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Substitute Senate Bill No. 54

PUBLIC ACT NO. 96-212

AN ACT ESTABLISHING THE CONNECTICUT LOTTERY CORPORATION.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) Sections 1 to 19, inclusive, of this act may be cited as the "Connecticut Lottery Corporation Act".

Sec. 2. (NEW) As used in sections 1 to 19, inclusive, of this act, the following terms shall have the following meanings unless the context clearly indicates another meaning: (1) "Board" or "board of directors" means the board of directors of the corporation; (2) "Corporation" means the Connecticut Lottery Corporation as created under section 3 of this act; (3) "Lottery" means (A) the Connecticut state lottery conducted prior to the transfer authorized under section 9 of this act by the Division of Special Revenue, (B) after such transfer, the Connecticut state lottery conducted by the corporation pursuant to sections 1 to 19, inclusive, of this act, and (C) the state lottery referred to in subsection (a) of section 53-278g of the general statutes; (4) "Lottery Fund" means a fund or funds established by, and under the management and control of, the corporation, into which all lottery revenues of the corporation are deposited, from which all payments and expenses of the corporation are paid and from which transfers to the General Fund are made pursuant to section 13 of this act; (5) "Operating revenue" means total revenue received from lottery sales less all canceled sales and amounts paid as prizes but before payment or provision for payment of any other expenses.

Sec. 3. (NEW) (a) There is created a body politic and corporate, constituting a public instrumentality and political subdivision of the state created for the performance of an essential governmental revenue-raising function, which shall be named the Connecticut Lottery Corporation, and which may exercise the functions, powers and duties set forth in sections 1 to 19, inclusive, of this act, to implement the purposes set forth in said sections, which are public purposes for which public funds may be expended. The Connecticut Lottery Corporation shall not be construed to be a department, institution or agency of the state with respect to budgeting, procurement or personnel requirements, except as provided in this act.

(b) The corporation shall be governed by a board of thirteen directors. The Governor, with the advice and consent of the General Assembly, shall appoint four directors who shall have skill, knowledge and experience in the fields of management, finance or operations in the private sector. Three directors shall be the State Treasurer, the Secretary of the Office of Policy and Management and the Executive Director of the Division of Special Revenue, all of whom shall serve ex officio and shall have all of the powers and privileges of a member of the board of directors. Each ex-officio director may designate his deputy or any member of his staff to represent him at meetings of the corporation with full power to act and vote on his behalf. The Executive Director of the Division of Special Revenue shall cease to be a director one year from the effective date of this act, or earlier at the discretion of the Governor. The Governor, with the advice and consent of the General Assembly, shall fill the vacancy created by the removal or departure of the Executive Director of the Division of Special Revenue with a person who shall have skill, knowledge and experience in the fields of management, finance or operations in the private sector. The Governor shall thereafter have the power to appoint a total of five members to the board. The procedures of section 4-7 shall apply to the confirmation of the Governor's appointments by both houses of the General Assembly. Six directors shall be appointed as follows: One by the president pro tempore of the Senate, one by the majority leader of the Senate, one by the minority leader of the Senate, one by the speaker of the House of Representatives, one by the majority leader of the House of Representatives and one by the minority leader of the House of Representatives. Each director appointed by the Governor shall serve at the pleasure of the Governor but no longer than the term of office of the Governor or until the director's successor is appointed and qualified, whichever term is longer. Each director appointed by a member of the General Assembly shall serve in accordance with the provisions of section 4-1a of the general statutes. The Governor shall fill any vacancy for the unexpired term of a member appointed by the Governor. The appropriate legislative appointing authority shall fill any vacancy for the unexpired term of a member appointed by such authority. Any director, other than the Executive Director of the Division of Special Revenue, shall be eligible for reappointment. Any director may be removed by order of the Superior Court upon application of the Attorney General for misfeasance, malfeasance or wilful neglect of duty. Such actions shall be tried to the court without a jury and shall be privileged in assignment for hearing. If the court, after hearing, finds there is clear and convincing evidence of such misfeasance, malfeasance or wilful neglect of duty it shall order the removal of such director. Any director so removed shall not be reappointed to the board. Each appointing authority shall make his initial appointment to the board no later than six months following the effective date of this act.

(c) The chairperson of the board shall be appointed by the Governor from among the members of the board. The directors shall annually elect one of their number as vice chairperson. The board may elect such other officers of the board as it deems proper. Directors shall receive no compensation for the performance of their duties under sections 1 to 19, inclusive, of this act, but shall be reimbursed for necessary expenses incurred in the performance of their duties.

(d) Meetings of the corporation shall be held at such times as shall be specified in the bylaws adopted by the corporation and at such other time or times as the chairperson deems necessary. The corporation shall, within the first ninety days of the transfer to the corporation of the lottery, pursuant to section 9 of this act, and on a fiscal quarterly basis thereafter, report on its operations for the preceding fiscal quarter to the Governor and the joint standing committees of the General Assembly having cognizance of matters relating to finance, revenue and bonding, and public safety. The report shall include a summary of the activities of the corporation, a statement of operations and, if necessary, recommendations for legislation to promote the purposes of the corporation. The accounts of the corporation shall be subject to audit by the state auditors of public accounts. The corporation shall have independent certified public accountants audit its books and accounts at least once each fiscal year. The books, records and financial statements of the corporation shall be prepared in accordance with generally accepted accounting principles.

