accessibility to the public, integrity, and reputation. |
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18|The board shall not consider political affiliation, activities, or |
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19|contributions to political committees or candidates for any public |
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20|office. The criteria shall include, but not be limited to, the |
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21|following: |
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22| 1. The applicant shall be current in filing all applicable tax |
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23|returns to the State of Oklahoma and in payment of all taxes, |
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24|interest, and penalties owed to the State of Oklahoma, excluding |
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1|items under formal appeal pursuant to applicable statutes. An |
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2|applicant who has entered into and is abiding by a payment agreement |
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3|with the Oklahoma Tax Commission shall be deemed current in payment |
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4|of such taxes, penalties and interest. Notwithstanding the |
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5|provisions of Section 205 of Title 68 of the Oklahoma Statutes, the |
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6|Oklahoma Tax Commission shall provide this information to the |
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7|Commission; |
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8| 2. No person, partnership, unincorporated association, |
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9|corporation, or other business entity or principal, officer or |
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10|director of a corporation or other business entity shall be selected |
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11|as a lottery retailer who: |
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12| a. has been convicted of or is awaiting sentencing on a |
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13| plea of guilt or nolo contendere to a criminal offense |
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14| related to the security or integrity of the lottery in |
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15| this or any other jurisdiction, |
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16| b. has been convicted of or is awaiting sentencing on a |
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17| plea of guilt or nolo contendere to any illegal |
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18| gambling activity, false statements, false swearing, |
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19| or perjury in this or any other jurisdiction or |
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20| convicted of or is awaiting sentencing on a plea of |
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21| guilt or nolo contendere to any crime punishable by |
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22| more than one (1) year of imprisonment or a fine of |
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23| more than One Thousand Dollars ($1,000.00) or both, |
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24| unless the civil rights of the person have been |
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1| restored and at least five (5) years have elapsed from |
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2| the date of the completion of the sentence without a |
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3| subsequent conviction of a crime described in this |
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4| subparagraph, |
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5| c. has been found to have violated the provisions of the |
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6| Oklahoma Education Lottery Act or any rule, policy, or |
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7| procedure of the Commission unless either ten (10) |
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8| years have passed since the violation or the board |
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9| finds the violation both minor and unintentional in |
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10| nature, |
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11| d. is a vendor or any employee or agent of any vendor |
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12| doing business with the Commission, |
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13| e. resides in the same household as the executive |
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14| director, any board member, or any employee of the |
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15| Commission, |
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16| f. has made a statement of material fact to the |
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17| Commission knowing such statement to be false, or |
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18| g. is engaged exclusively in the business of selling |
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19| lottery tickets or shares. This subparagraph shall |
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20| not preclude the Commission from selling or giving |
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21| away lottery tickets or shares for promotional |
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22| purposes; |
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23| 3. Persons applying to become lottery retailers shall be |
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24|charged a uniform application fee for each lottery outlet; |
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1| 4. Any lottery retailer contract executed pursuant to this |
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2|section may, for good cause, be suspended, revoked, or terminated by |
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3|the executive director or designee if the retailer is found to have |
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4|violated any provisions of the Oklahoma Education Lottery Act or |
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5|objective criteria established by the board. Review of such |
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6|activities shall be in accordance with the procedures outlined in |
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7|the Oklahoma Education Lottery Act and shall not be subject to the |
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8|Administrative Procedures Act; and |
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9| 5. All lottery retailer contracts may be renewable annually in |
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10|the discretion of the Commission unless sooner canceled or |
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11|terminated. |
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12| F. No certificate of authority to act as a lottery retailer |
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13|shall be issued to any applicant doing business or who holds a |
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14|license to do business as a pawnbroker, supervised lender, or |
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15|deferred deposit lender, also known as a payday lender, or whose |
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16|primary business is categorized as a check casher. |
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17| G. No lottery retailer or applicant to be a lottery retailer |
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18|shall pay, give, or make any economic opportunity, gift, loan, |
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19|gratuity, special discount, favor, hospitality, or service, to the |
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20|executive director, any board member, or any employee of the |
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21|Commission, or to any person related to any such person within the |
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22|third degree of consanguinity or affinity. |
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23| SECTION 3. AMENDATORY 3A O.S. 2021, Section 724, is |
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24|amended to read as follows: |
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1| Section 724. A. Proceeds of any lottery prize shall be subject |
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2|to the Oklahoma state income tax. |
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3| B. Attachments, garnishments, or executions authorized and |
