Part 9.
TEXAS LOTTERY COMMISSION
Chapter 401.
ADMINISTRATION OF STATE LOTTERY ACT
Subchapter E. RETAILER RULES
16 TAC §401.362
The Texas Lottery Commission proposes amendments to 16 TAC §401.362
relating to the retailer's financial responsibility for lottery tickets received,
for winning lottery tickets paid and for lottery-related property. The proposed
amendments delete references to stolen or lost tickets and the financial treatment
of such tickets, clarify that a retailer receives an accounting for packs
of unactivated tickets instead of a credit, clarify that report of damaged
tickets is made to the commission's lottery operations division instead of
the security division, and provide that the director may waive the administrative
fee for damaged unactivated packs instead of activated packs.
Lee Deviney, Financial Administration Director, has determined for each
year of the first five years the proposed amendments are in effect there will
be no fiscal implications for state or local government as a result of enforcing
or administering the rule. There is no anticipated impact on local or state
employment as a result of implementing the section. For each year of the first
five years the section is in effect, there will be no impact on small or micro
businesses as a result of enforcing or administering the rule. Additionally
there will be no effect on individuals.
Ed Rogers, Retailer Services Manager, Lottery Operations Division, has
determined that for each year of the first five years the proposed amendment
is in effect the public benefit anticipated as a result of enforcing the section
will be the clarification of each retailer's fiduciary obligations with respect
to lottery tickets received, lottery tickets received and subsequently damaged,
for prizes paid, and general financial obligations for lottery-related property.
Written comments on the proposed amendment may be submitted to Kimberly
L. Kiplin, General Counsel, Texas Lottery Commission, P.O. Box 16630, Austin,
Texas 78761-6630. Comments must be received within 30 days after publication
in the
Texas Register
to be considered. Additionally,
the Commission will conduct a public hearing to receive comments on July 27,
2004 at 10:00 am at the Texas Lottery Commission, Commission Auditorium, First
Floor, 611 E. Sixth Street, Austin, Texas.
The amendments are proposed under Government Code, Section 466.015
which authorizes the Commission to adopt all rules necessary to administer
the State Lottery Act and to adopt rules governing the establishment and operation
of the lottery, and under Government Code, Section 467.102 which authorizes
the Commission to adopt rules for the enforcement and administration of the
laws under the Commission's jurisdiction.
The amendments implement Government Code, Chapter 466.
§401.362.Retailer's Financial Responsibility for Lottery Tickets Received and Subsequently Damaged or Rendered Unsaleable , for Winning Lottery Tickets Paid and for Lottery-Related Property.
(a)
Responsibility for Lottery Tickets Received.
(1)
Except as otherwise expressly provided by this subsection,
each retailer shall bear the risk of loss for all lottery tickets received.
Receipt of tickets by a retailer shall constitute a purchase of such tickets,
and each retailer shall be liable to the commission for the retail sales price
of such tickets, less any applicable commission or credit.
(2)
Notwithstanding paragraph (1) of this subsection, a retailer
may return, and receive
an accounting indicating that the packs have
been removed from the retailer's inventory
[
(3)
Notwithstanding paragraph (1) of this subsection, and where
no winning ticket from such pack has been validated, the [
[(A)
the pack has been stolen and the retailer
has within 24 hours of the discovery of the theft to make a formal report
of such theft to both:]
[(i)
appropriate local law enforcement authorities; and]
[(ii)
the commission security division through the retailer
hotline;]
[(B)
the pack has been lost and cannot be
located by the retailer and the retailer has made a formal report of the loss
to the commission security division through the retailer hotline within 24
hours of discovery of the loss; or]
[
(4)
Notwithstanding paragraph (1) of this subsection, the [
(5)
A retailer shall report each
damaged
[
(b)
Responsibility for Winning Lottery Tickets Paid. After
a retailer has paid a prize on a winning ticket, that retailer shall completely
deface such ticket and render it physically incapable of being subsequently
presented as a winning ticket. A retailer who has failed to deface such a
winning ticket and render it physically incapable of being subsequently presented
as a winning ticket shall pay to the commission the full amount of each subsequent
prize that is paid on such ticket.
(c)
Responsibility for Lottery-Related Property. Each retailer
shall be financially responsible to the commission for all lottery-related
property placed at the retailer's location.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on July 1, 2004.