(e) (1) Connecticut Lottery Corporation shall be a successor employer to the state and shall recognize existing bargaining units and collective bargaining agreements existing at the time of transfer of the lottery to the corporation. The employees of the corporation shall be considered state employees under the provisions of sections 5-270 to 5-280, inclusive, of the general statutes, as amended. The corporation shall not be required to comply with personnel policies and procedures of the Department of Administrative Services and the Office of Policy and Management with regard to approval for the creation of new positions, the number of such positions, the decision to fill such positions or the time for filling such positions. The corporation, not the executive branch, shall have the power to determine whether an individual is qualified to fill a vacancy at the corporation. Non-managerial employees of the corporation shall be members of the classified service. Managerial employees shall be exempt from the classified service. The corporation shall have the ability to determine the qualifications and set the terms and conditions of employment of managerial employees including the establishment of incentive plans. (2) Existing lottery employees of the Division of Special Revenue in collective bargaining units shall be offered the opportunity to transfer with their position to the corporation. If the corporation elects to employ a smaller number of persons in such positions at the corporation than exist in the lottery at the Division of Special Revenue, the opportunity to transfer to the corporation shall be offered on the basis of seniority. Employees who are offered the opportunity to transfer to the corporation may decline to do so. Any person who is covered by a collective bargaining agreement as an employee of the Division of Special Revenue who accepts employment with the corporation shall transfer with his position and shall remain in the same bargaining unit of which he was a member as an employee of the Division of Special Revenue. (3) No employee who is covered by a collective bargaining agreement as an employee of the Division of Special Revenue shall be laid off as a result of the creation of the corporation. Each employee of the Division of Special Revenue who is not employed by the corporation and by virtue of sections 1 to 19, inclusive, of this act is no longer employed by the Division of Special Revenue shall be assigned with his position to another state agency. Such opportunities shall be offered in the order of seniority. Seniority shall be defined in the same way as cases of transfer under the appropriate collective bargaining agreements. Such assignments shall be made only with the approval of the Office of Policy and Management and shall be reported at the end of the fiscal year to the Finance Advisory Committee. Employees may choose to be laid off in lieu of accepting any such assignment. In such case, they shall be entitled to all collective bargaining rights under their respective collective bargaining agreements including the State Employees Bargaining Agent Coalition (SEBAC). This act shall in no way affect the collective bargaining rights of employees of the Division of Special Revenue.

(f) (1) In addition to the sales positions transferred to the corporation under subdivision (2) of subsection (e) of this section, the corporation may create one or more new classifications of entrepreneurial sales employees as determined by the board of directors. Such classifications shall not be deemed comparable to other classifications in state service. (2) For the period commencing on the effective date of this act until the expiration of the collective bargaining agreement in effect for transferred sales employees or the date of approval by the legislature of any interim agreement, whichever is earlier, the corporation may hire employees into a new entrepreneurial sales classification without regard to any collective bargaining agreement then in effect and may set the initial terms and conditions of employment for all employees in a new entrepreneurial sales classification. (3) Six months after the hiring of the first employee in any such new entrepreneurial sales classification, the collective bargaining agent of the transferred sales employees and the executive branch on behalf of the corporation shall engage in mid-term bargaining for such classification at the request of either party. The scope of such mid-term bargaining shall include all terms of employment, except that provisions relating to compensation shall not be subject to arbitration, provided that the average annualized compensation for such entrepreneurial sales classification shall not be less than the average annualized compensation for transferred sales employees. (4) Upon the expiration of the collective bargaining agreement covering transferred sales employees, all terms and conditions of employment in a new entrepreneurial sales classification shall be subject to collective bargaining as part of the negotiation of a common successor agreement.

(g) The executive branch shall be authorized and empowered to negotiate on behalf of the corporation for employees of the corporation covered by collective bargaining and represent the corporation in all other collective bargaining matters. The corporation shall be entitled to have a representative present at all such bargaining.

(h) In any interest arbitration regarding employees of the corporation, the arbitrator shall take into account as a factor, in addition to those factors specified in section 5-276a of the general statutes, the purposes of this act, the entrepreneurial mission of the corporation and the necessity to provide flexibility and innovation to facilitate the success of the Connecticut Lottery Corporation in the marketplace. In any arbitration regarding any classification of entrepreneurial sales employees, the arbitrator shall include a term awarding incentive compensation for such employees for the purpose of motivating employees to maximize lottery sales.

(i) The officers and all other employees of the corporation shall be state employees for the purposes of group welfare benefits and retirement, including, but not limited to, those provided under chapter 66 of the general statutes and sections 5-257 and 5-259 of the general statutes. The corporation shall reimburse the appropriate state agencies for all costs incurred by such designation.

Sec. 4. (NEW) The corporation shall have perpetual succession. Such succession shall continue until the existence of the corporation is terminated by law, provided no such termination shall affect any outstanding contractual obligation of the corporation and the state shall succeed to the obligations of the corporation under any such contract. Upon termination of the corporation, its rights and properties shall pass to and be vested in the state.

Sec. 5. (NEW) (a) The powers of the corporation shall be vested in and exercised by the board of directors. Notwithstanding subsection (a) of section 1-121 of the general statutes, until the appointment of five directors, a majority of the ex-officio directors then in office or their deputy or member of their staff designated to represent them as a member may take such action, including, without limitation, the adoption of interim bylaws, and approval of the transfer of lottery operations contemplated under section 9 of this act, as is necessary to organize the corporation. From and after the five or more directors, including ex-officio directors, have been seated a majority of the directors of the board then seated shall constitute a quorum. The affirmative vote of a majority of the directors present at a meeting of the board at which a quorum is present shall be necessary and sufficient for any action taken by the board. No vacancy in the membership of the board shall impair the right of a quorum to exercise all the rights and perform all the duties of the board. Any action taken by the board may be authorized by resolution at any regular or special meeting and shall take effect immediately unless otherwise provided in the resolution. Following the initial seating of five or more directors, the board shall have the power, from time to time, to ratify, adopt, amend and repeal bylaws for the conduct of its affairs. Notice of any regular meeting shall be given to directors as set forth in the bylaws of the corporation.

