Session of 1998
HOUSE BILL No. 2975
By Committee on Federal and State Affairs
2-18
9
AN ACT concerning the Kansas lottery; relating
to video lottery machine
10 games; concerning
revenue from games; funding the Kansas STARS
11 program; amending
K.S.A. 41-308, 74-8701, 74-8702, 74-8704, 74-
12 8708, 74-8711,
74-8712, 74-8720 and 74-8721 and K.S.A. 1997 Supp.
13 21-4302, 38-1602,
74-8710, 74-8717, 74-8718 and 74-8719 and re-
14 pealing the existing
sections.
15
16 Be it enacted by the Legislature of the
State of Kansas:
17 New Section 1. (a)
A video lottery machine vendor shall enter into a
18 contract with the Kansas lottery and
receive a certificate from the exec-
19 utive director before such vendor
manufactures, distributes, sells, main-
20 tains or places any video lottery machine
or associated equipment for
21 public use in this state.
22 (b) The commission shall
establish by rules and regulations an annual
23 fee for each certificate issued to a video
lottery machine vendor. Such
24 certificate shall be renewed annually if
the applicant complies with K.S.A.
25 74-8708, and amendments thereto and upon
timely payment of the an-
26 nual fee. Such fee shall not exceed:
27 (1) For a video lottery
machine manufacturer, $20,000.
28 (2) For a video lottery
machine distributor, $5,000.
29 (3) For a video lottery
machine operator or video lottery machine
30 leasing company, $150 per machine or
$5,000, whichever is greater.
31 (c) In addition to the
annual fee provided by this section, the exec-
32 utive director may charge a one-time
application fee to video lottery ma-
33 chine vendors. Such fee shall be
established by rules and regulations of
34 the commission in an amount not to exceed
$500.
35 (d) All moneys from fees
collected pursuant to this section shall be
36 deposited into the state treasury and
credited to the lottery operating
37 fund.
38 (e) Financial
institutions providing loans to video lottery machine
39 vendors secured by video lottery machines
shall secure the financial in-
40 stitution's interest in accordance with the
provisions of the uniform com-
41 mercial code.
42 (f) If a financial
institution or vendor must take possession of video
43 lottery machines to help protect its
interests, such financial institution or
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2
1 vendor shall notify the executive
director by telephone and confirm in
2 writing within 72 hours after its
agent has taken possession, the following
3 for each such machine:
4 (1) The name of
the entity that owns or has leased the machine;
5 (2) the financial
institution's or vendor's name, address and repre-
6 sentative to contact;
7 (3) the machine
serial numbers, name of the manufacturer, model
8 number and license number;
9 (4) the name of
the agent holding the machine;
10 (5) the location where
the machine is being held;
11 (6) the plan for
disposition of the machine; and
12 (7) any change in the
above.
13 (g) The financial
institution or vendor, or agent thereof, shall not
14 operate the video lottery machine, other
than for testing or repair, while
15 the machine is in its possession. The
financial institution or vendor, or
16 agent thereof, shall permit the executive
director or the executive direc-
17 tor's representative and any Kansas law
enforcement agency to enter the
18 financial institution's or vendor's
premises at any time to inspect the ma-
19 chine.
20 (h) The financial
institution or agent thereof, shall not be required to
21 receive a certificate by the Kansas lottery
merely for performing the fol-
22 lowing:
23 (1) Providing loans for
the financing of video lottery machines;
24 (2) taking possession of
and holding video lottery machines to help
25 protect the security or financial interest
of the financial institution or
26 lessor in the video lottery machine;
27 (3) without
participation in the management of a video lottery ma-
28 chine vendor holding indicia of ownership
of video lottery machines pri-
29 marily to protect the financial
institution's security interest in the ma-
30 chines; or
31 (4) the sale, lease or
other lawful disposition of video lottery machines
32 following the taking of possession.
33 New Sec. 2. (a) A
video lottery machine manufacturer shall not re-
34 ceive a certificate as, or own, manage,
control or have any financial in-
35 terest in, any other video lottery machine
vendor or a video lottery re-
36 tailer. A video lottery machine distributor
shall not receive a certificate
37 as, or own, manage, control or have any
financial interest, in any other
38 video lottery machine vendor or a video
lottery retailer. A video lottery
39 machine operator shall not receive a
certificate as, or own, manage, con-
40 trol or have any financial interest in, any
other video lottery machine
41 vendor or a video lottery retailer. An
owner or manager of a video lottery
42 retailer shall not receive a certificate
as, or own, manage, control or have
43 any financial interest in, a video lottery
machine vendor. A video lottery
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3
1 machine leasing company shall not
receive a certificate as, or own, man-
2 age, control or have any financial
interest in, any other video lottery ma-
3 chine vendor or a video lottery
retailer. A financial institution shall not
4 receive a certificate as, or own, a
video lottery machine vendor or retailer.
5 (b) A video
lottery machine vendor or video lottery retailer shall be
6 deemed in violation of the
prohibitions of this section if its owner or any
7 of its substantial owners is also
directly or indirectly the owner or sub-
8 stantial owner of any entity which
the video lottery machine vendor or
9 video lottery retailer is prohibited
by this section from owning, managing
10 or controlling or in which such vendor or
retailer is prohibited by this
11 section from having any financial interest.
A substantial owner is a person
12 who owns more than 5% of the stock of a
corporation, owns more than
13 5% of the interest of a limited liability
company or is a partner in a part-
14 nership and entitled to more than 5% of the
net profits of the partnership.
15 New Sec. 3. (a) The
placement of video lottery machines shall be
16 subject to rules and regulations of the
commission. Not more than 10
17 video lottery machines may be placed in any
licensed establishment, ex-
18 cept that:
19 (1) There shall be no
limit on the number of machines placed in a
20 licensed establishment located within a
racetrack facility licensed by the
21 Kansas racing commission;
22 (2) there shall be no
limit on the number of machines with respect
23 to which the state fair board is a retailer
and which are placed on the
24 state fairgrounds at locations established
by rules and regulations adopted
25 by the commission;
26 (3) the executive
director shall establish the limit on the number of
27 machines placed in licensed establishments
that are truck stops or non-
28 profit veterans or fraternal organizations,
which limit shall be established
29 by the executive director for each
classification and shall not exceed 50
30 machines per location; and
31 (4) the executive
director shall establish the limit on the number of
32 machines placed on premises used for the
operation and conduct of
33 bingo, which limit shall not exceed 50
machines per location.
34 (b) No person shall
place a video lottery machine on the premises of
35 a video lottery retailer or licensed
establishment or on premises used for
36 the operation and conduct of bingo unless
the executive director first
37 issues a certificate for such machine. Each
machine shall have the certif-
38 icate prominently displayed thereon. Any
machine which does not display
39 the certificate required by this section is
contraband and a public nuisance
40 subject to confiscation by any law
enforcement officer, but any sale of
41 contraband shall be subject to any lawful
ownership or security interest
42 of a financial institution or video lottery
machine vendor in the video
43 lottery machine. A violation of this
subsection is a severity level 8, non-
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1 person felony.
2 (c) Only video
lottery machines certified by the Kansas lottery shall
3 be permitted on the premises of a
licensed establishment or on premises
4 used for the operation and conduct of
bingo.
5 (d) A video
lottery machine may not accept more than $2 to be played
6 on a single game or award free games
or credits in excess of the value of
7 $1,000 per game.
8 (e) The Kansas
lottery shall examine prototypes of video lottery ma-
9 chines and associated equipment prior
to certification pursuant to this
10 section. The Kansas lottery shall require
the person seeking the exami-
11 nation and certification of a video lottery
machine or associated equip-
12 ment to pay the anticipated actual costs of
the examination in advance
13 and, after the completion of the
examination, shall refund overpayments
14 or charge and collect amounts sufficient to
reimburse the Kansas lottery
15 for underpayments of actual costs. The
Kansas lottery may contract for
16 the examination of video lottery machines
and associated equipment as
17 required by this subsection, and may rely
upon testing done by or for
18 other states regulating video lottery
machines, if it deems them to be
19 reliable and in the best interests of
Kansas.
