SPONSOR:   

Sen. Bushweller & Rep. Carson

 

Sens. Bonini, Ennis, Lawson, Pettyjohn; Reps. Lynn, Outten, Paradee, Spiegelman, Wilson, Yearick

 

DELAWARE STATE SENATE

148th GENERAL ASSEMBLY

 

SENATE BILL NO. 183

 

 

AN ACT TO AMEND TITLE 29 OF THE DELAWARE CODE RELATING TO LOTTERIES.

 


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

 


Section 1.  Amend Chapter 48, Title 29 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and by redesignating accordingly:

§ 4803 Definitions.

(k) "Internet lottery" shall mean all lottery games in which the player's interaction with the game operated by the Office occurs over the Internet (which, for purposes of this chapter, shall include any public or private computer or terminal network, whether linked electronically, wirelessly, through optical networking technology or other means), including Internet ticket games, the Internet video lottery, the Internet sports lottery and Internet table games.

(l) “Internet sports lottery” shall mean a lottery game in which the player’s interaction with the game operated by the Office occurs over the Internet through a website or network of a video lottery agent, rather than through a sports lottery machine, and in which the game is an Internet variation of the sports lottery.

(l)(m) "Internet table games" shall mean a lottery game in which the player's interaction with the game operated by the Office occurs over the Internet through a website or network of a video lottery agent, rather than at a table game in a video lottery facility, and in which the game is an Internet variation or compilation of a table game or table games, provided that the game is expressly authorized by rule of the Director.

 (m)(n) "Internet ticket games" shall mean a lottery game in which the player's interaction with the game operated by the Office occurs over the Internet through a website or network of the Office, and in which the winner is decided by chance through mechanical or electronic means, and which shall include keno but which shall not include the video lottery, table games, sports betting and other forms of the Internet lottery.

(w)(x) "Sports lottery" shall mean a lottery in which the winners are determined based on the outcome of any professional or collegiate sporting event, including racing, held within or without the State, but excluding collegiate sporting events that involve a Delaware college or university and amateur or professional sporting events that involve a Delaware team, and excluding the Internet lottery.

(x)(y) "Sports lottery machine" shall mean any machine in which bills, coins or tokens are deposited in order to play a sports lottery game,  but excluding the Internet sports lottery. A machine shall be considered a sports lottery machine notwithstanding the use of an electronic credit system making the deposit of bills, coins or tokens unnecessary.

Section 2. Amend Chapter 48, Title 29 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and by redesignating accordingly:

§ 4810 Sales to certain persons prohibited; penalties.

(a) No person who is under the age of 18 shall purchase a lottery ticket or participate in an Internet ticket game. No person who is under the age of 21 shall wager on the video lottery, sports lottery, table games, Internet table games, Internet sports betting games or Internet video lottery. Whoever has not reached the specified age and has violated this subsection shall be guilty of a misdemeanor.

(b) No ticket shall be sold to any person under the age of 18 years, but this shall not be deemed to prohibit the purchase of a ticket for the purpose of making a gift by a person 18 years of age or older to a person less than that age.

(c) No licensed video lottery agent, sports lottery agent, or employee of such agents shall allow a person under the age of 21 to wager on the video lottery, table games, sports lottery, Internet table games, Internet sports betting games or Internet video lottery.

Section 3. Amend Chapter 48, Title 29 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and by redesignating accordingly:

§ 4815 State Lottery Fund.

(e) Gross revenue from the Internet video lottery, the Internet sports lottery and Internet table games shall be accounted for to the State Treasurer and all proceeds, net of moneys returned to players, shall be placed into a special account known as the State Internet Lottery Fund. From the Fund, the Director shall first pay for the operation and administration of the Internet video lottery, the Internet sports lottery and Internet table games. Thereafter, the first $3,750,000 of proceeds in each fiscal year shall be transferred to the State Lottery Fund for the benefit of the State. After $3,750,000 of proceeds has been transferred to the State each fiscal year, tThe remaining proceeds shall be distributed as follows:

(1) The proceeds from the sales of Internet video lottery games shall be distributed pursuant to paragraphs (b)(2) and (b)(3) of this section, provided that the calculations for such distribution shall be done after netting out the proceeds returned to players and administrative and vendor costs; and

(2) The proceeds from the sales of Internet table games shall be distributed pursuant to subsection (d) of this section, net of proceeds returned to players, provided that the calculations for such distribution shall be done after netting out the proceeds returned to players and administrative and vendor costs.

(3) The proceeds from the sales of Internet sports lottery games shall be distributed pursuant to subsection (c) of this section, provided that the calculations for such distribution shall be done after netting out the proceeds returned to players and administrative and vendor costs.