(b) The board may delegate to three or more of the directors powers and duties as it deems proper. The board shall establish such committees, subcommittees or other entities as it deems necessary to further the purposes of the corporation including, but not limited to, an executive committee and a finance committee.

Sec. 6. (NEW) (a) The board shall appoint officers of the corporation, which shall include a president, a secretary, and such other officers as the board may approve. Such officers shall not be members of the board, shall serve at the pleasure of the board and shall receive such compensation as shall be determined by the board. The president and secretary shall not be the same person. The president shall be the chief executive officer of the corporation. The president shall have the general charge, supervision and control of the operation and management of business and affairs of the corporation subject to the direction of the board of directors. The president shall have such other powers and duties as are generally incident to the office of the president and as may be assigned by the board of directors. The president shall not be a state employee. The president shall attend all meetings of the board. The secretary shall keep a true, faithful and correct record of all proceedings and maintain and be custodian of all books, documents and papers filed with the corporation and of the book of minutes of the corporation and of its official seal. The secretary may cause copies to be made of all minutes and other records and documents of the corporation and may give certificates under the official seal of the corporation to the effect that such copies are true copies, and all persons dealing with the corporation may rely upon such certificates. The president or his designee may serve as a member of such other boards or committees as may be necessary or desirable to carry out the purposes of the corporation.

(b) The president shall take all such action as to the operation and management of the corporation as he in his discretion deems advisable in order to enhance the monetary value of the corporation and the lottery.

Sec. 7. (NEW) (a) The purposes of the corporation shall be to: (1) Operate and manage the lottery in an entrepreneurial and business-like manner free from the budgetary and other constraints that affect state agencies; (2) provide continuing and increased revenue to the people of the state through the lottery by being responsive to market forces and acting generally as a corporation engaged in entrepreneurial pursuits; and (3) ensure that the lottery continues to be operated with integrity and for the public good.

(b) The corporation shall have the following powers: (1) To receive as transferee from the state of Connecticut all of the tangible and intangible assets constituting the lottery including the exclusive right to operate the lottery as the exclusive lottery of the state and, subject to subsection (b) of section 9 of this act, to assume and discharge all of the agreements, covenants and obligations of the Division of Special Revenue entered into which constitute a part of the operation and management of the lottery; (2) To operate and manage the lottery consistent with the provisions of this act, and as specifically provided in section 13 of this act; (3) To have perpetual succession as a body corporate and to adopt bylaws, policies and procedures for the operation of its affairs and conduct of its businesses; (4) To introduce new lottery games, modify existing lottery games, utilize existing and new technologies, determine distribution channels for the sale of lottery tickets and, to the extent specifically authorized by regulations adopted by the Division of Special Revenue pursuant to chapter 54 of the general statutes, introduce instant ticket vending machines, kiosks and automated wagering systems or machines, with all such rights being subject to regulatory oversight by the Division of Special Revenue; (5) To establish an annual budget of revenues and expenditures, along with reasonable reserves for working capital, capital expenditures, debt retirement, and other anticipated expenditures, in a manner and at levels considered by the board of directors as appropriate and prudent; (6) To adopt such administrative and operating procedures which the board of directors deems appropriate; (7) To enter into agreements with one or more states for the promotion and operation of joint lottery games; (8) Subject to the provisions of section 16 of this act, to enter into agreements with vendors with respect to the operation and management of the lottery, including operation of lottery terminals, management services, printing of lottery tickets, management expertise, marketing expertise, advertising, or such other goods or services as the board of directors deems necessary and appropriate; (9) To purchase or lease operating equipment, including, but not limited to, computer gaming and automated wagering systems and to employ agents or employees to operate such systems; (10) To retain unclaimed prize funds as additional revenue for the state, or to use unclaimed prize funds to increase sales, or to return to participants unclaimed prize funds in a manner designed to increase sales; (11) To establish prize reserve accounts as the board of directors deems appropriate; (12) To pay lottery prizes as awarded under section 13 of this act, to purchase annuities to fund such prizes, and to assure that all annuities from which payments to winners of lottery prizes are made are invested in instruments issued by agencies of the United States government and backed by the full faith and credit of the United States, or are issued by insurance companies licensed to do business in the state, provided the issuer has been determined by the Division of Special Revenue to be financially stable and meets the minimum investment rating as determined by the division; (13) To pay or to reimburse the Division of Special Revenue, the Office of Policy and Management and other affected state agencies, for the reasonable direct and indirect costs of the planning for and implementation of the transactions contemplated by sections 1 to 19, inclusive, of this act including, without limitation, expenses related to such transactions arising prior to the effective date of this act, and the operation and management of the lottery, including, without limitation, regulatory oversight of the corporation, costs arising directly or indirectly from the licensing of lottery agents, performance of state police background investigations, and the planning for and implementation of the transactions contemplated by section 9 of this act; (14) In the event that the operation or management of the corporation becomes subject to the federal gaming occupation tax, to pay such tax on behalf of lottery sales agents and to assist agents subject thereto; (15) To determine the commissions payable to lottery sales agents, provided any agent's commission shall not average less than five per cent of such agent's lottery sales; (16) To invest in, acquire, lease, purchase, own, manage, hold and dispose of real property and lease, convey or deal in or enter into agreements with respect to such property on any terms necessary or incidental to carrying out the purposes of sections 1 to 19, inclusive, of this act, provided such transactions shall not be subject to approval, review or regulation pursuant to title 4b of the general statutes or any other statute by any state agency, except that real property transactions shall be subject to review by the State Properties Review Board; (17) To borrow money for the purpose of obtaining working capital; (18) To hold patents, copyrights, trademarks, marketing rights, licenses, or any other evidence of protection or exclusivity issued under the laws of the United States or any state; (19) To employ such assistants, agents and other employees as may be necessary or desirable to carry out its purposes in accordance with sections 1 to 19, inclusive, of this act, to fix their compensation and, subject to the provisions of subsections (e) and (f) of section 3 of this act, establish all necessary and appropriate personnel practices and policies; to engage consultants, accountants, attorneys and financial and other independent professionals as may be necessary or desirable to assist the corporation in performing its purposes in accordance with sections 1 to 19, inclusive, of this act; (20) To make and enter into all contracts and agreements necessary or incidental to the performance of its duties and the execution of its powers under sections 1 to 19, inclusive, of this act; (21) In its own name, to sue and be sued, plead and be impleaded, adopt a seal and alter the same at pleasure; (22) Subject to the approval of the board and to the requirement to remit excess lottery funds to the General Fund as set forth in section 13 of this act, to invest any funds not needed for immediate use or disbursement, including any funds held in approved reserve accounts, in investments permitted by sections 3-20 and 3-27a of the general statutes for the proceeds of state bonds; (23) To procure insurance against any loss in connection with its property and other assets in such amounts and from such insurers as it deems desirable; (24) To the extent permitted under any contract with other persons to which the corporation is a party, to consent to any termination, modification, forgiveness or other change of any term of any contractual right, payment, royalty, contract or agreement of any kind; (25) To acquire, lease, purchase, own, manage, hold and dispose of personal property, and lease, convey or deal in or enter into agreements with respect to such property on any terms necessary or incidental to the carrying out of these purposes; (26) To account for and audit funds of the corporation; (27) To pay or provide for payment from operating revenues all expenses, costs and obligations incurred by the corporation in the exercise of the powers of the corporation under sections 1 to 19, inclusive, of this act; and (28) To exercise any powers necessary to carry out the purposes of sections 1 to 19, inclusive, of this act.