20 (f) Video lottery
machine games shall pay out an average of not less
21 than 85% and not more than 95% of the
amount wagered when played
22 at the level of skill that will provide the
greatest return to the player over
23 a period of continuous play. The precise
percentages shall be established
24 by the commission through rules and
regulations.
25 New Sec. 4. Each
video lottery machine certified under section 3
26 and amendments thereto shall:
27 (a) Offer only games
certified and authorized by the Kansas lottery.
28 (b) Not have any means
of manipulation that affect the random prob-
29 abilities of winning credits.
30 (c) Have one or more
mechanisms that accept tokens, coins or cash
31 in the forms of bills, the mechanisms of
which shall be designed to prevent
32 obtaining credits without payment by
stringing, slamming, drilling or
33 other means and if those attempts involve
physical tampering, the ma-
34 chine shall suspend itself from operation
until reset.
35 (d) Have nonresettable
meters housed in any readily accessible
36 locked machine area that keeps a permanent
record of all cash inserted
37 into the machine, all refunds of winnings
made by the machine's printer,
38 credits played for games and credits won by
players.
39 (e) Be capable of
awarding tokens or printing a ticket stating the value
40 of the prize for the player at the
completion of each video lottery machine
41 game, the time of day in a 24-hour format
showing hours and minutes,
42 the date, the machine serial number, the
sequential number of the ticket
43 vouchers and an encrypted validation number
from which the validity of
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1 the prize may be determined.
2 (f) Have
accounting software that keeps an electronic record which
3 includes, but is not limited to, the
total cash inserted into the machine,
4 the value of winning tickets printed
by the machine, the total credits
5 played and the total credits
awarded.
6 (g) Be linked
under a central communications system to provide au-
7 diting program and other information
as required by the commission.
8 (h) Not use any
word or name suggesting any form of lottery or gam-
9 bling, any gambling establishment or
any city, county, state, country or
10 other governmental entity to describe any
video lottery machine certified
11 under this act.
12 New Sec. 5. (a)
Video lottery retailers shall not make any payments,
13 enhancements, loans or gifts, directly or
indirectly, to any video lottery
14 machine vendor, the vendor's owners,
officers, employees or family.
15 Video machine vendors shall not make any
payments, enhancements,
16 loans or gifts, directly or indirectly, to
any video lottery retailer or the
17 retailer's owners, officers, employees or
family. Prohibited enhancements
18 include, but shall not be limited to, the
following: Remodeling, bonuses,
19 incentives, furnishings and signage. Each
video lottery retailer shall pro-
20 vide, without compensation or
reimbursement, the retailer's own license
21 fees, electrical and telephone service to
the machines, floor space and
22 labor to pay prizes and such other services
as required pursuant to such
23 retailer's contract with the lottery. The
cost of installation of electrical or
24 telephone service for the machines shall be
paid by the retailer pursuant
25 to the contract with the lottery. A person
violating the terms of this sub-
26 section is guilty of a severity level 8,
nonperson felony and, upon convic-
27 tion, the person's certificate shall be
terminated by the executive director
28 or the executive director's designee.
29 (b) Net video lottery
machine income shall be reported and remitted
30 by the video lottery retailer to the Kansas
lottery within 15 days after the
31 15th day of each month and within 15 days
after the end of each month
32 unless rules and regulations of the
commission require such income to
33 be reported and remitted more frequently.
Each video lottery retailer
34 shall keep a record of net video lottery
machine income in the form the
35 Kansas lottery may require. A video lottery
retailer who falsely reports or
36 fails to report the amount due required by
this subsection is guilty of a
37 severity level 8, nonperson felony upon
conviction and is subject to ter-
38 mination of the operator's certificate by
the executive director or execu-
39 tive director's designee. A video lottery
retailer shall be assessed a penalty
40 for late payments at the rate of 11/2% per
month on the unpaid balance.
41 (c) The video lottery
retailer shall pay all credits resulting from video
42 lottery machine play as provided by the
contract with the lottery or by
43 rules and regulations of the
commission.
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1 New
Sec. 6. Sections 6 through 10 and amendments thereto
shall be
2 known and may be cited as the Kansas
STARS program act.
3 New
Sec. 7. As used in sections 6 through 10, and
amendments
4 thereto:
5 (a) ``Board''
means the state board of regents.
6 (b) ``Educational
program'' means an educational program that leads
7 to a certificate, diploma or degree
upon satisfactory completion of course-
8 work requirements at a Kansas
educational institution.
9 (c) ``Kansas
educational institution'' means any area vocational school,
10 area vocational-technical school, community
college, the municipal uni-
11 versity, state educational institution
under the control and supervision of
12 the state board of regents, technical
college or accredited independent
13 postsecondary educational institution
located and operating in Kansas.
14 (d) ``Kansas high
school'' means a Kansas public high school, an ac-
15 credited private Kansas high school, or the
equivalent thereof which is
16 located in Kansas.
17 (e) ``STARS program''
means the student tuition assistance recogni-
18 tion scholarship program established by
this act.
19 New Sec. 8. (a)
There is hereby established the student tuition as-
20 sistance recognition scholarship (STARS)
program to provide financial
21 aid for eligible Kansas residents enrolled
in educational programs at Kan-
22 sas educational institutions. The STARS
program shall be administered
23 by the state board of regents in accordance
with the eligibility require-
24 ments and other guidelines prescribed for
the STARS program by sec-
25 tions 6 through 10, and amendments thereto,
and policies and rules and
26 regulations adopted by the board. The board
shall adopt all necessary
27 policies and rules and regulations that may
be required for the imple-
28 mentation and administration of the STARS
program.
29 (b) Subject to available
appropriations, the amount of each STARS
30 program scholarship awarded to an eligible
student for study in an edu-
31 cational program at a Kansas educational
institution shall be the amount
32 equal to the tuition and fees charged the
student by the Kansas educa-
33 tional institution for each semester, or
other equivalent academic period,
34 of classes in which such student is
enrolled in the student's educational
35 program during an academic year, less all
amounts of free federal financial
36 aid received or approved to be received by
the student for that academic
37 year, except that the amount of any STARS
program scholarship shall not
38 be more than $1,200 per semester or other
equivalent academic period.
39 (c) Subject to available
appropriations, the board shall implement the
40 STARS program commencing with the fall
semester of the 1998-99 ac-
41 ademic year, or the equivalent academic
period that commences in the
42 fall of 1998.
43 New Sec. 9. (a) To
be eligible for a STARS program scholarship, a
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1 person applying therefor shall:
2 (1) Be a Kansas
resident;
3 (2) have an
adjusted gross family income of less than $50,000 per
4 year;
5 (3) (A) have
graduated from a Kansas high school, have attained a
6 cumulative grade point average of
2.75 or higher on a four-point scale,
7 or the equivalent thereof, at that
Kansas high school and have applied for
8 and have been accepted for enrollment
at a Kansas educational institu-
9 tion; or
10 (B) have satisfactorily
completed a normal course load for the stu-
11 dent's educational program at the Kansas
educational institution and have
12 attained a cumulative grade point average
of 2.75 or higher on a four-
13 point scale, or the equivalent thereof, in
the first or any succeeding se-
14 mester, or other comparable academic
period, if the student is currently
15 enrolled at a Kansas educational
institution;
16 (4) have applied for all
available free financial assistance from federal
17 sources; and
18 (5) if the student is
enrolled in an undergraduate degree program,
19 have not previously received a
baccalaureate degree.
20 (b) Each eligible Kansas
student awarded a STARS program schol-
21 arship and maintaining eligibility therefor
may renew the scholarship an-
22 nually for a maximum of the total number of
semesters, or other equiv-
23 alent academic periods, required to
complete the student's educational
24 program at the Kansas educational
institution.
25 (c) Each student
receiving a STARS program scholarship shall main-
26 tain a cumulative grade point average of
2.75 or higher on a four-point
27 scale, or the equivalent thereof, in each
semester, or other equivalent
28 academic period, in a normal course load
for the student's educational
29 program at a Kansas educational institution
in order to continue to receive
30 financial aid under the scholarship and to
continue to be eligible for re-
31 newal of the STARS program scholarship for
the ensuing semester, or
32 other equivalent academic period, at the
Kansas educational institution.