TRD-200404336
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Earliest possible date of adoption: August 15, 2004
For further information, please call: (512) 344-5113
16 TAC §401.370
The Texas Lottery Commission proposes new rule 16 TAC §401.370
relating to the retailer's financial responsibility for lottery tickets received
and subsequently stolen or lost. The new rule defines terms that are used
to identify the status of instant tickets in a pack and clarify what charges,
if any, will be assessed against a retailer for stolen or lost tickets in
a particular status. For each category of tickets, the proposed new rule sets
out the procedure the retailers will be required to follow in order to obtain
a credit on the retailer's account in the event of stolen or lost tickets.
Lee Deviney, Financial Administration Director, has determined for each
year of the first five years the section is in effect there will be the following
foreseeable additional fiscal implications for state or local government as
a result of enforcing or administering the rule: FY05, $1,289,820; FY06, $1,289,820;
FY07, $1,289,820; FY08, $1,289,820; and FY09, $1,289,820. There is no anticipated
impact on local or state employment as a result of implementing the section.
For each year of the first five years the section is in effect, there will
be the following foreseeable impact on small or micro businesses as a result
of enforcing or administering the rule: FY05, $214,970; FY06, $214,970; FY07,
$214,970; FY08, $214,970; and FY09, $214,970. Additionally there will be no
effect on individuals.
Ed Rogers, Retailer Services Manager, Lottery Operations Division, has
determined that for each of the first five years the section as proposed is
in effect, the public benefit anticipated as a result of the proposed rule
is a reduction in the financial burden for retailers that experience a business
loss from theft and other causes outside of their control. While it is anticipated
that the implementation of the proposed rule will have some negative impact
on the generation of revenue as the financial liability for stolen or lost
tickets shifts from retailers to the Commission, it is also anticipated that
the proposed rule will, over time, maintain or reduce potential loss overall
revenue by enhancing a licensed retailer's ability to maintain inventory levels
or make a larger number of lottery instant games available for sale due to
the reduction in the financial risk to which retailers are exposed. Additionally,
it is anticipated that the generation of revenue will be enhanced through
the retention of licensed retailers who may have otherwise discontinued their
participation as retailers or defaulted in payment to the Commission and subsequently
lost their licenses because of the financial requirements they must meet under
16 TAC §401.362.
Written comments on the proposed rule may be submitted to Kimberly L. Kiplin,
General Counsel, Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78761-6630.
Comments must be received within 30 days after publication in the Texas Register
to be considered. Additionally, the Commission will conduct a public hearing
to receive comments on July 27, 2004 at 10:00 am at the Texas Lottery Commission,
Commission Auditorium, First Floor, 611 E. Sixth Street, Austin, Texas.
The new rule is proposed under Government Code, Section 466.015
which authorizes the Commission to adopt all rules necessary to administer
the State Lottery Act and to adopt rules governing the establishment and operation
of the lottery, and under Government Code, Section 467.102 which authorizes
the Commission to adopt rules for the enforcement and administration of the
laws under the Commission's jurisdiction.
§401.370.Retailer's Financial Responsibility for Lottery Tickets Received and Subsequently Stolen or Lost.
(a)
Definitions. In addition to the definitions provided in §401.301
of this title (relating to General Definitions), and unless the context in
this section otherwise requires, the following definitions apply.
(1)
Available--The status in the lottery management system
for a pack of instant tickets that is stored in the instant ticket distribution
warehouse and is available to be assigned to a retailer's account. Instant
tickets in a pack in this status shall not be sold to the public and prizes
contained in instant tickets in the pack cannot be validated.
(2)
Issued--The status in the lottery management system for
a pack of instant tickets that has been assigned to a retailer's account and
is pending confirmation of delivery to the retailer's location. Instant tickets
in a pack in this status shall not be sold to the public and prizes contained
in instant tickets in the pack cannot be validated.
(3)
Confirmed--The status in the lottery management system
for a pack of instant tickets that has been physically received at the retailer's
location. A retailer is required to "confirm" receipt of a pack of instant
tickets upon delivery to the retailer's location. Instant tickets are confirmed
using the lottery terminal located in the retailer's business location and
the status is recorded on the lottery management system. Instant tickets in
a pack in this status shall not be sold to the public and prizes contained
in instant tickets in the pack cannot be validated.
(4)
Active--The status in the lottery management system for
a pack of instant tickets that has been physically received at the retailer's
location and that is being offered for sale to the public. A retailer is required
to "activate" a pack of instant tickets prior to selling the tickets to the
public. A pack of instant tickets is activated using the lottery terminal
located in the retailer's location and the status is recorded on the lottery
management system. A pack of instant tickets shall be placed in this status
prior to being sold to the public and prizes contained in instant tickets
in the pack may be validated.
