CHAPTER 173
Substitute for HOUSE BILL No. 2013
An Act concerning lotteries; relating to the regulation thereof; amending K.S.A. 74-8711,
74-8712, 79-4701, 79-4703, 79-4704, 79-4705, 79-4705a, 79-4706, 79-4707, 79-4708, 79-
4710, 79-4711, 79-4712a, 79-4713 and 79-4804 and K.S.A. 1999 Supp. 74-8836, 79-3603
and 79-4803 and repealing the existing sections; also repealing K.S.A. 79-4714.

Be it enacted by the Legislature of the State of Kansas:

      New Section  1. Sections 1 through 17, and amendments thereto,
shall be known and may be cited as the bingo act.

      Sec.  2. K.S.A. 79-4701 is hereby amended to read as follows: 79-
4701. As used in this act, each of the following words and phrases shall
have the following meaning unless the context otherwise requires:

      (a) ``Act'' means the bingo act.

      (b) ``Administrator'' means the administrator of charitable gaming
designated by the secretary pursuant to section 15, and amendments
thereto.

      (a) (c) ``Bingo'' or ``games of bingo'' means the games of call bingo
and instant bingo.

      (d) ``Bingo card'' or ``card'' means a reusable card which is marked
off into 25 squares arranged in five horizontal rows of five squares each
and five vertical rows of five squares each, with each square being des-
ignated by a number, letter or combination of numbers and letters. Only
the center square shall be designated with the word ``free''. No two cards
in the same game shall be identical.

      (e) ``Bingo face'' or ``face'' means a piece of paper which is marked
off into 25 squares arranged in five horizontal rows of five squares each
and five vertical rows of five squares each, with each square being des-
ignated by a number, letter or combination of numbers and letters. Only
the center square shall be designated with the word ``free''. No two bingo
faces in the same game shall be identical. Faces shall be disposable and
shall not be reused after the game in which a player has used such face.

      (b) (f) ``Call bingo'' means a game in which: (1) Each participant must
pay player pays a charge and; (2) a prize or prizes are awarded to the
winner or winners in which; (3) each participant player receives one or
more cards or in which a card or cards are included in a paper game
program booklet each of which is marked off into 25 squares arranged in
five horizontal rows of five squares each and five vertical rows of five
squares each, with each square being designated by number, letter or
combination of numbers and letters, and only the center square desig-
nated with the word ``free'' with no two cards being identical, with the
players covering or faces; and (4) each player covers the squares on each
card or face as the operator of such game announces a number, letter or
combination of numbers and letters appearing on an object selected by
chance, either manually or mechanically from a receptacle in which have
been placed objects bearing numbers, letters or combinations of numbers
and letters corresponding to the system used for designating the squares,
with. The winner of each game being is the player or players first properly
covering properly a predetermined and announced pattern of squares
upon the card or a card which is included in a paper game program
booklet face being used by such player or players.

      ``Call bingo'' shall include any regular, special, mini and progressive
game of bingo.

      ``Call bingo'' does shall not include any game utilizing an electronic or
computerized card system.

      (g) ``Department'' means the department of revenue.

      (h) ``Director'' means the director of taxation.

      (i) ``Distributor'' means any person or entity that sells or distributes
instant bingo tickets, bingo cards or bingo faces.

      (c) (j) ``Instant bingo'' means a game: (1) In which each participant
must pay player pays a charge; (2) in which a prize or prizes are awarded
to the winner or winners; (3) in which each participant player receives
one or more disposable pull-tab or break-open tickets which accord a
participant player an opportunity to win something of value by opening
or detaching the paper covering from the back of the ticket to reveal a
set of numbers, letters, symbols or configurations, or any combination
thereof; (4) which is conducted by a licensee under this act; (5) the con-
duct of which must be in the presence of the participants players; and
(6) which does not utilize any dice, normal playing cards, instant ticket
with a removable latex covering or slot machines. Winners of instant bingo
shall be determined either (1) by a combination of letters, numbers or
symbols determined and posted prior to the sale of instant bingo tickets
or (2) by matching a letter, number or symbol under a tab of an instant
bingo ticket with the winning letter, number or symbol in a designated
call game of bingo during the same session.

      ``Instant bingo'' does shall not include any game utilizing electronically
generated or computer-generated tickets.

      (k) ``Lessor'' means the owner, coowner, lessor or sublessor of prem-
ises upon which a licensee is permitted to manage, operate or conduct
games of bingo, whether or not a written lease has been entered into and
submitted to the administrator as required in subsection (c) of K.S.A. 79-
4703, and amendments thereto, and includes all political subdivisions and
other public agencies.

      (l) ``Licensee'' means any nonprofit organization holding a license to
manage, operate or conduct games of bingo pursuant to K.S.A. 79-4701
et seq., and amendments thereto.

      (m) ``Mini bingo'' means a game of call bingo in which the prizes
awarded are not less than 50% of the gross receipts derived from the sale
of cards or faces for participation in the game, but not more than $50.

      (n) ``Net proceeds'' means the gross receipts received by the licensee
from charges imposed on players for participation in games of bingo and
any admission fees or charges less amounts actually paid as prizes in
games of bingo and any tax payable by the licensee.

      (d) ``Bingo card distributor'' means any person or entity that sells or
otherwise distributes instant bingo tickets or disposable paper call bingo
cards to licensees under this act.

      (e) (o) ``Nonprofit religious organization'' means any organization,
church, body of communicants, or group, gathered in common member-
ship for mutual support and edification in piety, worship, and religious
observances, or a society of individuals united for religious purposes at a
definite place and of which no part of the net earnings inures to the
benefit of any private shareholder or individual member of such organi-
zation, and which religious organization maintains an established place of
worship within this state and has a regular schedule of services or meet-
ings at least on a weekly basis and has been determined by the secretary
of revenue administrator to be organized and created as a bona fide re-
ligious organization and which has been exempted from the payment of
federal income taxes as provided by section 501(c)(3) or section 501(d)
of the federal internal revenue code of 1954 1986, as amended, or de-
termined to be organized and operated as a bona fide nonprofit religious
organization by the secretary of revenue administrator.

      (f) (p) ``Nonprofit charitable organization'' means any organization
which is organized and operated for:

      (1) The relief of poverty, distress, or other condition of public con-
cern within this state; or

      (2) for financially supporting the activities of a charitable organization
as defined in paragraph (1); or

      (3) for conferring direct benefits on the community at large; and of
which no part of the net earnings inures to the benefit of any private
shareholder or individual member of such organization and has been de-
termined by the secretary of revenue administrator to be organized and
operated as a bona fide charitable organization and which has been ex-
empted from the payment of federal income taxes as provided by sections
501(c)(3), 501(c)(4), 501(c)(5), 501(c)(6) and 501(c)(7) of the federal in-
ternal revenue code of 1954 1986, as amended, or determined to be
organized and operated as a bona fide nonprofit charitable organization
by the secretary of revenue administrator.

      (g) (q) ``Nonprofit fraternal organization'' means any organization
within this state which exists for the common benefit, brotherhood, or
other interests of its members and is authorized by its written constitu-
tion, charter, articles of incorporation or bylaws to engage in a fraternal,
civic or service purpose within this state and has been determined by the
secretary of revenue administrator to be organized and operated as a bona
fide fraternal organization and which has been exempted from the pay-
ment of federal income taxes as provided by section 501(c)(8) or section
501(c)(10) of the federal internal revenue code of 1954 1986, as amended,
or determined to be organized and operated as a bona fide nonprofit
fraternal organization by the secretary of revenue administrator.

      (h) (r) ``Nonprofit educational organization'' means any public or pri-
vate elementary or secondary school or institution of higher education
which has been determined by the secretary of revenue administrator to
be organized and operated as a bona fide educational organization and
which has been exempted from the payment of federal income taxes as
provided by section 501(c)(3) of the federal internal revenue code of 1954
1986, as amended, or determined to be organized and operated as a bona
fide nonprofit educational organization by the secretary of revenue ad-
ministrator.

      (i) (s) ``Nonprofit veterans' organization'' means any organization
within this state or any branch, lodge, or chapter of a national or state
organization within this state, the membership of which consists exclu-
sively of individuals who qualify for membership because they were or
are members of the armed services or forces of the United States, or an
auxiliary unit or society of such a nonprofit veterans' organization the
membership of which consists exclusively of individuals who were or are
members of the armed services or forces of the United States, or are
cadets, or are spouses, widows or widowers of individuals who were or
are members of the armed services or forces of the United States, and of
which no part of the net earnings inures to the benefit of any private
shareholder or individual member of such organization, and has been
determined by the secretary of revenue administrator to be organized
and operated as a bona fide veterans' organization and which has been
exempted from the payment of federal income taxes as provided by sec-
tion 501(c)(4) or 501(c)(19) of the federal internal revenue code of 1954
1986, as amended, or determined to be organized and operated as a bona
fide nonprofit veterans' organization by the secretary of revenue admin-
istrator.

      (j) ``Lessor'' means the owner, coowner, lessor or sublessor of prem-
ises upon which a licensee is permitted to manage, operate or conduct
games of bingo, whether or not a written lease has been entered into and
submitted to the secretary of revenue as required in subsection (c) of
K.S.A. 79-4703, and amendments thereto, and includes all political sub-
divisions and other public agencies.

      (t) ``Person'' means any natural person, corporation, partnership,
trust or association.

      (k) (u) ``Premises'' means any room, hall, building, enclosure or out-
door area used for the management, operation or conduct of a game of
bingo by a licensee.

      (v) ``Progressive bingo'' means a game of call bingo in which either
the established prize amount or number of bingo balls or objects called,
or both, may be increased from one session to the next scheduled session
if no player completes the required pattern within the specified number
of bingo balls or objects drawn. The player's opportunity to win shall
increase as the prize amount increases.

      (w) ``Regular game of bingo'' means any game of bingo which is sub-
ject to the 25 game limit, $50 prize limit and the $1 charge limit imposed
under subsections (g), (h) and (j) of K.S.A. 79-4706, and amendments
thereto.

      (x) ``Secretary'' means the secretary of revenue or the secretary's des-
ignee.

      (y) ``Session'' means a day on which a licensee conducts games of
bingo.