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4|issued pursuant to law shall be withheld if timely served upon the |
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5|Oklahoma Lottery Commission. This subsection shall not apply to |
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6|payment of prizes by a retailer. |
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7| C. The Commission shall adopt policies and procedures to |
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8|establish a system of verifying the validity of tickets or shares |
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9|claimed to win prizes and to effect payment of the prizes, except |
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10|that: |
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11| 1. No prize, any portion of a prize, or any right of any person |
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12|to a prize awarded shall be assignable. Any prize or any portion of |
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13|a prize remaining unpaid at the death of a prize winner shall be |
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14|paid to the estate of the deceased prize winner or to the trustee of |
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15|a trust established by the deceased prize winner as settlor if a |
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16|copy of the trust document or instrument has been filed with the |
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17|Commission along with a notarized letter of direction from the |
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18|settlor and no written notice of revocation has been received by the |
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19|Commission prior to the death of the settlor. Following the death |
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20|of a settlor and prior to any payment to a successor trustee, the |
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21|Commission shall obtain from the trustee a written agreement to |
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22|indemnify and hold the Commission harmless with respect to any |
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23|claims that may be asserted against the Commission arising from |
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24|payment to or through the trust. Notwithstanding any other |
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1|provisions of this section, any person, pursuant to an appropriate |
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2|judicial order, shall be paid the prize to which a winner is |
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3|entitled; |
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4| 2. No prize shall be paid arising from claimed tickets that |
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5|are: |
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6| a. stolen, counterfeit, altered, fraudulent, unissued, |
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7| produced or issued in error, unreadable, not received, |
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8| or not recorded by the Commission within applicable |
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9| deadlines, |
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10| b. lacking in captions that conform and agree with the |
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11| play symbols as appropriate to the particular lottery |
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12| game involved, or |
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13| c. not in compliance with such additional public or |
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14| confidential validation and security tests of the |
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15| Commission appropriate to the particular lottery game |
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16| involved; |
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17| 3. No particular prize in any lottery game shall be paid more |
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18|than once, and in the event of a determination that more than one |
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19|claimant is entitled to a particular prize, the sole remedy of the |
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20|claimants is the award to each of them of an equal share in the |
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21|prize; |
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22| 4. A holder of a winning cash ticket or share from a lottery |
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23|game shall claim a cash prize within one hundred eighty (180) days, |
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24|or for a multistate or multisovereign lottery game within one |
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1|hundred eighty (180) days, after the drawing in which the cash prize |
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2|was won. In any Oklahoma lottery game in which the player may |
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3|determine instantly if the player has won or lost, the player shall |
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4|claim a cash prize within ninety (90) days, or for a multistate |
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5|lottery game within one hundred eighty (180) days, after the end of |
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6|the lottery game. If a valid claim is not made for a cash prize |
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7|within the applicable period, the cash prize shall constitute an |
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8|unclaimed prize for purposes of the Oklahoma Education Lottery Act; |
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9| 5. Any person or persons claiming a lottery prize exceeding Six |
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10|Hundred Dollars ($600.00) shall provide the Commission with their |
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11|name, address, social security number, and sufficient valid |
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12|identification as proof of the same prior to payment of the prize by |
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13|the Commission; and |
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14| 6. Any person or persons claiming a lottery prize exceeding |
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15|Five Thousand Dollars ($5,000.00) shall provide the Commission with |
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16|their name, address, social security number, and sufficient valid |
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17|identification and proof of social security number prior to payment |
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18|of the prize by the Commission; and |
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19| 7. Any person or persons claiming a lottery prize exceeding Six |
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20|Hundred Dollars ($600.00) as a trust shall provide for each person |
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21|entitled to any portion of the prize their name, address, social |
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22|security number, and sufficient valid identification as proof of the |
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23|same and proof of social security number prior to payment of the |
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24|prize by the Commission except that such information specified in |
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1|this paragraph shall be confidential and not subject to the |
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2|provisions of the Oklahoma Open Records Act. |
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3| D. No prize shall be paid upon a ticket or share purchased or |
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4|sold in violation of the Oklahoma Education Lottery Act. Any such |
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5|prize shall constitute an unclaimed prize for purposes of the |
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6|Oklahoma Education Lottery Act. |
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7| E. The Commission is discharged of all liability upon payment |
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8|of a prize. |
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9| F. No ticket or share shall be purchased by and no prize shall |
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10|be paid to any member of the board of trustees of the Oklahoma |
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11|Lottery Commission, any officer or employee of the Commission, or to |