33 New Sec. 10. There
is hereby established in the state treasury the
34 STARS scholarship program fund which shall
be administered by the state
35 board of regents. All moneys credited to
the STARS scholarship program
36 fund shall be used for STARS program
scholarships in accordance with
37 this act. All expenditures from the STARS
scholarship program fund shall
38 be made in accordance with appropriation
acts upon warrants of the di-
39 rector of accounts and reports issued
pursuant to vouchers approved by
40 the executive officer of the state board of
regents or the executive officer's
41 designee.
42 Sec. 11. K.S.A.
1997 Supp. 21-4302 is hereby amended to read as
43 follows: 21-4302. (a) ``Bet'' means a
bargain in which the parties agree
HB 2975
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1 that, dependent upon chance, one
stands to win or lose something of
2 value specified in the agreement. A
bet does not include:
3 (1) Bona fide
business transactions which are valid under the law of
4 contracts including, but not limited
to, contracts for the purchase or sale
5 at a future date of securities or
other commodities, and agreements to
6 compensation for loss caused by the
happening of the chance including,
7 but not limited to, contracts of
indemnity or guaranty and life or health
8 and accident insurance;
9 (2) offers of
purses, prizes or premiums to the actual contestants in
10 any bona fide contest for the determination
of skill, speed, strength, or
11 endurance or to the bona fide owners of
animals or vehicles entered in
12 such a contest;
13 (3) a lottery as defined
in this section;
14 (4) any bingo game by or
for participants managed, operated or con-
15 ducted in accordance with the laws of the
state of Kansas by an organi-
16 zation licensed by the state of Kansas to
manage, operate or conduct
17 games of bingo;
18 (5) a lottery operated
by the state pursuant to the Kansas lottery act;
19 (6) any system of
parimutuel wagering managed, operated and con-
20 ducted in accordance with the Kansas
parimutuel racing act; or
21 (7) tribal gaming.
22 (b) ``Lottery'' means an
enterprise wherein for a consideration the
23 participants are given an opportunity to
win a prize, the award of which
24 is determined by chance. A lottery does not
include:
25 (1) A lottery operated
by the state pursuant to the Kansas lottery act;
26 or
27 (2) tribal gaming.
28 (c) ``Consideration''
means anything which is a commercial or finan-
29 cial advantage to the promoter or a
disadvantage to any participant.
30 Mere registration without
purchase of goods or services; personal at-
31 tendance at places or events, without
payment of an admission price or
32 fee; listening to or watching radio and
television programs; answering the
33 telephone or making a telephone call and
acts of like nature are not
34 consideration.
35 As used in this subsection,
consideration does not include:
36 (1) Sums of money paid
by or for participants in any bingo game
37 managed, operated or conducted in
accordance with the laws of the state
38 of Kansas by any bona fide nonprofit
religious, charitable, fraternal, ed-
39 ucational or veteran organization licensed
to manage, operate or conduct
40 bingo games under the laws of the state of
Kansas and it shall be conclu-
41 sively presumed that such sums paid by or
for such participants were
42 intended by such participants to be for the
benefit of the sponsoring
43 organizations for the use of such
sponsoring organizations in furthering
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1 the purposes of such sponsoring
organizations, as set forth in the appro-
2 priate paragraphs of subsection (c)
or (d) of section 501 of the internal
3 revenue code of 1986 and as set forth
in K.S.A. 79-4701 and amendments
4 thereto;
5 (2) sums of money
paid by or for participants in any lottery operated
6 by the state pursuant to the Kansas
lottery act;
7 (3) sums of money
paid by or for participants in any system of pari-
8 mutuel wagering managed, operated and
conducted in accordance with
9 the Kansas parimutuel racing act;
or
10 (4) sums of money paid
by or for a person to participate in tribal
11 gaming.
12 (d) (1) ``Gambling
device'' means:
13 (A) Any so-called ``slot
machine'' or any other machine, mechanical
14 device, electronic device or other
contrivance an essential part of which
15 is a drum or reel with insignia thereon,
and (i) which when operated may
16 deliver, as the result of chance, any money
or property, or (ii) by the
17 operation of which a person may become
entitled to receive, as the result
18 of chance, any money or property;
19 (B) any other machine,
mechanical device, electronic device or other
20 contrivance (including, but not limited to,
roulette wheels and similar
21 devices) which is equipped with or designed
to accommodate the addition
22 of a mechanism that enables accumulated
credits to be removed, is
23 equipped with or designed to accommodate a
mechanism to record the
24 number of credits removed or is otherwise
designed, manufactured or
25 altered primarily for use in connection
with gambling, and (i) which when
26 operated may deliver, as the result of
chance, any money or property, or
27 (ii) by the operation of which a person may
become entitled to receive,
28 as the result of chance, any money or
property;
29 (C) any subassembly or
essential part intended to be used in connec-
30 tion with any such machine, mechanical
device, electronic device or other
31 contrivance, but which is not attached to
any such machine, mechanical
32 device, electronic device or other
contrivance as a constituent part; or
33 (D) any token, chip,
paper, receipt or other document which evi-
34 dences, purports to evidence or is designed
to evidence participation in
35 a lottery or the making of a
bet.; or
36 (E) any device that
awards credits and contains a circuit, meter,
37 switch or electronic computer program
capable of removing and record-
38 ing the removal of credits when the
award of credits is dependent upon
39 chance.
40 The fact that the prize is
not automatically paid by the device does not
41 affect its character as a gambling
device.
42 (2) Gambling device does
not include:
43 (A) Any machine,
mechanical device, electronic device or other con-
HB 2975
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1 trivance used or for use by a
licensee of the Kansas racing commission as
2 authorized by law and rules and
regulations adopted by the commission
3 or by the Kansas lottery or Kansas
lottery retailers as authorized by law
4 and rules and regulations adopted by
the Kansas lottery commission;
5 (B) any machine,
mechanical device, electronic device or other con-
6 trivance, such as a coin-operated
bowling alley, shuffleboard, marble ma-
7 chine (a so-called pinball machine),
or mechanical gun, which is not de-
8 signed and manufactured primarily for
use in connection with gambling,
9 and (i) which when operated does not
deliver, as a result of chance, any
10 money, or (ii) by the operation of which a
person may not become entitled
11 to receive, as the result of the
application of an element of chance, any
12 money;
13 (C) any so-called claw,
crane, or digger machine and similar devices
14 which are designed and manufactured
primarily for use at carnivals or
15 county or state fairs; or
16 (D) any machine,
mechanical device, electronic device or other con-
17 trivance used in tribal gaming.
18 (e) A ``gambling place''
is any place, room, building, vehicle, tent or
19 location which is used for any of the
following: Making and settling bets;
20 receiving, holding, recording or forwarding
bets or offers to bet; con-
21 ducting lotteries; or playing gambling
devices. Evidence that the place
22 has a general reputation as a gambling
place or that, at or about the time
23 in question, it was frequently visited by
persons known to be commercial
24 gamblers or known as frequenters of
gambling places is admissible on the
25 issue of whether it is a gambling
place.
26 (f) ``Tribal gaming''
has the meaning provided by K.S.A. 1997 Supp.
27 74-9802 and amendments thereto.
28 (g) ``Tribal gaming
commission'' has the meaning provided by K.S.A.
29 1997 Supp. 74-9802 and amendments
thereto.
30 (h) ``Something of
value'' includes credits or free replays when
31 awarded to a player of a gambling
device.
32 Sec. 12. K.S.A.
1997 Supp. 38-1602 is hereby amended to read as
33 follows: 38-1602. As used in this code,
unless the context otherwise re-
34 quires:
35 (a) ``Juvenile'' means a
person 10 or more years of age but less than
36 18 years of age.
37 (b) ``Juvenile
offender'' means a person who does an act while a ju-
38 venile which if done by an adult would
constitute the commission of a
39 felony or misdemeanor as defined by K.S.A.