      Sec.  3. K.S.A. 79-4703 is hereby amended to read as follows: 79-
4703. (a) Any bona fide nonprofit religious, charitable, fraternal, educa-
tional or veterans' organization desiring to manage, operate or conduct
games of bingo within the state of Kansas may make application for a
license therefor in the manner provided under this section. Application
for licenses required under the provisions of this act shall be made to the
secretary of revenue administrator upon forms prepared by the secretary
of revenue or the secretary's designee and prescribed by the administra-
tor. The application shall contain:

      (1) The name and address of the organization;

      (2) the particular place or location for which a license is desired;

      (3) a sworn statement verifying that such organization is a bona fide
nonprofit religious, charitable, fraternal, educational or veterans' organi-
zation authorized to operate within the state of Kansas signed by the
presiding officer and secretary of the organization; and

      (4) such other information as may be required by the secretary of
revenue administrator.

      (b) No bingo license shall be issued to any bona fide nonprofit relig-
ious, charitable, fraternal, educational or veterans' organization if any of
its officers, directors or officials or persons employed on the premises:

      (1) Has been convicted of, has pleaded guilty to or pleaded nolo con-
tendere to a violation of gambling laws of any state or the gambling laws
of the United States, or shall have forfeited bond to appear in court to
answer charges for any such violation, or has been convicted or pleaded
guilty or pleaded nolo contendere to the violation of any law of this or any
other state which is classed as a felony under the laws of such state;

      (2) at the time of application for renewal of a bingo license issued
hereunder would not be eligible for such license upon a first application.

      (c) An application for a license required under the provisions of this
act shall be accompanied by a fee of $25 and if such organization is to
conduct bingo on any leased premises, the terms of the lease shall be
reduced to writing and a copy of the lease shall be submitted to the
secretary of revenue. The secretary of revenue shall have the power and
administrator. The administrator shall have the power and authority to
approve or disapprove any lease submitted. No lease, which has been
approved by the secretary of revenue administrator, shall be amended,
modified or renewed in any manner until such amendments, modifica-
tions or renewals of such lease have been approved by and are on file
with the secretary of revenue. No lease submitted to the secretary of
revenue shall administrator. No lease submitted to the administrator shall
be approved unless:

      (1) The rental cost of the premises itself is fair and reasonable and,
in no event, shall. The rent charged for any session of bingo shall not
exceed 50% of the net proceeds for the session after payment of prizes
and taxes or the fair and reasonable rental value determined by the sec-
retary of revenue administrator, whichever is less. The rental costs so
charged shall be substantiated to the secretary of revenue administrator
under rules and regulations adopted by the secretary pursuant to the
bingo act.

      (2) Any costs additional to the costs under paragraph (1) of this sub-
section (c) which are to be borne by the lessee shall reflect the actual
costs incurred by the lessor and shall first shall be substantiated to the
secretary of revenue. administrator under rules and regulations adopted
pursuant to the bingo act.

      (3) No costs shall be borne by the lessee unless such costs are enu-
merated in the lease submitted to the secretary of revenue administrator.

      (d) Each license issued shall expire at midnight on June 30 following
its date of issuance. A licensee may hold only one license and that license
is valid for only one location. However, any licensee may operate or con-
duct games of bingo, not to exceed five days in any one year, at locations
other than that specified in the license and. If any licensee does operate
or conduct games of bingo under this provision at a location other than
that specified in the license, such licensee shall submit a written notifi-
cation to the secretary of revenue administrator, at least three days prior
to operating or conducting bingo at the change of such other location. No
organization shall be issued a license to operate or conduct games of bingo
at any location outside the county within which such organization is lo-
cated as reported in its application for licensure pursuant to subsection
(a), nor shall any. No licensee shall operate or conduct games of bingo at
any location outside the county within which such licensee is located.
Licenses issued under the provisions of this act shall not be transferred
or assignable. If any organization licensed to play bingo changes any of
its officers, directors or officials during the term of its bingo license, such
organization shall report the names and addresses of such individuals to
the secretary of revenue administrator immediately with the sworn state-
ment of each such individual as required by this section on forms fur-
nished prescribed by the secretary of revenue administrator. No organi-
zation which denies its membership to persons for the reason of their
race, color or physical handicap, shall be granted or allowed to retain a
license issued under the authority of this act. Except for nonprofit adult
care homes licensed under the laws of the state of Kansas, no license shall
be issued to any organization under the provisions of this act which has
not been in existence continuously within the state of Kansas for a period
of 18 months immediately preceding the date of making application for
a license. The licensee shall display the license in a prominent place in
the vicinity of the area where it is to conduct bingo.

      (d) (e) No lessor of premises used for the management, operation or
conduct of any games of bingo shall permit the management, operation
or conduct of bingo games on such premises unless and until such lessor
has made application for and has been issued a registration certificate by
the secretary of revenue administrator. Application for registration shall
be accompanied by a fee in the amount of $100 and. Such application
shall be made upon forms prescribed by the secretary administrator and
shall be submitted to the administrator. The application shall contain:

      (1) The name or names of the lessor of premises which will be used
for the management, operation or conduct of any games of bingo includ-
ing, in the case of a corporation, partnership, association, trust or other
entity, the names of all individuals having more than a 10% ownership
interest, either directly or indirectly in such entity;

      (2) the address of such premises;

      (3) the name or names of any and all organizations which will manage,
operate or conduct any games of bingo on such premises during the pe-
riod for which the registration certificate is valid;

      (4) such other information as may be required by the secretary ad-
ministrator.

      (e) (f) Each registration certificate, or renewal thereof, issued under
the provisions of subsection (d) (e) shall expire at midnight on June 30
following its date of issuance. The certificate of registration shall be valid
for only one premises and shall be prominently displayed in a prominent
place in the registered premises.

      (f) The secretary of revenue shall not issue a (g) No registration
certificate shall be issued for any premises if any individual who is con-
nected in any way, directly or indirectly, with the owner or lessor of the
premises has, within five years prior to registration, has been convicted
of or pleaded guilty or nolo contendere to any felony or illegal gambling
activity or purchased a tax stamp for wagering or gambling activity.

      Sec.  4. K.S.A. 79-4704 is hereby amended to read as follows: 79-
4704. For the purpose of providing revenue which may be used by the
state, counties and cities and for the privilege of operating or conducting
games of bingo under the authority of this act:

      (a) There is hereby levied and there shall be collected and paid by
each licensee a tax at the rate of 3% upon the gross receipts received by
the licensee from charges for participation in call bingo games using bingo
cards and any admission fees or charges in connection therewith. The tax
imposed by this section shall be in addition to the license fee imposed
under K.S.A. 79-4703, and amendments thereto.

      (b) There is hereby levied and there shall be collected and paid by
each distributor a tax at a rate of $0.002 upon each bingo face sold or
distributed by the distributor to each licensee conducting call bingo games
within the state of Kansas. The distributor shall include the tax due under
this subsection in the sales price of each bingo face paid by the licensee
and such tax shall be itemized separately on the invoice provided to the
licensee.

      (b) (c) There is hereby levied and there shall be collected and paid
by each bingo card distributor a tax at a rate of 1% upon the total of the
printed retail sales price of all tickets in each box of instant bingo tickets
sold or distributed by the distributor to each licensee conducting instant
bingo games within the state of Kansas. The bingo card distributor shall
include the tax due under this subsection in the sales price of each box
paid by the licensee and such tax shall be itemized separately on the
invoice provided to the licensee.

      (c) (d) Whenever, in the judgment of the secretary of revenue ad-
ministrator, it is necessary, in order to secure the collection of the tax
due under subsection (b), the secretary administrator shall require any
bingo card distributor subject to such tax to file a bond with the director
of taxation under conditions established by and in such form and amount
as prescribed by rules and regulations adopted by the secretary.

      Sec.  5. K.S.A. 79-4705 is hereby amended to read as follows: 79-
4705. (a) On dates prescribed by the director of taxation administrator,
every licensee operating or conducting a game of bingo operator shall
make a return to the director of taxation administrator upon forms pre-
scribed by the director stating administrator. Such form shall contain:

      (1) The name and address of the organization, licensee;

      (2) the amount of the gross receipts received from charges for ad-
mission or participation in such game games using bingo cards during the
preceding reporting period,;

      (3) the number of bingo faces and the name of the distributor from
whom such faces were purchased or otherwise obtained during the pre-
ceding reporting period;

      (4) the amount of the gross receipts received from charges for admis-
sion to the premises for participation in games of bingo during the pre-
ceding reporting period;

      (5) the number of each denomination of instant bingo tickets sold
during the preceding reporting period and; and

      (6) such other information as the director administrator may deem
necessary. The licensee making the return shall,

      (b) At the time of making such return, pay licensees conducting call
bingo games using bingo cards shall remit to the director of taxation ad-
ministrator the amount of the tax then due under subsection (a) of K.S.A.
79-4704, and amendments thereto. The director administrator may ex-
tend the time for making returns and the payment of such taxes for a
period not exceeding 60 days under rules and regulations adopted by the
secretary of revenue. adopted pursuant to the bingo act.

      (b) (c) On dates prescribed by the director of taxation administrator,
every bingo card distributor shall make a return to the director of taxation
administrator upon forms prescribed by the director, listing administra-
tor. Such form shall state:

      (1) the number of instant bingo tickets sold or distributed to each
licensee,;

      (2) the amount of the retail sales price of such tickets,;

      (3) the number of bingo cards sold or distributed to each licensee;

      (4) the number of disposable paper call bingo faces sold or distributed
to each licensee; and

      (5) and such other information as the director administrator may
deem necessary. The distributor making the return shall, pay At the time
of making such return, the distributor shall remit to the director of tax-
ation the administrator an amount equal to 98% of the tax then due on
the instant bingo tickets under K.S.A. 79-4704 due under subsection (b)
of K.S.A. 79-4704, and amendments thereto.

      (c) (d) If any licensee or bingo card licensee or distributor fails to
make a return, or to pay or remit any tax, when required to do so by the
provisions of this act, except in the case of an extension of time granted
by the director of taxation administrator, there shall be added to the tax
determined to be due a penalty of 25% of the amount of such tax, together
with interest at the rate per month prescribed by subsection (a) of K.S.A.
79-2968, and amendments thereto, from the date the tax was due until
paid.