                Section 4. Amend Chapter 48, Title 29 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and by redesignating accordingly:

§ 4815 State Lottery Fund.  [Effective January 1, 2017]

(d) Gross table game revenue shall be electronically transferred daily or weekly at the direction of the Lottery Director into a designated state lottery account by the agent, and transferred to the State Lottery Fund by the lottery on a daily or weekly basis. Gross table game revenue shall be applied as follows:

                (1) Proceeds returned to the State.

a. Except as otherwise provided by this paragraph, of gross table game revenue, there shall be returned to the State 29.420%.

                Section 5. Amend Chapter 48, Title 29 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and by redesignating accordingly:

§ 4815 State Lottery Fund.  [Effective January 1, 2018]

(d) Gross table game revenue shall be electronically transferred daily or weekly at the direction of the Lottery Director into a designated state lottery account by the agent, and transferred to the State Lottery Fund by the lottery on a daily or weekly basis. Gross table game revenue shall be applied as follows:

                (1) Proceeds returned to the State.

a. Except as otherwise provided by this paragraph, of gross table game revenue, there shall be returned to the State 29.415%.

Section 6. Amend Chapter 48, Title 29 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and by redesignating accordingly:

§ 4819 Restrictions on location and use of video lottery and sports lottery machines; fees.

(d)(1) For the privilege of hosting the operation of table games, the State shall collect from the video lottery agents for the benefit of the General Fund, for each fiscal year after June 30, 2011, license fees totaling $13,250,000, to be paid no later than June 1 of the preceding fiscal year, and to be allocated among the video lottery agents offering table games as follows: Each video lottery agent's license fee shall be the portion of $13,250,000 that is equal to the percentage of gross table game revenue generated at that video lottery facility in the preceding fiscal year out of the total gross table game revenue generated at all video lottery facilities in the preceding fiscal year.

(2) Each video lottery agent shall be permitted for purposes of this subsection to reduce the license fee it would otherwise owe for that year pursuant to paragraph (d)(1) of this section by the amount of qualified investments, up to a cap of $10,250,000 for all video lottery agents, made in the 12-month period ending on June 30 by the video lottery agent in the competitiveness of its facilities and business. The video lottery agents shall provide the Director annually an accounting of the qualified investments made pursuant to this paragraph. A qualified investment pursuant to this paragraph shall be determined by the Director to benefit the competitiveness or services of such video lottery agent and may include:

a. Amounts paid out for new or enhanced buildings or permanent improvements or betterments to video lottery facilities or immediately adjacent property or properties that are owned by video lottery licensees that would not be deductible for purposes of § 263(a)(1) of the Internal Revenue Code (26 U.S.C. § 263(a)(1)), or amounts paid out to service debt incurred in the construction of buildings or permanent improvements or betterments b. Expenditures for marketing of lottery games and promotion items provided to patrons, all as determined by the Office to be in excess of the comparable amount of such expenditures made by the video lottery agent during the 12-month period ending June 30, 2012, measured as a percentage of the proceeds from the operation of the video lottery and table games.

Section 7. Amend Chapter 48, Title 29 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and by redesignating accordingly:

§ 4815 State Lottery Fund. [Effective July 1, 2016]

(b)(3) c. Application of funds retained by the state lottery. — The funds retained by the state lottery shall be applied as follows: first, to the administrative costs and expenses in respect of the video lottery including, but not limited to, administrative expenses including payroll and other employment costs attributable to the operation of the video lottery by the State Lottery Office, law-enforcement and security expenses, including payroll and other employment costs of the state lottery, the Office of the Attorney General and the Delaware State Police, attributable to the operation by the state lottery of a video lottery; second, $1,000,000 or 1%, whichever is greater, of the proceeds returned to the State under this paragraph (b)(3), to the Division of Substance Abuse and Mental Health of the Department of Health and Social Services for funding programs for the treatment, education and assistance of compulsive gamblers and their families; third, costs of the Administrator of Racing and racing inspectors referenced in Chapters 100 and 101 of Title 3; fourth, the State's contribution to the Delaware Standardbred Breeder's Program and Delaware Certified Thoroughbred Program (DCTP); fifth, an amount equal to 2.5% of the proceeds remaining after payments made under paragraph (b)(1) of this section, shall be added to the payments made to video lottery agents under paragraph (b)(4) d. of this section and to be used by video lottery agents for capital expenditures or refunded to the State as provided herein; and fifth sixth, the remainder shall be paid into the State's General Fund. The amounts to be used by video lottery agents for capital expenditures must be incurred or paid or committed to be paid during each fiscal year ending June 30 and if not, the balance shall be refunded to the State within 30 days following the end of such fiscal year. Amounts incurred, paid or committed to be paid shall be subject to audit by an independent auditor at the request of the video lottery agent or the State. Amounts to be used by video lottery agents for capital expenditures shall refer to amounts properly characterized as capital expenditures under generally accepted accounting principles and shall apply to assets at any facilities used by the video lottery agent in connection with its operations – including its video lottery facilities, horse racing facilities, food and beverage operations, retail operations, parking facilities, hotel, golf course and other amenities.