Sec. 8. (NEW) (a) The corporation shall: (1) Comply with all laws, rules and regulations of the United States and the state of Connecticut; (2) Comply with regulations, adopted by the Division of Special Revenue in accordance with chapter 54 of the general statutes; (b) The corporation shall not: (1) Sell, transfer, assign, deliver, license, grant or otherwise alienate any portion or aspect of the lottery or lottery operations, but may sell real or personal property, provided any revenue from such sale shall be remitted to the state; (2) Take any action with respect to the introduction or modification of lottery games which would cause a violation of any compact or any memorandum of understanding or agreement from time to time in force between the state and the Mashantucket Pequot Tribal Nation or the Mohegan Tribe of Montville, Connecticut, or any future compact or agreement with a federally recognized tribe.

Sec. 9. (NEW) (a) As soon as practicable after July 1, 1996, and the organization of the corporation, the corporation shall enter into such agreements as the board shall authorize in order to effect the transfer, assignment and delivery to the corporation from the state of all the tangible and intangible assets constituting the lottery, including the exclusive right to operate the lottery, and, subject to subsection (b) of this section, to effect the assignment to and assumption by the corporation of all agreements, covenants and obligations of the Division of Special Revenue and other agencies of the state, relating to the operation and management of the lottery. Such agreements may contain such other provisions as the board deems necessary or appropriate for the continued operation of the lottery by the corporation pursuant to sections 1 to 19, inclusive, of this act.

(b) The state shall retain ownership of all annuities it purchased for payment of lottery prizes prior to the date of transfer described in subsection (a) of this section, and shall remain liable for all lottery awards occurring prior to such transfer, but payable thereafter. In addition, the state shall remain liable for all obligations of the lottery arising prior to the date of such transfer, other than those arising in the ordinary course of business under existing contracts specifically assumed by the corporation. Unless otherwise agreed to in writing with the Division of Special Revenue, the corporation shall be solely responsible for the payment of all lottery prizes arising on and after the date of such transfer to the corporation and the purchase of all annuities to provide revenue for such payment.

(c) The corporation shall request and obtain all approvals, consents and rulings of and from all state and federal governmental agencies necessary or in order to effect the transactions contemplated by section 9 of this act.

Sec. 10. (NEW) Each director and the president shall execute a surety bond in the penal sum of fifty thousand dollars. The chairman of the board may execute a blanket position surety bond, or arrange for separate surety bonds covering each director, the president and the employees of the corporation at amounts determined by the board, but in no event less than the sum of fifty thousand dollars per person. Each surety bond shall be conditioned upon the faithful performance of the duties of the office or offices covered, be executed by a surety company authorized to transact business in this state as surety, be approved by the Attorney General and be filed in the office of the Secretary of State. The cost of each such bond shall be paid by the corporation.

Sec. 11. (NEW) (a) Sections 1-15, 1-18a to 1-21a, inclusive, and 1-21c to 1-21l, inclusive, of the general statutes, as amended, shall apply to all actions, meetings and records of the corporation, except (1) where otherwise limited by subsection (c) of this section as to new lottery games and serial numbers of unclaimed lottery tickets, and (2) with respect to financial, credit and proprietary information submitted by any person to the corporation in connection with any proposal to provide goods, services or professional advice to the corporation as provided in section 16 of this act.

(b) The records of proceedings as provided in subsection (a) of section 6 of this act shall be subject to disclosure pursuant to the provisions of subsection (a) of section 1-19 of the general statutes, as amended.