      (d) (e) If any tax determined and assessed by the director of taxation
is unpaid administrator is not remitted due to fraud with intent to evade
the tax imposed by this act, there shall be added thereto a penalty of fifty
percent 50% of the amount of such tax, together with interest at the rate
per month prescribed by subsection (a) of K.S.A. 79-2968, and amend-
ments thereto, from the date the tax was due until paid.

      (e) (f) Whenever, in the judgment of the director of taxation admin-
istrator, the failure of any licensee or bingo card licensee or distributor
to comply with the provisions of subsection (a) or (b), (b) or (c) was due
to reasonable cause, the director of taxation may, in the director's discre-
tion, the administrator, in the administrator's discretion, may waive or
reduce any of the penalties or interest imposed by this section, upon
making a record of the reason therefor.

      (f) (g) The penalties imposed under this section shall be in addition
to , and in no way shall abridge, supersede, or contravene, all other pen-
alties imposed by this act for violation of the provisions of this act law.

      Sec.  6. K.S.A. 79-4705a is hereby amended to read as follows: 79-
4705a. (a) For the purpose of ascertaining the correctness of any return
or for the purpose of determining the receipts and payments of any li-
censee remittances of any licensee or distributor, the secretary of revenue
shall have power to examine, or cause to be examined by any agent or
representative designated by the secretary for that purpose, administrator
may examine any books, papers, records or memoranda, bearing upon
the matters required to be included in the records of the licensee or
distributor, and. The administrator may require the attendance of the
licensee or distributor in the county where the licensee or distributor
resides, or where the location or of the registered premises for bingo
games are located, or of any person having knowledge relating to such
records, and may take testimony and require proof of such person or
persons.

      (b) The secretary of revenue administrator may issue subpoenas to
compel access to or for the production of such books, papers, records or
memoranda in the custody of or to which the licensee or distributor has
access, or to compel the appearance of such persons, and. The adminis-
trator may issue interrogatories to any such person to the same extent
and subject to the same limitations as would apply if the subpoena or
interrogatories were issued or served in aid of a civil action in the district
court. The secretary or an agent or representative designated by the sec-
retary for that purpose administrator may administer oaths and take dep-
ositions to the same extent and subject to the same limitations as would
apply if the deposition was in aid of a civil action in the district court. In
case of the refusal of any person to comply with any subpoena or inter-
rogatory or to testify to any matter regarding which such person lawfully
may be lawfully questioned, the district court of any county may, upon
application of the secretary administrator, may order such person to com-
ply with such subpoena or interrogatory or to testify. Failure to obey the
court's order may be punished by the court as contempt. Subpoenas or
interrogatories issued under the provisions of this section may be served
upon individuals and corporations in the manner provided in K.S.A. 60-
304, and amendments thereto, for the service of process by any officer
authorized to serve subpoenas in civil actions or by the secretary of rev-
enue or an agent or representative designated by the secretary adminis-
trator.

      Sec.  7. K.S.A. 79-4706 is hereby amended to read as follows: 79-
4706. Games of bingo managed, operated or conducted by organizations
licensed under the provisions of this act shall be managed, operated or
conducted subject to rules and regulations adopted by the secretary of
revenue and conducted in accordance with the bingo act and rules and
regulations adopted pursuant thereto and the following restrictions:

      (a) The entire gross receipts received by any such organization li-
censee from the operation or conduct of games of bingo, except that
portion utilized for the payment of the cost of prizes and license fees and
taxes on games of bingo cards imposed under the provisions of this act,
shall be used exclusively for the lawful purposes of the organization li-
censee permitted to conduct that game.

      (b) No person except Games of bingo managed, conducted or oper-
ated by a licensee, shall be managed, conducted or operated only by a
bona fide member or spouse of a bona fide member of the sponsoring
organization licensee or parent organization or an auxiliary unit or society
of such sponsoring organization may participate in the management, con-
duct or operation of any game of bingo licensee.

      (c) No lessor, any employee of any such lessor or any employee, of-
ficer or shareholder of a for profit corporation which is the lessor, shall
play any game of bingo or participate in any drawing on premises leased
by any such lessor or shall nor shall such person be responsible for or
assist in the management, operation or conduct of any game of bingo or
drawing on such premises.

      (d) No person may participate in the management, conduct or op-
eration of bingo games by a licensee if such person, within five years prior
to such participation, has been convicted of or pleaded guilty or nolo
contendere to any felony or illegal gambling activity or purchased a tax
stamp for wagering or gambling activity.

      (e) No person may receive any remuneration or profit for participat-
ing in the management, conduct or operation of any game of bingo.

      (e) No person may receive any remuneration or profit for participat-
ing in the management, conduct or operation of any game of bingo man-
aged, conducted or operated by a licensee.

      (f) The aggregate value of all prizes including the retail value of all
merchandise awarded or offered by any such organization on any single
day a licensee in a single session to winners of games of regular and special
call bingo shall not exceed $1,200, and. The value of a prize awarded in
a progressive or mini bingo game shall not be included when determining
the limit imposed by this subsection. Any monetary prize awarded in cash
of $100 of $500 or more awarded in games of bingo shall be paid by a
check drawn on the bingo trust bank account of the licensee. Any mon-
etary prize awarded in games of bingo shall be paid by a check on the
bingo trust bank account of the licensee upon the request of the winner
of such award.

      (g) The total number of regular, special and progressive call bingo
games managed, operated or conducted by any licensee in any one day
session shall not exceed 25 and not more than five of such games shall be
jackpot or special games and. Not more than one licensee may conduct
bingo games at a given location or registered premises in any one calendar
day session.

      (h) The prize awarded by a licensee in any one regular call bingo game
shall not exceed $50 in cash or its equivalent and such. The prize in any
one jackpot or special call bingo game shall not exceed $500 in cash or
its equivalent.

      (i) The retail value of any merchandise received by a winner of a
bingo game shall be considered as the cash value for the purposes of
determining the value of the prize.

      (j) The charge made by a licensee for a single reusable bingo card or
equivalent number of disposable paper cards bingo faces to play in call
regular bingo games in any one session other than jackpot or special
games shall not exceed $1 and. Such reusable bingo card or equivalent
number of disposable paper cards bingo faces shall be valid for all such
regular call bingo games conducted or operated by the licensee on a
particular day in any one session. The charge made by a licensee for a
single reusable bingo card or disposable paper card bingo face to play in
any single jackpot or, mini or progressive special game shall not exceed
$1. Paper game program booklets with multiple bingo cards printed on
the pages thereof are permitted so long as the charge made for a regular
game program booklet does not exceed $1, except that the charge for
such game program booklet may be increased by an amount not exceed-
ing $1 for each single jackpot or special game in the game program book-
let. The charge made by a licensee for a single instant bingo ticket shall
not exceed $1.

      (k) Games of bingo shall not be managed, operated or conducted by
any licensee on more than two calendar days in any one week.

      (l) All licenses issued under the provisions of this act shall be issued
in the name of the organization licensed.

      (m) Each licensee shall keep a record of all bingo games of bingo
managed, operated or conducted by it for a period of three years following
the date the game is managed, operated or conducted.

      (n) No person under the age of 18 years shall participate in the man-
agement, operation or conduct of any game of bingo managed, operated
or conducted by a licensee under the provisions of this act and no licensee
shall sell any instant bingo ticket to a person under the age of 18 years.

      (o) A lessor of premises used for the management, operation or con-
duct of games of bingo or a licensee may not advertise games of bingo
games except to the extent and in the manner prescribed by the rules
and regulations adopted by the secretary of revenue, and pursuant to the
bingo act. Any advertisement of any bingo game of bingo by or on behalf
of such lessor or licensee shall specify the organization which is managing,
operating or conducting the bingo such game. For the purposes of this
act and rules and regulations of the secretary of revenue, The announce-
ment of the cancellation of a game of bingo shall not be considered to be
an advertisement.

      (p) No lessor of premises used for the management, operation or
conduct of any games of bingo or any licensee shall offer an opportunity
to participate in a game of chance, drawing, contest, door prize, game,
test of skill, lottery or any similar activity as an inducement to participate
in games of bingo nor as a bingo prize or preliminary to the awarding of
a bingo prize.

      (p)  (1) Except as provided by paragraph (2) of this subsection, no
game of chance or contest where a prize is awarded, other than games of
bingo, shall be conducted on any premises where licensees are conducting
games of bingo, where the intent of such game of chance or contest is to
induce participation in such games of bingo.

      (2) One drawing during a session may be conducted by the licensee
or the lessor of the premises. Only a nonmonetary prize having a value
not exceeding $25 shall be awarded to the winner of such drawing. There
shall be no charge for participation in such drawing. There shall be no
requirement to purchase anything of value in order to participate in such
drawing. No more than four of such drawings shall be conducted by each
licensee or lessor during any calendar year.

      (q) No licensee shall manage, operate or conduct bingo on any leased
premises or with leased equipment unless all of the terms and conditions
of rental or use, including the rental of chairs, bingo equipment, tables,
security guards, janitor service or any other services, are set forth in a
lease submitted, approved and on file with the secretary of revenue ad-
ministrator.

      (r) No premises shall be used for the management, operation or con-
duct of bingo games of bingo by licensees on more than three calendar
days in any one week.

      (s) No premises shall be subdivided to provide multiple premises
where games of bingo are managed, operated or conducted by licensees,
whether or not the multiple premises have different addresses.

      (t) No game of bingo shall be managed, operated or conducted by
licensees on leased premises if at any time during the immediately pre-
ceding 44 hours the premises, or any leased premises within 1,000 feet
of them, have been used for the management, operation or conduct of a
game of bingo.

      (u) Every licensee who has gross receipts of $1,000 or more received
from participation in games, admission fees or charges and from any other
source directly related to the operation or conduct of any bingo games of
bingo in any calendar month shall maintain a bingo trust bank account
into which all such receipts are deposited daily and from which all pay-
ments are made relating to the management, operation or conduct of any
bingo games of bingo, except payment of prizes of less than $100 $200.
Having once established such bingo trust bank account, the licensee shall
continue to make deposits of all receipts therein. Every licensee shall
notify the secretary of revenue administrator of the name of the bank in
which the bingo trust bank account is maintained, together with the num-
ber and name of the account. Every licensee who maintains a bingo trust
bank account shall maintain a complete record of all deposits and with-
drawals from such bank account and the same shall be available to the
secretary of revenue or the secretary's agents or investigators administra-
tor to audit at any reasonable time.