Section 8. Amend Chapter 48, Title 29 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and by redesignating accordingly:

§ 4815 State Lottery Fund. [Effective July 1, 2017]

(b)(3) c. Application of funds retained by the state lottery. — The funds retained by the state lottery shall be applied as follows: first, to the administrative costs and expenses in respect of the video lottery including, but not limited to, administrative expenses including payroll and other employment costs attributable to the operation of the video lottery by the State Lottery Office, law-enforcement and security expenses, including payroll and other employment costs of the state lottery, the Office of the Attorney General and the Delaware State Police, attributable to the operation by the state lottery of a video lottery; second, $1,000,000 or 1%, whichever is greater, of the proceeds returned to the State under this paragraph (b)(3), to the Division of Substance Abuse and Mental Health of the Department of Health and Social Services for funding programs for the treatment, education and assistance of compulsive gamblers and their families; third, costs of the Administrator of Racing and racing inspectors referenced in Chapters 100 and 101 of Title 3; fourth, the State's contribution to the Delaware Standardbred Breeder's Program and Delaware Certified Thoroughbred Program (DCTP); fifth, an amount equal to 2.5% of the proceeds remaining after payments made under paragraph (b)(1) of this section, shall be added to the payments made to video lottery agents under paragraph (b)(4) d. of this section and to be used by video lottery agents for marketing purposes or refunded to the State as provided herein: sixth, an amount equal to 2.5% of the proceeds remaining after payments made under paragraph (b)(1) of this section, shall be added to the payments made to video lottery agents under paragraph (b)(4) d. of this section and to be used by video lottery agents for capital expenditures or refunded to the State as provided herein; and fifth seventh, the remainder shall be paid into the State's General Fund. The amounts to be used by video lottery agents for marketing purposes and capital expenditures must be incurred or paid or committed to be paid during each fiscal year ending June 30 and if not, the balance shall be refunded to the State within 30 days following the end of such fiscal year. Amounts incurred, paid or committed to be paid shall be subject to audit by an independent auditor at the request of the video lottery agent or the State. Amounts to be used by video lottery agents for capital expenditures shall refer to amounts properly characterized as capital expenditures under generally accepted accounting principles and shall apply to assets at any facilities used by the video lottery agent in connection with its operations – including its video lottery facilities, horse racing facilities, food and beverage operations, retail operations, parking facilities, hotel, golf course and other amenities. Amounts to be used by video lottery agents for marketing purposes shall include advertising and promotions, provided that complimentaries such as free or discounted food and beverage offers, hotel rooms, gifts and prizes shall be accounted for at the video lottery agent’s cost to provide such complimentaries.

Section 9. Amend Chapter 48, Title 29 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and by redesignating accordingly:

§ 4815 State Lottery Fund. [Effective July 1, 2018]

(b)(3) c. Application of funds retained by the state lottery. — The funds retained by the state lottery shall be applied as follows: first, to the administrative costs and expenses in respect of the video lottery including, but not limited to, administrative expenses including payroll and other employment costs attributable to the operation of the video lottery by the State Lottery Office, law-enforcement and security expenses, including payroll and other employment costs of the state lottery, the Office of the Attorney General and the Delaware State Police, attributable to the operation by the state lottery of a video lottery; second, $1,000,000 or 1%, whichever is greater, of the proceeds returned to the State under this paragraph (b)(3), to the Division of Substance Abuse and Mental Health of the Department of Health and Social Services for funding programs for the treatment, education and assistance of compulsive gamblers and their families; third, costs of the Administrator of Racing and racing inspectors referenced in Chapters 100 and 101 of Title 3; fourth, the State's contribution to the Delaware Standardbred Breeder's Program and Delaware Certified Thoroughbred Program (DCTP); fifth, an amount equal to 2.5% of the proceeds remaining after payments made under paragraph (b)(1) of this section, shall be added to the payments made to video lottery agents under paragraph (b)(4) d. of this section and to be used by video lottery agents for marketing purposes or refunded to the State as provided herein: sixth, an amount equal to 5% of the proceeds remaining after payments made under paragraph (b)(1) of this section, shall be added to the payments made to video lottery agents under paragraph (b)(4) d. of this section and to be used by video lottery agents for capital expenditures or refunded to the State as provided herein; and fifth seventh, the remainder shall be paid into the State's General Fund. The amounts to be used by video lottery agents for marketing purposes and capital expenditures must be incurred or paid or committed to be paid during each fiscal year ending June 30 and if not, the balance shall be refunded to the State within 30 days following the end of such fiscal year. Amounts incurred, paid or committed to be paid shall be subject to audit by an independent auditor at the request of the video lottery agent or the State. Amounts to be used by video lottery agents for capital expenditures shall refer to amounts properly characterized as capital expenditures under generally accepted accounting principles and shall apply to assets at any facilities used by the video lottery agent in connection with its operations – including its video lottery facilities, horse racing facilities, food and beverage operations, retail operations, parking facilities, hotel, golf course and other amenities. Amounts to be used by video lottery agents for marketing purposes shall include advertising and promotions, provided that complimentaries such as free or discounted food and beverage offers, hotel rooms, gifts and prizes shall be accounted for at the video lottery agent’s cost to provide such complimentaries.