21-3105 and amendments
40 thereto or who violates the provisions of
K.S.A. 21-4204a or K.S.A. 41-
41 727, subsection (b) or (c) of K.S.A.
74-7819 or subsection (j) of K.S.A. 74-
42 8810, and amendments thereto, but does not
include:
43 (1) A person 14 or more
years of age who commits a traffic offense,
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11
1 as defined in subsection (d) of
K.S.A. 8-2117 and amendments thereto;
2 (2) a person 16
years of age or over who commits an offense defined
3 in chapter 32 of the Kansas Statutes
Annotated;
4 (3) a person whose
prosecution as an adult is authorized pursuant to
5 K.S.A. 38-1636 and amendments thereto
and whose prosecution results
6 in the conviction of an adult crime;
or
7 (4) a person who
has been found to be an extended jurisdiction ju-
8 venile pursuant to subsection (a)(2)
of K.S.A. 38-1636, and amendment
9 thereto, and whose stay of adult
sentence execution has been revoked.
10 (c) ``Parent,'' when
used in relation to a juvenile or a juvenile of-
11 fender, includes a guardian, conservator
and every person who is by law
12 liable to maintain, care for or support the
juvenile.
13 (d) ``Law enforcement
officer'' means any person who by virtue of
14 that person's office or public employment
is vested by law with a duty to
15 maintain public order or to make arrests
for crimes, whether that duty
16 extends to all crimes or is limited to
specific crimes.
17 (e) ``Youth residential
facility'' means any home, foster home or struc-
18 ture which provides twenty-four-hour-a-day
care for juveniles and which
19 is licensed pursuant to article 5 of
chapter 65 of the Kansas Statutes
20 Annotated.
21 (f) ``Juvenile detention
facility'' means any secure public or private
22 facility which is used for the lawful
custody of accused or adjudicated
23 juvenile offenders and which must not be a
jail.
24 (g) ``Juvenile
correctional facility'' means a facility operated by the
25 commissioner for juvenile offenders.
26 (h) ``Warrant'' means a
written order by a judge of the court directed
27 to any law enforcement officer commanding
the officer to take into cus-
28 tody the juvenile named or described
therein.
29 (i) ``Commissioner''
means the commissioner of juvenile justice.
30 (j) ``Jail'' means:
31 (1) An adult jail or
lockup; or
32 (2) a facility in the
same building as an adult jail or lockup, unless the
33 facility meets all applicable licensure
requirements under law and there
34 is (A) total separation of the juvenile and
adult facility spatial areas such
35 that there could be no haphazard or
accidental contact between juvenile
36 and adult residents in the respective
facilities; (B) total separation in all
37 juvenile and adult program activities
within the facilities, including rec-
38 reation, education, counseling, health
care, dining, sleeping, and general
39 living activities; and (C) separate
juvenile and adult staff, including man-
40 agement, security staff and direct care
staff such as recreational, educa-
41 tional and counseling.
42 (k) ``Court-appointed
special advocate'' means a responsible adult,
43 other than an attorney appointed pursuant
to K.S.A. 38-1606 and amend-
HB 2975
12
1 ments thereto, who is appointed by
the court to represent the best inter-
2 ests of a child, as provided in
K.S.A. 1997 Supp. 38-1606a, and amend-
3 ments thereto, in a proceeding
pursuant to this code.
4 (l) ``Juvenile
intake and assessment worker'' means a responsible
5 adult authorized to perform intake
and assessment services as part of the
6 intake and assessment system
established pursuant to K.S.A. 1997 Supp.
7 76-3202, and amendments thereto.
8
(m) ``Institution'' means the following institutions: The
Atchison ju-
9 venile correctional facility, the
Beloit juvenile correctional facility, the
10 Larned juvenile correctional facility and
the Topeka juvenile correctional
11 facility.
12 (n) ``Sanction house''
means a facility which is operated or structured
13 so as to ensure that all entrances and
exits from the facility are under the
14 exclusive control of the staff of the
facility, whether or not the person
15 being detained has freedom of movement
within the perimeters of the
16 facility, or which relies on locked rooms
and buildings, fences, or physical
17 restraint in order to control behavior of
its residents. Upon an order from
18 the court, a licensed juvenile detention
facility may serve as a sanction
19 house. A sanction house may be physically
connected to a nonsecure
20 shelter facility provided the sanction
house is not a licensed juvenile de-
21 tention facility.
22 (o) ``Sentencing risk
assessment tool'' means an instrument adminis-
23 tered to juvenile offenders which delivers
a score, or group of scores,
24 describing, but not limited to describing,
the juvenile's potential risk to
25 the community.
26 Sec. 13. K.S.A.
41-308 is hereby amended to read as follows: 41-308.
27 (a) A retailer's license shall allow the
licensee to sell and offer for sale at
28 retail and deliver in the original package,
as therein prescribed, alcoholic
29 liquor for use or consumption off of and
away from the premises specified
30 in such license. A retailer's license shall
permit sale and delivery of al-
31 coholic liquor only on the licensed
premises and shall not permit sale of
32 alcoholic liquor for resale in any form,
except that a licensed retailer may:
33 (1) Sell alcoholic
liquor to a temporary permit holder for resale by
34 such permit holder; and
35 (2) sell and deliver
alcoholic liquor to a caterer or to the licensed
36 premises of a club or drinking
establishment, if such premises are in the
37 county where the retailer's premises are
located or in an adjacent county,
38 for resale by such club, establishment or
caterer.
39 (b) The holder of a
retailer's license shall not sell, offer for sale, give
40 away or permit to be sold, offered for sale
or given away in or from the
41 premises specified in such license any
service or thing of value whatsoever
42 except alcoholic liquor in the original
package, except that a licensed
43 retailer may:
HB 2975
13
1 (1) Charge a
delivery fee for delivery to a club, drinking establishment
2 or caterer pursuant to subsection
(a);
3 (2) sell lottery
tickets and shares and video lottery machine games to
4 the public in accordance with the
Kansas lottery act, if the retailer is
5 selected as a lottery retailer;
6 (3) include in the
sale of alcoholic liquor any goods included by the
7 manufacturer in packaging with the
alcoholic liquor, subject to the ap-
8 proval of the director; and
9 (4) distribute to
the public, without charge, consumer advertising
10 specialties bearing advertising matter,
subject to rules and regulations of
11 the secretary limiting the form and
distribution of such specialties so that
12 they are not conditioned on or an
inducement to the purchase of alcoholic
13 liquor.
14 (c) No licensed retailer
shall furnish any entertainment except as pro-
15 vided in subsection (b)(2) in such
premises or permit any pinball machine
16 or game of skill or chance to be located in
or on such premises.
17 (d) A retailer's license
shall allow the licensee to store alcoholic liquor
18 in refrigerators, cold storage units, ice
boxes or other cooling devices, and
19 the licensee may sell such alcoholic liquor
to consumers in a chilled con-
20 dition.
21 Sec. 14. K.S.A.
74-8701 is hereby amended to read as follows: 74-
22 8701. K.S.A. 74-8701 through 74-8721 and
sections 1 through 5, and
23 amendments thereto, shall be known
as and may be cited as the Kansas
24 lottery act.
25 Sec. 15. K.S.A.
74-8702 is hereby amended to read as follows: 74-
26 8702. As used in this act, unless the
context otherwise requires:
27 (a) ``Commission'' means
the Kansas lottery commission.
28 (b) ``Executive
director'' means the executive director of the Kansas
29 lottery.
30 (c) ``Gaming equipment''
means any electric, electronic or mechani-
31 cal device or other equipment unique to the
Kansas lottery used directly
32 in the operation of any lottery and in the
determination of winners pur-
33 suant to this act.
34 (d) ``Kansas lottery''
means the state agency created by this act to
35 operate a lottery or lotteries pursuant to
this act.
36 (e) ``Lottery retailer''
means: (1) Any person with whom the Kansas
37 lottery has contracted to sell lottery
tickets or shares, or both, to the
38 public.; or
39 (2) a video lottery
retailer.
