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177Type of Legislation: General Bill GBIntroducing Body: SenateIntroduced Date: 20010123Primary Sponsor: McConnellAll Sponsors: McConnell, Passailaigue, Patterson, Land, Matthews, Ravenel, Ford, HuttoDrafted Document Number: l:\council\bills\dka\4071mm01.docCompanion Bill Number: 3307Residing Body: SenateCurrent Committee: Judiciary Committee 11 SJSubject: Education Lottery Act, Lotteries, State; Businesses and Corporations, Treasurers, School Districts, Taxation, GovernorHistory Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ Senate 20010125 Co-Sponsor added by Senator Hutto ------ 20010123 Companion Bill No. 3307 Senate 20010123 Introduced, read first time, 11 SJ referred to Committee Versions of This Bill
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 57 TO TITLE 33 SO AS TO ENACT THE "SOUTH CAROLINA EDUCATION LOTTERY ACT"; TO PROVIDE FOR A STATE LOTTERY AND TO CREATE THE SOUTH CAROLINA EDUCATION LOTTERY CORPORATION TO CONDUCT THE STATE LOTTERY; TO PROVIDE FOR THE CORPORATION'S BOARD MEMBERSHIP, DUTIES, AND POWERS; TO PROVIDE FOR THE CREATION OF A LOTTERY RETAILERS ADVISORY COMMITTEE; TO PROVIDE FOR THE METHOD OF CONTRACTING WITH VENDORS AND RETAILERS; TO PROVIDE FOR THE SALE OF LOTTERY GAME TICKETS AND THE DISTRIBUTION OF PRIZES; TO PROVIDE FOR ALLOCATION OF LOTTERY PROCEEDS WHICH MUST BE USED FOR EDUCATIONAL PURPOSES AND PROGRAMS; TO PROVIDE CRIMINAL PENALTIES FOR SELLING A LOTTERY TICKET TO A MINOR, PURCHASING A LOTTERY TICKET AS A MINOR, AND DEFRAUDING OR OTHERWISE TAMPERING WITH THE LOTTERY OR MAKING MATERIAL REPRESENTATIONS IN AN APPLICATION OR REPORT IN CONNECTION WITH THE LOTTERY; TO CREATE A SOUTH CAROLINA EDUCATION LOTTERY OVERSIGHT COMMITTEE; TO PROVIDE FOR SET-OFF DEBT COLLECTION FROM PRIZE WINNINGS; TO ESTABLISH THE SOUTH CAROLINA EDUCATION LOTTERY ACCOUNT INTO WHICH THE NET REVENUE RECEIVED FROM THE STATE EDUCATION LOTTERY MUST BE DEPOSITED AND TO PROVIDE APPROPRIATIONS FROM THE EDUCATION LOTTERY ACCOUNT BEGINNING IN FISCAL YEAR 2001-02 FOR SPECIFIED PURPOSES; AND TO AMEND SECTION 1-3-240, AS AMENDED, RELATING TO THE ENTITIES FROM WHICH AN APPOINTEE BY THE GOVERNOR MAY BE REMOVED IN CERTAIN CONDITIONS, SO AS TO ADD THE SOUTH CAROLINA EDUCATION LOTTERY CORPORATION TO THAT LIST OF ENTITIES.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The General Assembly finds that:
(1) net proceeds of lottery games conducted pursuant to this chapter must be used to support improvements and enhancements for educational purposes and programs as provided by the General Assembly and that the net proceeds must be used to supplement, not supplant, existing resources for educational purposes and programs;
(2) lottery games are an entrepreneurial enterprise and that the State shall create an instrumentality of the State and public body, corporate and politic, known as the South Carolina Education Lottery Corporation, with the comprehensive and extensive powers as generally exercised by corporations engaged in entrepreneurial pursuits;
(3) lottery games must be operated and managed in a manner which ensures that the lottery is operated with integrity and dignity and free of political influence, maximizes revenues, and provides continuing entertainment to the public; and
(4) the South Carolina Education Lottery Corporation must be accountable to the General Assembly and to the public through a system of audits and reports.
SECTION 2. Title 33 of the 1976 Code is amended by adding:
Section 33-57-110. This chapter may be cited as the 'South Carolina Education Lottery Act'.
Section 33-57-120. As used in this chapter, the term:
(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 33-57-270.
(2) 'Board' means the board of directors of the South Carolina Education Lottery Corporation.
(3) 'Chief Executive Officer' means the chief executive officer of the South Carolina Education Lottery Corporation.
(4) 'Corporation' means the South Carolina Education Lottery Corporation.
(5) 'Educational purposes and programs' means scholarships and financial aid to citizens of this State to enable them to attend public educational institutions of higher learning located within this State and independent institutions of higher learning, as defined in Section 59-113-50 and costs associated with providing, repairing, and maintaining computers and advanced electronic instructional technology for public education, including costs associated with personnel to provide instruction or other services related to this technology.
(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 board and operated pursuant to this chapter including, but not limited to, instant tickets, on-line lottery games, drawing numbers, and lottery games using mechanical or electronic devices 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.
As used in this item, 'casino gambling' means a location or business for the purpose of conducting illegal 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 involving horses or dogs at tracks and the distribution of winnings by pools. The term does not mean lottery games that may be predicated on a horse racing or dog racing scheme that does not involve actual track events, nor does it mean traditional lottery games that may involve the distribution of winnings by pools.
(8) 'Lottery retailer' means a person who sells lottery game tickets or shares on behalf of the corporation pursuant to a contract.
(9) 'Member' or 'members' means a director or directors of the board of the South Carolina Education Lottery Corporation.
(10) 'Minority business' means a business that is owned by:
(a) an individual who is a member of a minority and who reports as his personal income for South Carolina income tax purposes the income of the business;
(b) a partnership in which a majority of the ownership interest is held by one or more members of a minority who report as their personal income for South Carolina income tax purposes more than fifty percent of the income of the partnership; or
(c) a corporation organized under the laws of this State in which a majority of the common stock is owned by one or more members of a minority who report as their personal income for South Carolina income tax purposes more than fifty percent of the distributed earnings of the corporation.
(11) '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.
(12) 'Operating expenses' means all costs of doing business including, but not limited to, commissions and other compensation paid to retailers, advertising and marketing costs, 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 33-57-270, and other operating costs, but excluding prizes.
(13) 'Person' means an individual, corporation, partnership, unincorporated association, or other legal entity.
(14) 'Prize' means an award, gift, or anything of value regardless of whether there are conditions or restrictions attached to its receipt.
(15) '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 corporation.
(16) 'Share' means intangible evidence of participation in a lottery game.
(17) 'Ticket' means tangible evidence issued by the South Carolina Education Lottery Corporation to provide participation in a lottery game.
(18) 'Vendor' means a person who provides or proposes to provide goods or services to the corporation pursuant to a procurement contract, but does not include an employee of the corporation, a retailer, or a state agency or instrumentality of the State. The term does not include a corporation whose shares are publicly traded and which is the parent company of the contracting party in a procurement contract.