Section 10. Amend Chapter 48, Title 29 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and by redesignating accordingly:

§ 4815 State Lottery Fund. [Effective July 1, 2019]

(b)(3) c. Application of funds retained by the state lottery. — The funds retained by the state lottery shall be applied as follows: first, to the administrative costs and expenses in respect of the video lottery including, but not limited to, administrative expenses including payroll and other employment costs attributable to the operation of the video lottery by the State Lottery Office, law-enforcement and security expenses, including payroll and other employment costs of the state lottery, the Office of the Attorney General and the Delaware State Police, attributable to the operation by the state lottery of a video lottery; second, $1,000,000 or 1%, whichever is greater, of the proceeds returned to the State under this paragraph (b)(3), to the Division of Substance Abuse and Mental Health of the Department of Health and Social Services for funding programs for the treatment, education and assistance of compulsive gamblers and their families; third, costs of the Administrator of Racing and racing inspectors referenced in Chapters 100 and 101 of Title 3; fourth, the State's contribution to the Delaware Standardbred Breeder's Program and Delaware Certified Thoroughbred Program (DCTP); fifth, an amount equal to 5% of the proceeds remaining after payments made under paragraph (b)(1) of this section, shall be added to the payments made to video lottery agents under paragraph (b)(4) d. of this section and to be used by video lottery agents for marketing purposes or refunded to the State as provided herein: sixth, an amount equal to 5% of the proceeds remaining after payments made under paragraph (b)(1) of this section, shall be added to the payments made to video lottery agents under paragraph (b)(4) d. of this section and to be used by video lottery agents for capital expenditures or refunded to the State as provided herein; and fifth seventh, the remainder shall be paid into the State's General Fund. The amounts to be used by video lottery agents for marketing purposes and capital expenditures must be incurred or paid or committed to be paid during each fiscal year ending June 30 and if not, the balance shall be refunded to the State within 30 days following the end of such fiscal year. Amounts incurred, paid or committed to be paid shall be subject to audit by an independent auditor at the request of the video lottery agent or the State. Amounts to be used by video lottery agents for capital expenditures shall refer to amounts properly characterized as capital expenditures under generally accepted accounting principles and shall apply to assets at any facilities used by the video lottery agent in connection with its operations – including its video lottery facilities, horse racing facilities, food and beverage operations, retail operations, parking facilities, hotel, golf course and other amenities. Amounts to be used by video lottery agents for marketing purposes shall include advertising and promotions, provided that complimentaries such as free or discounted food and beverage offers, hotel rooms, gifts and prizes shall be accounted for at the video lottery agent’s cost to provide such complimentaries.

Section 11. Sections 1, 2, 3, 6 and 7 shall be effective July 1, 2016; Section 4 shall be effective January 1, 2017; Section 5 shall be effective January 1, 2018; Section 8 shall be effective July 1, 2017; Section 9 shall be effective July 1, 2018; and Section 10 shall be effective July 1, 2019.


SYNOPSIS

This Bill implements certain recommendations of the Lottery & Gaming Study Commission adopted on January 22, 2015 but not implemented by legislation in 2015. The Bill intends for the State to continue to benefit from video lottery proceeds, allows for continued employment at the State’s three video lottery facilities, and allows for the reinvestment of capital in those facilities to enable them to compete and remain vibrant tourism enterprises for the State. The Bill also provides for an expansion of the Internet lottery to include sports betting and allows video lottery agents to participate in all proceeds from the Internet lottery once administrative and vendor costs are paid. Effective July 1, 2016, the table game license fee is eliminated; and effective January 1, 2017 and January 1, 2018, the State’s share of gross table game revenues is revised to 20% and 15%, respectively. Video lottery agents shall receive certain credits for marketing expenditures and capital expenditures to be phased in over the next four fiscal years.

 

Author:  Senator Bushweller