      (v) The records required under this subsection (u) are in addition to
all other records required to be kept by the licensee by statute or rules
and regulations. The records required by this subsection (u) shall be
maintained in the same place as all other records required to be kept by
the licensee.

      (w) (v) No instant bingo ticket shall be sold by a licensee more than
one hour prior to the start of the first regular or special game of call bingo
for the day of a session or after the termination of the last game of call
bingo operated or conducted by the licensee for such calendar day session.

      (x) (w) No licensee shall purchase disposable paper call bingo cards
or obtain bingo faces or instant bingo tickets from any person or entity
other than a bingo card distributor registered by the secretary of revenue
as provided in this act pursuant to K.S.A. 79-4712a, and amendments
thereto.

      (y) (x) All instant bingo tickets sold or distributed to licensees shall
bear on the face thereof a unique serial number which shall not be re-
peated on the same manufacturer's form number less than every three
years. All instant bingo tickets shall be sold or distributed in boxes, and.
Each box shall be sealed by the manufacturer with a seal which includes
a warning to the purchaser that the box may have been tampered with if
the box was received by the purchaser with the seal broken. Each box of
instant bingo tickets shall contain tickets printed in such a manner as to
insure that at least 60% of the gross revenues generated by the ultimate
sale of all tickets from such box shall be returned to the final purchasers
of such tickets. No box of instant bingo tickets may be opened by a li-
censee unless all tickets contained in a previously opened box with the
same form number have been sold.

      (z) (y) Each box of instant bingo tickets sold or distributed to licens-
ees shall be accompanied by a flare which contains the following infor-
mation: (1) The name of the game; (2) the manufacturer's name or logo;
(3) the game form number; (4) the ticket count in the game; (5) the prize
structure for the game, which includes the number of winning tickets by
denomination and their respective winning symbol or number combina-
tions; (6) the cost per ticket; (7) the game serial number; (8) the winning
numbers or symbols for the top three winning tiers set out in such a
manner that each prize may be marked off as the prize is won and
awarded; (9) the business name of the bingo card distributor; and (10) if
sold or distributed to a licensee under the bingo act, the Kansas bingo
license number of the licensee to which the game is sold.

      (z)  (1) No progressive game may exceed 20 consecutive sessions con-
ducted by a licensee prior to the awarding of the established prize.

      (2) No more than two progressive bingo games may be conducted in
any one session.

      (3) A prize for a progressive game may start at an amount not to
exceed $250 and may be increased by no more than $100 for each session
during which the progressive game is continued. The prize awarded at
the end of any progressive game shall not exceed $1,000.

      (4) If the progressive bingo game prize is not awarded at a bingo
session, the progressive bingo game shall be continued at a future occasion
until such time a winner is determined. The winning prize shall be the
full amount. If there is no winner of a progressive bingo game at a session,
a stated consolation prize in an amount not to exceed $250 may be
awarded. Any consolation prize shall be less than the value of the pro-
gressive bingo game prize amount.

      (5) All progressive bingo games and rules for such games shall be
described fully and posted in the house rules prior to the start of the
session. Such games shall comply with requirements imposed under the
bingo act and any rules and regulations adopted pursuant thereto.

      (6) When a person achieves the first preannounced winning combi-
nation, the game shall be completed and the next progressive bingo game
and winning combination shall be commenced with a new bingo card or
face and all objects or balls in the receptacle.

      (7) The rules for a progressive bingo game shall remain in effect until
the game ends and the winner is determined.

      (8) Progressive bingo games may not be conducted in conjunction
with a session of bingo conducted at a location other than that specified
in the license as authorized by subsection (c) of 79-4703, and amendments
thereto.

      (9) A licensee shall not cease bingo operations unless all progressive
bingo games are completed and prizes are awarded, unless prior approval
has been received from the secretary.

      (aa) Except as specifically provided by rules and regulations adopted
pursuant to the bingo act, the distribution, sale or use of bingo cards is
prohibited from and after July 1, 2003, and thereafter, only bingo faces
shall be distributed, sold or used in call bingo games operated and con-
ducted by licensees.

      (bb) Only three games of instant bingo in which the winner or win-
ners of such game is determined by matching a letter, number or symbol
under a tab of an instant bingo ticket with the winning letter, number or
symbol in a designated call game of bingo during the same session shall
be played in any one session. There shall be no limit on the number of
instant bingo tickets which may be sold for participation in any such game
of instant bingo.

      (cc) The total number of mini games of bingo managed, operated or
conducted by a licensee during a session shall not exceed 20 games. No
mini bingo game shall be conducted by a licensee more than one hour
prior to, or after the commencement of, the first regular or special game
of call bingo operated or conducted by the licensee for such session.

      New Sec.  8. The administrator shall require, pursuant to rules and
regulations adopted pursuant to the bingo act, identification of each sheet
of bingo faces in order to insure compliance with the provisions of this
act. Each package of bingo faces sold or distributed to licensees shall be
accompanied by a printed statement which contains the following infor-
mation:

      (a) The number of bingo faces contained in the package;

      (b) the wholesale cost of each package, including the tax paid;

      (c) identification of the manufacturer;

      (d) the business name of the distributor;

      (e) the Kansas bingo license number of the licensee to which the
package is sold; and

      (f) any other information required by the administrator.

      Sec.  9. K.S.A. 79-4707 is hereby amended to read as follows: 79-
4707. (a) The secretary of revenue administrator, after a hearing in ac-
cordance with the provisions of the Kansas administrative procedure act,
may revoke or suspend any license or registration certificate issued under
the provisions of this act for any one of the following reasons:

      (1) The licensee or registrant has fraudulently obtained the license
or registration certificate by giving false information in the application
therefor;

      (2) the licensee or registrant has violated any of the laws of the state
of Kansas or provisions of this act or any rules and regulations of the
secretary of revenue for the registration, licensing, taxing, management,
adopted pursuant thereto for the registration, licensing, taxing, manage-
ment, conduct or operation of games of bingo; or

      (3) the licensee or registrant has become ineligible to obtain a license
under this act.

      (b) Any action of the secretary administrator pursuant to subsection
(a) is subject to review in accordance with the act for judicial review and
civil enforcement of agency actions. In case of the revocation of the li-
cense of any licensee or the registration of any registrant, no new license
or registration shall be issued to such lessor, sublessor or organization, or
any person acting for or on its behalf, for a period of six months thereafter.
No revocation or suspension of a license or registration certificate shall
be for a period in excess of one year if the applicant is otherwise is qual-
ified on the date the applicant makes a new application therefor.

      (c) The secretary of revenue, or the secretary's designee, administra-
tor is hereby authorized to enjoin any person from managing, operating
or conducting any games of bingo, or from leasing any premises for such
purposes, if such person does not possess a valid license or registration
certificate issued pursuant to the provisions of the acts contained in article
47 of chapter 79 of the Kansas Statutes Annotated and amendments
thereto, and bingo act. The secretary, or the secretary's designee, admin-
istrator shall be entitled to have an order restraining such person from
managing, operating or conducting any games of bingo or for any other
purpose contrary to the provisions of the acts contained in article 47 of
chapter 79 of the Kansas Statutes Annotated and amendments thereto,
bingo act or from leasing premises for any of such purposes, and. No
bond shall be required for any such restraining order, nor for any tem-
porary or permanent injunction issued in such proceedings.

      Sec.  10. K.S.A. 79-4708 is hereby amended to read as follows: 79-
4708. The administration of this act shall be vested in the secretary of
revenue who shall adopt and enforce rules and regulations to regulate,
license, and tax the management, operation and conduct of games of
bingo and participants therein and to properly administer and enforce
the provisions of this act. Also, the secretary shall adopt rules and regu-
lations relating to the leasing of premises for the management, operation
and conduct of games of bingo.

      (a) The administration and enforcement of the bingo act and any rules
and regulations adopted pursuant thereto shall be vested in the admin-
istrator.

      (b) Upon recommendation of the administrator, the secretary shall
adopt all rules and regulations necessary for the administration and en-
forcement of the bingo act by the administrator.

      Sec.  11. K.S.A. 79-4710 is hereby amended to read as follows: 79-
4710. (a) All amounts received by or for the secretary of revenue admin-
istrator from license and registration fees pursuant to this act shall be
remitted to the state treasurer and. The state treasurer shall deposit all
of such moneys in the state treasury and, except as otherwise provided
by K.S.A. 79-4711, and amendments thereto, for maintenance of the
bingo refund fund, shall credit the same to the state bingo regulation
fund.

      (b) All amounts received by or for the secretary of revenue admin-
istrator from the tax levied pursuant to K.S.A. 79-4704, and amendments
thereto, shall be remitted to the state treasurer and. The state treasurer
shall deposit all of such moneys in the state treasury.

      (c) There is hereby created, in the state treasury, the state bingo
regulation fund and the county and city bingo tax fund. Subject to the
maintenance requirements of the bingo refund fund under K.S.A. 79-
4711 and amendments thereto, 1/3 of each deposit shall be credited to the
state general fund, 1/3 of each deposit to the state bingo regulation fund
and the remaining 1/3 of such deposit shall be credited to the county and
city bingo tax fund. Except as provided by K.S.A. 79-4711, and amend-
ments thereto, 1/3 of each deposit remitted to the state treasurer pursuant
to subsection (b) shall be credited to the state bingo regulation fund and
the balance shall be credited to the state general fund. Moneys Except as
provided by subsections (d) and (e), all moneys in the state bingo regu-
lation fund shall be expended for the administration and enforcement of
the bingo statutes in article 47 of chapter 79 of Kansas Statutes Annotated
act, and amendments thereto, and rules and regulations adopted pursuant
thereto. Such expenditures shall be made upon vouchers approved by the
secretary of revenue or a person designated by the secretary administra-
tor.