Section 33-57-130. There is created a body corporate and politic to be known as the South Carolina Education Lottery Corporation, which is deemed to be an instrumentality of the State and a public corporation. The corporation is exempt from all statutory laws and regulations affecting state agencies, except as specifically provided in this chapter. The corporation and its employees are subject to the South Carolina Consolidated Procurement Code, South Carolina Ethics Reform Act, and South Carolina Freedom of Information Act. The corporation is exempt from the Administrative Procedures Act. Venue for the corporation is in Richland County.
Section 33-57-140. (A) The corporation is governed by a board composed of seven members to be appointed by the Governor, with the advice and consent of the Senate. The Governor shall appoint one person representing each of the six congressional districts and one person from the State at large. The at-large appointee shall serve as chair of the board.
(B) A member must:
(1) be a resident of the State of South Carolina;
(2) be a prominent person in a business or profession; and
(3) not have been convicted of a felony offense. A background investigation must be conducted on each board nominee. The corporation shall pay for the cost of the investigation and may contract with the State Law Enforcement Division for the performance of the investigation;
(4) meet the qualifications for electors as provided in Section 7-5-120;
(5) not be an elected public official, as provided in Section 24, Article III, of the Constitution of this State and Section 2-1-100.
(C) The Governor shall consider in making the appointments to the board:
(1) legal, financial, accounting, and marketing experience; and
(2) race, gender, and other demographics factors to ensure nondiscrimination, inclusion, and representation of all segments of the State to the greatest extent possible.
(D) The chair must be appointed for a term of four years. The other members serve terms of four years, except that of the initial members appointed, three must be appointed for initial terms of two years and three must be appointed for initial terms of four years. A vacancy that occurs on the board must be filled by appointment by the Governor for the remainder of the unexpired term.
(E) A member appointed when the General Assembly is not in regular session serves until a confirmation vote of the full Senate. If the appointment is not confirmed during the regular legislative session, the confirmation fails.
(F) A member of the board must comply with Ethics Reform Act requirements while performing official board duties. A member may not serve on the board if he is an officer or employee of the corporation or if he has an immediate family member employed by the corporation.
(G) 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.
(H) The board shall elect from their membership officers of the board, other than the chair, as prescribed by the bylaws of the corporation.
(I) The board may delegate to any one or more of its members, to the chief executive officer of the corporation, or to an agent or employee of the corporation, those powers and duties it considers proper.
(J) A majority of members in office, to include members appointed but awaiting confirmation from the Senate, constitutes a quorum for the transaction of business and for the exercise of a power or function of the corporation.
(K) Action may be taken and motions and resolutions adopted by the board at a board meeting by the 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.
(L) 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.
(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 33-57-150. The board shall:
(1) approve, disapprove, amend, or modify the budget recommended by the chief executive officer for the operation of the corporation;
(2) approve, disapprove, amend, or modify the terms of procurements recommended by the chief executive officer;
(3) hear appeals of hearings required by this chapter;
(4) promulgate regulations and adopt policies and procedures relating to the conduct of lottery games and as specified in Section 33-57-170; and
(5) perform functions ordinarily and customarily performed by boards corporate and politic so long as they are not inconsistent with the requirements of this chapter.
Section 33-57-160. (A) The corporation 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 of this State and which are generally exercised by corporations engaged in entrepreneurial pursuits 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) adopt, amend, and repeal bylaws, promulgate regulations, 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 corporation; and to perform other matters as the corporation 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 and policies and procedures adopted pursuant 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;
(8) conduct necessary or appropriate market research;
(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 corporation shall use, to the maximum extent possible, 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;
(10) enter into contracts to incur debt in its own name and enter into financing agreements with the State, agencies or instrumentalities of the State, or with a commercial bank or credit provider; however, no obligation is assumed by the State.
(11) 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 corporation;
(12) appoint, select, or hire officers, agents, and employees, including professional and administrative staff and personnel and hearing officers to conduct hearings required by this chapter, and to fix their compensation and pay their expenses. Notwithstanding another provision of law, the corporation has exclusive authority to contract for legal services. All employees of the corporation are employees-at-will and are eligible for participation in the South Carolina Retirement System, the State Health Insurance Group plans, and are encompassed by the South Carolina Tort Claims Act;
(13) make pension payments to the South Carolina 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 corporation who qualify in the same manner as other state employees in the executive branch of government;
(14) select and contract with vendors and retailers;
(15) enter into contracts or agreements with state or local law enforcement agencies for the performance of law enforcement, background investigations, and security checks;
(16) enter into contracts of any and all types on such terms and conditions as the corporation may determine;
(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. The corporation shall promote fair and responsible play, including disclosure of the odds of winning. In addition, wherever lottery game tickets are sold, the corporation shall provide information regarding resources for persons with gambling problems;
(19) act as a 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; and
(20) promulgate regulations and adopt and amend policies and procedures necessary to carry out and implement its powers and duties, organize and operate the corporation, regulate the conduct of lottery games in general, and other matters necessary or desirable for the efficient and effective operation of the lottery or the convenience of the public.
(B) The powers enumerated in subsection (A) of this section are cumulative of and in addition to those powers enumerated elsewhere in this chapter, and do not limit or restrict other powers of the corporation.
(C) The corporation is prohibited from distributing monies other than as prescribed by this chapter.
(D) The corporation is not authorized to use any machine specifically prohibited by Sections 12-21-2710, 16-19-40, and 16-19-50.
(E) The corporation is subject to the limitations upon, and exemptions from, liability and damages provided in the South Carolina Tort Claims Act.
Section 33-57-170. The board may promulgate regulations and adopt policies and procedures regulating the conduct of lottery games in general including, but not limited to, regulations, policies, and procedures specifying the:
(1) type of lottery games as described in Section 33-57-120(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 33-57-120(7);
(2) sale price of lottery game tickets or shares and the manner of sale, except that all sales must be for cash or debit card only. Payment by checks, credit cards, charge cards, or other form of deferred payment is 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 retailers 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;
(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 may be placed only in locations on the premises of the lottery retailer which are within the view of the retailer or his employee;
(10) manner and amount of compensation to lottery retailers; and
(11) other matters necessary, desirable, or convenient toward ensuring the efficient and effective operation of lottery games, the continued entertainment and convenience of the public, and the integrity of the lottery.
Section 33-57-180. (A) The board shall appoint and provide for the compensation of a chief executive officer who must be an employee of the corporation and who directs the day-to-day operations and management of the corporation and is vested with powers and duties specified by the board and by law. The chief executive officer serves at the pleasure of the board.
(B) The board shall hire and shall provide for the compensation of an internal auditor and necessary staff who must be employees of the corporation 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 33-57-190. (A) The chief executive officer of the corporation shall direct and supervise all administrative and technical activities as provided by this chapter and by the regulations promulgated and policies and procedures adopted by the board. It is the duty of the chief executive officer to:
(1) oversee the initiation, supervision, and administration of the operation of the lottery games;
(2) employ and direct necessary personnel;
(3) employ by contract and compensate necessary persons and firms;
(4) promote or provide for promotion of the lottery and functions related to the corporation;
(5) prepare a budget for the approval of the board;
(6) require bond from retailers and vendors in amounts required by the board;
(7) report quarterly to the board with a full and complete statement of lottery revenues and expenses for the preceding quarter; and
(8) perform other duties generally associated with a chief executive officer of a corporation of an entrepreneurial nature.
