As Amended by House Commettee
         

          Session of 1998
                   
HOUSE BILL No. 2999
         
By Committee on Federal and State Affairs
         
2-26
          10             AN ACT concerning lottery machines; relating to the unlawful sale of
11             lottery tickets; amending K.S.A. 74-8702 and 79-4701 and K.S.A. 1997
12             Supp. 74-8710, 74-8718 and 74-9802 and repealing the existing
13             sections.
14            
15       Be it enacted by the Legislature of the State of Kansas:
16           Section 1. K.S.A. 74-8702 is hereby amended to read as follows:
17       74-8702. As used in this act, unless the context otherwise requires:
18           (a) ``Commission'' means the Kansas lottery commission.
19           (b) ``Executive director'' means the executive director of the Kansas
20       lottery.
21           (c) ``Gaming equipment'' means any electric, electronic or mechani-
22       cal device or other equipment unique to the Kansas lottery used directly
23       in the operation of any lottery and in the determination of winners pur-
24       suant to this act.
25           (d) ``Kansas lottery'' means the state agency created by this act to
26       operate a lottery or lotteries pursuant to this act.
27           (e) ``Lottery retailer'' means any person with whom the Kansas lottery
28       has contracted to sell lottery tickets or shares, or both, to the public.
29           (f) ``Lottery'' or ``state lottery'' means the lottery or lotteries operated
30       pursuant to this act.
31           (g) ``Major procurement'' means any gaming product or service, in-
32       cluding but not limited to facilities, advertising and promotional services,
33       annuity contracts, prize payment agreements, consulting services, equip-
34       ment, tickets and other products and services unique to the Kansas lot-
35       tery, but not including materials, supplies, equipment and services com-
36       mon to the ordinary operations of state agencies.
37           (h) ``Person'' means any natural person, association, corporation or
38       partnership.
39           (i) ``Prize'' means any prize paid directly by the Kansas lottery pur-
40       suant to its rules and regulations.
41           (j) ``Share'' means any intangible manifestation authorized by the
42       Kansas lottery to prove participation in a lottery game.
43           (k) ``Ticket'' means any tangible evidence issued by the Kansas lottery

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  1       to prove participation in a lottery game.
  2           (l) ``Vendor'' means any person who has entered into a major pro-
  3       curement contract with the Kansas lottery.
  4           (m) ``Returned ticket'' means any ticket which was transferred to a
  5       lottery retailer, which was not sold by the lottery retailer and which was
  6       returned to the Kansas lottery for refund by issuance of a credit or oth-
  7       erwise.
  8           (n) ``Video lottery machine'' means any electronic video game ma-
  9       chine that, upon insertion of cash, is available to play or simulate the play
10       of a video game authorized by the commission, including but not limited
11       to bingo, poker, black jack and keno, and which uses a video display and
12       microprocessors and in which, by chance, the player may receive free
13       games or credits that can be redeemed for cash. ``Lottery machine'' means
14       any machine or device that allows a player to insert cash, any form of
15       credit or other consideration, and may deliver, as the result of an element
16       of chance, regardless of the skill required by the player, a prize or evidence
17       of a prize, including, but not limited to, interactive lottery machines and
18       noninteractive lottery machines.
19           (o) ``Interactive lottery machine'' means a lottery machine in which
20       the prize is determined by both chance and player or players' skill and in
21       which the player or players can influence the prize through one-on-one
22       interaction with the machine, including, but not limited to, machines on
23       which lottery games, such as poker and blackjack, are played.
24           (p) ``Noninteractive lottery machine'' means a lottery machine in
25       which the prize is determined only by chance, including, but not limited
26       to, slot machines, bingo, keno ticket dispensers, lottery ticket dispensers,
27       pull-tab dispensers and instant bingo dispensers.
28           Sec. 2. K.S.A. 1997 Supp. 74-8710 is hereby amended to read as
29       follows: 74-8710. (a) The commission, upon the recommendation of the
30       executive director, shall adopt rules and regulations governing the estab-
31       lishment and operation of a state lottery as necessary to carry out the
32       purposes of this act. Temporary rules and regulations may be adopted by
33       the commission without being subject to the provisions and requirements
34       of K.S.A. 77-415 through 77-438, and amendments thereto, but shall be
35       subject to approval by the attorney general as to legality and shall be filed
36       with the secretary of state and published in the Kansas register. Tem-
37       porary and permanent rules and regulations may include but shall not be
38       limited to:
39           (1) Subject to the provisions of subsection (b), the types of lottery
40       games to be conducted, including but not limited to instant lottery, on-
41       line and traditional games, but not including games on video lottery ma-
42       chines.
43           (2) The manner of selecting the winning tickets or shares, except that,