(c) Any new lottery game and the procedures for such game, until the game is publicly announced by the corporation, and any serial number of an unclaimed lottery ticket shall not be deemed public records, as defined in section 1-18a of the general statutes, as amended, and shall not be available to the public under the provisions of section 1-19 of the general statutes, as amended. The president shall submit a fiscal note prepared by the corporation with respect to the procedures for a new lottery game to the joint standing committees of the General Assembly having cognizance of matters relating to finance, revenue, bonding and public safety after approval of such game by the board.

Sec. 12. (NEW) (a) The president and all directors, officers and employees of the corporation shall be state employees for purposes of sections 1-79 to 1-89, inclusive, of the general statutes.

(b) No director, officer or employee of the corporation shall, directly or indirectly, participate in, or share in the winnings from, a game conducted pursuant to sections 1 to 19, inclusive, of this act.

Sec. 13. (NEW) (a) The president of the corporation, subject to the direction of the board, shall conduct daily, weekly, multi-state, special instant or other lottery games and shall determine the number of times a lottery shall be held each year, the form and price of the tickets and the aggregate amount of prizes, which shall not be less than forty-five per cent of the sales unless required by the terms of any agreement entered into for the conduct of multi-state lottery games. The proceeds of the sale of tickets shall be deposited in the lottery fund of the corporation from which prizes shall be paid, upon vouchers signed by the president, or by either of two persons designated and authorized by him, in such numbers and amounts as the president determines. The corporation may limit its liability in games with fixed payouts and may cause a cessation of sales of tickets of certain designation when such liability limit has been reached.

(b) The president, subject to the direction of the board, may enter into agreements for the sale of product advertising on lottery tickets, play slips and other lottery media.

(c ) On a weekly basis, the president shall estimate, and certify to the state Treasurer, that portion of the balance in the lottery fund which exceeds the current needs of the corporation for the payment of prizes, the payment of current operating expenses and funding of approved reserves of the corporation. The corporation shall transfer the amount so certified from the lottery fund of the corporation to the General Fund, upon notification of receipt of such certification by the Treasurer.

Sec. 14. (NEW) (a) The corporation may sell lottery tickets at any location in the state determined by the president which, in the opinion of the president, will best enhance lottery revenues, except that no license shall be issued by the Division of Special Revenue to any person to engage in business exclusively as a lottery sales agent. Subject to the provisions of subdivision (15) of subsection (b) of section 7 of this act, the president may authorize compensation to such agents in such manner and amounts and subject to such limitations as he may determine if he finds such compensation is necessary to assure adequate availability of lottery tickets, provided, if such agent is a lessee of state property and his rental fee is based upon the gross receipts of his business conducted thereon, all receipts from the sale of such lottery tickets shall be excluded from such gross receipts for rental purposes. The president may suspend for cause any licensed agent, subject to a final determination through a hearing provided by the Division of Special Revenue.

(b) All moneys received by lottery sales agents from the sale of lottery tickets constitute property of the corporation while in such agent's possession and shall be held in trust for the corporation by such agents. The president shall require lottery sales agents to deposit, in a special or suspense account in the name of the corporation to the credit of the corporation, which the president shall establish, in institutions which are legal for the deposit of state funds under section 4-33 of the general statutes, as amended, all moneys received by such agents from the sale of lottery tickets, less the amount of compensation authorized under subsection (a) of this section and less the amounts paid out as prizes and, if requested by the president, to conform with the corporation their recorded receipts and transactions in the sale of lottery tickets, in such form and with such information as the president may require. Lottery sales agents shall not commingle lottery sales funds with other funds.

(c) The president may impose surety bonding requirements on lottery sales agents.

(d) No ticket shall be sold at a price greater than that fixed by the president, subject to the direction of the board and no sale shall be made other than by a licensed lottery sales agent or his designated employee, or by such other lawful means. No person shall sell a lottery ticket to a minor and no minor shall purchase a lottery ticket. Any person who violates the provisions of this subsection shall be guilty of a class A misdemeanor. A minor may receive a lottery ticket as a gift.

Sec. 15. (NEW) (a) In each advertisement intended to promote the purchase of lottery tickets issued for games authorized under sections 1 to 19, inclusive, of this act, the corporation shall include a prominent and clear statement of the average chances of winning per lottery ticket.

(b) The provisions of subsection (a) of this section shall apply only to (1) advertisements in newspapers, magazines, brochures and on posters and (2) television and radio advertisements thirty seconds or longer for one game.

Sec. 16. (NEW) (a) The corporation shall establish and adopt specific policies, rules and procedures on purchasing and contracting. Such policies, rules and procedures or amendments thereto shall be approved by a two-thirds vote of the entire board. Notwithstanding any other provision of law to the contrary, the corporation may enter into management, consulting and other agreements for the provision of goods, services and professional advisors necessary or useful in connection with the operation and management of the lottery (1) pursuant to a process of open or competitive bidding, provided (A) the corporation shall first determine the format, content and scope of any agreement for any procurement of goods or services, the conditions under which bidding will take place and the schedule and stipulations for contract award, and (B) the corporation may select the contractor deemed to have submitted the most favorable bid, considering price and other factors, when, in the judgment of the corporation, such award is in the best interests of the corporation, or (2) if the corporation, in its discretion, determines that, due to the nature of the agreement to be contracted for or procured, open or public bidding is either impracticable or not in the best interests of the corporation, by negotiation with such prospective providers as the corporation may determine. The terms and conditions of agreements and the fees or other compensation to be paid to such persons shall be determined by the corporation. The agreements entered into by the corporation in accordance with the provisions of this section shall not be subject to the approval of any state department, office or agency, except as provided in regulations adopted by the Division of Special Revenue. Nothing in this section shall be deemed to restrict the discretion of the corporation to utilize its own staff and workforce for the performance of any of its assigned responsibilities and functions whenever, in the discretion of the corporation, it becomes necessary, convenient or desirable to do so. Copies of all agreements of the corporation shall be maintained by the corporation at its offices as public records, subject to said exemption.

