S 0002 General Bill, By Passailaigue, McConnell, Ford, Elliott, Hutto, Glover and 
Reese

Similar(H 3005)
 A BILL TO AMEND TITLE 11 OF THE CODE OF LAWS OF SOUTH CAROLINA, 1976 RELATING
 TO PUBLIC FINANCE, BY ADDING CHAPTER 45, ENTITLED THE "SOUTH CAROLINA LOTTERY
 FOR EDUCATION ACT" SO AS TO PROVIDE FOR A STATE LOTTERY, THE PROCEEDS OF WHICH
 MUST BE USED FOR EDUCATIONAL PURPOSES AND PROGRAMS; TO CREATE THE SOUTH
 CAROLINA LOTTERY CORPORATION AND TO PROVIDE FOR ITS 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 TICKETS AND THE DISTRIBUTION OF PRIZES;
 TO PROVIDE FOR BUDGETING OF LOTTERY PROCEEDS; TO CREATE A LOTTERY CORPORATION
 LEGISLATIVE OVERSIGHT COMMITTEE; AND TO PROVIDE FOR SET-OFF DEBT COLLECTION
 FROM PRIZE WINNINGS.

   11/18/98  Senate Prefiled
   11/18/98  Senate Referred to Committee on Finance
   01/12/99  Senate Introduced and read first time SJ-9
   01/12/99  Senate Referred to Committee on Finance SJ-9
   01/20/99  Senate Committee report: Favorable Finance SJ-11
   01/20/99  Senate Retaining place on calendar recommitted to
                     Committee on Finance SJ-12

TO AMEND TITLE 11 OF THE CODE OF LAWS OF SOUTH CAROLINA, 1976 RELATING TO PUBLIC FINANCE, BY ADDING CHAPTER 45, ENTITLED THE "SOUTH CAROLINA LOTTERY FOR EDUCATION ACT" SO AS TO PROVIDE FOR A STATE LOTTERY, THE PROCEEDS OF WHICH MUST BE USED FOR EDUCATIONAL PURPOSES AND PROGRAMS; TO CREATE THE SOUTH CAROLINA LOTTERY CORPORATION AND TO PROVIDE FOR ITS 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 TICKETS AND THE DISTRIBUTION OF PRIZES; TO PROVIDE FOR BUDGETING OF LOTTERY PROCEEDS; TO CREATE A LOTTERY CORPORATION LEGISLATIVE OVERSIGHT COMMITTEE; AND TO PROVIDE FOR SET-OFF DEBT COLLECTION FROM PRIZE WINNINGS.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Title 11 of the 1976 Code is amended by adding:

Section 11-45-100. This chapter is known and may be cited as the `South Carolina Lottery for Education Act.'

Section 11-45-110. It is found and declared by the General Assembly:

(1) that net proceeds of lottery games conducted pursuant to this chapter must be used to support improvements and enhancements for educational purposes and programs and that such net proceeds must be used to supplement, not supplant, existing resources for educational purposes and programs;

(2) that lottery games are an entrepreneurial enterprise and that the State must create a public body, corporate and politic, known as the South Carolina Lottery Corporation, with comprehensive and extensive powers as generally exercised by corporations engaged in entrepreneurial pursuits;

(3) that lottery games must be operated and managed in a manner which provides continuing entertainment to the public, maximizes revenues, and ensures that the lottery is operated with integrity and dignity and free of political influence; and

(4) that the South Carolina Lottery Corporation must be accountable to the General Assembly and to the public through a system of audits and reports.

Section 11-45-120. As used in this chapter, the term:

(1) `Administrative expenses' means operating expenses, excluding amounts set aside for prizes, regardless of whether such prizes are claimed and excluding amounts held as a fidelity fund pursuant to Section 11-45-280.

(2) `Board' means the board of directors of the South Carolina Lottery Corporation.

(3) `Capital outlay projects' means the acquisition, construction, installation, modification, renovation, repair, extension, renewal, replacement, or rehabilitation of land, interests in land, buildings, structures, facilities, or other improvements and the acquisition, installation, modification, renovation, repair, extension, renewal, replacement, rehabilitation, or furnishing of fixtures, machinery, equipment, computers, software, laboratories, furniture, textbooks, and reference material or other property of any nature whatsoever used on, in, or in connection with educational facilities.

(4) `Casino gambling' means a location or business for the purpose of conducting illegal gambling activities, but excluding the sale and purchase of lottery tickets or shares as authorized by this chapter.

(5) `Chief executive officer' means the chief executive officer of the South Carolina Lottery Corporation.

(6) `Corporation' means the South Carolina Lottery Corporation.

(7) `Educational facilities' means land, structures, and buildings under the control of a public educational institution of higher learning, a school district, or the State Department of Education within this State; provided, however, that a public road or highway leading to an educational facility may not be considered an educational facility.

(8) `Educational purposes and programs' means capital outlay projects for educational facilities; tuition grants, scholarships, or loans to citizens of this State to enable such citizens 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; costs of providing to teachers at accredited public institutions who teach levels K-12, personnel at public institutions of higher learning the necessary training in the use and application of computers and advanced electronic instructional technology to implement interactive learning environments in the classroom; costs associated with repairing and maintaining advanced electronic instructional technology; voluntary pre-kindergarten; and an education shortfall reserve.

(9) `Lottery,' `lotteries,' `lottery game,' or `lottery games' means any game of chance approved by the board and operated pursuant to this chapter, including, but not limited to, instant tickets, on-line games, and games using mechanical or electronic devices but excluding pari-mutuel betting and casino gambling as defined in this section.

(10) `Major procurement contract' means any gaming product or service costing in excess of seventy-five thousand dollars including, but not limited to, major advertising contracts, annuity contracts, prize payment agreements, consulting services, equipment, tickets, and other products and services unique to the South Carolina lottery, but not including materials, supplies, equipment, and services common to the ordinary operations of a corporation.