      (c) All moneys deposited in the county and city bingo tax fund shall
be returned to the counties and cities in which the locations and regis-
tered premises are located at a time or times fixed by the secretary but
not less than once each year. If the locations and registered premises are
located within the corporate limits of a city, all taxes collected therefrom
shall be remitted to the city treasurer of such city and credited to the city
general fund. If the locations and registered premises are located within
the unincorporated area of any county, all taxes collected therefrom shall
be remitted to the county treasurer of such county and credited to the
county general fund. Moneys distributed to cities and counties under this
section shall be used to assist in the enforcement of the bingo laws of this
state.

      (d) Except as otherwise provided by this act, all operating expenses
of the administrator related to the administration and enforcement of the
bingo act appropriated by the legislature shall be paid from the state bingo
regulation fund. At the end of each fiscal year, the director of accounts
and reports shall transfer to the state general fund any moneys in the state
bingo regulation fund on each such date in excess of the amount required
to pay all operating expenses of the administrator related to the admin-
istration and enforcement of the bingo act.

      (e) On July 1 of each year or as soon thereafter as sufficient moneys
are available, $20,000 credited to the state bingo regulation fund shall be
transferred and credited to the problem gambling grant fund established
by section 20, and amendments thereto.

      (f) Upon the effective date of this act, the director of accounts and
reports shall transfer all moneys in the county and city bingo tax fund to
the state bingo regulation fund. Upon the effective date of this act, all
liabilities of the county and city bingo tax fund existing prior to the effec-
tive date are hereby imposed on the state bingo regulation fund. The
county and city bingo tax fund is hereby abolished.

      Sec.  12. K.S.A. 79-4711 is hereby amended to read as follows: 79-
4711. There is hereby created the bingo refund fund in the state treasury.
The bingo refund fund shall be a refund clearing fund and refunds of the
fees imposed under K.S.A. 79-4703, and amendments thereto, and of the
tax levied under K.S.A. 79-4704, and amendments thereto, shall be made
from this such fund. The bingo refund fund shall be maintained by the
secretary of revenue administrator from the license and registration fees
received under this act and from the tax collected under K.S.A. 79-4704
and amendments thereto and taxes collected under the bingo act in an
amount sufficient for such refunds not to exceed $10,000.

      Sec.  13. K.S.A. 79-4712a is hereby amended to read as follows: 79-
4712a. (a) No person or entity shall sell or otherwise distribute any dis-
posable paper call bingo faces, bingo cards or instant bingo tickets to any
organization licensed under the provisions of this act licensee unless and
until such person or entity has made application for and has been issued
a bingo card distributor registration certificate by the secretary of revenue
administrator. Application for registration shall be submitted to the ad-
ministrator and shall be accompanied by a fee in the amount of $500 and
shall be made upon forms prescribed by the secretary administrator.

      (b) Each bingo card distributor registration certificate shall expire at
midnight on June 30 following its date of issuance. Application for renewal
of a registration certificate shall be submitted to the administrator and
shall be accompanied by a fee in the amount of $500 and shall be made
upon forms prescribed by the secretary administrator.

      (c) The secretary of revenue administrator shall establish by rule and
regulation, by rules and regulations adopted under the bingo act, reason-
able criteria for approval of bingo card distributors applications for reg-
istration. The secretary of revenue administrator shall refuse to register
a bingo card distributor if any owner, manager or employee thereof has,
within five years prior to registration, has been convicted of or pleaded
guilty or nolo contendere to any felony or illegal gambling violation in
this or any other jurisdiction.

      (d) All bingo card distributors shall maintain for a period of not less
than three years full and complete records of all disposable paper call
bingo cards, bingo faces and instant bingo tickets sold to licensees within
this state or distributed to licensees. Such records shall be made available
for inspection by any authorized representative of the secretary of reve-
nue administrator.

      Sec.  14. K.S.A. 79-4713 is hereby amended to read as follows: 79-
4713. (a) In addition to or in lieu of any other civil or criminal penalty
provided by law, the secretary of revenue or the secretary's designee
administrator, upon a finding that a licensee under K.S.A. 79-4703 and
amendments thereto, a, lessor or a bingo card distributor has violated any
provision of K.S.A. 79-4701 through 79-4705, 79-4705a, 79-4706, 79-
4707, 79-4708, 79-4710, 79-4711 or 79-4712 the bingo act, and amend-
ments thereto, or any provision of any rule and regulation of the secretary
of revenue adopted pursuant thereto, shall impose on such licensee, lessor
or bingo card distributor a civil fine not exceeding $500 for each violation.

      (b) No fine shall be imposed pursuant to this section except upon the
written order of the secretary of revenue or the secretary's designee ad-
ministrator to the licensee, lessor or bingo card distributor who commit-
ted the violation. Such order shall state the violation, the fine to be im-
posed and the right of the licensee, lessor or bingo card distributor to
appeal the order. Such order shall be subject to appeal and review in the
manner provided by the Kansas administrative procedures procedure act.

      (c) Any fine collected pursuant to this section shall be paid to the
state treasurer, who shall deposit the entire amount in the state treasury
and credit it to the state bingo regulation fund.

      New Sec.  15. (a) The secretary of revenue shall designate an admin-
istrator of charitable gaming. Any person designated the administrator of
charitable gaming shall have at least five years' experience in the area of
charitable gaming regulation. The administrator of charitable gaming shall
be in the unclassified service and shall receive an annual salary fixed by
the secretary of revenue and approved by the governor.

      (b) Under the supervision of the secretary, the administrator of char-
itable gaming shall administer and enforce the provisions of the bingo act
and any rules and regulations adopted pursuant thereto. The administra-
tor's exclusive duties shall be the administration and enforcement of the
bingo act and any rules and regulations adopted pursuant thereto. The
administrator shall be solely accountable to and report to the secretary of
revenue.

      New Sec.  16. The department of revenue shall be subject to a per-
formance audit of the first year of implementation and enforcement of
this act by the department. The scope of such audit shall be determined
by the legislative post audit committee and shall include, but not be lim-
ited to, the efficiency and effectiveness of the department in implement-
ing and enforcing this act. The post auditor may contract for the conduct
of such performance audit in accordance with procedures established by
the legislative post audit act. The report of the audit required by this
section shall be submitted to the legislative post audit committee and to
the legislature no later than the first day of the 2002 session. The fur-
nishing of audit services pursuant to this section shall be a transaction
between the post auditor and the department of revenue and shall be
settled in accordance with the provisions of K.S.A. 75-5515 and amend-
ments thereto.

      New Sec.  17. If any provision of the bingo act or the application
thereof to any person or circumstances is held unconstitutional or oth-
erwise invalid, such unconstitutionality or invalidity shall not affect other
provisions or applications of the act which can be given effect without
the unconstitutional or invalid provision or application, and, to this end,
the provisions of this act are severable.

      Sec.  18. K.S.A. 74-8711 is hereby amended to read as follows: 74-
8711. (a) There is hereby established in the state treasury the lottery
operating fund.

      (b) The executive director shall remit at least weekly to the state
treasurer all moneys collected from the sale of lottery tickets and shares
and any other moneys received by or on behalf of the Kansas lottery.
Upon receipt of any such remittance, the state treasurer shall deposit the
entire amount thereof in the state treasury and credit it to the lottery
operating fund. Moneys credited to the fund shall be expended or trans-
ferred only as provided by this act. Expenditures from such fund shall be
made in accordance with appropriations acts upon warrants of the direc-
tor of accounts and reports issued pursuant to vouchers approved by the
executive director or by a person designated by the executive director.

      (c) Moneys in the lottery operating fund shall be used for:

      (1) The payment of expenses of the lottery, which shall include all
costs incurred in the operation and administration of the Kansas lottery;
all costs resulting from contracts entered into for the purchase or lease
of goods and services needed for operation of the lottery, including but
not limited to supplies, materials, tickets, independent studies and sur-
veys, data transmission, advertising, printing, promotion, incentives, pub-
lic relations, communications, and distribution of tickets and shares; and
reimbursement of costs of facilities and services provided by other state
agencies;

      (2) the payment of compensation to lottery retailers;

      (3) transfers of moneys to the lottery prize payment fund pursuant to
K.S.A. 74-8712, and amendments thereto;

      (4) transfers to the state general fund pursuant to K.S.A. 74-8713,
and amendments thereto;

      (5) transfers to the state gaming revenues fund pursuant to subsection
(d) of this section and as otherwise provided by law; and

      (6) the transfers to the county reappraisal fund as prescribed by law.

      (d) The director of accounts and reports shall transfer moneys in the
lottery operating fund to the state gaming revenues fund created by
K.S.A. 79-4801, and amendments thereto, on or before the 15th day of
each month, for fiscal years commencing on or after July 1, 1988 in an
amount certified monthly by the executive director and determined as
follows, whichever is greater:

      (1) In An amount equal to the moneys in the lottery operating fund
in excess of those needed for the purposes described in subsections (c)(1)
through (c)(4); or

      (2) except for pull-tab lottery tickets and shares, an amount equal to
not less than 30% of total monthly revenues from the sales of lottery
tickets and shares less estimated returned tickets. In the case of pull-tab
lottery tickets and shares, an amount equal to not less than 20% of the
total monthly revenues from the sales of pull-tab lottery tickets and shares
less estimated returned tickets.

      Sec.  19. K.S.A. 74-8712 is hereby amended to read as follows: 74-
8712. (a) There is hereby established in the state treasury the lottery prize
payment fund.

      (b) The executive director shall certify periodically to the director of
accounts and reports such amounts as the executive director determines
necessary to pay prizes to the holders of valid winning lottery tickets or
shares or for the purchase of nonmonetary prizes. Upon receipt of such
certification, the director of accounts and reports shall promptly transfer
the amount certified from the lottery operating fund to the lottery prize
payment fund. Moneys credited to the fund shall be expended only for
the:

      (1) The payment of prizes to the holders of valid winning lottery tick-
ets or shares, for;

      (2) the reimbursement of retailers who have paid holders of winning
tickets or shares or;

      (3) the purchase of nonmonetary prizes; or

      (4) as purposes otherwise specifically authorized by law.

      (c) Prior to making any expenditure for reimbursement of a retailer
or payment of a prize of $50 or more, the executive director shall cause
all proposed prize payments to be matched against the state debtor files
maintained by the director of accounts and reports and shall certify and
pay or deliver any matched prize or the cash amount thereof to the di-
rector of accounts and reports for setoff as prescribed under K.S.A. 75-
6201 et seq., and amendments thereto.