40 (f) ``Lottery'' or
``state lottery'' means the lottery or lotteries operated
41 pursuant to this act.
42 (g) ``Major
procurement'' means any gaming product or service, in-
43 cluding but not limited to facilities,
advertising and promotional services,
HB 2975
14
1 annuity contracts, prize payment
agreements, consulting services, equip-
2 ment, tickets and other products and
services unique to the Kansas lot-
3 tery, but not including materials,
supplies, equipment and services com-
4 mon to the ordinary operations of
state agencies.
5 (h) ``Person''
means any natural person, association, corporation or
6 partnership.
7 (i) ``Prize''
means any prize paid directly by the Kansas lottery pur-
8 suant to its rules and
regulations.
9 (j) ``Share''
means any intangible manifestation authorized by the
10 Kansas lottery to prove participation in a
lottery game.
11 (k) ``Ticket'' means any
tangible evidence issued by the Kansas lottery
12 to prove participation in a lottery
game.
13 (l) ``Vendor'' means any
person who has entered into a major pro-
14 curement contract with the Kansas lottery
or a video lottery machine
15 vendor.
16 (m) ``Returned ticket''
means any ticket which was transferred to a
17 lottery retailer, which was not sold by the
lottery retailer and which was
18 returned to the Kansas lottery for refund
by issuance of a credit or oth-
19 erwise.
20 (n) ``Video lottery
machine'' means any electronic video game ma-
21 chine that, upon insertion of cash,
coins or tokens is available to play or
22 simulate the play of a video game
authorized by the commission, including
23 but not limited to bingo, poker, black jack
and keno, and which uses a
24 video display and microprocessors and in
which, by chance, the player
25 may receive free games or credits that can
be redeemed for cash. A video
26 lottery machine does not include a
machine that directly dispenses coins
27 or cash.
28 (o) ``Associated
equipment'' means any proprietary device, machine
29 or part used in the manufacture or
maintenance of a video lottery ma-
30 chine, including but not limited to,
integrated circuit chips, printed wired
31 assembly, printed wired boards, printing
mechanisms, video display mon-
32 itors and metering devices.
33 (p) ``Bingo'' means
games of bingo managed, operated and conducted
34 in accordance with K.S.A. 79-4701 and
amendments thereto.
35 (q) ``Credit'' means
the smallest unit of payment entitling a player to
36 play a video lottery machine
game.
37 (r) ``Financial
institution'' means any savings and loan association,
38 federally chartered savings bank, bank,
trust company, credit union, in-
39 surance company or other organization
which is authorized to make loans
40 and lending by which is regulated by
law.
41 (s) ``Licensed
establishment'' means a:
42 (1) Retailer licensed
pursuant to the Kansas liquor control act;
43 (2) club or drinking
establishment licensed pursuant to the club and
HB 2975
15
1 drinking establishment act;
or
2 (3) retailer
licensed pursuant to the provisions of article 27 of
chapter
3 41 of the Kansas Statutes
Annotated.
4 (t) ``Net video
lottery machine income'' means cash put into a video
5 lottery machine minus credits
redeemed for cash.
6 (u) ``Truck
stop'' means a video lottery retailer which has: (1) An
area
7 regulated from entry by minors for
the play of video lottery machines; (2)
8 five acres of paved parking; (3)
overnight facilities; (4) a restaurant; and
9 (5) revenue from the sale of
diesel fuel exceeding revenue derived from
10 video lottery.
11 (v) ``Video lottery
machine leasing company'' means any person
12 which owns and leases video lottery
machines to video lottery machine
13 distributors or video lottery machine
operators and which receives con-
14 sideration in the form of fixed regular
payments and does not receive
15 additional payments or reductions
directly or indirectly based upon the
16 profits or losses generated from the
machines it leases.
17 (w) ``Video lottery
machine manufacturer'' means any person that
18 assembles or produces video lottery
machines or associated equipment for
19 sale or use in this state.
20 (x) ``Video lottery
machine distributor'' means any person that dis-
21 tributes or sells video lottery machines
or associated equipment for use in
22 this state, other than a video lottery
machine leasing company.
23 (y) ``Video lottery
machine operator'' means any person that places,
24 maintains, owns or leases video lottery
machines or associated equipment
25 for use in this state.
26 (z) ``Video lottery
retailer'' means the state fair board, with regard to
27 video lottery machines placed on the
state fairgrounds, or any person with
28 whom the Kansas lottery has contracted
for the placement of video lottery
29 machines.
30 (aa) ``Video lottery
machine vendor'' means a video lottery machine
31 leasing company, video lottery machine
manufacturer, video lottery ma-
32 chine distributor and video lottery
machine operator.
33 Sec. 16. K.S.A.
74-8704 is hereby amended to read as follows: 74-
34 8704. (a) The executive director shall have
the power to:
35 (1) Supervise and
administer the operation of the state lottery in ac-
36 cordance with the provisions of this act
and such rules and regulations as
37 adopted hereunder.
38 (2) Appoint, subject to
the Kansas civil service act and within the
39 limitations of appropriations therefor, all
other employees of the Kansas
40 lottery, which employees shall be in the
classified service unless otherwise
41 specifically provided by this act.
42 (3) Enter into contracts
for advertising and promotional services, sub-
43 ject to the provisions of subsection (b);
annuities or other methods
HB 2975
16
1 deemed appropriate for the payment of
prizes; data processing and other
2 technical products, equipment and
services; and facilities as needed to
3 operate the Kansas lottery, including
but not limited to gaming equip-
4 ment, tickets and other services
involved in major procurement contracts,
5 in accordance with K.S.A. 74-8705 and
amendments thereto.
6 (4) Enter into
contracts with persons for the sale of lottery tickets or
7 shares to the public or the
placement of video lottery machines, as pro-
8 vided by this act and rules and
regulations adopted pursuant to this act,
9 which contracts shall not be subject
to the provisions of K.S.A. 75-3738
10 through 75-3744, and amendments
thereto.
11 (5) Require lottery
retailers to furnish proof of financial stability or
12 furnish surety in an amount based upon the
expected volume of sales of
13 lottery tickets or shares or video
lottery machine games.
14 (6) Examine, or cause to
be examined by any agent or representative
15 designated by the executive director, any
books, papers, records or mem-
16 oranda of any lottery retailer for the
purpose of ascertaining compliance
17 with the provisions of this act or rules
and regulations adopted hereunder.
18 (7) Issue subpoenas to
compel access to or for the production of any
19 books, papers, records or memoranda in the
custody or control of any
20 lottery retailer, or to compel the
appearance of any lottery retailer or
21 employee of any lottery retailer, for the
purpose of ascertaining compli-
22 ance with the provisions of this act or
rules and regulations adopted here-
23 under. Subpoenas issued under the
provisions of this subsection may be
24 served upon natural persons and
corporations in the manner provided in
25 K.S.A. 60-304 and amendments thereto for
the service of process by any
26 officer authorized to serve subpoenas in
civil actions or by the executive
27 director or an agent or representative
designated by the executive direc-
28 tor. In the case of the refusal of any
person to comply with any such
29 subpoena, the executive director may make
application to the district
30 court of any county where such books,
papers, records, memoranda or
31 person is located for an order to
comply.
32 (8) Administer oaths and
take depositions to the same extent and
33 subject to the same limitations as would
apply if the deposition were in
34 aid of a civil action in the district
court.
35 (9) Require
fingerprinting of employees and such other persons who
36 work in sensitive areas within the lottery
as deemed appropriate by the
37 director. The director may submit such
fingerprints to the Kansas bureau
38 of investigation and to the federal bureau
of investigation for the purposes
39 of verifying the identity of such employees
and persons and obtaining
40 records of their criminal arrests and
convictions.
41 (b) The Kansas lottery
shall not engage in on-site display advertising
42 or promotion of the lottery at any amateur
athletic or sporting event
43 including, but not limited to, amateur
athletic sporting events at institu-
HB 2975
17
1 tions under the jurisdiction and
control of the state board of regents.