(11) `Member' or `members' means a director or directors of the board of directors of the South Carolina Lottery Corporation.

(12) `Member of a minority' means an individual who is a member of a race that comprises less than fifty percent of the total population of the State.

(13) `Minority business' means any business which 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 such business;

(b) a partnership in which a majority of the ownership interest 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 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.

(14) `Net proceeds' means all revenue derived from the sale of lottery tickets or shares and all other moneys derived from the lottery less operating expenses.

(15) `Operating expenses' means all costs of doing business, including, but not limited to, prizes, 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 11-45-280, and other operating costs.

(16) `Pari-mutuel betting' means a method or system of wagering on actual races involving horses or dogs at tracks which involves the distribution of winnings by pools. Such 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. Such term does not mean traditional lottery games that may involve the distribution of winnings by pools.

(17) `Person' means any individual, corporation, partnership, unincorporated association, or other legal entity.

(18) `Retailer' means a person who sells lottery tickets or shares on behalf of the corporation pursuant to a contract.

(19) `Share' means any intangible evidence of participation in a lottery game.

(20) `Ticket' means any tangible evidence issued by the lottery to provide participation in a lottery game.

(21) `Vendor' means a person who provides or proposes to provide goods or services to the corporation pursuant to a major procurement contract, but does not include an employee of the corporation, a retailer, or a state agency or instrumentality thereof. Such term does not include any corporation whose shares are publicly traded and which is the parent company of the contracting party in a major procurement contract.

Section 11-45-130. There is created a body corporate and politic to be known as the South Carolina Lottery Corporation, which is deemed to be an instrumentality of the State, and not a state agency, and a public corporation. Venue for the corporation is in Richland County.

Section 11-45-140. (A) The corporation is governed by a board of directors composed of seven members to be appointed by the Governor, with the advice and consent of the Senate. The Governor shall appoint a chairman and one person representing each of the six congressional districts.

(B) Members must be residents of the State of South Carolina, must be prominent persons in their businesses or professions, and must not have been convicted of any felony offense. The Governor should consider appointing to the board an attorney, an accountant, and a person having expertise in marketing.

(C) The chairman must be appointed for a term of five years. The other members serve terms of five years, except that of the initial members appointed, two must be appointed for initial terms of two years, two must be appointed for initial terms of four years, and two must be appointed for initial terms of five years. Any vacancy occurring on the board must be filled by the Governor by appointment for the unexpired term.

(D) Members appointed when the General Assembly is not in regular session serve only until the Senate has confirmed the appointment at the next regular or special session of the General Assembly. If the Senate refuses to confirm an appointment, the member must vacate his office on the date the confirmation fails.

(E) Members of the board must not have any direct or indirect interest in an undertaking that puts their personal interest in conflict with that of the corporation, including, but not limited to, an interest in a major procurement contract or a participating retailer.

(F) Members of the board may receive the per diem and mileage paid by the State to members of boards and commissions during their attendance at meetings.

(G) The members must elect from their membership a chairperson and vice-chairperson. The members must also elect a secretary and treasurer who can be the chief executive officer of the corporation. Such officers must serve for such terms as prescribed by the bylaws of the corporation or until their respective successors are elected and qualified. A member of the board may not hold more than any one office of the corporation, except that the same person may serve as secretary and treasurer.

(H) The board of directors may delegate to any one or more of its members, to the chief executive officer, or to any agent or employee of the corporation such powers and duties as it may deem proper.

(I) A majority of members in office constitute a quorum for the transaction of any business and for the exercise of any power or function of the corporation.

(J) Action may be taken and motions and resolutions adopted by the board at any meeting thereof by the affirmative vote of a majority of present and voting board members.

(K) A vacancy in the membership of the board does not impair the right of the members to exercise all the powers and perform all the duties of the board.

Section 11-45-150. (A) The chairperson of the board of directors shall appoint a Lottery Retailer Advisory Board to be composed of ten lottery retailers representing the broadest possible spectrum of geographical, racial, and business characteristics of lottery retailers. The function of the advisory board is to advise the board of directors on retail aspects of the lottery and to present the concerns of lottery retailers throughout the State.

(B) Members appointed to the Lottery Retailer Advisory Board serve terms of two years; provided, however, that five of the initial appointees serve initial terms of one year.

(C) The advisory board shall establish its own rules and internal operating procedures. Members of the advisory board serve without per diem, compensation, or reimbursement of expenses. The advisory board may report to the board of directors or to the oversight committee in writing at any time. The board of directors may invite the advisory board to make an oral presentation to the board of directors at regular meetings of the board.

Section 11-45-160. The board of directors shall provide the chief executive officer with private-sector perspectives of a large marketing enterprise. 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 major lottery procurements recommended by the chief executive officer;

(3) hear appeals of hearings required by this chapter;

(4) adopt regulations, policies, and procedures relating to the conduct of lottery games and as specified in Section 11-45-190;

(5) perform such other functions as specified by this chapter.

Section 11-45-170. The board of directors shall appoint and shall 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 such powers and duties as specified by the board and by law. The chief executive officer serves at the pleasure of the board.

Section 11-45-180. (A) The corporation has any and all powers necessary or convenient to its usefulness in carrying out and effectuating 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 following powers:

(1) to sue and be sued in contract and in tort and to complain and defend in all courts;

(2) to adopt and alter a seal;

(3) to adopt, amend, and repeal bylaws, regulations, and 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 such other matters as the corporation may determine. In the adoption of bylaws, regulations, policies, and procedures or in the exercise of any regulatory power, the corporation is exempt from the requirements the Administrative Procedure Act;

(4) to procure or to provide insurance;

(5) to hold copyrights, trademarks, and service marks and enforce its rights with respect thereto;

(6) to initiate, supervise, and administer the operation of the lottery in accordance with the provisions of this chapter and regulations, policies, and procedures adopted pursuant thereto;

(7) to 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) to conduct such market research as is necessary or appropriate, which may include an analysis of the demographic characteristics of the players of each lottery game and an analysis of advertising, promotion, public relations, incentives, and other aspects of communication;

(9) to acquire or lease real property and make improvements thereon 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;

(10) to 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 any commercial bank or credit provider; provided, however, that any such debt must be approved by the State Budget and Control Board.