      (d) Expenditures from such the lottery prize payment fund shall be
made in accordance with appropriations acts upon warrants of the direc-
tor of accounts and reports, or a person designated by the director of
accounts and reports pursuant to K.S.A. 75-3732, and amendments
thereto, issued pursuant to vouchers approved by the executive director,
or a person designated by the executive director.

      New Sec.  20. (a) There is hereby established in the state treasury the
problem gambling grant fund. All moneys credited to such fund shall be
used only for the awarding of grants under this section. Such fund shall
be administered in accordance with this section and the provisions of
appropriation acts.

      (b) All expenditures from the problem gambling grant fund shall be
made in accordance with appropriation acts upon warrants of the director
of accounts and reports issued pursuant to vouchers approved in the man-
ner prescribed by law.

      (c) There is hereby established a state grant program to provide as-
sistance for the direct treatment of persons diagnosed as suffering from
pathological gambling and to provide funding for research regarding the
impact of gambling on residents of Kansas. Research grants awarded un-
der this section may include, but need not be limited to, grants for de-
termining the effectiveness of education and prevention efforts on the
prevalence of pathological gambling in Kansas. All grants shall be made
after open solicitation of proposals and evaluation of proposals against
criteria established in rules and regulations adopted by the secretary of
the department of social and rehabilitation services. Both public and pri-
vate entities shall be eligible to apply for and receive grants under the
provisions of this section.

      (d) The secretary of the department of social and rehabilitation serv-
ices is hereby authorized to receive moneys from any grants, gifts, con-
tributions or bequests made for the purpose of funding grants under this
section and to expend such moneys for the purpose for which received.

      (e) All grants made in accordance with this section shall be made from
the problem gambling grant fund. The secretary shall administer the pro-
visions of this section and shall adopt rules and regulations establishing
criteria for qualification to receive grants and such other matters deemed
necessary by the secretary for the administration of this section. Such
rules and regulations shall include, but need not be limited to, a require-
ment that each recipient of a grant to provide treatment for pathological
gamblers report at least annually to the secretary the grantee's measurable
achievement of specific outcome goals.

      (f) For the purpose of this section ``pathological gambling'' means the
disorder by that name described in the most recent edition of the diag-
nostic and statistical manual.

      Sec.  21. K.S.A. 1999 Supp. 74-8836 is hereby amended to read as
follows: 74-8836. (a) Any organization licensee that conducts at least 150
days of live racing during a calendar year or a fair association that conducts
fewer than 22 days of live racing during a calendar year may apply to the
commission for a simulcasting license to display simulcast horse or grey-
hound races and to conduct intertrack parimutuel wagering thereon. If
the organization licensee conducts races at a racetrack facility that is
owned by a facility owner licensee, both licensees shall join in the appli-
cation. A simulcasting license granted to a fair association that conducts
fewer than 22 days of live racing shall restrict the fair association's display
of simulcast races to a number of days, including days on which it con-
ducts live races, equal to not more than twice the number of days on
which it conducts live races.

      (b)  (1) A simulcasting license granted to an organization licensee
other than a fair association shall authorize the display of simulcast races
at the racetrack facility where the live races are conducted so long as the
licensee conducts at least eight live races per day and an average of 10
live races per day per week. If a simulcasting licensee conducts live horse
races on a day when simulcast races are displayed by the licensee and the
licensee conducts fewer than an average of 10 live horse races per day
per week, not less than 80% of the races on which wagers are taken by
the licensee during such week shall be live races conducted by the li-
censee unless approved by the recognized horsemen's group or upon a
finding by the commission that the organization licensee was unable to
do so for reasonable cause. If a simulcast licensee conducts live greyhound
races on a day when simulcast races are displayed by the licensee and the
licensee schedules fewer than 13 live greyhound races during a perform-
ance on such day, not less than 80% of the races on which wagers are
taken by the licensee during such performance shall be live races con-
ducted by the licensee.

      (2) A simulcasting license granted to a fair association shall authorize
the display of simulcast races at the racetrack facility where the races are
conducted only if live races are scheduled for two or more days of the
same calendar week, except that the licensee may conduct simulcast races
in the week immediately before and immediately after a live meeting if
the total number of days on which simulcast races are displayed does not
exceed the total authorized in subsection (a). In no case shall the live
meet or simulcast races allowed under this subsection exceed 10 consec-
utive weeks. For purposes of this subsection, a calendar week shall be
measured from Monday through the following Sunday.

      (3) Notwithstanding the provisions of subsection (a), (b)(1) or (b)(2),
a fair association may apply to the commission for not more than five
additional days of simulcasting of special events. In addition, the com-
mission may authorize a fair association to display additional simulcast
races but, if such fair association is less than 100 miles from an organi-
zation licensee that is not a fair association, it must also shall secure writ-
ten consent from that organization licensee.

      (4) Notwithstanding the provisions of subsection (b)(1), if an emer-
gency causes the cancellation of all or any live races scheduled for a day
or performance by a simulcasting licensee, the commission or the com-
mission's designee may authorize the licensee to display any simulcast
races previously scheduled for such day or performance.

      (5) Notwithstanding the provisions of subsection (b)(1), the commis-
sion may authorize the licensee to display simulcast special racing events
as designated by the commission.

      (c) The application for a simulcasting license shall be filed with the
commission at a time and place prescribed by rules and regulations of
the commission. The application shall be in a form and include such
information as the commission prescribes.

      (d) To qualify for a simulcasting license the applicant shall:

      (1) Comply with the interstate horse racing act of 1978 (15 U.S.C.
3001 et seq.) as in effect December 31, 1991;

      (2) submit with the application a written approval of the proposed
simulcasting schedule signed by: (A) The recognized horsemen's group
for the track, if the applicant is licensed to conduct only horse races; (B)
the recognized greyhound owners' group, if the applicant is licensed to
conduct only greyhound races and only greyhound races are to be si-
mulcast; (C) both the recognized greyhound owners' group and a rec-
ognized horsemen's group, if the applicant is licensed to conduct only
greyhound races and horse races are to be simulcast; (D) the recognized
greyhound owners' group, if the applicant is licensed to conduct both
greyhound and horse races, only greyhound races are to be simulcast and
races are to be simulcast only while the applicant is conducting live grey-
hound races; (E) the recognized horsemen's group for the track, if the
applicant is licensed to conduct both greyhound and horse races, only
horse races are to be simulcast and races are to be simulcast only while
the applicant is conducting live horse races; or (F) both the recognized
greyhound owners' group and the recognized horsemen's group for the
track, if the applicant is licensed to conduct both greyhound races and
horse races and horse races are to be simulcast while the applicant is
conducting live greyhound races or greyhound races are to be simulcast
while the applicant is conducting live horse races; and

      (3) submit, in accordance with rules and regulations of the commis-
sion and before the simulcasting of a race, a written copy of each contract
or agreement which the applicant proposes to enter into with regard to
such race, and any proposed modification of any such contract or agree-
ment.

      (e) The term of a simulcasting license shall be one year.

      (f) A simulcasting licensee may apply to the commission or its des-
ignee for changes in the licensee's approved simulcasting schedule if such
changes are approved by the respective recognized greyhound owners'
group or recognized horsemen's group needed throughout the term of
the license. Application shall be made upon forms furnished by the com-
mission and shall contain such information as the commission prescribes.

      (g) Except as provided by subsection (j), the takeout for simulcast
horse and greyhound races shall be the same as it is for the live horse
and greyhound races conducted during the current or next live race meet-
ing at the racetrack facility where the simulcast races are displayed. For
simulcast races the tax imposed on amounts wagered shall be as provided
by K.S.A. 74-8823, and amendments thereto. Of the balance of the tak-
eout remaining after deduction of taxes, an amount equal to a percentage,
to be determined by the commission, of the gross sum wagered on si-
mulcast races shall be used for purses, as follows:

      (1) For greyhound races conducted by the licensee, if the simulcast
race is a greyhound race and the licensee conducts only live greyhound
races;

      (2) for horse races conducted by the licensee, if the simulcast race is
a horse race and the licensee conducts only live horse races;

      (3) for horse races and greyhound races, as determined by both the
recognized horsemen's group and the recognized greyhound owners'
group, if the simulcast race is a greyhound race and the licensee does not
conduct or is not currently conducting live greyhound races; or

      (4) for horse races and greyhound races, as determined by both the
recognized horsemen's group and the recognized greyhound owners'
group, if the simulcast is a horse race and the licensee does not conduct
or is not currently conducting live horse races. That portion of simulcast
purse money determined to be used for horse purses shall be apportioned
by the commission to the various horse race meetings held in any calendar
year based upon the number of live horse race dates comprising such
horse race meetings in the preceding calendar year.

      (h) Except as provided by subsection (j):

      (1) If a simulcasting licensee has a license to conduct live horse races
and the licensee displays a simulcast horse race: (A) All breakage proceeds
shall be remitted by the licensee to the commission not later than the
15th day of the month following the race from which the breakage is
derived and the commission shall promptly remit any such proceeds re-
ceived to the state treasurer, who shall deposit the entire amount in the
state treasury and credit it to the Kansas horse breeding development
fund created by K.S.A. 74-8829, and amendments thereto; and (B) all
unclaimed ticket proceeds shall be remitted by the licensee to the com-
mission on the 61st day after the end of the calendar year and the com-
mission shall promptly remit any such proceeds received to the state
treasurer, who shall deposit the entire amount in the state treasury and
credit it to the Kansas horse breeding development fund created by
K.S.A. 74-8829, and amendments thereto.

      (2) If a simulcasting licensee has a license to conduct live greyhound
races and the licensee displays a simulcast greyhound race, breakage and
unclaimed winning ticket proceeds shall be distributed in the manner
provided by K.S.A. 74-8821 and 74-8822, and amendments thereto, for
breakage and unclaimed winning ticket proceeds from live greyhound
races.

      (3) If a simulcasting licensee has a license to conduct live racing of
only horses and the licensee displays a simulcast greyhound race, un-
claimed winning ticket proceeds shall be distributed in the manner pro-
vided by K.S.A. 74-8822, and amendments thereto, for unclaimed win-
ning ticket proceeds from live greyhound races. Breakage for such races
shall be distributed for use to benefit greyhound racing as determined by
the commission.