2
Sec. 17. K.S.A. 74-8708 is hereby amended to read as
follows: 74-
3 8708. (a) Subject to the
limitations of this act, the executive director shall
4 select as lottery retailers such
persons as deemed best able to serve the
5 public convenience and promote the
sale of tickets or shares or video
6 lottery machine games in
accordance with marketing plans developed by
7 the Kansas lottery. In the selection
of lottery retailers, the executive di-
8 rector shall consider factors such as
financial responsibility, security of
9 the applicant's place of business or
activity, accessibility of the applicant's
10 place of business or activity, integrity,
reputation, volume of expected
11 sales and such other factors as the
executive director may deem appro-
12 priate. The executive director may select
the state fair board as a lottery
13 retailer to sell lottery tickets or shares
or to have video lottery machines
14 placed on the premises of the state
fairgrounds, but the state fair board
15 shall be authorized to sell such tickets
or shares or have such machines
16 in operation only on the state
fairgrounds and only during the time of the
17 annual state fair. Other persons lawfully
engaged in nongovernmental
18 business on state property may be selected
as lottery retailers.
19 (b) The executive
director may charge an application fee to persons
20 applying to become lottery
retailers. video lottery retailers, which fee
shall
21 be $50 for each machine to be placed on
the premises. In addition, the
22 commission shall establish by rules and
regulations an annual fee for each
23 certificate issued to a video lottery
retailer, which fee shall not exceed
24 $500. The executive director may charge
an application fee to persons
25 applying to become lottery retailers
other than video lottery retailers,
26 which fee shall be established by rules
and regulations of the commission.
27 All moneys from fees collected pursuant
to this subsection shall be depos-
28 ited in the state treasury and credited
to the lottery operating fund.
29 (c) All lottery retailer
contracts awarded by the Kansas lottery under
30 this act shall be renewable annually after
issuance unless sooner canceled
31 or terminated.
32 (d) No lottery retailer
contract awarded under this act shall be trans-
33 ferred or assignable.
34 (e) Each lottery
retailer shall be issued a lottery retailer certificate
35 which shall be conspicuously
displayed at the for each place where the
36 lottery retailer is authorized to sell
lottery tickets or shares. or is
author-
37 ized to have a video lottery machine.
The certificate shall be conspicuously
38 displayed at such place.
39 (f) Lottery tickets or
shares shall only be sold by the lottery retailer
40 at the location stated on the lottery
retailer certificate. Video lottery ma-
41 chine games shall be placed only by the
video lottery retailer at the lo-
42 cation stated on the video lottery
retailer certificate.
43 (g) To be selected as a
lottery retailer or a video lottery machine
HB 2975
18
1 vendor, a natural person
acting as a sole proprietor must:
2 (1) Be at least 18
years of age;
3 (2) have
sufficient financial resources to support the activities re-
4 quired to sell lottery tickets or
shares or video lottery machine games;
5 (3) be current in
payment of all taxes, interest and penalties owed to
6 any taxing subdivision where the
lottery retailer will sell lottery tickets or
7 shares or video lottery machine
games;
8 (4) be current in
filing all applicable tax returns and in payment of
9 all taxes, interest and penalties
owed to the state of Kansas, excluding
10 items under formal appeal pursuant to
applicable statutes; and
11 (5) not be engaged
exclusively in the sale of lottery tickets and shares
12 or video lottery machine games.
13 (h) No natural person
shall be selected as a lottery retailer or a video
14 lottery machine vendor who:
15 (1) Has been convicted
of a felony in this or any other jurisdiction,
16 unless at least 10 years have passed since
satisfactory completion of the
17 sentence or probation imposed by the court
for each such felony;
18 (2) has been convicted
of an illegal gambling activity in this or any
19 other jurisdiction;
20 (3) has been found to
have violated the provisions of this act or any
21 rule and regulation adopted hereunder;
22 (4) is
a another vendor or an employee or agent of
any other vendor
23 doing business with the Kansas lottery;
24 (5) resides in the same
household of an employee of the Kansas lot-
25 tery or of a member of the commission;
or
26 (6) has made a statement
of material fact to the Kansas lottery, know-
27 ing such statement to be false.
28 (i) For a partnership to
be selected as a lottery retailer or a video
29 lottery machine vendor, the
partnership must meet the requirements of
30 subsections (g)(2), (g)(3), (g)(4) and
(g)(5) and each partner must meet
31 the requirements of subsections (g)(1),
(g)(3), (g)(4) and (h)(1) through
32 (h)(6).
33 (j) For a corporation to
be selected as a lottery retailer or a video
34 lottery machine vendor, the
corporation must meet the requirements of
35 subsections (g)(2), (g)(3), (g)(4) and
(g)(5) and each officer or director
36 and each stockholder who owns 5% or more of
the stock of such corpo-
37 ration or of any parent or subsidiary
corporation must meet the require-
38 ments of subsections (g)(3), (g)(4) and
(h)(1) through (h)(6).
39 (k) For an
unincorporated association to be selected as a lottery re-
40 tailer or a video lottery machine
vendor, the association must meet the
41 requirements of subsections (g)(2), (g)(3),
(g)(4) and (g)(5) and each of-
42 ficer or director must meet the
requirements of subsections (g)(1), (g)(3),
43 (g)(4) and (h)(1) through (h)(6).
HB 2975
19
1 (l) The executive
director may terminate the certificate of any lottery
2 retailer or a video lottery
machine vendor who fails to meet any of the
3 applicable qualifying standards for
selection as a retailer or vendor pro-
4 vided in this section or on the
grounds for termination provided in the
5 contract pursuant to rules and
regulations adopted by the commission.
6 (m) If a lottery
retailer's or a video lottery machine vendor's rental
7 payments for the business premises
are contractually computed, in whole
8 or in part, on the basis of a
percentage of retail sales, and such compu-
9 tation of retail sales is not
explicitly defined to include sale of tickets or
10 shares or sales of video lottery machine
games in a state-operated lottery,
11 the compensation received by the lottery
retailer from the lottery, other
12 than reimbursement of prizes paid by the
lottery retailer, shall be consid-
13 ered the amount of the retail sale for
purposes of computing the rental
14 payment.
15 (n) For a limited
liability company to be selected as a video lottery
16 machine vendor, the company must meet
the requirements of subsections
17 (g)(2), (g)(3), (g)(4) and (g)(5) and
each member having a 5% or more
18 interest in the company, or any parent
or subsidiary of such company
19 must meet the requirements of
subsections (g)(3), (g)(4) and (h)(1)
20 through (h)(6).
21 (o) Each person
entering a contract with the Kansas lottery as a video
22 lottery machine vendor or video lottery
retailer shall submit to a back-
23 ground investigation, including: (1)
Each partner of a partnership; (2)
24 each officer and director of a
corporation or of a parent or subsidiary
25 corporation; (3) each stockholder owning
5% or more of the stock of a
26 corporation or of a parent or subsidiary
corporation; (4) each officer and
27 director of an unincorporated
association; and (5) each member having a
28 5% or more ownership interest in a
limited liability company. The com-
29 mission may adopt rules and regulations
concerning the nature and extent
30 of background investigations provided
for by this subsection.
31 (p) In addition to
the requirements of subsections (a) through (o):
32 (1) A natural person
shall not receive a certificate as a video lottery
33 machine vendor unless such person is a
resident of this state;
34 (2) a partnership
shall not receive a certificate as a video lottery ma-
35 chine vendor unless each partner is a
resident of this state;
36 (3) a corporation
shall not receive a certificate as a video lottery ven-
37 dor unless such a corporation is a
Kansas corporation; and
38 (4) an unincorporated
association shall not receive a certificate as a
39 video lottery machine vendor unless each
officer or director is a resident
40 of this state.