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  1       if a lottery game utilizes a drawing of winning numbers, a drawing among
  2       entries or a drawing among finalists, such drawings shall always be open
  3       to the public and shall be recorded on both video and audio tape.
  4           (3) The manner of payment of prizes to the holders of winning tickets
  5       or shares.
  6           (4) The frequency of the drawings or selections of winning tickets or
  7       shares.
  8           (5) The type or types of locations at which tickets or shares may be
  9       sold.
10           (6) The method or methods to be used in selling tickets or shares.
11           (7) Additional qualifications for the selection of lottery retailers and
12       the amount of application fees to be paid by each.
13           (8) The amount and method of compensation to be paid to lottery
14       retailers, including special bonuses and incentives.
15           (9) Deadlines for claims for prizes by winners of each lottery game.
16           (10) Provisions for confidentiality of information submitted by ven-
17       dors pursuant to K.S.A. 74-8705, and amendments thereto.
18           (11) Information required to be submitted by vendors, in addition to
19       that required by K.S.A. 74-8705, and amendments thereto.
20           (12) The major procurement contracts or portions thereof to be
21       awarded to minority business enterprises pursuant to subsection (a) of
22       K.S.A. 74-8705, and amendments thereto, and procedures for the award
23       thereof.
24           (b) No new lottery game shall commence operation after the effective
25       date of this act unless first approved by the governor or, in the governor's
26       absence or disability, the lieutenant governor. The provisions of this
27       subsection shall not allow the governor or lieutenant governor to
28       approve games on lottery machines.
29           Sec. 3. K.S.A. 1997 Supp. 74-8718 is hereby amended to read as
30       follows: 74-8718. (a) It is unlawful for:
31           (1) Any person to sell a lottery ticket or share at a price other than
32       that fixed by rules and regulations adopted pursuant to this act;
33           (2) any person other than a lottery retailer authorized by the Kansas
34       lottery to sell or resell any lottery ticket or share; or
35           (3) any person to sell a lottery ticket or share to any person, knowing
36       such person to be under 18 years of age.
37           (b) (1) Violation of this section is a class A nonperson misdemeanor
38       upon conviction for a first offense; and
39           (2) violation of this section is a severity level 9, nonperson felony upon
40       conviction for a second or subsequent offense.
41        (c) It shall be a defense to a prosecution under this section if:
42       (1) The defendant sold the lottery ticket to the person under 18
43       years of age with reasonable cause to believe that such person was