      (4) If a simulcasting licensee has a license to conduct live racing of
only greyhounds and the licensee displays a simulcast horse race: (A) All
breakage proceeds shall be remitted by the licensee to the commission
not later than the 15th day of the month following the race from which
the breakage is derived and the commission shall promptly remit any such
proceeds received to the state treasurer, who shall deposit the entire
amount in the state treasury and credit it to the Kansas horse breeding
development fund created by K.S.A. 74-8829, and amendments thereto;
and (B) all unclaimed ticket proceeds shall be remitted by the licensee
to the commission on the 61st day after the end of the calendar year and
the commission shall promptly remit any such proceeds received to the
state treasurer, who shall deposit the entire amount in the state treasury
and credit it to the Kansas horse breeding development fund created by
K.S.A. 74-8829, and amendments thereto.

      (i) The commission may approve a request by two or more simul-
casting licensees to combine wagering pools within the state of Kansas
pursuant to rules and regulations adopted by the commission.

      (j)  (1) The commission may authorize any simulcasting licensee to
participate in an interstate combined wagering pool with one or more
other racing jurisdictions.

      (2) If a licensee participates in an interstate pool, the licensee may
adopt the takeout of the host jurisdiction or facility, except that the tak-
eout shall not be more than 20% on win, place and show bets and not
more than 25% on all other bets. The amount and manner of paying
purses from the takeout in an interstate pool shall be as provided by
subsection (g).

      (3) The tax imposed on amounts wagered in an interstate pool shall
be as provided by K.S.A. 74-8823, and amendments thereto. Parimutuel
taxes may not be imposed on any amounts wagered in an interstate com-
bined wagering pool other than amounts wagered within this jurisdiction.

      (4) Breakage for interstate combined wagering pools shall be calcu-
lated in accordance with the statutes and rules and regulations of the host
jurisdiction and shall be allocated among the participating jurisdictions in
a manner agreed to among the jurisdictions. Breakage allocated to this
jurisdiction shall be distributed as provided by subsection (h).

      (5) Upon approval of the respective recognized greyhound owners'
group or recognized horsemen's group, the commission may permit an
organization licensee to simulcast to other racetrack facilities or off-track
wagering or intertrack wagering facilities in other jurisdictions one or
more races conducted by such licensee, use one or more races conducted
by such licensee for an intrastate combined wagering pool or use one or
more races conducted by such licensee for an interstate combined wa-
gering pool at off-track wagering or intertrack wagering locations outside
the commission's jurisdiction and may allow parimutuel pools in other
jurisdictions to be combined with parimutuel pools in the commission's
jurisdiction for the purpose of establishing an interstate combined wa-
gering pool.

      (6) The participation by a simulcasting licensee in a combined inter-
state wagering pool does not cause that licensee to be considered to be
doing business in any jurisdiction other than the jurisdiction in which the
licensee is physically located.

      (k) If the organization licensee, facility owner licensee if any and the
recognized horsemen's group or recognized greyhound owners' group are
unable to agree concerning a simulcasting application, the matter may be
submitted to the commission for determination at the written request of
any party in accordance with rules and regulations of the commission.

      (l) This section shall be part of and supplemental to the Kansas par-
imutuel racing act.

      New Sec.  22. On July 1 of each year or as soon thereafter as sufficient
moneys are available, $80,000 credited to the state gaming revenues fund
shall be transferred and credited to the problem gambling grant fund
established by section 20, and amendments thereto.

      Sec.  23. K.S.A. 1999 Supp. 79-4803 is hereby amended to read as
follows: 79-4803. (a) After the transfer of moneys pursuant to section 22,
and amendments thereto:

      (1) An amount equal to 10% of the balance of all moneys credited to
the state gaming revenues fund shall be transferred and credited to the
correctional institutions building fund created pursuant to K.S.A. 76-6b09
and amendments thereto, to be appropriated by the legislature for the
use and benefit of state correctional institutions as provided in K.S.A. 76-
6b09 and amendments thereto; and

      (2) an amount equal to 5% of the balance of all moneys credited to
the state gaming revenues fund shall be transferred and credited to the
juvenile detention facilities fund.

      (b) There is hereby created in the state treasury the juvenile deten-
tion facilities fund which shall be administered by the commissioner of
juvenile justice. The Kansas advisory group on juvenile justice and delin-
quency prevention shall review and make recommendations concerning
the administration of the fund. All expenditures from the juvenile deten-
tion facilities fund shall be for the retirement of debt of facilities for the
detention of juveniles; or for the construction, renovation, remodeling or
operational costs of facilities for the detention of juveniles in accordance
with a grant program which shall be established with grant criteria de-
signed to facilitate the expeditious award and payment of grants for the
purposes for which the moneys are intended. ``Operational costs'' shall
not be limited to any per capita reimbursement by the commissioner of
juvenile justice for juveniles under the supervision and custody of the
commissioner but shall include payments to counties as and for their costs
of operating the facility. The commissioner of juvenile justice shall make
grants of the moneys credited to the juvenile detention facilities fund for
such purposes to counties in accordance with such grant program. All
expenditures from the juvenile detention facilities fund shall be made in
accordance with appropriation acts upon warrants of the director of ac-
counts and reports issued pursuant to vouchers approved by the com-
missioner of juvenile justice or the commissioner's designee.

      Sec.  24. K.S.A. 79-4804 is hereby amended to read as follows: 79-
4804. (a) After the transfer of moneys pursuant to section 22, and amend-
ments thereto, an amount equal to 85% of the balance of all moneys
credited to the state gaming revenues fund shall be transferred and cred-
ited to the state economic development initiatives fund. Expenditures
from the state economic development initiatives fund shall be made in
accordance with appropriations acts for the financing of such programs
supporting and enhancing the existing economic foundation of the state
and fostering growth through the expansion of current, and the establish-
ment and attraction of new, commercial and industrial enterprises as pro-
vided by this section and as may be authorized by law and not less than
1/2 of such money shall be distributed equally among the congressional
districts of the state. Except as provided by subsection (g), all moneys
credited to the state economic development initiatives fund shall be cred-
ited within the fund, as provided by law, to an account or accounts of the
fund which are created by this section.

      (b) There is hereby created the Kansas capital formation account in
the state economic development initiatives fund. All moneys credited to
the Kansas capital formation account shall be used to provide, encourage
and implement capital development and formation in Kansas.

      (c) There is hereby created the Kansas economic development re-
search and development account in the state economic development in-
itiatives fund. All moneys credited to the Kansas economic development
research and development account shall be used to promote, encourage
and implement research and development programs and activities in Kan-
sas and technical assistance funded through state educational institutions
under the supervision and control of the state board of regents or other
Kansas colleges and universities.

      (d) There is hereby created the Kansas economic development en-
dowment account in the state economic development initiatives fund. All
moneys credited to the Kansas economic development endowment ac-
count shall be accumulated and invested as provided in this section to
provide an ongoing source of funds which shall be used for economic
development activities in Kansas, including but not limited to continuing
appropriations or demand transfers for programs and projects which shall
include, but are not limited to, specific community infrastructure projects
in Kansas that stimulate economic growth.

      (e) Except as provided in subsection (f), the director of investments
may invest and reinvest moneys credited to the state economic develop-
ment initiatives fund in accordance with investment policies established
by the pooled money investment board under K.S.A. 75-4232, and
amendments thereto, in the pooled money investment portfolio. All mon-
eys received as interest earned by the investment of the moneys credited
to the state economic development initiatives fund shall be deposited in
the state treasury and credited to the Kansas economic development en-
dowment account of such fund.

      (f) Moneys credited to the Kansas economic development endow-
ment account of the state economic development initiatives fund may be
invested in government guaranteed loans and debentures as provided by
law in addition to the investments authorized by subsection (e) or in lieu
of such investments. All moneys received as interest earned by the in-
vestment under this subsection of the moneys credited to the Kansas
economic development endowment account shall be deposited in the
state treasury and credited to the Kansas economic development endow-
ment account of the state economic development initiatives fund.

      (g) In each fiscal year, the director of accounts and reports shall make
transfers in equal amounts on July 15 and January 15 which in the aggre-
gate equal $2,000,000 from the state economic development initiatives
fund to the state water plan fund created by K.S.A. 82a-951, and amend-
ments thereto. No other moneys credited to the state economic devel-
opment initiatives fund shall be used for: (1) Water-related projects or
programs, or related technical assistance; or (2) any other projects or
programs, or related technical assistance, which meet one or more of the
long-range goals, objectives and considerations set forth in the state water
resource planning act.

      New Sec.  25. All sales of bingo cards, bingo faces and instant bingo
tickets by licensees under K.S.A. 79-4701 et seq., and amendments
thereto, shall be exempt from the taxes levied and collected by cities and
counties under K.S.A. 12-187 et seq., and amendments thereto.