41 Sec. 18. K.S.A.
1997 Supp. 74-8710 is hereby amended to read as
42 follows: 74-8710. (a) The commission, upon
the recommendation of the
43 executive director, shall adopt rules and
regulations governing the estab-
HB 2975
20
1 lishment and operation of a state
lottery as necessary to carry out the
2 purposes of this act. Temporary rules
and regulations may be adopted by
3 the commission without being subject
to the provisions and requirements
4 of K.S.A. 77-415 through 77-438, and
amendments thereto, but shall be
5 subject to approval by the attorney
general as to legality and shall be filed
6 with the secretary of state and
published in the Kansas register. Tem-
7 porary and permanent rules and
regulations may include but shall not be
8 limited to:
9 (1) Subject to the
provisions of subsection (b), the types of lottery
10 games to be conducted, including but not
limited to instant lottery, on-
11 line and traditional games, but not
including games on and video lottery
12 machines machine
games.
13 (2) The manner of
selecting the winning tickets or shares, except that,
14 if a lottery game utilizes a drawing of
winning numbers, a drawing among
15 entries or a drawing among finalists, such
drawings shall always be open
16 to the public and shall be recorded on both
video and audio tape.
17 (3) The manner of
payment of prizes to the holders of winning tickets
18 or shares and winners of video lottery
machine games.
19 (4) The frequency of the
drawings or selections of winning tickets or
20 shares.
21 (5) The type or types of
locations at which tickets or shares may be
22 sold or at which video lottery machines
may be placed.
23 (6) The method or
methods to be used in selling tickets or shares or
24 video lottery machine games.
25 (7) Additional
qualifications for the selection of lottery retailers and
26 the amount of application fees to be paid
by each.
27 (8) The amount and
method of compensation to be paid to lottery
28 retailers, including special bonuses and
incentives.
29 (9) Deadlines for claims
for prizes by winners of each lottery game
30 or video lottery machine game.
31 (10) Provisions for
confidentiality of information submitted by ven-
32 dors pursuant to K.S.A. 74-8705, and
amendments thereto.
33 (11) Information
required to be submitted by vendors, in addition to
34 that required by K.S.A. 74-8705, and
amendments thereto.
35 (12) The major
procurement contracts or portions thereof to be
36 awarded to minority business enterprises
pursuant to subsection (a) of
37 K.S.A. 74-8705, and amendments thereto, and
procedures for the award
38 thereof.
39 (13) Provisions to
prevent direct and indirect payment by manufac-
40 turers, distributors or operators to
video lottery retailers or shareholders
41 and owners of video lottery retailers,
other than payments expressly per-
42 mitted by contract.
43 (14) Provisions to
prohibit lottery retailers from holding themselves
HB 2975
21
1 out to the public as gambling
establishments, casinos or other terms sug-
2 gesting any form of lottery or
gambling.
3 (b) No new lottery
game shall commence operation after the effective
4 date of this act unless first
approved by the governor or, in the governor's
5 absence or disability, the lieutenant
governor.
6
Sec. 19. K.S.A. 74-8711 is hereby amended to read as
follows: 74-
7 8711. (a) There is hereby established
in the state treasury the lottery
8 operating fund.
9 (b) The executive
director shall remit at least weekly to the state
10 treasurer all moneys collected from the
sale of lottery tickets and shares
11 and video lottery machine games and
any other moneys received by or
12 on behalf of the Kansas lottery. Upon
receipt of any such remittance, the
13 state treasurer shall deposit the entire
amount thereof in the state treasury
14 and credit it to the lottery operating
fund. Moneys credited to the fund
15 shall be expended or transferred only as
provided by this act. Expendi-
16 tures from such fund shall be made in
accordance with appropriations
17 acts upon warrants of the director of
accounts and reports issued pursuant
18 to vouchers approved by the executive
director or by a person designated
19 by the executive director.
20 (c) Moneys in the
lottery operating fund shall be used for:
21 (1) The payment of
expenses of the lottery, which shall include all
22 costs incurred in the operation and
administration of the Kansas lottery;
23 all costs resulting from contracts entered
into for the purchase or lease
24 of goods and services needed for operation
of the lottery, including but
25 not limited to equipment supplies,
materials, tickets, independent studies
26 and surveys, data transmission,
advertising, printing, promotion, incen-
27 tives, public relations, communications,
and distribution of tickets and
28 shares and video lottery machines;
and reimbursement of costs of facilities
29 and services provided by other state
agencies;
30 (2) the payment of
compensation to lottery retailers;
31 (3) transfers of moneys
to the lottery prize payment fund pursuant to
32 K.S.A. 74-8712 and amendments thereto;
33 (4) transfers to the
state general fund pursuant to K.S.A. 74-8713 and
34 amendments thereto;
35 (5) transfers to the
state gaming revenues fund pursuant to subsection
36 (d) of this section and as
otherwise provided by law; and
37 (6) the transfers to the
county reappraisal fund as prescribed by
law.;
38 and
39 (7) transfers to the
STARS scholarship program fund pursuant to
40 subsection (e).
41 (d) The director of
accounts and reports shall transfer moneys in the
42 lottery operating fund to the state gaming
revenues fund created by
43 K.S.A. 79-4801 and amendments thereto, on
or before the 15th day of
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22
1 each month, for fiscal years
commencing on or after July 1, 1988. The
2 transfer shall be in an amount
certified monthly by the executive director
3 and determined as follows, whichever
is greater:
4 (1) In an amount
equal to the moneys in the lottery operating fund
5 in excess of those needed for the
purposes described in subsection (e)
6 and subsections (c)(1) through
(c)(4); or
7 (2) an amount
equal to not less than 30% of total monthly revenues
8 from the sales of lottery tickets and
shares less estimated returned tickets.
9 (e) The
director of accounts and reports shall transfer moneys in
the
10 lottery operating fund to the STARS
scholarship program fund established
11 in section 10 and amendments thereto, on
or before the 15th day of each
12 month. The transfer shall be in an
amount certified monthly by the ex-
13 ecutive director in an amount equal to
the monthly net video lottery ma-
14 chine income received by the lottery in
excess of those amounts needed
15 for the purposes described in
subsections (c)(1) through (c)(3) and attrib-
16 utable to video lottery machine
games.
17 Sec. 20. K.S.A.
74-8712 is hereby amended to read as follows: 74-
18 8712. (a) There is hereby established in
the state treasury the lottery prize
19 payment fund.
20 (b) The executive
director shall certify periodically to the director of
21 accounts and reports such amounts as the
executive director determines
22 necessary to pay prizes to the holders of
valid winning lottery tickets or
23 shares and such amounts as the executive
director determines necessary
24 to pay prizes to winners of video
lottery machine games, other than prizes
25 paid by video lottery retailers in the
ordinary course of business as a video
26 lottery retailer. Upon receipt of
such certification, the director of accounts
27 and reports shall promptly transfer the
amount certified from the lottery
28 operating fund to the lottery prize payment
fund. Moneys credited to the
29 fund shall be expended only for the payment
of prizes to the holders of
30 valid winning lottery tickets or shares
or winners of video lottery machine
31 games, for the reimbursement of
retailers who have paid holders of win-
32 ning tickets or shares or winners of
video lottery machine games or as
33 otherwise authorized by law. Prior to
making any expenditure for reim-
34 bursement of a retailer or payment of a
prize of $50 or more, the executive
35 director shall cause all proposed prize
payments to be matched against
36 the state debtor files maintained by the
director of accounts and reports
37 and shall certify and pay or deliver any
matched prize or the cash amount
38 thereof to the director of accounts and
reports for setoff as prescribed
39 under K.S.A. 75-6201 et seq. and
amendments thereto. Expenditures
40 from such fund shall be made in accordance
with appropriations acts upon
41 warrants of the director of accounts and
reports, or a person designated
42 by the director of accounts and reports
pursuant to K.S.A. 75-3732 and
43 amendments thereto, issued pursuant to
vouchers approved by the ex-
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23
1 ecutive director, or a person
designated by the executive director.
2
Sec. 21. K.S.A. 1997 Supp. 74-8717 is hereby amended to
read as
3 follows: 74-8717. (a) It is unlawful
to: (1) Falsely make, alter, forge, pass
4 or counterfeit, with intent to
defraud, a lottery ticket or share, or receipt
5 for the purchase thereof, issued or
purported to have been issued by the
6 Kansas lottery under this
act.;
7 (2) tamper with
a video lottery machine with intent to interfere with
8 the proper operation of such
machine;
9
(3) intentionally manipulate the outcome, payoff or operation
of a
10 video lottery machine by physical
tampering or any other means; or
11 (4) possess or
control, or permit to be kept in a person's possession
12 or control, a video lottery machine or
device identified as a gambling
13 device pursuant to K.S.A. 21-4302 and
amendments thereto, but not in-
14 cluding a video lottery machine
certified by the Kansas lottery.