(B) The chief executive officer, for good cause, may suspend revoke, or refuse to renew a contract entered into as provided by this chapter or the regulations, policies, and procedures of the board.
(C) The chief executive officer or his designee may conduct hearings and administer oaths to persons for the purpose of assuring the security and integrity of lottery operations or to determine the qualifications of, or compliance by, vendors and retailers.
Section 33-57-200. (A) The corporation shall establish and maintain a personnel program for its employees and fix the compensation and terms of compensation of its employees including, but not limited to, production incentive payments.
(B) An employee of the corporation may not have a financial interest in a vendor doing business or proposing to do business with the corporation.
(C) An employee of the corporation who has decision-making authority may not participate in a decision involving a retailer with whom the employee has an economic interest as defined in the South Carolina Ethics Reform Act.
(D) An employee of the corporation who leaves the employment of the corporation may not represent a vendor or lottery retailer before the corporation for a period of one year following termination of employment with the corporation.
(E) A background investigation must be conducted on each applicant who has reached the final selection process before employment by the corporation at the level of division director and above and at any level within a division of security and as otherwise required by the board. The corporation shall pay for the cost of the investigations and may contract with the State Law Enforcement Division for the performance of the investigations.
(F) The corporation may not employ a person who has been convicted of a felony or bookmaking or other forms of illegal gambling or of a crime involving moral turpitude.
(G) The corporation shall bond corporation employees who have access to corporation funds or lottery revenue in an amount provided by the board and may bond other employees as necessary.
Section 33-57-210. (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 lottery retailers. The Governor also shall appoint the chairman of the Advisory Board. The function of the advisory board is to advise the board on retail aspects of the lottery and to present the concerns of lottery retailers throughout the State. The Lottery Retailer 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 Lottery Retailer Advisory Board serve terms of two years, except that four of the initial retailer appointees serve initial terms of one year and five serve initial terms of two years. The chairman of the Lottery Retailer 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, or commissions. The advisory board may report to the board or to the oversight committee in writing at any time. The board may invite the advisory board to make an oral presentation to the board at regular meetings of the board.
Section 33-57-220. The corporation shall encourage participation by minority businesses. The board shall adopt a plan that achieves to the greatest extent possible a level of participation by minority businesses, taking into account the total number of all retailers and vendors, to include subcontractors. The corporation shall undertake training programs and other educational activities to enable minority businesses to compete for contracts on an equal basis. The board shall monitor the results of minority business participation and shall report those results to the Governor on at least an annual basis.
Section 33-57-230. (A) The corporation shall investigate the financial responsibility, security, and integrity of a lottery system vendor who is a finalist in submitting a bid, proposal, or offer as part of a procurement. At the time of submitting the bid, proposal, or offer to the corporation, the corporation may require disclosure of the:
(1) vendor's name and address and, as applicable, the names and addresses of the following, if the 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 vendor does business and the nature of the business for each such state or jurisdiction;
(3) states and jurisdictions in which the 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 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 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 vendor; and
(7) additional disclosures and information the corporation determines appropriate for the procurement involved. If at least twenty percent of the cost of a vendor's contract is subcontracted, the vendor shall disclose all of the information required by this section for the subcontractor as if the subcontractor were itself a vendor.
(B) A lottery procurement contract may not be entered into with a lottery system vendor who has not complied with the disclosure requirements described in subsection (A) of this section, and a contract with a noncomplying vendor is voidable at the option of the corporation. The corporation may terminate a contract with a 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 corporation of the competence, integrity, background, and character of vendors for procurements.
(C) A procurement contract may not be entered into with a vendor who has been found guilty of a felony related to the security or integrity of the lottery in this or any other jurisdiction.
(D) A procurement contract may not be entered into with a vendor if the vendor has an ownership interest in an entity that supplied consultation services under contract to the corporation regarding the request for proposals pertaining to those particular goods or services.
(E) A lottery system vendor or applicant for a procurement contract may not pay, give, or otherwise make available anything of value in violation of provisions of the South Carolina Ethics Reform Act.
(F) A lottery system vendor may not contribute to the campaign of a candidate for political office.
Section 33-57-240. (A) At the execution of the contract with the corporation, a vendor shall post a performance bond or letter of credit from a bank or credit provider acceptable to the corporation in an amount determined by the corporation for that particular bid or contract. Instead of the bond, a vendor, to assure the faithful performance of its obligations, may deposit and maintain with the corporation 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:
(a) 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 corporation;
(b) 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
(c) corporate bonds approved by the corporation. The corporation that issued the bonds may 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 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 may not be entered into with a vendor in which a public official has an ownership interest of ten percent or more.
(D) Procurement contracts must be handled in accordance with the South Carolina Consolidated Procurement Code.
Section 33-57-250. (A) The corporation shall:
(1) develop and maintain a statewide network of lottery retailers to serve the public convenience and promote the sale of lottery game tickets or shares and the playing of lottery games while ensuring the integrity of the lottery operations, lottery games, and activities;
(2) provide small retailers a chance to participate in the sales of lottery game tickets or shares;
(3) provide for compensation to lottery retailers in the form of commissions in an amount not less than six percent of gross proceeds, and may provide for other forms of compensation for services rendered in the sale or cashing of lottery game tickets or shares, up to two percent of gross lottery revenues;
(4) issue a certificate of authority to each person with whom it contracts as a retailer and each lottery retailer shall post and conspicuously display its certificate on the premises in a location clearly visible to the public. A certificate is not assignable or transferable to a third party.
(B) The board shall develop a list of objective criteria upon which the qualification of lottery retailers must be based. Separate criteria must be developed to govern the selection of retailers of instant tickets and on-line retailers. 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 may not consider political affiliation or activities or monetary contributions to political organizations or candidates for public office. The criteria must include, but may not be 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 corporation.
(2) A person, partnership, unincorporated association, corporation, or other business entity may 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 illegal 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 the imprisonment and the fine, 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 corporation, unless either ten years have passed since the violation or the board finds the violation both minor and unintentional in nature;
(d) is a vendor or an employee or agent of a vendor doing business with the corporation;
(e) resides in the same household as an officer of the corporation;
(f) has made a statement of material fact to the corporation knowing the statement is false;
(g) is a public official or is an entity in which a public official has an ownership interest of ten percent or more; or
(h) is engaged exclusively in the business of selling lottery game tickets or shares, except that the corporation may sell or give away lottery game tickets or shares for promotional purposes.
(3) A person applying to become a lottery retailer must be charged a uniform application fee for each lottery outlet. A 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 chief executive officer or his designee if the retailer is found to have violated a provision of this chapter or objective criteria established by the board.
(5) Lottery retailer contracts may be renewable annually at the discretion of the corporation, unless sooner canceled or terminated.