(11) to be authorized to 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) to appoint and select 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, pay their expenses, and provide a benefit program, including, but not limited to, a retirement plan and a group insurance plan;

(13) to select and contract with vendors and retailers;

(14) to enter into contracts or agreements with state or local law enforcement agencies for the performance of law enforcement, background investigations, and security checks;

(15) to enter into contracts of any and all types on such terms and conditions as the corporation may determine;

(16) to establish and maintain banking relationships, including, but not limited to, establishment of checking and savings accounts and lines of credit;

(17) to advertise and promote the lottery and lottery games;

(18) to act as a retailer, to conduct promotions which involve the dispensing of lottery tickets or shares, and to establish and operate a sales facility to sell lottery tickets or shares and any related merchandise; and

(19) to adopt and amend such regulations, policies, and procedures as necessary to carry out and implement its powers and duties, organize and operate the corporation, regulate the conduct of lottery games in general, and any other matters necessary or desirable for the efficient and effective operation of the lottery or the convenience of the public. The promulgation of any such regulations, policies, and procedures is exempt from the requirements of the Administrative Procedure Act.

(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 no such powers limit or restrict any other powers of the corporation.

Section 11-45-190. The board may adopt regulations, policies, and procedures regulating the conduct of lottery games in general, including, but not limited to, regulations, policies, and procedures specifying:

(1) the type of games to be conducted, including, but not limited to, instant lotteries, on-line games, and other games traditional to the lottery. Such games may include the selling of tickets or shares or the use of electronic or mechanical devices;

(2) the sale price of tickets or shares and the manner of sale; provided, however, that all sales must be for cash only and payment by checks, credit cards, charge cards, or any form of deferred payment is prohibited;

(3) the number and amount of prizes;

(4) the method and location of selecting or validating winning tickets or shares;

(5) the manner and time of payment of prizes, which may include lump sum payments or installments over a period of years;

(6) the manner of payment of prizes to the holders of winning tickets or shares, including without limitation provision for payment of prizes not exceeding six hundred dollars after deducting the price of the 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 can 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 such ticket or share was purchased;

(7) the frequency of games and drawings or selection of winning tickets or shares;

(8) the means of conducting drawings;

(9) the method to be used in selling tickets or shares, which may include the use of electronic or mechanical devices, but such devices may be placed only in locations on the premises of the lottery retailer which are within the view of such retailer or an employee of such retailer;

(10) the manner and amount of compensation to lottery retailers; and

(11) any and all 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 11-45-200. (A) The chief executive officer of the corporation must direct and supervise all administrative and technical activities in accordance with the provisions of this chapter and with the regulations, policies, and procedures adopted by the board. It is the duty of the chief executive officer to:

(1) facilitate the initiation and supervise and administer the operation of the lottery games;

(2) employ and direct such personnel as deemed necessary;

(3) employ by contract and compensate such persons and firms as deemed necessary;

(4) promote or provide for promotion of the lottery and any functions related to the corporation;

(5) prepare a budget for the approval of the board;

(6) require bond from such retailers and vendors in such amounts as required by the board;

(7) report quarterly to the state auditor and the board 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 may for good cause suspend, revoke, or refuse to renew any contract entered into in accordance with the provisions of 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 or integrity of lottery operations or to determine the qualifications of or compliance by vendors and retailers.

Section 11-45-210. (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 any vendor doing business or proposing to do business with the corporation.

(C) An employee of the corporation with decision-making authority may not participate in any decision involving a retailer with whom the employee has a financial interest.

(D) An employee of the corporation who leaves the employment of the corporation may not represent any vendor or lottery retailer before the corporation for a period of two years following termination of employment with the corporation.

(E) A background investigation must be conducted on each applicant who has reached the final selection process prior to employment by the corporation at the level of division director and above and at any level within any division of security and as otherwise required by the board. The corporation is authorized to pay for the actual cost of such investigations and may contract with the State Law Enforcement Division for the performance of such investigations. The results of such a background investigation must not be considered a record open to the public pursuant to the Freedom of Information Act.

(F) A person who has been convicted of a felony or bookmaking or other forms of illegal gambling or of a crime involving moral turpitude may not be employed by the corporation.

(G) The corporation must bond corporation employees with access to corporation funds or lottery revenue in such an amount as provided by the board and may bond other employees as deemed necessary.

Section 11-45-220. (A)(1) All lottery proceeds are the property of the corporation.

(2) From its lottery proceeds the corporation must pay the operating expenses of the corporation. At least fifty percent of the amount of money from the actual sale of lottery tickets or shares must be made available as prize money; provided, however, that this paragraph is deemed not to create any lien, entitlement, cause of action, or other private right, and any rights of holders of tickets or shares must be determined by the corporation in setting the terms of its lottery or lotteries.

(3) As nearly as practical, for each fiscal year, net proceeds must equal at least forty percent of the lottery proceeds. However, for the first two full fiscal years and any partial first fiscal year of the corporation, net proceeds need only equal thirty-five percent of the proceeds as nearly as practical.

(B)(1) On or before the fifteenth day of each quarter, the corporation must transfer to the general fund of the state treasury, for credit to the Lottery for Education Account for the preceding quarter, the amount of all net proceeds during the preceding quarter. The State Treasurer must separately account for net proceeds by establishing and maintaining a Lottery for Education Account within the state treasury.