(5)
Settled--The status in the lottery management system for
a pack of instant tickets that has been physically received at the retailer's
location, has been activated and the cost of the tickets in the pack has been
or is being charged to the retailer's account. Instant tickets "settle" against
a retailer's account and the value of the settled packs are swept from the
retailers' bank account through an electronic funds transfer. Settled instant
tickets are recorded in the lottery management system. Instant tickets in
a pack in settled status may be sold to the public and prizes contained in
instant ticket in the pack may be validated.
(6)
Unactivated Instant Tickets--Unactivated instant tickets
are tickets in Available, Issued or Confirmed status. Unactivated tickets
have never been activated or settled and no prizes have been validated for
unactivated tickets.
(b)
Responsibility for Lottery Tickets Received and Subsequently
Stolen or Lost.
(1)
Except as otherwise expressly provided by this subsection,
each retailer shall bear the risk of loss for all lottery tickets received.
Receipt of tickets by a retailer shall constitute a purchase of such tickets,
and each retailer shall be liable to the commission for the retail sales price
of such tickets, less any applicable commission or credit.
(2)
Notwithstanding paragraph (1) of this subsection, a retailer
may return, and receive an accounting indicating that the packs have been
removed from the retailer's inventory for, full and complete packs of unactivated
tickets in original condition. Nothing in this subsection waives the requirements
of §401.361 of this title (relating to Required Sales of Lottery Tickets).
(3)
Notwithstanding paragraph (1) of this subsection, the director
may charge a retailer full face value of an activated pack of tickets if prizes
have been paid from the pack. The director may credit a retailer's account
for a range of activated tickets in a pack reported as stolen or lost provided
that no validations have occurred on tickets in the range reported as stolen
or lost if:
(A)
the pack has been stolen and the retailer, within 24 hours
of the discovery of the theft, has made a formal report of such theft to both:
(i)
appropriate local law enforcement authorities; and
(ii)
the commission's security division through the retailer
hotline;
(B)
the pack has been lost and cannot be located by the retailer
and the retailer, within 24 hours of discovery of the loss, has made a formal
report of the loss to the commission's security division through the retailer
hotline; or
(4)
Notwithstanding paragraph (1) of this subsection, the director
may charge a retailer an administrative fee of $25 for each unactivated pack
of tickets if:
(A)
the pack has been stolen and the retailer, within 24 hours
of the discovery of the theft, has made a formal report of such theft to both:
(i)
appropriate local law enforcement authorities; and
(ii)
the commission's security division through the retailer
hotline;
(B)
the pack has been lost and cannot be located by the retailer
and the retailer, within 24 hours of discovery of the loss, has made a formal
report of the loss to the commission's security division through the retailer
hotline.
(5)
A retailer shall report each stolen or lost pack of tickets
to the commission's security division through the retailer hotline within
24 hours of the discovery of the theft or loss.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on July 1, 2004.
TRD-200404337
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Earliest possible date of adoption: August 15, 2004
For further information, please call: (512) 344-5113
credit
] for, full
and complete packs of unactivated tickets in original condition. Nothing in
this subsection waives the requirements of §401.361 of this title (relating
to Required Sales of Lottery Tickets).
The term "unactivated" has the
meaning as defined in §401.370 of this title.
executive
]
director may charge a retailer an administrative fee of $25 for each pack
of unactivated tickets if[
:
]
(C)
]
damage to the pack has rendered the tickets
unsaleable and the retailer has made a formal report of such damage to the
commission's
[
commission
]
lottery operations
[
security
] division through the retailer hotline within 24 hours of discovery
of the damage.
executive
] director may
waive the
[
charge a retailer
an
] administrative fee of $25 for each
unactivated
[
activated
] pack of tickets that are
damaged to the extent the tickets
are
[
lost or rendered
] unsaleable
due to
[
by
] an Act of God
provided
[
where
] the retailer
within 24 hours of the discovery of the damage
has made a formal report
of such [
loss or
] damage to the
commission's
[
commission
]
lottery operations
[
security
] division
through the retailer hotline [
within 24 hours of discovery of the damage
].
stolen
] pack of tickets to the
commission's
[
commission
]
lottery operations
[
security
] division through the retailer
hotline within 24 hours of the discovery of the
damage
[
theft
].
Chapter 402.
BINGO REGULATION AND TAX