(6) A lottery retailer or lottery retailer applicant may not pay, give, or otherwise make available anything of value in violation of provisions of the South Carolina Ethics Reform Act.
Section 33-57-260. (A) A lottery retailer contract is not transferable or assignable. A lottery retailer may not contract with a person for lottery goods or services except with the approval of the board.
(B) Lottery game tickets and shares may be sold only by the retailer named on the lottery retailer certificate.
Section 33-57-270. (A) The corporation shall establish a fidelity fund separate from all other funds and shall assess each retailer a one-time fee not to exceed one hundred dollars for each sales location. The corporation may invest the funds or place the funds in one or more interest-bearing accounts. Monies deposited into the fund may be used to cover losses the corporation may experience due to nonfeasance, misfeasance, or malfeasance of a lottery retailer. In addition, the funds may be used to purchase blanket bonds covering the corporation against losses from all retailers. At the end of each fiscal year, the corporation shall pay to the Lottery for Education Account any amount in the fidelity fund which exceeds five hundred thousand dollars, and the funds paid must be commingled with and treated as net proceeds from the lottery.
(B) A reserve account may be established as a general operating expense to cover amounts deemed uncollectible from the retailers. The corporation 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 corporation may require a retailer to post an appropriate bond, as determined by the corporation, using an insurance company acceptable to the corporation. The amount may not exceed the applicable district sales average of lottery game tickets for two billing periods.
(D)(1) In its discretion, the corporation may allow a retailer to deposit and maintain with the corporation 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 corporation.
Section 33-57-280. (A) A retail contract executed by the corporation pursuant to this chapter must specify the reasons for which the contract may be canceled, suspended, revoked, or terminated by the corporation including, but not be limited to:
(1) commission of a violation of this chapter, a regulation, or a policy or procedure of the corporation;
(2) failure to account accurately or timely for lottery game tickets, lottery games, revenues, or prizes as required by the corporation;
(3) commission of 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 retailer;
(7) a material change, as determined in the sole discretion of the corporation, in a matter considered material by the corporation in executing the contract with the retailer; or
(8) failure to meet any of the objective criteria established by the corporation 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 chief executive officer 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. The contract may be suspended temporarily by the chief executive officer or his designee without prior notice pending any prosecution, hearing, or investigation, whether by a third party or by the chief executive officer. A contract may be suspended, revoked, or terminated by the chief executive officer or his designee for any one or more of the reasons provided in this section. A hearing must be conducted by the chief executive officer or his designee. A party to the contract aggrieved by the decision of the chief executive officer or his designee may appeal the adverse decision to the board pursuant to the regulations, policies, and procedures set by the board.
Section 33-57-290. (A) All proceeds from the sale of the lottery game tickets or shares constitute a trust fund until paid to the corporation either directly or through the corporation'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 lottery retailers. Sales proceeds and unused instant tickets must be delivered to the corporation or its authorized collection representative upon demand.
(B) 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. These lottery proceeds may not be commingled with other funds or assets. Each lottery retailer shall place all lottery proceeds due the corporation in accounts in institutions insured by the Federal Deposit Insurance Corporation no later than the close of the next banking day after the date of their collection by the retailer until the date they are paid over to the corporation. At the time of deposit, lottery proceeds are the property of the corporation. The corporation may require a retailer to establish a single separate electronic funds transfer account, where available, for receiving monies from lottery game ticket or share sales, making payments to the corporation, and receiving payments for the corporation.
(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 corporation from the person or his estate in preference over all debts or demands.
Section 33-57-300. 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 corporation may be considered the amount of the lottery retail sale for purposes of computing the rental payment.
Section 33-57-310. (A) A person may not sell a lottery game ticket or share at a price other than that established by the corporation unless authorized in writing by the chief executive officer. A person other than a duly certified lottery retailer may not sell lottery game tickets, but a person may lawfully purchase lottery game tickets or shares and make a gift of the lottery game tickets or shares to another. The corporation may designate certain agents and employees to sell or give lottery game tickets or shares directly to the public.
(B) Lottery game tickets or shares may 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 corporation.
(C) A lottery retailer may not sell a lottery game ticket or share except from the locations listed in the retailer's contract and as evidenced by the retailer's certificate of authorization unless the corporation authorizes in writing a temporary location not listed in the retailer's contract.
(D) Lottery game tickets or shares may 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 corporation 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 62-5-433.
Section 33-57-320. (A) Lottery prizes are subject to the South Carolina state income tax. Residents and nonresidents of this State who receive a lottery prize in excess of five hundred dollars are subject to a mandatory withholding of state income tax as required by law. Federal income tax is required by law to be withheld from lottery prizes in excess of five thousand dollars.
(B) Except as otherwise provided in this chapter, attachments, garnishments, or executions authorized and issued pursuant to law must be withheld if timely served upon the corporation. This subsection does not apply to a retailer.
(C) The corporation shall promulgate regulations and adopt policies and procedures to establish a system of verifying the validity of lottery games tickets or shares claimed to win prizes and to effect payment of prizes.
(1) A prize, a portion of a prize, or a right of a person to a prize awarded is not assignable except as provided in this section. A prize or a portion of a prize remaining unpaid at the death of a prize winner must be paid to the estate of the deceased prize winner or to the trustee of a trust established by the deceased prize winner as settlor if a copy of the trust document or instrument has been filed with the corporation with a notarized letter of direction from the settlor and no written notice of revocation has been received by the corporation before the settlor's death. Following a settlor's death and before payment to a trustee, the corporation shall obtain from the trustee a written agreement to indemnify and hold the corporation harmless with respect to claims that may be asserted against the corporation arising from payment to or through the trust. Notwithstanding any other provisions of this section, a person, pursuant to an appropriate judicial order, may be paid the prize to which a winner is entitled.
(2) A prize may not be paid if it:
(a) arises from claimed lottery game tickets that are stolen, counterfeit, altered, fraudulent, unissued, produced or issued in error, unreadable, not received, or not recorded by the corporation within applicable deadlines;
(b) lacks in captions that conform and agree with the play symbols as appropriate to the particular lottery game involved;
(c) fails to comply with additional specific regulations and public or confidential validation and security tests of the corporation appropriate to the particular lottery game involved.
(3) A particular prize in a lottery game may not be paid more than once, and if more than one person is entitled to a particular prize, the sole remedy of those persons is the award to each of them of an equal share in the prize.
(4) A holder of a winning lottery game ticket or share from a lottery game, multi-state, or multi-sovereign lottery game shall claim a cash prize within one hundred eighty days after the drawing in which the cash prize was won. In a South Carolina lottery game in which the player may determine instantly if he has won or lost, he shall claim a cash prize within ninety days, or for a multi-state lottery game within one hundred eighty days, after the end of the lottery game. If a valid claim is not made for a cash prize within the applicable period, the cash prize is an unclaimed prize for purposes of this chapter.
(D) A prize may not be paid upon a lottery game ticket or share purchased or sold in violation of this chapter and is an unclaimed prize for purposes of this section.
(E) The corporation is discharged of all liability upon payment of a prize.