(2) Upon their deposit into the state treasury, any moneys representing a deposit of net proceeds must then become the unencumbered property of the State of South Carolina and the corporation does not have the power to agree or undertake otherwise. Such moneys may be invested by the treasurer in accordance with state investment practices. All earnings attributable to such investments are likewise the unencumbered property of the State and accrue to the credit of the Lottery for Education Account.

(3) A shortfall reserve account must be maintained within the Lottery for Education Account. The amount of the shortfall reserve account must be equal to ten percent of the total amount of lottery proceeds deposited into the Lottery for Education Account for the preceding fiscal year. If the net proceeds deposited into the Lottery for Education Account in any year, exclusive of the amount in the shortfall reserve account, are not sufficient to meet the amount appropriated for education purposes pursuant to subsection (C) of this section, the shortfall reserve account may be drawn upon to meet the deficiency. In the event the shortfall reserve account is drawn upon, the account must be brought back to the appropriate level with the first available funds duly deposited into the Lottery for Education Account.

(C)(1) In the budget report to the General Assembly, as a separate budget category entitled `lottery proceeds,' the Governor must estimate the amount of net proceeds and treasury earnings thereon to be credited to the Lottery for Education Account during the fiscal year and the amount of unappropriated surplus estimated to be accrued in the account at the beginning of the fiscal year. The sum of estimated net proceeds, treasury earnings thereon, and unappropriated surplus must be designated lottery proceeds.

(2) In the budget report, the Governor must further make specific recommendations as to the education programs and purposes for which appropriations should be made from the Lottery for Education Account. The General Assembly must appropriate from the Lottery for Education Account by specific reference to it, or by reference to `lottery proceeds.' All appropriations of lottery proceeds to any particular budget unit must be made together in a separate part entitled, identified, administered, and accounted for separately as a distinct budget unit for lottery proceeds. Such appropriations must otherwise be made in the manner required by law for appropriations.

(3) Appropriations from the Lottery for Education Account must be for educational purposes and projects only.

(4) If, for any educational purpose or program, less is appropriated in or during the fiscal year than is authorized, the excess must be available for appropriation the following fiscal year and must not retain its character as funds for the particular purpose.

(D) Appropriations for educational purposes and programs from the account not committed during the fiscal year must lapse to the general fund and must be credited to the Lottery for Education Account.

(E) A deficiency in the Lottery for Education Account may not replenished by book entries reducing any nonlottery reserve of general funds, including specifically but without limitation the revenue shortfall reserve or the midyear adjustment reserve; nor must any program or project started specifically from lottery proceeds be continued from the general fund; such programs must be adjusted or discontinued according to available lottery proceeds unless the General Assembly by general law establishes eligibility requirements and appropriates specific funds within the general appropriation act; nor must any nonlottery surplus in the general fund be reduced. A surplus in the Lottery for Education Account may not be reduced to correct any nonlottery deficiencies in sums available for general appropriations, and a surplus in the Lottery for Education Account may not be included in any surplus calculated for setting aside any nonlottery reserve or midyear adjustment reserve. In calculating net revenue collections for the revenue shortfall reserve and midyear adjustment reserve, the state auditor may not include the net proceeds.

Section 11-45-230. The corporation must encourage participation by minority businesses. The board of directors must adopt a plan which achieves to the greatest extent possible a level of participation by minority businesses taking into account the total number of all retailers and vendors, including any subcontractors. The corporation is authorized and directed to undertake training programs and other educational activities to enable such minority businesses to compete for contracts on an equal basis. The board must monitor the results of minority business participation and must report the results of minority business participation to the Governor at least on an annual basis.

Section 11-45-240. (A) The corporation must investigate the financial responsibility, security, and integrity of any lottery system vendor who is a finalist in submitting a bid, proposal, or offer as part of a major procurement. At the time of submitting such bid, proposal, or offer to the corporation, the corporation may require the following items:

(1) A disclosure of the vendor's name and address and, as applicable, the names and addresses of the following:

(a) if the vendor is a corporation, the officers, directors, and each stockholder in such corporation; provided, however, that in the case of owners of equity securities of a publicly traded corporation, only the names and addresses of those known to the corporation to own beneficially five percent or more of such securities need be disclosed;

(b) if the vendor is a trust, the trustee and all persons entitled to receive income or benefits from the trust;

(c) if the vendor is an association, the members, officers, and directors; and

(d) if the vendor is a partnership or joint venture, all of the general partners, limited partners, or joint venturers;

(2) a disclosure of all the states and jurisdictions in which the vendor does business and the nature of the business for each such state or jurisdiction;

(3) a disclosure of all the 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 such state or jurisdiction;

(4) a disclosure of all the states and jurisdictions in which the vendor has applied for, has sought renewal of, has received, has been denied, has pending, or has had revoked a lottery or gaming license of any kind or had fines or penalties assessed to his license, contract, or operation and the disposition of such in each such state or jurisdiction. If any lottery or gaming license or contract has been revoked or has not been renewed or any lottery or gaming license or application has been either denied or is pending and has remained pending for more than six months, all of the facts and circumstances underlying the failure to receive such a license must be disclosed;

(5) a disclosure of the details of any finding or plea, conviction, or adjudication of guilt in a state or federal court of the vendor for any felony or any other criminal offense other than a traffic violation;

(6) a disclosure of the details of any bankruptcy, insolvency, reorganization, or corporate or individual purchase or takeover of another corporation, including bonded indebtedness, or any pending litigation of the vendor; and

(7) such additional disclosures and information as the corporation may determine to be appropriate for the procurement involved. If at least twenty percent of the cost of a vendor's contract is subcontracted, the vendor must 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 any lottery system vendor who has not complied with the disclosure requirements described in subsection (A) of this section, and any contract with such a vendor is voidable at the option of the corporation. Any contract with a vendor who does not comply with such requirements for periodically updating such disclosures during the tenure of contract as may be specified in such contract may be terminated by the corporation. 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 major procurements.