(b) The corporation shall not be subject to rules, regulations or restrictions on purchasing or procurement or the disposition of assets generally applicable to Connecticut state agencies, including those contained in titles 4a and 4b of the general statutes and the corresponding rules and regulations. The board shall adopt rules and procedures on purchasing, procurement and the disposition of assets applicable to the corporation. The adoption of such rules or procedures shall not be subject to chapter 54 of the general statutes. Any such rules or procedures shall be a public record as defined in section 1-18a of the general statutes, as amended.

Sec. 17. (NEW) The exercise of the powers granted by this act constitute the performance of an essential governmental function and all operations of the corporation shall be free from any form of federal or state taxation. In addition, except pursuant to any federal requirements, the corporation shall not be required to pay any taxes or assessments upon or in respect to sales of lottery tickets, or any property or moneys of the corporation, levied by the state or any political subdivision or municipal taxing authority. The corporation and its assets, property and revenues shall at all times be free from taxation of every kind by the state and by the municipalities and all other political subdivisions or special districts having taxing powers in the state.

Sec. 18. (NEW) (a) The Superior Court shall have jurisdiction to enter judgment against the corporation founded upon any express contract between the corporation and any person or party thereto for the provision of goods, services or professional advice to the corporation or the lottery.

(b) Any action brought under subsection (a) of this section shall be brought in the superior court for the judicial district of Hartford-New Britain. The jurisdiction conferred upon the Superior Court by this section includes any setoff, claim or demand whatsoever on the part of the corporation against any plaintiff commencing an action under this section. Such action shall be tried to the court without a jury. All legal defenses, except governmental immunity, shall be reserved to the corporation. Any action brought under this section shall be privileged in respect to assignment for trial upon matters of either party. Nothing in this section shall be construed to authorize any action against the state of Connecticut or to abrogate any defense available to the state of Connecticut, including governmental immunity.

Sec. 19. (NEW) (a) The executive director of the Division of Special Revenue shall, within available resources, prepare and distribute informational materials designed to inform the public of the programs available for the prevention, treatment and rehabilitation of compulsive gamblers in this state. The executive director shall require any person or business organization which is licensed to sell lottery tickets, operate an off-track betting system or conduct wagering on racing events or jai alai games, to display such informational materials at each licensed premise.

(b) For the fiscal year ending June 30, 1997, and each fiscal year thereafter, the Connecticut Lottery Corporation shall transfer the sum of two hundred fifty thousand dollars of the revenue received from the sale of lottery tickets to the Chronic Gamblers Fund for educational, prevention and treatment programs.

Sec. 20. Section 1-120 of the general statutes is repealed and the following is substituted in lieu thereof:

As used in sections 1-120 to 1-123, inclusive AS AMENDED: (1) "Quasi-public agency" means the Connecticut Development Authority, Connecticut Innovations, Incorporated, Connecticut Health and Educational Facilities Authority, Connecticut Higher Education Supplemental Loan Authority, Connecticut Housing Finance Authority, Connecticut Housing Authority, Connecticut Resources Recovery Authority, Connecticut Hazardous Waste Management Service [and] Connecticut Coastline Port Authority AND CONNECTICUT LOTTERY CORPORATION. (2) "Procedure" means each statement, by a quasi-public agency, of general applicability, without regard to its designation, that implements, interprets, or prescribes law or policy, or describes the organization or procedure of any such agency. The term includes the amendment or repeal of a prior regulation, but does not include, unless otherwise provided by any provision of the general statutes, (A) statements concerning only the internal management of any agency and not affecting procedures available to the public and (B) intra-agency memoranda. (3) "Proposed procedure" means a proposal by a quasi-public agency under the provisions of section 1-121 AS AMENDED BY SECTION 21 OF THIS ACT for a new procedure or for a change in, addition to or repeal of an existing procedure.

Sec. 21. Section 1-121 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) A quasi-public agency, before adopting a proposed procedure, shall give at least thirty days' notice by publication in the Connecticut Law Journal of its intended action. The notice shall include (1) either a statement of the terms or of the substance of the proposed procedure or a description sufficiently detailed so as to apprise persons likely to be affected of the issues and subjects involved in the proposed procedure, (2) a statement of the purposes for which the procedure is proposed and (3) when, where and how interested persons may present their views on the proposed procedure. A quasi-public agency may only adopt a proposed procedure by a two-thirds vote of the full membership of the board of directors of the quasi-public agency.

(b) If a quasi-public agency finds that an imminent peril to the public health, safety or welfare requires adoption of a proposed procedure upon fewer than thirty days' notice, states in writing its reasons for such finding and the agency's board of directors, by a three-fourths vote of the statutory membership, approves the finding in writing, the agency may proceed without prior notice or hearing or upon any abbreviated notice and hearing that it finds practicable, to adopt an emergency proposed procedure not later than ten days, excluding Saturdays, Sundays and holidays, prior to the proposed effective date of the proposed procedure. An approved emergency procedure may be effective for a period of not more than one hundred twenty days and renewable once for a period of not more than sixty days. If the necessary steps to adopt a permanent procedure, including publication of notice of intent to adopt, are not completed prior to the expiration date of an emergency procedure, the emergency procedure shall cease to be effective on that date.