(F) A lottery game ticket or share may not be purchased by and a prize may not be paid to a member of the board, an officer or employee of the corporation, or a spouse, child, brother, sister, or parent residing as a member of the same household in his principal place of residence. A lottery game ticket or share may not be purchased by and a prize may not be paid to an officer, employee, agent, or a subcontractor of a vendor, or a spouse, child, brother, sister, or parent residing as a member of the same household in his principal place of residence if he has access to confidential information that may compromise the integrity of the lottery.
(G) A lottery game, authorized pursuant to this chapter, utilizing an electronic or mechanical machine, may not use a machine that dispenses coins or currency.
(H) The first five hundred thousand dollars received annually must be directed to the Department of Alcohol and Other Drug Abuse Services for the treatment of compulsive gambling disorder and educational programs related to that disorder, including a gambling hotline. The director of the Department of Alcohol and Other Drug Abuse Services shall report to the board on the programs implemented with these funds and provide a copy of the report to the General Assembly. Unclaimed prize money in excess of five hundred thousand dollars must be deposited in the Education Lottery Account.
Section 33-57-330. (A) The corporation is subject to the provisions of Chapter 4, Title 30, the South Carolina Freedom of Information Act.
(B) The corporation shall perform full criminal background investigations before the execution of a vendor contract.
(C) The corporation or its authorized agent shall:
(1) conduct criminal background investigations and credit investigations on all potential retailers and employees;
(2) supervise lottery game ticket or share validation and lottery drawings;
(3) inspect at times determined solely by the corporation the facilities or operations of a vendor or lottery retailer to determine the integrity of the vendor's product or compliance by the retailer or vendor with its contract;
(4) report suspected violations of this chapter to the appropriate investigative and prosecutorial agency having jurisdiction over the violation; and
(5) upon request, provide assistance to a solicitor, the Attorney General, or a law enforcement agency investigating a violation of this chapter.
Section 33-57-340. (A) A person who knowingly sells a lottery game ticket or share to a person under eighteen years of age or permits a person under eighteen years of age to play a lottery game is guilty of a misdemeanor and, upon conviction, must be fined not less than one hundred dollars nor more than two hundred dollars or be imprisoned not less than thirty days nor more than sixty days, or both, in the discretion of the court. It is an affirmative defense to a charge of a violation of this section that the retailer reasonably and in good faith relied upon representation of proof of age in making the sale.
(B) A person under eighteen years of age who knowingly purchases a lottery game ticket is guilty of a misdemeanor and, upon conviction, must be fined not less than twenty-five dollars and not more than one hundred dollars.
(C) A lottery game using an electronic or mechanical device must bear a conspicuous label prohibiting the use of the device by a person under eighteen years of age. Electronic or mechanical device does not include machines and lottery games prohibited by Sections 12-21-2710, 16-19-40, and 16-19-50.
Section 33-57-350. (A) A person who, with intent to defraud, falsely makes, alters, forges, utters, passes, or counterfeits a state lottery game ticket is guilty of a felony and, upon conviction, must be fined not more than fifty thousand dollars or imprisoned not more than five years, or both.
(B) A person who influences or attempts to influence the winning of a prize through the use of coercion, fraud, deception, or tampering with lottery equipment or materials is guilty of a felony and, upon conviction, must be fined not more than fifty thousand dollars or imprisoned not more than five years, or both.
(C) A person who is convicted of a violation of subsection (A) or (B) of this section may not be the recipient of an award of a lottery prize or a portion of a lottery prize and is ineligible for employment by the corporation.
Section 33-57-360. (A) A person may not make, knowingly or intentionally, a material false statement in an application for a license or proposal to conduct lottery activities or a material false entry in a book or record which is compiled or maintained or submitted to the board pursuant to the provisions of this chapter. A person who violates the provisions of this section is guilty of a felony and, upon conviction, must be fined not more than twenty-five thousand dollars or the dollar amount of the false entry or statement, whichever is greater, or imprisoned for not more than five years, or both.
(B) A person who is convicted of a violation of subsection (A) of this section also shall surrender his license immediately and is ineligible to be issued a license by the corporation.
Section 33-57-370. (A) The corporation may enter into intelligence sharing, reciprocal use, or restricted use agreements with the federal government, law enforcement agencies, lottery regulation agencies, and gaming enforcement agencies of other jurisdictions which provide for and regulate the use of information provided and received pursuant to the agreement.
(B) Records, documents, and information in the possession of the corporation received pursuant to an intelligence sharing, reciprocal use, or restricted use agreement entered into by the corporation with a federal department or agency, a law enforcement agency, or the lottery regulation or gaming enforcement agency of a jurisdiction are considered investigative records of a law enforcement agency and are subject to the confidentiality and disclosure policies, and may not be released without the permission of the person or agency providing the record or information, except as may be required by the Freedom of Information Act.
Section 33-57-380. The corporation must enter into its contracts for procurements in compliance with the South Carolina Consolidated Procurement Code.
Section 33-57-390. (A) Any retailer, vendor, applicant for a retailer license, or lottery game ticket holder aggrieved by an action of the board may appeal that decision to the South Carolina Administrative Law Judge Division. The action is subject to review by an administrative law judge on the record of the board, upon petition of the aggrieved person within ten days from receipt of official notice from the board of the action of which review is sought. Service of notice is presumed conclusively ten days after mailing by registered or certified mail to the applicant or licensee of notice at his last known address. An appeal to the South Carolina Administrative Law Judge Division pursuant to this section is not a contested case as defined by the Administrative Procedures Act, but the appeal is subject to the procedural due process requirements provided for in Article 5, Chapter 23, Title 1 and the Rules of Procedure of the Administrative Law Judge Division. Appeals regarding vendor contracts must be brought pursuant to the South Carolina Procurement Code.
(B) The South Carolina Administrative Law Judge Division shall hear appeals from decisions of the board and, based upon the record of the proceedings before the board, may reverse the decision of the board only if the appellant proves the decision to be:
(1) in violation of constitutional or statutory provisions;
(2) in excess of the statutory authority of the board;
(3) made upon unlawful procedure;
(4) affected by other error of law;
(5) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or
(6) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion;
(C) The South Carolina Administrative Law Judge Division may remand an appeal to the board to conduct further hearings.
(D) For judicial review of a final decision of an administrative law judge in a case involving the corporation, the petition by an aggrieved party must be filed with the circuit court and served on the opposing party not more than thirty days after the aggrieved party receives the final decision and order of the administrative law judge. Appeal in these matters is by right.
(E) A vendor who appeals the award of a procurement contract for the supply of a lottery game ticket system, share system, or an on-line or other mechanical or electronic system is liable for all costs of appeal and defense if the appeal is denied or the contract award is upheld. Cost of appeal and defense specifically includes, but is not limited to, administrative proceedings, court costs, bond, legal fees, and loss of income to the corporation resulting from institution of the appeal if, upon the motion of the corporation, the court finds the appeal was frivolous.
(F) All actions and proceedings for review pursuant to this chapter, and all actions and proceedings to which the corporation may be a party and in which a question arises pursuant to this chapter or pursuant to or concerning any order or decision of the corporation must be given priority of hearing in all courts and reviewing entities over all other civil causes except election cases irrespective of position on the calendar.