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  1       18 or more years of age; and (2) to purchase the lottery ticket, the
  2       person under 18 years of age exhibited to the defendant a driver's
  3       license, Kansas nondriver's identification card or other official or
  4       apparently official document, containing a photograph of such
  5       person and purporting to establish that such person was 18 or
  6       more years of age.
  7           Sec. 4. K.S.A. 1997 Supp. 74-9802 is hereby amended to read as
  8       follows: 74-9802. As used in the tribal gaming oversight act:
  9           (a) ``Class III gaming'' means all tribal gaming activities defined as
10       class III gaming by the Indian gaming regulatory act (25 U.S.C. 2701 et
11       seq.), as in effect on the effective date of this act.
12           (b) ``Executive director'' means the executive director of the state
13       gaming agency.
14           (c) ``Tribal gaming'' means any class III gaming conducted pursuant
15       to a tribal-state gaming compact. ``Tribal gaming'' does not include games
16       on video lottery machines, as defined by K.S.A. 74-8702 and amendments
17       thereto, that the Kansas lottery is prohibited from conducting under
18       K.S.A. 74-8704 and amendments thereto.
19           (d) ``Tribal gaming commission'' means a commission created by a
20       native American tribe in accordance with a tribal-state gaming compact.
21           (e) ``Tribal gaming facility'' means a facility where tribal gaming is
22       conducted or operated.
23           (f) ``Tribal-state gaming compact'' means a compact entered into be-
24       tween the state of Kansas and the Iowa Tribe of Kansas and Nebraska,
25       the Kickapoo Tribe of Indians of the Kickapoo Reservation in Kansas, the
26       Prairie Band Potawatomi Nation in Kansas or the Sac and Fox Nation of
27       Missouri in Kansas and Nebraska with respect to the tribe's authority to
28       engage in class III gaming on the tribe's reservation property in the state
29       of Kansas.
30           Sec. 5. K.S.A. 79-4701 is hereby amended to read as follows: 79-
31       4701. As used in this act, each of the following words and phrases shall
32       have the following meaning unless the context otherwise requires:
33           (a) ``Bingo'' means the games of call bingo and instant bingo but shall
34       not include games played on a lottery machine.
35           (b) ``Call bingo'' means a game in which each participant must pay a
36       charge and a prize or prizes are awarded to the winner or winners in
37       which each participant receives one or more cards or in which a card or
38       cards are included in a paper game program booklet each of which is
39       marked off into 25 squares arranged in five horizontal rows of five squares
40       each and five vertical rows of five squares each, with each square being
41       designated by number, letter or combination of numbers and letters, and
42       only the center square designated with the word ``free'' with no two cards
43       being identical, with the players covering squares as the operator of such

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  1       game announces a number, letter or combination of numbers and letters
  2       appearing on an object selected by chance, either manually or mechani-
  3       cally from a receptacle in which have been placed objects bearing num-
  4       bers, letters or combinations of numbers and letters corresponding to the
  5       system used for designating the squares, with the winner of each game
  6       being the player or players first properly covering a predetermined and
  7       announced pattern of squares upon the card or a card which is included
  8       in a paper game program booklet being used by such player or players.
  9       ``Call bingo'' does not include any game utilizing an electronic or com-
10       puterized card system.
11           (c) ``Instant bingo'' means a game: (1) In which each participant must
12       pay a charge; (2) in which a prize or prizes are awarded to the winner or
13       winners; (3) in which each participant receives one or more disposable
14       pull-tab or break-open tickets which accord a participant an opportunity
15       to win something of value by opening or detaching the paper covering
16       from the back of the ticket to reveal a set of numbers, letters, symbols or
17       configurations, or any combination thereof; (4) which is conducted by a
18       licensee under this act; (5) the conduct of which must be in the presence
19       of the participants; and (6) which does not utilize any dice, normal playing
20       cards, instant ticket with a removable latex covering or slot machines.
21       ``Instant bingo'' does not include any game utilizing electronically gen-
22       erated or computer-generated tickets.
23           (d) ``Bingo card distributor'' means any person or entity that sells or
24       otherwise distributes instant bingo tickets or disposable paper call bingo
25       cards to licensees under this act.
26           (e) ``Nonprofit religious organization'' means any organization,
27       church, body of communicants, or group, gathered in common member-
28       ship for mutual support and edification in piety, worship, and religious
29       observances, or a society of individuals united for religious purposes at a
30       definite place and of which no part of the net earnings inures to the
31       benefit of any private shareholder or individual member of such organi-
32       zation, and which religious organization maintains an established place of
33       worship within this state and has a regular schedule of services or meet-
34       ings at least on a weekly basis and has been determined by the secretary
35       of revenue to be organized and created as a bona fide religious organi-
36       zation and which has been exempted from the payment of federal income
37       taxes as provided by section 501(c)(3) or section 501(d) of the federal
38       internal revenue code of 1954, as amended, or determined to be organ-
39       ized and operated as a bona fide nonprofit religious organization by the
40       secretary of revenue.
41           (f) ``Nonprofit charitable organization'' means any organization which
42       is organized and operated for:
43           (1) The relief of poverty, distress, or other condition of public con-