15 (b) Violation of this
section is a severity level 8, nonperson felony.
16 Sec. 22. K.S.A.
1997 Supp. 74-8718 is hereby amended to read as
17 follows: 74-8718. (a) It is unlawful
for:
18 (1) Any person to sell a
lottery ticket or share or a video lottery ma-
19 chine game at a price other than
that fixed by rules and regulations
20 adopted pursuant to this act;
21 (2) any person other
than the Kansas lottery or a lottery retailer au-
22 thorized by the Kansas lottery to sell or
resell any lottery ticket or share;
23 or
24 (3) any person to sell a
lottery ticket or share to any person, knowing
25 such person to be under 18 years of
age.;
26 (4) any person other
than the Kansas lottery to have a video lottery
27 machine on premises owned by or under
the control of such person unless
28 such person is the Kansas lottery; a
video lottery machine vendor; a fi-
29 nancial institution or its agent, or a
video lottery machine leasing company
30 or its agent, who has taken possession
and advised the executive director
31 of its possession; or a video lottery
retailer operating with a certificate
32 from the Kansas lottery;
33 (5) any video lottery
retailer or any employee of such retailer, to per-
34 mit an individual under 18 years of age
to play a video lottery machine
35 game, knowing such individual to be
under 18 years of age; or
36 (6) any person who
owns or controls premises where a video lottery
37 machine is placed, or any employee of
such person, to permit an individual
38 under 18 years of age to be in an area
where video lottery machines are
39 located knowing such individual to be
under 18 years of age.
40 (b) (1) Violation
of this section is a class A nonperson misdemeanor
41 upon conviction for a first offense;
and
42 (2) violation of this
section is a severity level 9, nonperson felony upon
43 conviction for a second or subsequent
offense.
HB 2975
24
1
Sec. 23. K.S.A. 1997 Supp. 74-8719 is hereby amended to
read as
2 follows: 74-8719. (a) It is unlawful
for any person to purchase a lottery
3 ticket or share or play a video
lottery machine game, or to share in the
4 lottery winnings of a person, knowing
that such person is:
5 (1) The executive
director, a member of the commission or an em-
6 ployee of the Kansas lottery;
7 (2) an officer or
employee of a vendor contracting with the Kansas
8 lottery to supply gaming equipment or
tickets to the Kansas lottery for
9 use in the operation of any lottery
conducted pursuant to this act;
10 (3) a spouse, child,
stepchild, brother, stepbrother, sister, stepsister,
11 parent or stepparent of a person described
by subsection (a)(1) or (2); or
12 (4) a person who resides
in the same household as any person de-
13 scribed by subsection (a)(1) or (2).
14 (b) It is unlawful
for any person to play a video lottery machine game
15 at any time when the licensed
establishment where the machine is located
16 is not open to the public.
17 (c) It is unlawful
for any person under 18 years of age to:
18 (1) Play a video
lottery machine game; or
19 (2) be in an area
where video lottery machines are located.
20
(d) (1) Violation of subsection (a) is a class A
nonperson misde-
21 meanor upon conviction for a first
offense.
22 (2) Violation of
subsection (a) is a severity level 9, nonperson felony
23 upon conviction for a second or subsequent
offense. Violation of subsec-
24 tion (b) or (c) by a person 18 or more
years of age is a class A nonperson
25 misdemeanor. Violation of subsection (b)
or (c) by a person less than 18
26 years of age shall render the person
subject to adjudication as a juvenile
27 offender under the Kansas juvenile
justice code.
28 (c)
(e) Notwithstanding subsection (a), the executive
director may au-
29 thorize in writing any employee of the
Kansas lottery and any employee
30 of a lottery vendor to purchase a lottery
ticket or play a video lottery
31 machine game for the purposes of
verifying the proper operation of the
32 state lottery with respect to security,
systems operation and lottery retailer
33 contract compliance. Any prize awarded as a
result of such ticket or share
34 purchase or playing such game shall
become the property of the Kansas
35 lottery and be added to the prize pools of
subsequent lottery games.
36 (d)
(f) Certain classes of persons who, because of the
unique nature
37 of the supplies or services they provide
for use directly in the operation
38 of a lottery pursuant to this act, may be
prohibited, in accordance with
39 rules and regulations adopted by the
commission, from participating in
40 any lottery in which such supplies or
services are used.
41 (e) (g)
Except as provided by subsection (b) and (c), nothing in
this
42 section shall prohibit lottery retailers or
their employees from purchasing
43 lottery tickets and
or shares or playing video lottery machine games
or
HB 2975
25
1 from being paid a prize
of for a winning ticket or share or
game.
2 (f)
(h) Each person who purchases a lottery ticket or share
or plays
3 a video lottery machine game
thereby agrees to be bound by rules and
4 regulations adopted by the commission
and by the provisions of this act.
5
Sec. 24. K.S.A. 74-8720 is hereby amended to read as
follows: 74-
6 8720. (a) As nearly as practical, an
amount equal to not less than 45% of
7 the total sales of lottery tickets or
shares, computed on an annual basis,
8 shall be allocated for payment of
lottery prizes for winning tickets or
9 shares.
10 (b) The prize to be paid
or awarded for each winning ticket or share
11 or game shall be paid to one natural
person who is adjudged by the ex-
12 ecutive director, the director's designee
or the retailer paying the prize,
13 to be the holder of such winning ticket or
share or the winner of the game,
14 or the person designated in writing by
the holder of the winning ticket
15 or share such holder or
winner on a form satisfactory to the executive
16 director, except that the prize of a
deceased holder or winner shall be
17 paid to the duly appointed representative
of the estate of such holder or
18 winner or to such other person or persons
appearing to be legally entitled
19 thereto.
20 (c) The executive
director shall award the designated prize to the
21 holder of the ticket or share or the
winner of the game upon the validation
22 of a claim or confirmation of a winning
share. The executive director shall
23 have the authority to make payment for
prizes by any means deemed
24 appropriate upon the validation of winning
tickets or shares or games.
25 (d) The right of a
person to a prize drawn or awarded is not assign-
26 able.
27 (e) All prizes awarded
shall be taxed as Kansas source income and
28 shall be subject to all state and federal
income tax laws and rules and
29 regulations. State income taxes shall be
withheld from prizes paid when-
30 ever federal income taxes are required to
be withheld under current fed-
31 eral law.
32 (f) Unclaimed prize
money not payable directly by lottery retailers
33 shall be retained for the period
established by rules and regulations and
34 if no claim is made within such period,
then such unclaimed prize money
35 shall be added to the prize pools of
subsequent lottery games.
36 (g) The state of Kansas,
members of the commission and employees
37 of the Kansas lottery shall be discharged
of all further liability upon pay-
38 ment of a prize pursuant to this
section.
39 (h) The Kansas lottery
shall not publicly disclose the identity of any
40 person awarded a prize except upon written
authorization of such person.
41 Sec. 25. K.S.A.
74-8721 is hereby amended to read as follows: 74-
42 8721. All sales of lottery tickets and
shares and video lottery machine
43 games shall be exempt from
retailers' sales taxes imposed pursuant to
HB 2975
26
1 K.S.A. 12-187 et seq., and
amendments thereto, and from the tax imposed
2 by the Kansas retailers' sales tax
act.
3
Sec. 26. K.S.A. 41-308, 74-8701, 74-8702, 74-8704,
74-8708, 74-
4 8711, 74-8712, 74-8720 and 74-8721
and K.S.A. 1997 Supp. 21-4302, 38-
5 1602, 74-8710, 74-8717, 74-8718 and
74-8719 are hereby repealed.
6 Sec. 27. This
act shall take effect and be in force from and after its
7 publication in the statute book.
8
9