Section 33-57-400. (A) The corporation may borrow, or accept and expend, pursuant to the provisions of this chapter, monies received from any source, including income from the corporation's operations, for effectuating its corporate purposes, including payment of the initial expenses of initiation, administration, and operation of the corporation and the lottery.
(B) The corporation must be self-sustaining and self-funded. Monies in the state general fund may not be used or obligated to pay the expenses of the corporation or prizes of the lottery, and a claim for the payment of an expense of the lottery or prizes of the lottery may not be made against any monies other than monies credited to the corporation operating account.
(C) The corporation may purchase, lease, or lease-purchase goods or services necessary for effectuating the purposes of this chapter. The corporation may make procurements which integrate functions such as lottery game design, lottery game ticket distribution to retailers, supply of goods and services, and advertising. In all procurement decisions, the corporation shall act to promote and ensure security, honesty, fairness, and integrity in the operation and administration of the lottery and the objectives of raising net proceeds for the benefit of educational programs and purposes.
Section 33-57-410. To ensure the financial integrity of the lottery, the corporation, through its board, shall:
(1) submit quarterly and annual reports to the Governor, President Pro Tempore of the Senate, the Speaker of the House of Representatives, State Auditor, Comptroller General, State Treasurer, and the oversight committee created by Section 33-57-420 disclosing the total lottery revenues, prize disbursements, operating expenses, and administrative expenses of the corporation during the reporting period. The annual report additionally must describe the organizational structure of the corporation, summarize the functions performed by each organizational division within the corporation, and contain a detailed budget for the next fiscal year;
(2) adopt a system of internal audits;
(3) maintain weekly or more frequent records of lottery transactions including the distribution of lottery game tickets or shares to retailers, revenues received, claims for prizes, prizes paid, prizes forfeited, and other financial transactions of the corporation;
(4) authorize the State Auditor to contract with a certified public accountant or firm for an independently audited financial statement prepared in accordance with generally accepted accounting principles, to be submitted to the Comptroller General's office each year no later than October fifteenth. The certified public accountant or firm may not have a financial interest in a vendor with whom the corporation is under contract. The certified public accountant or firm shall evaluate the internal auditing controls in effect during the audit period. The cost of this annual financial audit is an operating expense of the corporation. The State Auditor may at any time conduct an audit of any phase of the operations of the corporation at the expense of the State and shall receive a copy of the annual independent financial audit. A copy of an audit performed by the certified public accountant or firm or the State Auditor must be transmitted by October fifteenth after the close of the corporation's fiscal year to the Governor, President Pro Tempore of the Senate, the Speaker of the House of Representatives, the State Auditor, State Treasurer, and the oversight committee co-chairmen;
(5) submit, for informational purposes only, to the Office of State Budget of the Budget and Control Board and the State Auditor by June thirtieth of each year a copy of the annual operating budget for the corporation for the next fiscal year. This annual operating budget must be approved by the board;
(6) submit, for informational purposes only, to the Office of State Budget on November tenth of each year a proposed operating budget for the corporation for the upcoming fiscal year. This budget proposal also must be accompanied by an estimate of the net proceeds to be deposited into the Lottery for Education Account during the upcoming fiscal year; and
(7) adopt the same fiscal year as that used by state government.
Section 33-57-420. (A) There is created as a committee, the South Carolina Education Lottery Oversight Committee, to be composed of twelve members. The members of the committee are appointed as follows: the Speaker of the House of Representatives appoints three members; the President Pro Tempore of the Senate appoints three members; the Chairman of the South Carolina Commission on Higher Education appoints three members; and the Chairman of the South Carolina Education Oversight Committee appoints three members. The Speaker of the House of Representatives and the President Pro Tempore of the Senate shall each appoint one co-chairman from the membership of the South Carolina Education Lottery Oversight Committee. The oversight committee periodically shall inquire into and review the operations of the corporation, and periodically shall review and evaluate the success with which the authority is accomplishing its statutory duties and functions as provided in this chapter. The oversight committee may conduct an independent audit or investigation of the authority as necessary.
(B) The corporation shall provide the oversight committee, no later than December first of each year, a complete report of the level of participation of minority businesses in all retail and procurement contracts awarded by the corporation.
Section 33-57-430. (A) All claimant agencies of this State and persons on whose behalf the State and its claimant agencies act, in conjunction with the corporation, shall cooperate in identifying debtors who owe money to the State and who qualify for prizes pursuant to this chapter from the corporation; and the sum of any debt owed to the State or to persons on whose behalf the State and its claimant agencies act must be set off against a prize awarded pursuant to this chapter. This section is to be liberally construed to effectuate these purposes.
(B) As used in this section:
(1) 'Claimant agency' means any state or local agency, department, board, bureau, commission, or authority to which an individual owes a debt or which acts on behalf of an individual to collect a debt.
(2) 'Debt' means a liquidated sum due and owing a claimant agency, which sum has accrued through contract, subrogation, tort, or operation of law regardless of whether there is an outstanding judgment for the sum, or a sum which is due and owing a person and is enforceable by the State or any of its agencies or departments.
(3) 'Debtor' means an individual owing money to or having a delinquent account with a claimant agency, which obligation has not been adjudicated as satisfied by court order, set aside by court order, or discharged in bankruptcy.
(4) 'Prize' means the proceeds of a lottery prize awarded pursuant to this chapter.
(C) The collection remedy authorized by this section is in addition to and not in substitution for any other remedy available by law.
(D)(1) A claimant agency may submit to the corporation a list of the names of all persons owing debts in excess of one hundred dollars to the claimant agency or to persons on whose behalf the claimant agency acts. The full amount of the debt is collectible from lottery winnings without regard to limitations on the amounts that may be collectible in increments through garnishment or other proceedings. The list constitutes a valid lien upon and claim of lien against the lottery winnings of a debtor named in the list. The list must contain the names of the debtors, their Social Security numbers if available, and other information which would assist the corporation in identifying the debtors named in the list.
(2) The corporation shall withhold winnings subject to the lien created by this section and send notice to the winner by certified mail, return receipt requested, of such action and the reason the winnings were withheld. If the winner appears and claims winnings in person, the corporation shall notify the winner at that time, by hand delivery, of the action. If the debtor does not protest, in writing, the withholding of the funds within thirty days of notice, the corporation shall pay the funds over to the claimant agency. If the debtor protests the withholding of funds, in writing, within thirty days of the notice, the corporation shall file an action in interpleader in the circuit court of the county in which the debtor resides, pay the disputed sum into the court, and give notice to the claimant agency and debtor of the initiation of the action.
(3) The liens created by this section rank among themselves as follows:
(a) taxes due the State;
(b) delinquent child support;
(c) delinquent student loans; and
(d) all other judgments and liens in order of the date entered or perfected.
(4) The corporation is not required to deduct claimed debts from prizes paid out by retailers or entities other than the corporation.