(C) A major procurement contract may not be entered into with any 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 major procurement contract may not be entered into with any vendor if such vendor has an ownership interest in an entity that had 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 nor any applicant for a major procurement contract may not pay, give, or make any economic opportunity, gift, loan, gratuity, special discount, favor, hospitality, or service, excluding food and beverages having an aggregate value not exceeding one hundred dollars in any calendar year, to the chief executive officer, any board member, or any employee of the corporation or to a member of the immediate family residing in the same household as any such person.

Section 11-45-250. (A)(1) Each vendor must, at the execution of the contract with the corporation, post a performance bond or letter of credit from a bank or credit provider acceptable to the corporation in an amount as deemed necessary by the corporation for that particular bid or contract. In lieu of the bond, a vendor may, to assure the faithful performance of its obligations, 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 under this section are limited to:

(a) certificates of deposit issued by solvent banks or savings associations approved by the corporation and which are 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 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 must not be an affiliate or subsidiary of the depositor. Such securities must be held in trust and must have at all times a market value at least equal to the full amount estimated to be paid annually to the lottery vendor under contract.

(2) Because of certain economic considerations, minority businesses may not be able financially to comply with the bonding, deposit of securities, or letter of credit requirements of paragraph (1) of this subsection. Notwithstanding any other provisions of this subsection, in order to assure minority participation in major procurement contracts to the most feasible and practicable extent possible, the chief executive officer is authorized and directed to waive the bonding, deposit of securities, and letter of credit requirements of paragraph (1) of this subsection for a period of five years from the time that a minority business enters into a major procurement contract for any minority business which substantiates financial hardship pursuant to the policies and procedures established by the board.

(B) Each vendor must be qualified to do business in this State and must file appropriate tax returns as provided by the laws of this State. All contracts under this section are governed by the laws of this State.

(C) A contract may not be let with any vendor in which a public official has an ownership interest of ten percent or more.

(D) All major procurement contracts must be competitively bid pursuant to policies and procedures approved by the board unless there is only one qualified vendor and that vendor has an exclusive right to offer the service or product.

Section 11-45-260. (A) The General Assembly recognizes that to conduct a successful lottery, the corporation must develop and maintain a state-wide network of lottery retailers that will serve the public convenience and promote the sale of tickets or shares and the playing of lottery games while ensuring the integrity of the lottery operations, games, and activities.

(B) The corporation must make every effort to provide small retailers a chance to participate in the sales of lottery tickets or shares.

(C) The corporation must provide for compensation to lottery retailers in the form of commissions in an amount of not less than five percent of gross sales and may provide for other forms of compensation for services rendered in the sale or cashing of lottery tickets or shares.

(D) The corporation must issue a certificate of authority to each person with whom it contracts as a retailer for purposes of display. Every lottery retailer must post and keep conspicuously displayed in a location on the premises accessible to the public its certificate of authority. A certificate is not assignable or transferable.

(E) 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 must consider such factors as the applicant's financial responsibility, security of the applicant's place of business or activity, accessibility to the public, integrity, and reputation. The board must not consider political affiliation, activities, or monetary contributions to political organizations or candidates for any public office. The criteria must include but 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 is authorized and directed to provide this information to the corporation.

(2) No person, partnership, unincorporated association, corporation, or other business entity may be selected as a lottery retailer who:

(a) has been convicted of a criminal offense related to the security or integrity of the lottery in this or any other jurisdiction;

(b) has been convicted of any illegal gambling activity, false statements, false swearing, or perjury in this or any other jurisdiction or convicted of any crime punishable by more than one year of imprisonment or a fine of more than one thousand dollars, or both, unless the person's civil rights have been restored and at least five years have elapsed from the date of the completion of the sentence without a subsequent conviction of a crime described in this subparagraph;

(c) has been found to have violated the provisions of this chapter or any 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 any employee or agent of any 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 such statement to be false;

(g) is a public official or 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 tickets or shares; provided, however, that this subsection must not preclude the corporation from selling or giving away lottery tickets or shares for promotional purposes.

(3) Persons applying to become lottery retailers must be charged a uniform application fee for each lottery outlet. Retailers who participate in on-line games must be charged a uniform application fee for each on-line outlet.

(4) Any lottery retailer contract executed pursuant to this section may, for good cause, be suspended, revoked, or terminated by the chief executive officer or his designee if the retailer is found to have violated any provision of this chapter or objective criteria established by the board. Review of such activities must be in accordance with the procedures outlined in this chapter and is not subject to the Administrative Procedure Act.

(5) All lottery retailer contracts may be renewable annually in the discretion of the corporation unless sooner canceled or terminated.

(6) A lottery retailer or applicant to be a lottery retailer may not pay, give, or make any economic opportunity, gift, loan, gratuity, special discount, favor, hospitality, or service, excluding food and beverages having an aggregate value not exceeding one hundred dollars in any calendar year, to the chief executive officer, any board member, or any employee of the corporation or to a member of the immediate family residing in the same household as any such person.

Section 11-45-270. (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 tickets and shares may only be sold by the retailer stated on the lottery retailer certificate.

Section 11-45-280. (A) The corporation must establish a fidelity fund separate from all other funds and must assess each retailer a one-time fee not to exceed one hundred dollars per sales location. The corporation is authorized to invest the funds or place such funds in one or more interest-bearing accounts. Moneys deposited to the fund may be used to cover losses the corporation experiences due to nonfeasance, misfeasance, or malfeasance of a lottery retailer. In addition, the funds may be used to purchase blanket bonds covering the South Carolina Lottery Corporation against losses from all retailers. At the end of each fiscal year, the corporation must pay to the general lottery fund any amount in the fidelity fund which exceeds five hundred thousand dollars, and such funds 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 uncollectable. The corporation must establish procedures for minimizing any losses that may be experienced for the foregoing reasons and must exercise and exhaust all available options in such procedures prior to amounts being written off to this account.