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12|any spouse, child, brother, sister, or parent residing as a member |
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13|of the same household in the principal place of residence of any |
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14|such person. No ticket or share shall be purchased by and no prize |
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15|shall be paid to any officer, employee, agent, or subcontractor of |
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16|any vendor or to any spouse, child, brother, sister, or parent |
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17|residing as a member of the same household in the principal place of |
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18|residence of any such person if the officer, employee, agent, or |
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19|subcontractor has access to confidential information which may |
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20|compromise the integrity of the lottery. |
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21| G. Unclaimed prize money shall not constitute net lottery |
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22|proceeds. The first Seven Hundred Fifty Thousand Dollars |
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23|($750,000.00) of unclaimed prize money accruing annually shall be |
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24|transferred to the Department of Mental Health and Substance Abuse |
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1|Services for the treatment of compulsive gambling disorder and |
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2|educational programs related to such disorder. All other unclaimed |
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3|prize money shall be added to the pool from which future prizes are |
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4|to be awarded or used for special prize promotions. |
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5| SECTION 4. AMENDATORY 3A O.S. 2021, Section 733, is |
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6|amended to read as follows: |
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7| Section 733. To ensure the financial integrity of the lottery, |
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8|the Oklahoma Lottery Commission through its board of trustees shall: |
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9| 1. Submit quarterly and an annual reports report to the |
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10|Governor, State Auditor and Inspector, Oklahoma State Bureau of |
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11|Investigation, and Attorney General, and the oversight committee |
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12|created by Section 734 of this title, disclosing the total lottery |
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13|revenues, prize disbursements, operating expenses, and |
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14|administrative expenses of the Commission during the reporting |
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15|period. The annual report shall additionally describe the |
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16|organizational structure of the Commission and summarize the |
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17|functions performed by each organizational division within the |
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18|Commission; |
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19| 2. Adopt a system of internal audits; |
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20| 3. Maintain weekly or more frequent records of lottery |
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21|transactions, including the distribution of tickets or shares to |
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22|retailers, revenues received, claims for prizes, prizes paid, |
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23|prizes forfeited, and other financial transactions of the |
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24|Commission; |
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1| 4. Contract with a certified public accountant or firm for an |
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2|annual financial audit of the Commission. The certified public |
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3|accountant or firm shall have no financial interest in any vendor |
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4|with whom the Commission is under contract. The certified public |
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5|accountant or firm shall present an audit report not later than |
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6|seven (7) months after the end of the fiscal year. The certified |
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7|public accountant or firm shall evaluate the internal auditing |
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8|controls in effect during the audit period. The cost of this annual |
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9|financial audit shall be an operating expense of the Commission. |
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10|The State Auditor and Inspector may at any time conduct an audit of |
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11|any phase of the operations of the Commission at the expense of the |
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12|Commission and shall receive a copy of the annual independent |
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13|financial audit. A copy of any audit performed by the certified |
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14|public accountant or firm or the State Auditor and Inspector shall |
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15|be transmitted to the Governor, the President Pro Tempore of the |
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16|Senate, and the Speaker of the House of Representatives, and the |
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17|State Auditor and Inspector, and the cochairs of the oversight |
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18|committee created in Section 734 of this title; |
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19| 5. Submit to the Office of Management and Enterprise Services |
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20|and the State Auditor and Inspector by June 30 of each year a copy |
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21|of the annual operating budget for the Commission for the next |
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22|fiscal year. This annual operating budget shall be approved by the |
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23|board and be on such forms as prescribed by the Office of Management |
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24|and Enterprise Services; and |
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1| 6. For informational purposes only, submit Submit to the Office |
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2|of Management and Enterprise Services on September 1 by October 1 of |
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3|each year a proposed operating budget for the Commission for the |
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4|succeeding fiscal year. The budget proposal shall also be |
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5|accompanied by an estimate of the net proceeds to be deposited into |
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6|the Oklahoma Education Lottery Trust Fund during the succeeding |
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7|fiscal year. The budget estimate shall be on such forms as |
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8|prescribed by the Office of Management and Enterprise Services. |
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9| SECTION 5. REPEALER 3A O.S. 2021, Section 706, is hereby |
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10|repealed. |
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11| SECTION 6. REPEALER 3A O.S. 2021, Section 713, as |
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12|amended by Section 1, Chapter 359, O.S.L. 2022 (3A O.S. Supp. 2022, |
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13|Section 713), is hereby repealed. |
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14| SECTION 7. REPEALER 3A O.S. 2021, Section 734, is hereby |
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15|repealed. |
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16| SECTION 8. This act shall become effective November 1, 2023. |
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18| 59-1-5596 CMA 01/10/23 |
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