(5) A list of debtors and debts must be provided, pursuant to this section, periodically as the corporation determines by rules and regulations, and the corporation is not obligated to retain the lists or deduct debts appearing on the lists beyond the period determined by the rules and regulations.
(6) The corporation may prescribe forms, propose rules, and promulgate regulations necessary to carry out the provisions of this section.
(7) The corporation and a claimant agency do not incur civil or criminal liability for good faith adherence to the provisions of this section.
(8) The claimant agency shall pay the corporation for all costs incurred by the corporation in setting off debts in the manner provided in this section. The corporation may retain this fee as part of administrative expenses.
(E)(1) Notwithstanding Section 33-57-370 or other confidentiality law, the corporation may provide to a claimant agency all information necessary to accomplish and effectuate the intent of this section.
(2) The information obtained by a claimant agency from the corporation pursuant to this section must retain its confidentiality and may be used only by a claimant agency in the pursuit of its debt collection duties and practices. An employee or former employee of a claimant agency who unlawfully discloses this information for another purpose, except as otherwise specifically authorized by law, is subject to penalties as provided by law.
(F) The provisions of this section apply only to prizes of five thousand dollars or more and do not apply to retailers authorized by the board to pay prizes of up to five thousand dollars after deducting the price of the lottery game ticket or share.
Section 33-57-440. (A)(1) All lottery proceeds are the property of the corporation.
(2) From its lottery proceeds, the corporation shall pay the operating expenses of the corporation. Approximately fifty percent of the amount of money from the actual sale of lottery game tickets or shares must be made available as prize money, except that this item does not create any lien, entitlement, cause of action, or other private right, and rights of holders of lottery games tickets or shares must be determined by the corporation in setting the terms of its lottery or lotteries.
(B)(1) On or before the twentieth day of each month, the corporation shall transfer to the Lottery for Education Account, the amount of all net proceeds during the preceding month. The State Treasurer shall account separately for net proceeds by establishing and maintaining a Lottery for Education Account. These proceeds may not be commingled with any other funds.
(2) Upon their deposit with the State, monies representing a deposit of net proceeds become the unencumbered property of the State of South Carolina and the corporation may not agree or undertake otherwise. The monies may be invested by the State Treasurer pursuant to state investment practices. All earnings attributable to the investments are also the unencumbered property of the State and accrue to the credit of the Lottery for Education Account.
(3)(a) A reserve account must be maintained within the Lottery for Education Account. The amount of the reserve account must equal ten percent of the total amount of lottery proceeds deposited into the Lottery for Education Account for the preceding fiscal year. For the first twelve months of operation, ten percent of the lottery proceeds received by the State must be credited to the reserve account. After the end of the first complete fiscal year, the reserve account must be maintained at the ten percent level.
(b) If the reserve account is drawn upon during the fiscal year, the account must be brought back to the appropriate level during the following fiscal year.
(c) The reserve account may only be drawn upon if the net proceeds are insufficient to meet the required funding for the scholarships as provided in Section 33-57-460.
(C)(1) Pursuant to Section 11-9-880, the Board of Economic Advisors, in conjunction with the corporation, shall provide to the General Assembly, in a separate estimate, the amount of projected net lottery proceeds for the upcoming fiscal year. The State Treasurer's Office shall estimate the annual interest earnings from corporation funds. All interest earnings and other net proceeds must be used for educational purposes and programs.
(2) Appropriations from the Lottery for Education Account must be for educational purposes and programs only as defined in Section 33-57-120(5). These appropriations must be used to supplement and not supplant existing funds used for education.
(3) If expenditures for particular educational purposes or programs as defined in this chapter are less than the amounts appropriated, the excess may be retained in the account and expended the following fiscal year for those particular purposes or programs.
(D)(1) A deficiency in the Lottery for Education Account may not be replenished by book entries reducing a nonlottery reserve of general funds including specifically, but without limitation, the General Reserve Fund or the Capital Reserve Fund.
(2) A surplus in the Lottery for Education Account may not be reduced to correct nonlottery deficiencies in sums available for general appropriations, and a surplus in the Lottery for Education Account may not be included in a surplus calculated for setting aside a nonlottery reserve, specifically, without limitation, the General Reserve Fund or the Capital Reserve Fund.
Section 33-57-450. The net proceeds received from the state lottery for education as provided by law must be deposited by the State Treasurer in a fund separate and distinct from the state general fund entitled the 'Education Lottery Account'. All interest or income earned by the fund must be retained in the account and used for its stated purposes. However, all revenue received by the Education Lottery Account in any fiscal year together with earnings on it for that year must be disbursed as required by Section 33-57-460. It is the intent of the General Assembly in creating this Education Lottery Account that its funds be managed so as to establish and fund these programs permanently. Upon receipt of monies transferred to the Education Lottery Account by the State Treasurer, these monies must be appropriated to the programs and for the purposes stipulated in Section 33-57-460 in priority order with the programs ranked in higher order being fully funded first before other programs in lesser order are funded to any degree. The Comptroller General shall record these revenues received on a cash basis and disbursements for the purposes provided also must be on a cash basis; except, that unexpended funds at the end of a fiscal year after disbursement to the programs authorized to receive the funds as provided in Section 33-57-460 may be carried forward to future years and expended for the same purposes.
Section 33-57-460. (A) There is appropriated for the following purposes and programs annually from the Education Lottery Account in priority order on a fiscal year basis beginning with fiscal year 2001-02 the amounts indicated as follows, after maintaining the reserve fund as provided in Section 33-57-440(3):
(1) free tuition at state technical colleges and two-year public institutions as provided in Section 33-57-470 of this chapter. Lottery tuition assistance at independent two-year institutions must be the same as the maximum in-state tuition rate at a two-year public institution:
(a) for fiscal year 2001-02, twenty million dollars is appropriated for the Spring semester beginning in January, 2002;
(b) for fiscal year 2002-03, forty million dollars is appropriated;
(c) for fiscal years after 2002-03, the South Carolina Budget and Control Board may increase this annual amount to account for inflation and enrollment growth in an amount certified by the Board of Economic Advisors;
(d) at least six million dollars of the needs-based grants generated by the South Carolina Education Lottery must be designated to help offset the cost of attendance of Pell grant recipients at public two-year institutions. A student may not receive reduced financial aid as a result of this section.
(2) SC HOPE Scholarship Program established pursuant to Section 33-57-480 of this chapter:
(a) for fiscal year 2001-02, twenty million dollars is appropriated for the Spring semester beginning in January, 2002;
(b) for fiscal year 2002-03, forty million dollars is appropriated;
(c) for fiscal years after 2002-03, the South Carolina Budget and Control Board may increase this annual amount to account for inflation and enrollment growth in an amount certified by the Board of Economic Advisors;
(3)(a) sixteen million dollars is appropriated beginning with fiscal year 2002-03 for needs-based grants pursuant to Chapter 142, Title 59;
(b) six million dollars is appropriated beginning with fiscal year 2002-03 for tuition grants pursuant to Chapter 113, Title 59;
(4) eight million dollars is appropriated beginning with fiscal year 2002-03 for teacher scholarship programs established pursuant to Section 33-57-490 of this chapter;
(5) forty-five million dollars is appropriated beginning with fiscal year 2002-03 for school technology funding as provided in Section 33-57-500 of this chapter.