(C) The corporation may require any retailer to post an appropriate bond, as determined by the corporation, using an insurance company acceptable to the corporation. The amount should not exceed the applicable district sales average of lottery 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 under this paragraph must be 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;

(c) federal agency securities by an agency or instrumentality of the United States government.

(2) Such securities must be held in trust in the name of the South Carolina Lottery Corporation.

Section 11-45-290. (A) Any retail contract executed by the corporation pursuant to this chapter must specify the reasons for which a contract may be canceled, suspended, revoked, or terminated by the corporation, which reasons must include 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 accurately or timely account for lottery tickets, lottery games, revenues, or prizes as required by the corporation;

(3) commission of any fraud, deceit, or misrepresentation;

(4) insufficient sales;

(5) conduct prejudicial to public confidence in the lottery;

(6) the retailer filing for or being placed in bankruptcy or receivership;

(7) any material change as determined in the sole discretion of the corporation in any matter considered 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, in the discretion of the chief executive officer or his designee, 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 may cancel, suspend, revoke, or terminate, after notice and a right to a hearing, any contract issued pursuant to this chapter. Such contract may, however, be temporarily suspended 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 enumerated in this section. Any hearing held 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. Such appeal must be pursuant to the regulations, policies, and procedures set by the board and is not subject to the Administrative Procedure Act.

Section 11-45-300. (A) All proceeds from the sale of the lottery tickets or shares must 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 lottery retailers are personally liable for all proceeds. Proceeds include unsold instant tickets received by a lottery retailer and cash proceeds of the sale of any lottery products, net of allowable sales commissions and credit for lottery prizes sold to 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) The corporation must require retailers to place all lottery proceeds due the corporation in accounts in institutions insured by the Federal Deposit Insurance Corporation not 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 such deposit, lottery proceeds are deemed to be the property of the corporation. The corporation may require a retailer to establish a single separate electronic funds transfer account where available for the purpose of receiving moneys from ticket or share sales, making payments to the corporation, and receiving payments for the corporation. Unless otherwise authorized in writing by the corporation, each lottery retailer must establish a separate bank account for lottery proceeds which must be kept separate and apart from all other funds and assets and must not be commingled with any other funds or assets.

(C) Whenever a person who receives proceeds from the sale of lottery tickets or shares in the capacity of a lottery retailer becomes insolvent or dies insolvent, the proceeds due the corporation from such person or his estate has preference over all debts or demands.

Section 11-45-310. 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 such computation of retail sales is not explicitly defined to include sales of 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 11-45-320. (A) A person may not sell a ticket or share at a price other than 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 tickets, but this subsection must not be construed to prevent a person who may lawfully purchase tickets or shares from making a gift of lottery tickets or shares to another. Nothing in this chapter may be construed to prohibit the corporation from designating certain of its agents and employees to sell or give lottery tickets or shares directly to the public.

(B) Lottery tickets or shares may be given by merchants as a means of promoting goods or services to customers or prospective customers subject to prior approval by the corporation.

(C) A lottery retailer may not sell a lottery ticket or share except from the locations listed in his contract and as evidenced by his certificate of authorization unless the corporation authorizes in writing any temporary location not listed in his contract.

(D) Lottery tickets or shares may not be sold to persons under eighteen years of age, but this section does not prohibit the purchase of a lottery ticket or share by a person eighteen years of age or older for the purpose of making a gift to a person of any age. In such case, the corporation must direct payment of proceeds of any lottery prize to an adult member of the person's family or a legal representative of the person on behalf of such person.

Section 11-45-330. (A) Proceeds of any lottery prize are subject to the South Carolina state income tax. Residents of this State who receive a lottery prize in excess of ten thousand dollars are subject to a mandatory withholding of State income tax of three and one-half percent. Nonresidents who receive a prize in excess of one thousand dollars are subject to a mandatory withholding of State income tax of three and one-half percent.

(B) Except as otherwise provided in Section 11-45440, 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 adopt regulations, policies, and procedures to establish a system of verifying the validity of tickets or shares claimed to win prizes and to effect payment of such prizes, except that:

(1) A prize, any portion of a prize, or any right of a person to a prize awarded is not assignable. A prize or any 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 along with a notarized letter of direction from the settlor and no written notice of revocation has been received by the corporation prior to the settlor's death. Following a settlor's death and prior to any payment to such a successor trustee, the corporation must obtain from the trustee a written agreement to indemnify and hold the corporation harmless with respect to any 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 arising from claimed 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; lacking in captions that conform and agree with the play symbols as appropriate to the particular lottery game involved; or not in compliance with such 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 any lottery game may not be paid more than once, and in the event of a determination that more than one claimant is entitled to a particular prize, the sole remedy of such claimants is the award to each of them of an equal share in the prize.

(4) A holder of a winning cash ticket or share from a lottery game must claim a cash prize within one hundred eighty days, or for a multi-state or multi-sovereign lottery game within one hundred eighty days, after the drawing in which the cash prize was won. In any South Carolina lottery game in which the player may determine instantly if he has won or lost, he must 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 constitutes an unclaimed prize for purposes of this section.

(D) A prize may not be paid upon a ticket or share purchased or sold in violation of this chapter. Any such prize constitutes an unclaimed prize for purposes of this section.

(E) The corporation is discharged of all liability upon payment of a prize.