(c) THE PROVISIONS OF SUBSECTIONS (a) AND (b) OF THIS SECTION SHALL NOT APPLY TO THE CONNECTICUT LOTTERY CORPORATION, ESTABLISHED PURSUANT TO SECTION 3 OF THIS ACT, PRIOR TO JULY 1, 1997m.

Sec. 22. Section 1-125 of the general statutes is repealed and the following is substituted in lieu thereof:

The directors, officers and employees of the Connecticut Development Authority, Connecticut Innovations, Incorporated, Connecticut Higher Education Supplemental Loan Authority, Connecticut Housing Finance Authority, Connecticut Housing Authority, Connecticut Resources Recovery Authority, Connecticut Health and Educational Facilities Authority CONNECTICUT LOTTERY CORPORATION and Connecticut Coastline Port Authority and any person executing the bonds or notes of the agency shall not be liable personally on such bonds or notes or be subject to any personal liability or accountability by reason of the issuance thereof, nor shall any director or employee of the agency be personally liable for damage or injury, not wanton, reckless, wilful or malicious, caused in the performance of his or her duties and within the scope of his or her employment or appointment as such director, officer or employee. The agency shall protect, save harmless and indemnify its directors, officers or employees from financial loss and expense, including legal fees and costs, if any, arising out of any claim, demand, suit or judgment by reason of alleged negligence or alleged deprivation of any person's civil rights or any other act or omission resulting in damage or injury, if the director, officer or employee is found to have been acting in the discharge of his or her duties or within the scope of his or her employment and such act or omission is found not to have been wanton, reckless, wilful or malicious.

Sec. 23. (NEW) The Division of Special Revenue shall adopt regulations, in accordance with chapter 54 of the general statutes, concerning the regulation of the state lottery under the operation and management of the Connecticut Lottery Corporation. Such regulations may include but need not be limited to offerings of lottery games, minimum prize payouts and payments, regulation of lottery sales agents including qualifications for licensure and license suspension and revocation, lottery sales including categories of sales and limitations on sales, assurance of the integrity of the state lottery including the computer gaming system, computer internal control and system testing, and limitations on advertising and marketing content to assure public information as to the odds of winning the lottery and the prohibition of sales of tickets to minors.

Sec. 24. Section 12-557e of the general statutes is repealed and the following is substituted in lieu thereof:

The Gaming Policy Board shall work in cooperation with the Division of Special Revenue to implement and administer the provisions of this chapter and chapter 226b. In carrying out its duties the board shall be responsible for: (1) Approving, suspending or revoking licenses issued under subsection (a) of section 12-574; (2) approving contracts for facilities, goods, components or services necessary to carry out the provisions of [sections 12-568 and] SECTION 12-572; (3) setting racing and jai alai meeting dates, except that the board may delegate to the executive director the authority for setting make-up performance dates within the period of a meeting set by the board; (4) imposing fines on licensees under subsection (j) of section 12-574; (5) approving the types of pari-mutuel betting to be permitted; (6) advising the executive director concerning the conduct of [the state lotteries and] off-track betting facilities; (7) assisting the executive director in developing regulations to carry out the provisions of this chapter and chapter 226b, and approving such regulations prior to their adoption; (8) hearing all appeals taken under subsection (j) of section 12-574; and (9) advising the Governor on state-wide plans and goals for legalized gambling.

Sec. 25. Section 12-563 of the general statutes is repealed and the following is substituted in lieu thereof:

All regulations of the division shall be adopted in the manner provided in chapter 54. The executive director shall, at least annually, on or before December thirty-first of each year, publish in convenient pamphlet form all regulations then in force and shall furnish copies of such pamphlets to every establishment authorized to engage in the activities authorized under section 12-567 [, to every agent licensed under section 12-569,] and to such other persons as desire such pamphlets.

Sec. 26. Section 12-564 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The executive director shall make an annual report in writing to the Governor as provided in section 4-60 and shall make such additional reports as the Governor may from time to time reasonably request. The annual report shall include a statement of the receipts and disbursements of the division, a statement of the costs of administering the division [including its advertising budget,] a summary of its activities, and any additional information and recommendations which the executive director may deem of value or which the Governor may request.

(b) The executive director shall, with the advice and consent of the board, conduct studies concerning the effect of legalized gambling on the citizens of this state, including but not limited to, studies to determine the types of gambling activity engaged in by the public and the desirability of expanding, maintaining or reducing the amount of legalized gambling permitted in this state. Such studies shall be conducted as often as the executive director deems necessary but in no event shall a study be conducted less than once every five years. The joint standing committees of the General Assembly having cognizance of matters relating to legalized gambling shall each receive a report concerning each study carried out, stating the findings of the study and the costs of conducting the study.

Sec. 27. Section 12-566 of the general statutes is repealed and the following is substituted in lieu thereof:

[(a)] The executive director and the board shall provide books in which shall be kept a true, faithful and correct record of all of their proceedings, which books shall be open to the public as provided in section 1-19 AS AMENDED.

[(b) A new lottery game and the procedures for such game, until the game is publicly announced by the division, and any serial number of an unclaimed lottery or pari-mutuel ticket shall not be deemed to be public records, as defined in section 1-18a, and shall not be available to the public under the provisions of section 1-19. The executive director shall submit a fiscal note prepared by the division with respect to the procedures for a new lottery game to the joint standing committee of the General Assembly having cognizance of matters relating to finance, revenue and bonding at the time he submits such procedures to the board for its consideration.]