(B) Distributions must be made from the Education Lottery Account on a quarterly basis on the last day of January, April, July, and October of each year beginning with the last day of January in the second year after a state education lottery has been implemented as provided by law. The Comptroller General shall distribute all available funds in the Education Lottery Account each quarter to the programs or for the purposes indicated in subsection (A). Appropriations from the Education Lottery Account for fiscal year 2001-02 must be distributed beginning in January 2002.
Section 33-57-470. (A) Notwithstanding other provisions of law, a person who qualifies for in-state tuition rates pursuant to Chapter 112, Title 59 may attend, tuition-free, a technical college of this State or a public two-year institution of higher learning. A person who qualifies for in-state tuition rates pursuant to this title may attend an independent two-year institution of higher learning and receive, each year, lottery tuition assistance up to the maximum in-state tuition rate at a two-year public institution. Each technical college or two-year institution must receive quarterly allocations from the Education Lottery Account in an amount specified by the South Carolina Budget and Control Board. In order to qualify, a student shall:
(1) be a South Carolina resident for a minimum of one year;
(2) be enrolled and maintain six credit hours each semester in a certificate, degree, or diploma program;
(3) make reasonable progress towards completion of the requirements for the certificate, degree, or diploma program;
(4) complete a Free Application for Federal Student Aid (FAFSA) application.
The South Carolina State Board for Technical and Comprehensive Education or the Commission on Higher Education, as appropriate, may provide regulations for the implementation of this section.
(B) For purposes of this chapter, a 'public or independent institution' which a student may attend to receive a scholarship as provided in this chapter includes South Carolina two-year public institutions defined in Section 59-103-5 including branch campuses and two-year independent institutions as defined in Section 59-113-50.
(C) Institutions whose sole purpose is religious or theological training, or the granting of professional degrees, do not meet the definition of 'public or independent institution' for purposes of this chapter.
(D) 'Tuition' for purposes of this section means the amount charged for registering for credit hours of instruction and academic fees and does not include other fees, charges, or costs of textbooks.
Section 33-57-480. (A) SC HOPE Scholarships are hereby established and are provided by the State. These scholarships cover the cost of attendance as defined by the Commission on Higher Education by regulation up to a maximum of two thousand dollars a year to eligible resident students attending four-year public and independent institutions as defined in subsection (B).
(B) For purposes of this chapter, a 'public or independent institution' which a student may attend to receive an SC HOPE Scholarship includes the following:
(1) a South Carolina four-year public institution defined in Section 59-103-5 and a four-year independent institution as defined in Section 59-113-50;
(2) a public or independent bachelor's level institution chartered before 1962 whose major campus and headquarters are located within South Carolina; or an independent bachelor's level institution which has attained 501(c)(3) tax status and is accredited by the Southern Association of Colleges and Secondary Schools or the New England Association of Colleges and Schools. Institutions whose sole purpose is religious or theological training, or the granting of professional degrees do not meet the definition of 'public or independent institution' for purposes of this chapter.
(C) A student is eligible to receive and maintain a SC HOPE Scholarship if he meets the criteria for receiving and maintaining the Legislative Incentives for Future Excellence (LIFE) Scholarship; except that a minimum Scholastic Aptitude Test or ACT score is not required for eligibility for the SC HOPE Scholarship. These SC HOPE Scholarships must be granted and awarded as provided in this section.
(D) A student receiving a LIFE or Palmetto Fellows Scholarship also receives an SC HOPE Scholarship pursuant to this section.
(E) These SC HOPE Scholarships in combination with all other grants and scholarships may not exceed the cost of attendance at the particular institutions referenced in subsection (B).
(F) The Commission on Higher Education shall promulgate regulations and establish procedures to administer the provision of this section. In addition, the commission shall ensure accountability for the scholarship by monitoring the distribution of grades at the institutions that receive these scholarship funds.
(G) All institutions participating in the SC HOPE Scholarship Program shall report their enrollment and other relevant data as solicited by the Commission on Higher Education which may audit these institutions to ensure compliance with this provision.
(H) If there are insufficient funds in the Education Lottery Account to provide full two thousand dollar scholarships to each eligible recipient for any particular year, the amount of each eligible recipient's scholarship must be reduced on a pro rata basis for that year as necessary to reflect the funds available.
Section 33-57-490. The Commission on Higher Education, in consultation with the State Department of Education, shall develop an Education Lottery Teaching Scholarship Grants Program to provide certified teachers in the public schools of this State grants not to exceed one thousand dollars a year to attend public or private colleges and universities for the purposes of upgrading existing content area skills or obtaining a Master's Degree in the teacher's content area. If there are insufficient funds in the Education Lottery Account to provide the grant to each eligible recipient for a particular year, priority must be given whose subject areas are critical subject needs as determined by the State Department of Education.
Section 33-57-500. (A) The State Department of Education, the South Carolina Commission on Higher Education, and the State Board for Comprehensive and Technical Education shall develop a program to provide and upgrade technology and technology delivery to the public schools and colleges of this State and establish the criteria for the program including, but not limited to, eligibility for participation, an application process, required procedures upon application or grant approval, and the manner of delivery. Half of the funds must be allocated to the state's K-12 public schools. Funds for this program must be distributed to each school district according to Education Finance Act formulas, with a local match not required and each district to receive a minimum of one hundred thousand dollars each year pursuant to this program. The other half of the available funds must be allocated to the state's public institutions of higher learning based upon performance funding criteria.
(B) If sufficient funds are not available in the Education Lottery Account to provide each school district with a minimum distribution of one hundred thousand dollars each year, each district shall receive an equal share of the available funds."
SECTION 3. Section 1-3-240(C) of the 1976 Code, as last amended by Act 181 of 1993, is further amended by adding:
"(11) South Carolina Education Lottery Corporation."
SECTION 4. Provisions of this chapter relating to the appropriation of lottery proceeds may be amended only in a separate piece of legislation solely for that purpose and by a two-thirds vote of those present and voting in both houses of the General Assembly.
SECTION 5. The repeal or amendment by this act of any law, whether temporary or permanent or civil or criminal, does not affect pending actions, rights, duties, or liabilities founded thereon, or alter, discharge, release or extinguish any penalty, forfeiture, or liability incurred under the repealed or amended law, unless the repealed or amended provision shall so expressly provide. After the effective date of this act, all laws repealed or amended by this act must be taken and treated as remaining in full force and effect for the purpose of sustaining any pending or vested right, civil action, special proceeding, criminal prosecution, or appeal existing as of the effective date of this act, and for the enforcement of rights, duties, penalties, forfeitures, and liabilities as they stood under the repealed or amended laws.
SECTION 6. Criminal penalties contained in Chapter 57, Title 33 apply only to offenses committed on or after the effective date of this act.
SECTION 7. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this chapter, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 8. Upon approval by the Governor, this act takes effect upon ratification of the amendment to Section 7, Article XVII of the Constitution of this State.
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