(F) A ticket or share may not be purchased by and a prize may not be paid to any member of the board of directors; any officer or employee of the corporation; or to any spouse, child, brother, sister, or parent residing as a member of the same household in the principal place of residence of any such person. A ticket or share may not be purchased by and a prize may not be paid to any officer, employee, agent, or subcontractor of any vendor or to any spouse, child, brother, sister, or parent residing as a member of the same household in the principal place of residence of any such person if such officer, employee, agent, or subcontractor 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) Unclaimed prize money does not constitute net lottery proceeds. A portion of unclaimed prize money, not to exceed two hundred thousand dollars annually, must be directed to the Department of Mental Health for the treatment of compulsive gambling disorder and educational programs related to such disorder. In addition, unclaimed prize money may be added to the pool from which future prizes are to be awarded or used for special prize promotions.

Section 11-45-340. (A) Except as otherwise provided in this chapter, the corporation is subject to the provisions of Chapter 4 of Title 30. The corporation is specifically authorized to determine which information relating to the operation of the lottery is confidential. Such information includes trade secrets; security measures, systems, or procedures; security reports; information concerning bids or other contractual data, the disclosure of which would impair the efforts of the corporation to contract for goods or services on favorable terms; employee personnel information unrelated to compensation, duties, qualifications, or responsibilities; and information obtained pursuant to investigations which is otherwise confidential. Information deemed confidential pursuant to this section is exempt from the provisions of Chapter 4 of Title 30. Meetings or portions of meetings devoted to discussing information deemed confidential pursuant to this section are exempt from Chapter 4 of Title 30.

(B) The corporation must perform full criminal background investigations prior to the execution of any vendor contract.

(C) The corporation or its authorized agent must:

(1) conduct criminal background investigations and credit investigations on all potential retailers;

(2) supervise ticket or share validation and lottery drawings;

(3) inspect at times determined solely by the corporation the facilities of any vendor or lottery retailer in order to determine the integrity of the vendor's product or the operations of the retailer in order to determine whether the vendor or the retailer is in compliance with its contract;

(4) report any suspected violations of this chapter to the appropriate solicitor or the Attorney General and to any law enforcement agencies having jurisdiction over the violation; and

(5) upon request, provide assistance to any solicitor, the Attorney General, or a law enforcement agency investigating a violation of this chapter.

Section 11-45-350. A person who knowingly sells a lottery ticket or share to a person under eighteen years of age or permits a person under eighteen years of age to play any lottery games is guilty of a misdemeanor and must be fined not less than one hundred dollars nor more than five hundred dollars for the first offense and for each subsequent offense not less than two hundred dollars nor more than one thousand dollars. It is an affirmative defense to a charge of a violation under this section that the retailer reasonably and in good faith relied upon representation of proof of age in making the sale.

All electronic or mechanical devices must bear a conspicuous label prohibiting the use of such device by persons under eighteen years of age.

Section 11-45-360. (A) A person who, with intent to defraud, falsely makes, alters, forges, utters, passes, or counterfeits a state lottery ticket must be punished by a fine not to exceed fifty thousand dollars or imprisonment for not longer 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 must be punished by a fine not to exceed fifty thousand dollars or by imprisonment for not longer than five years, or both.

Section 11-45-370.A person may not knowingly or intentionally make a material false statement in any application for a license or proposal to conduct lottery activities or make a material false entry in any 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 must be punished by a fine not to exceed twenty-five thousand dollars or the dollar amount of the false entry or statement, whichever is greater, or by imprisonment for not longer than five years, or both.

Section 11-45-380. (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, any law enforcement agency, or the lottery regulation or gaming enforcement agency of any jurisdiction are considered investigative records of a law enforcement agency and are not subject to Chapter 4 of Title 30 and may not be released under any condition without the permission of the person or agency providing the record or information.

Section 11-45-390. (A) The corporation must enter into its contracts for major procurements after competitive bidding. The requirement for competitive bidding does not apply in the case of a single vendor having exclusive rights to offer a particular service or product. Procedures adopted by the board must be designed to allow the selection of proposals that provide the greatest long-term benefit to the State, the greatest integrity for the corporation, and the best service and products for the public.

(B) In any bidding process, the corporation may administer its own bidding and procurement or may utilize the services of the Budget and Control Board or other state agency or subdivision thereof.

Section 11-45-400. (A) Any retailer, vendor, or applicant for a retailer or vendor contract aggrieved by an action of the board may appeal that decision to the Circuit Court sitting in Richland County.

(B) The circuit court must 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) clearly erroneous;

(2) arbitrary and capricious;

(3) procured by fraud;

(4) a result of substantial misconduct by the board; or

(5) contrary to the United States Constitution or the Constitution of South Carolina or the provisions of this chapter.

(C) The circuit court may remand an appeal to the board to conduct further hearings.

(D) A person who appeals the award of a major procurement contract for the supply of a lottery ticket system, share system, or an on-line or other mechanical or electronic system is liable for all costs of appeal and defense in the event the appeal is denied or the contract award upheld. Cost of appeal and defense must specifically include, but not be limited to, 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 to have been frivolous.

Section 11-45-410. (A) The corporation may borrow, or accept and expend, in accordance with the provisions of this chapter, such moneys as may be received from any source, including income from the corporation's operations, for effectuating its corporate purposes, including the 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. Moneys in the state general fund may not be used or obligated to pay the expenses of the corporation or prizes of the lottery, and no claim for the payment of an expense of the lottery or prizes of the lottery may be made against any moneys other than moneys credited to the corporation operating account.