Sec. 28. Section 12-567 of the general statutes is repealed and the following is substituted in lieu thereof:

Notwithstanding the provisions of section 4-8 the executive director, with the advice and consent of the board, shall establish within the division such organizational units as he deems necessary for the effective operation of the division. Such units shall be responsible for the following functions: Division administration; licensing and integrity assurance; planning and research; gambling regulation; and state off-track betting and state lottery [administration] REGULATION. Each unit shall be under the direction of a unit head who shall administer and coordinate the operation of his respective unit. The division shall maintain full and complete records of the operation of each unit which shall be open to the public as provided in section 1-19 AS AMENDED. The executive director shall establish procedures for record keeping.

Sec. 29. Section 12-569 of the general statutes is repealed and the following is substituted in lieu thereof:

[(a) The division may sell lottery tickets at its main office and at any of its branch offices or off-track betting facilities and may license as agents to sell such tickets such persons as, in its opinion, will best serve public convenience, except that no license shall be issued to any person to engage in business exclusively as a lottery sales agent. The executive director may authorize compensation to such agents in such manner and amounts and subject to such limitations as he may determine if he finds such compensation is necessary to assure adequate availability of lottery tickets, provided, if such agent is a lessee of state property and his rental fee is based upon the gross receipts of his business conducted thereon, all receipts from the sale of such lottery tickets shall be excluded from such gross receipts for rental purposes. No ticket shall be sold at a price greater than that fixed by the executive director, with the advice and consent of the board, and no sale shall be made other than by a licensed lottery sales agent or his designated employee. Any person who violates the provisions of this subsection shall be guilty of a class A misdemeanor.

(b) All moneys received by lottery sales agents from the sale of lottery tickets constitute property of the state while in such agent's possession and shall be held in trust for the state by such agents. The executive director shall require lottery sales agents to deposit in a special or suspense account in the name of the division, to the credit of the division, which the executive director is authorized to establish, in institutions designated by him which are legal for the deposit of state funds under section 4-33, all moneys received by such agents from the sale of lottery tickets, less the amount of compensation, if any, authorized under subsection (a), and to file with the division reports of their receipts and transactions in the sale of lottery tickets in such form and containing such information as the executive director may require.] If the [executive director] PRESIDENT OF THE CONNECTICUT LOTTERY determines that any lottery sales agent has breached his fiduciary responsibility to the [state] CORPORATION in that the account of such lottery sales agent with respect to moneys received from the sale of lottery tickets has become delinquent in accordance with regulations adopted as provided in [this subsection] SECTION 23 OF THIS ACT, the PRESIDENT SHALL NOTIFY THE executive director OF THE BREACH OF FIDUCIARY DUTY AND THE EXECUTIVE DIRECTOR shall impose a delinquency assessment upon such account equal to ten per cent of the amount due or ten dollars, whichever amount is greater, plus interest at the rate of one and one-half per cent of such amount for each month or fraction of a month from the date such amount is due to the date of payment. Subject to the provisions of section 12-3a, AS AMENDED the executive director may waive all or part of the penalties provided under this subsection when it is proven to his satisfaction that the failure to pay such moneys to the state within the time allowed was due to reasonable cause and was not intentional or due to neglect. Any such delinquent lottery sales agent shall be notified of such delinquency assessment and shall be afforded an opportunity to contest the validity and amount of such assessment before the executive director who is hereby authorized to conduct such hearing. [Thereafter, the executive director is authorized to designate or employ collection agents to collect such delinquent amounts. The] UPON REQUEST OF THE PRESIDENT OF THE CONNECTICUT LOTTERY CORPORATION, THE executive director may prepare and sign a warrant directed to any sheriff, deputy sheriff, constable or any [such] collection agent EMPLOYED BY THE CONNECTICUT LOTTERY CORPORATION for distraint upon any property of such delinquent lottery sales agent within the state, whether personal or real property. An itemized bill shall be attached thereto certified by the executive director as a true statement of the amount due from such lottery sales agent. Such warrant shall have the same force and effect as an execution issued in accordance with chapter 906. Such warrant shall be levied on any real, personal, tangible or intangible property of such agent and sale made pursuant to such warrant in the same manner and with the same force and effect as a levy and sale pursuant to an execution. The executive director, with the advice and consent of the board, shall adopt regulations in accordance with chapter 54 to carry out the purposes of this [subsection] SECTION.

[(c) The executive director may authorize compensation to such depositories in such manner and amounts and subject to such limitation as he may determine. The depositories referred to in subsection (b) shall transfer the deposits made pursuant to subsection (b) less any compensation for the services rendered by the depositories to the division, and less any amounts due the agents or depositories by adjustments authorized by the executive director because of agent or bank errors, to the treasury account of the state of Connecticut, pursuant to section 4-32. The depositories shall file reports of their receipts and transactions pursuant to this section with the division in such form and containing such information as the executive director may require.

(d) The executive director may authorize compensation to claim centers in such manner and amounts and subject to such limitation as he may determine.]

Sec. 30. Subsection (d) of section 12-574 of the general statutes is repealed and the following is substituted in lieu thereof:

(d) No person or business organization awarded the primary contract by [the state] THE CONNECTICUT LOTTERY CORPORATION or by an association licensee to provide facilities, components, goods or services which are necessary for the operation of the activities authorized by the provisions of [sections 12-568 and] SECTION 12-572 OR SECTIONS 1 TO 19, INCLUSIVE, OF THIS ACT may do so unless such person or business organization is licensed as a vendor licensee by the executive director.

Sec. 31. Sections 12-568 and 12-569a of the general statutes are repealed.

Sec. 32. This act shall take effect from its passage, except that sections 1, 2, 4 and 7 to 31, inclusive, shall take effect July 1, 1996.

Approved June 4, 1996. Effective as provided in section 32.

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