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  1       cern within this state; or
  2           (2) for financially supporting the activities of a charitable organization
  3       as defined in paragraph (1); or
  4           (3) for conferring direct benefits on the community at large; and of
  5       which no part of the net earnings inures to the benefit of any private
  6       shareholder or individual member of such organization and has been de-
  7       termined by the secretary of revenue to be organized and operated as a
  8       bona fide charitable organization and which has been exempted from the
  9       payment of federal income taxes as provided by sections 501(c)(3),
10       501(c)(4), 501(c)(5), 501(c)(6) and 501(c)(7) of the federal internal rev-
11       enue code of 1954, as amended, or determined to be organized and op-
12       erated as a bona fide nonprofit charitable organization by the secretary
13       of revenue.
14           (g) ``Nonprofit fraternal organization'' means any organization within
15       this state which exists for the common benefit, brotherhood, or other
16       interests of its members and is authorized by its written constitution,
17       charter, articles of incorporation or bylaws to engage in a fraternal, civic
18       or service purpose within this state and has been determined by the sec-
19       retary of revenue to be organized and operated as a bona fide fraternal
20       organization and which has been exempted from the payment of federal
21       income taxes as provided by section 501(c)(8) or section 501(c)(10) of the
22       federal internal revenue code of 1954, as amended, or determined to be
23       organized and operated as a bona fide nonprofit fraternal organization by
24       the secretary of revenue.
25           (h) ``Nonprofit educational organization'' means any public or private
26       elementary or secondary school or institution of higher education which
27       has been determined by the secretary of revenue to be organized and
28       operated as a bona fide educational organization and which has been
29       exempted from the payment of federal income taxes as provided by sec-
30       tion 501(c)(3) of the federal internal revenue code of 1954, as amended,
31       or determined to be organized and operated as a bona fide nonprofit
32       educational organization by the secretary of revenue.
33           (i) ``Nonprofit veterans' organization'' means any organization within
34       this state or any branch, lodge, or chapter of a national or state organi-
35       zation within this state, the membership of which consists exclusively of
36       individuals who qualify for membership because they were or are mem-
37       bers of the armed services or forces of the United States, or an auxiliary
38       unit or society of such a nonprofit veterans' organization the membership
39       of which consists exclusively of individuals who were or are members of
40       the armed services or forces of the United States, or are cadets, or are
41       spouses, widows or widowers of individuals who were or are members of
42       the armed services or forces of the United States, and of which no part
43       of the net earnings inures to the benefit of any private shareholder or

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  1       individual member of such organization, and has been determined by the
  2       secretary of revenue to be organized and operated as a bona fide veterans'
  3       organization and which has been exempted from the payment of federal
  4       income taxes as provided by section 501(c)(4) or 501(c)(19) of the federal
  5       internal revenue code of 1954, as amended, or determined to be organ-
  6       ized and operated as a bona fide nonprofit veterans' organization by the
  7       secretary of revenue.
  8           (j) ``Lessor'' means the owner, coowner, lessor or sublessor of prem-
  9       ises upon which a licensee is permitted to manage, operate or conduct
10       games of bingo, whether or not a written lease has been entered into and
11       submitted to the secretary of revenue as required in subsection (c) of
12       K.S.A. 79-4703 and amendments thereto, and includes all political sub-
13       divisions and other public agencies.
14           (k) ``Premises'' means any room, hall, building, enclosure or outdoor
15       area used for the management, operation or conduct of a game of bingo.
16           (l) ``Lottery machine'' means any machine or device that allows a
17       player to insert cash, any form of credit or other consideration, and may
18       deliver, as the result of an element of chance, regardless of the skill re-
19       quired by the player, a prize or evidence of a prize, including, but not
20       limited to, interactive lottery machines and noninteractive lottery ma-
21       chines.
22           (m) ``Interactive lottery machine'' means a lottery machine in which
23       the prize is determined by both chance and player or players' skill and in
24       which the player or players can influence the prize through one-on-one
25       interaction with the machine, including, but not limited to, machines on
26       which lottery games, such as poker and blackjack, are played.
27           (n) ``Noninteractive lottery machine'' means a lottery machine in
28       which the prize is determined only by chance, including, but not limited
29       to, slot machines, bingo, keno ticket dispensers, lottery ticket dispensers,
30       pull-tab dispensers and instant bingo dispensers.
31           Sec. 6. K.S.A. 74-8702 and 79-4701 and K.S.A. 1997 Supp. 74-8710,
32       74-8718 and 74-9802 are hereby repealed.
33           Sec. 7. This act shall take effect and be in force from and after its
34       publication in the statute book.
35