(C) The corporation may purchase, lease, or lease-purchase such goods or services as are necessary for effectuating the purposes of this chapter. The corporation may make procurements which integrate functions such as lottery game design, lottery ticket distribution to retailers, supply of goods and services, and advertising. In all procurement decisions, the corporation must take into account the particularly sensitive nature of the state lottery and must 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 11-45-420. To ensure the financial integrity of the lottery, the corporation through its board of directors shall:

(1) submit quarterly and annual reports to the Governor, state auditor, and the oversight committee created by Section 11-45-430, disclosing the total lottery revenues, prize disbursements, operating expenses, and administrative expenses of the corporation during the reporting period. The annual report must additionally describe the organizational structure of the corporation and summarize the functions performed by each organizational division within the corporation;

(2) adopt a system of internal audits;

(3) maintain weekly or more frequent records of lottery transactions, including the distribution of tickets or shares to retailers, revenues received, claims for prizes, prizes paid, prizes forfeited, and other financial transactions of the corporation;

(4) contract with a certified public accountant or firm for an annual financial audit of the corporation. The certified public accountant or firm must not have a financial interest in any vendor with whom the corporation is under contract. The certified public accountant or firm must present an audit report not later than seven months after the end of the fiscal year. The certified public accountant or firm must evaluate the internal auditing controls in effect during the audit period. The cost of this annual financial audit must be an operating expense of the corporation. The state auditor may at any time conduct an audit of any phase of the operations of the South Carolina Lottery Corporation at the expense of the State and must receive a copy of the annual independent financial audit. A copy of any audit performed by the certified public accountant or firm or the state auditor must be transmitted to the Governor, the Lieutenant Governor, and the Speaker of the House of Representatives, the state auditor, and the oversight committee chairperson;

(5) submit to the State Budget Division of the Budget and Control Board and the state auditor by June 30 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 and be on such forms as prescribed by the Budget Division;

(6) for informational purposes only, submit to the Budget Division on September 1 of each year a proposed operating budget for the corporation for the succeeding fiscal year. This budget proposal must also be accompanied by an estimate of the net proceeds to be deposited into the Lottery for Education Account during the succeeding fiscal year. This budget must be on such forms as prescribed by the Budget Division; and

(7) adopt the same fiscal year as that used by state government.

Section 11-45-430. (A) There is created as a joint committee of the General Assembly the South Carolina Lottery Corporation Legislative Oversight Committee, to be composed of the members of the House Ways and Means Committee and the Senate Finance Committee. The chairmen of such committees must serve as co-chairmen of the oversight committee. The oversight committee must periodically inquire into and review the operations of the South Carolina Lottery Corporation, as well as periodically 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 any independent audit or investigation of the authority it deems necessary.

(B) The South Carolina Lottery Corporation must provide the oversight committee not later than December 1 of each year with a complete report of the level of participation of minority businesses in all retail and major procurement contracts awarded by the corporation.

Section 11-45-440. (A) The purpose of this section is to establish a policy and to provide a system whereby all claimant agencies of this State in conjunction with the corporation cooperate in identifying debtors who owe money to the State through its various claimant agencies or to persons on whose behalf the State and its claimant agencies act and who qualify for prizes under this chapter from the corporation. It is also the purpose of this section to establish procedures for setting off against any such prize the sum of any debt owed to the State or to persons on whose behalf the State and its claimant agencies act. It is the intent of the General Assembly that this section be liberally construed to effectuate these purposes.

(B) As used in this section, the term:

(1) `Claimant agency' means any state 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 any liquidated sum due and owing any 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 any sum which is due and owing a person and is enforceable by the State or any of its agencies or departments.

(3) `Debtor' means any individual owing money to or having a delinquent account with any 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 any lottery prize awarded under 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) Any claimant agency may submit to the corporation a list of the names of all persons owing debts in excess of one hundred dollars to such claimant agency or to persons on whose behalf the claimant agency is acting. The full amount of the debt is collectable from any lottery winnings without regard to limitations on the amounts that may be collectable in increments through garnishment or other proceedings. Such list constitutes a valid lien upon and claim of lien against the lottery winnings of any debtor named in such list. The list must contain the names of the debtors, their social security numbers if available, and any other information which would assist the corporation in identifying the debtors named in the list.

(2) The corporation is authorized and directed to withhold any 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. However, if the winner appears and claims winnings in person, the corporation must notify the winner at that time by hand delivery of such action. If the debtor does not protest the withholding of such funds in writing within thirty days of such notice, the corporation must pay the funds over to the claimant agency. If the debtor protests the withholding of such funds within thirty days of such notice, the corporation must 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 such action.

(3) The liens created by this section must rank among themselves as follows:

(a) taxes due the State;

(b) delinquent child support; and

(c) 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) Any list of debt provided pursuant to this section must be provided periodically as the corporation provides by rules and regulations and the corporation is not obligated to retain such lists or deduct debts appearing on such lists beyond the period determined by such rules and regulations.

(6) The corporation is authorized to prescribe forms and promulgate rules and regulations which it deems necessary to carry out the provisions of this section.

(7) The corporation and any claimant agency does not incur civil or criminal liability for good faith adherence to the provisions of this section.

(8) The claimant agency must pay the corporation for all costs incurred by the corporation in setting off debts in the manner provided in this section.

(E)(1) Notwithstanding Section 11-45-380(B), which prohibits disclosure by the corporation of the contents of prize winner records or information, and notwithstanding any other confidentiality statute, 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 in accordance with this section must retain its confidentiality and may only be used by a claimant agency in the pursuit of its debt collection duties and practices. Any employee or prior employee of any claimant agency who unlawfully discloses any such information for any other purpose, except as otherwise specifically authorized by law, is subject to the same penalties specified by law for unauthorized disclosure of confidential information by an agent or employee of the corporation.

(F) The provisions of this section only apply to prizes of five thousand dollars or more and do not apply to any retailers authorized by the board to pay prizes of up to five thousand dollars after deducting the price of the ticket or share."

SECTION 2. Subject to approval of the Governor, this act shall take effect upon ratification of the amendment to Section 7, Article XVII of the Constitution of the State.