      Sec.  26. K.S.A. 1999 Supp. 79-3603 is hereby amended to read as
follows: 79-3603. For the privilege of engaging in the business of selling
tangible personal property at retail in this state or rendering or furnishing
any of the services taxable under this act, there is hereby levied and there
shall be collected and paid a tax at the rate of 4.9% and, unless otherwise
specifically provided by law. Within a redevelopment district established
pursuant to K.S.A. 74-8921, and amendments thereto, there is hereby
levied and there shall be collected and paid an additional tax at the rate
of 2% until the earlier of the date the bonds issued to finance or refinance
the redevelopment project have been paid in full or the final scheduled
maturity of the first series of bonds issued to finance any part of the
project upon:

      (a) The gross receipts received from the sale of tangible personal
property at retail within this state;

      (b)  (1) the gross receipts from intrastate telephone or telegraph serv-
ices and (2) the gross receipts received from the sale of interstate tele-
phone or telegraph services, which (A) originate within this state and
terminate outside the state and are billed to a customer's telephone num-
ber or account in this state; or (B) originate outside this state and ter-
minate within this state and are billed to a customer's telephone number
or account in this state except that the sale of interstate telephone or
telegraph service does not include: (A) Any interstate incoming or out-
going wide area telephone service or wide area transmission type service
which entitles the subscriber to make or receive an unlimited number of
communications to or from persons having telephone service in a speci-
fied area which is outside the state in which the station provided this
service is located; (B) any interstate private communications service to
the persons contracting for the receipt of that service that entitles the
purchaser to exclusive or priority use of a communications channel or
group of channels between exchanges; (C) any value-added nonvoice
service in which computer processing applications are used to act on the
form, content, code or protocol of the information to be transmitted; (D)
any telecommunication service to a provider of telecommunication serv-
ices which will be used to render telecommunications services, including
carrier access services; or (E) any service or transaction defined in this
section among entities classified as members of an affiliated group as
provided by federal law (U.S.C. Section 1504). For the purposes of this
subsection the term gross receipts does not include purchases of tele-
phone, telegraph or telecommunications using a prepaid telephone call-
ing card or pre-paid authorization number. As used in this subsection, a
pre-paid telephone calling card or pre-paid authorization number means
the right to exclusively make telephone calls, paid for in advance, with
the prepaid value measured in minutes or other time units, that enables
the origination of calls using an access number or authorization code or
both, whether manually or electronically dialed;

      (c) the gross receipts from the sale or furnishing of gas, water, elec-
tricity and heat, which sale is not otherwise exempt from taxation under
the provisions of this act, and whether furnished by municipally or pri-
vately owned utilities;

      (d) the gross receipts from the sale of meals or drinks furnished at
any private club, drinking establishment, catered event, restaurant, eating
house, dining car, hotel, drugstore or other place where meals or drinks
are regularly sold to the public;

      (e) the gross receipts from the sale of admissions to any place pro-
viding amusement, entertainment or recreation services including admis-
sions to state, county, district and local fairs, but such tax shall not be
levied and collected upon the gross receipts received from sales of ad-
missions to any cultural and historical event which occurs triennially;

      (f) the gross receipts from the operation of any coin-operated device
dispensing or providing tangible personal property, amusement or other
services except laundry services, whether automatic or manually operated;

      (g) the gross receipts from the service of renting of rooms by hotels,
as defined by K.S.A. 36-501 and amendments thereto, or by accommo-
dation brokers, as defined by K.S.A. 12-1692, and amendments thereto;

      (h) the gross receipts from the service of renting or leasing of tangible
personal property except such tax shall not apply to the renting or leasing
of machinery, equipment or other personal property owned by a city and
purchased from the proceeds of industrial revenue bonds issued prior to
July 1, 1973, in accordance with the provisions of K.S.A. 12-1740 through
12-1749, and amendments thereto, and any city or lessee renting or leas-
ing such machinery, equipment or other personal property purchased
with the proceeds of such bonds who shall have paid a tax under the
provisions of this section upon sales made prior to July 1, 1973, shall be
entitled to a refund from the sales tax refund fund of all taxes paid
thereon;

      (i) the gross receipts from the rendering of dry cleaning, pressing,
dyeing and laundry services except laundry services rendered through a
coin-operated device whether automatic or manually operated;

      (j) the gross receipts from the rendering of the services of washing
and washing and waxing of vehicles;

      (k) the gross receipts from cable, community antennae and other sub-
scriber radio and television services;

      (l) the gross receipts received from the sales of tangible personal
property to all contractors, subcontractors or repairmen of materials and
supplies for use by them in erecting structures for others, or building on,
or otherwise improving, altering, or repairing real or personal property
of others;

      (m) the gross receipts received from fees and charges by public and
private clubs, drinking establishments, organizations and businesses for
participation in sports, games and other recreational activities, but such
tax shall not be levied and collected upon the gross receipts received from:
(1) Fees and charges by any political subdivision, by any organization
exempt from property taxation pursuant to paragraph Ninth of K.S.A. 79-
201, and amendments thereto, or by any youth recreation organization
exclusively providing services to persons 18 years of age or younger which
is exempt from federal income taxation pursuant to section 501(c)(3) of
the federal internal revenue code of 1986, for participation in sports,
games and other recreational activities; and (2) entry fees and charges for
participation in a special event or tournament sanctioned by a national
sporting association to which spectators are charged an admission which
is taxable pursuant to subsection (e);

      (n) the gross receipts received from dues charged by public and pri-
vate clubs, drinking establishments, organizations and businesses, pay-
ment of which entitles a member to the use of facilities for recreation or
entertainment, but such tax shall not be levied and collected upon the
gross receipts received from: (1) Dues charged by any organization ex-
empt from property taxation pursuant to paragraphs Eighth and Ninth of
K.S.A. 79-201, and amendments thereto; and (2) sales of memberships
in a nonprofit organization which is exempt from federal income taxation
pursuant to section 501 (c)(3) of the federal internal revenue code of
1986, and whose purpose is to support the operation of a nonprofit zoo;

      (o) the gross receipts received from the isolated or occasional sale of
motor vehicles or trailers but not including: (1) The transfer of motor
vehicles or trailers by a person to a corporation solely in exchange for
stock securities in such corporation; or (2) the transfer of motor vehicles
or trailers by one corporation to another when all of the assets of such
corporation are transferred to such other corporation; or (3) the sale of
motor vehicles or trailers which are subject to taxation pursuant to the
provisions of K.S.A. 79-5101 et seq., and amendments thereto, by an
immediate family member to another immediate family member. For the
purposes of clause (3), immediate family member means lineal ascendants
or descendants, and their spouses. In determining the base for computing
the tax on such isolated or occasional sale, the fair market value of any
motor vehicle or trailer traded in by the purchaser to the seller may be
deducted from the selling price;

      (p) the gross receipts received for the service of installing or applying
tangible personal property which when installed or applied is not being
held for sale in the regular course of business, and whether or not such
tangible personal property when installed or applied remains tangible
personal property or becomes a part of real estate, except that no tax shall
be imposed upon the service of installing or applying tangible personal
property in connection with the original construction of a building or
facility, the original construction, reconstruction, restoration, remodeling,
renovation, repair or replacement of a residence or the construction, re-
construction, restoration, replacement or repair of a bridge or highway.

      For the purposes of this subsection:

      (1) ``Original construction'' shall mean the first or initial construction
of a new building or facility. The term ``original construction'' shall include
the addition of an entire room or floor to any existing building or facility,
the completion of any unfinished portion of any existing building or fa-
cility and the restoration, reconstruction or replacement of a building or
facility damaged or destroyed by fire, flood, tornado, lightning, explosion
or earthquake, but such term, except with regard to a residence, shall not
include replacement, remodeling, restoration, renovation or reconstruc-
tion under any other circumstances;

      (2) ``building'' shall mean only those enclosures within which individ-
uals customarily are employed, or which are customarily used to house
machinery, equipment or other property, and including the land improve-
ments immediately surrounding such building;

      (3) ``facility'' shall mean a mill, plant, refinery, oil or gas well, water
well, feedlot or any conveyance, transmission or distribution line of any
cooperative, nonprofit, membership corporation organized under or sub-
ject to the provisions of K.S.A. 17-4601 et seq., and amendments thereto,
or of any municipal or quasi-municipal corporation, including the land
improvements immediately surrounding such facility; and

      (4) ``residence'' shall mean only those enclosures within which indi-
viduals customarily live;

      (q) the gross receipts received for the service of repairing, servicing,
altering or maintaining tangible personal property, except computer soft-
ware described in subsection (s), which when such services are rendered
is not being held for sale in the regular course of business, and whether
or not any tangible personal property is transferred in connection there-
with. The tax imposed by this subsection shall be applicable to the services
of repairing, servicing, altering or maintaining an item of tangible personal
property which has been and is fastened to, connected with or built into
real property;

      (r) the gross receipts from fees or charges made under service or
maintenance agreement contracts for services, charges for the providing
of which are taxable under the provisions of subsection (p) or (q);

      (s) the gross receipts received from the sale of computer software,
and the sale of the services of modifying, altering, updating or maintaining
computer software. As used in this subsection, ``computer software''
means information and directions loaded into a computer which dictate
different functions to be performed by the computer. Computer software
includes any canned or prewritten program which is held or existing for
general or repeated sale, even if the program was originally developed
for a single end user as custom computer software. The sale of computer
software or services does not include: (1) The initial sale of any custom
computer program which is originally developed for the exclusive use of
a single end user; or (2) those services rendered in the modification of
computer software when the modification is developed exclusively for a
single end user only to the extent of the modification and only to the
extent that the actual amount charged for the modification is separately
stated on invoices, statements and other billing documents provided to
the end user. The services of modification, alteration, updating and main-
tenance of computer software shall only include the modification, alter-
ation, updating and maintenance of computer software taxable under this
subsection whether or not the services are actually provided; and

      (t) the gross receipts received for telephone answering services, in-
cluding mobile phone services, beeper services and other similar services;
and

      (u) the gross receipts received from the sale of prepaid telephone
calling cards or pre-paid authorization numbers and the recharge of such
cards or numbers. A pre-paid telephone calling card or pre-paid author-
ization number means the right to exclusively make telephone calls, paid
for in advance, with the prepaid value measured in minutes or other time
units, that enables the origination of calls using an access number or
authorization code or both, whether manually or electronically dialed. If
the sale or recharge of such card or number does not take place at the
vendor's place of business, it shall be conclusively determined to take
place at the customer's shipping address; if there is no item shipped then
it shall be the customer's billing address.; and

      (v) the gross receipts received from the sales of bingo cards, bingo
faces and instant bingo tickets by licensees under K.S.A. 79-4701, et seq.,
and amendments thereto, shall be taxed at a rate of: (1) 4.9% on July 1,
2000, and before July 1, 2001; and (2) 2.5% on July 1, 2001, and before
July 1, 2002. From and after July 1, 2002, all sales of bingo cards, bingo
faces and instant bingo tickets by licensees under K.S.A. 79-4701 et seq.,
and amendments thereto, shall be exempt from taxes imposed pursuant to
this section. 
Sec.  27. K.S.A. 74-8711, 74-8712, 79-4701, 79-4703, 79-4704, 79-
4705, 79-4705a, 79-4706, 79-4707, 79-4708, 79-4710, 79-4711, 79-4712a,
79-4714 and 79-4804 and K.S.A. 1999 Supp. 74-8836, 79-3603 and 79-
4803 are hereby repealed.

      Sec.  28. This act shall take effect and be in force from and after its
publication in the statute book.

Approved May 16, 2000.
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