Session of 1999
SENATE BILL No. 330
By Committee on Federal and State Affairs
9 AN ACT concerning the Kansas lottery; relating to video lottery machine
10 games; concerning revenue from games; amending K.S.A. 41-308, 74-
11 8701, 74-8702, 74-8704, 74-8708, 74-8711, 74-8712, 74-8720 and 74-
12 8721 and K.S.A. 1998 Supp. 21-4302, 38-1602, 74-8710, 74-8717, 74-
13 8718 and 74-8719 and repealing the existing sections; also repealing
14 K.S.A. 1998 Supp. 38-1602a.
16 Be it enacted by the Legislature of the State of Kansas:
17 New Section 1. (a) A video lottery machine vendor shall enter into
18 a contract with the Kansas lottery and receive a certificate from the ex-
19 ecutive director before such vendor manufactures, distributes, sells,
20 maintains or places any video lottery machine or associated equipment
21 for public use in this state.
22 (b) The commission shall establish by rules and regulations an annual
23 fee for each certificate issued to a video lottery machine vendor. Such
24 certificate shall be renewed annually if the applicant complies with K.S.A.
25 74-8708, and amendments thereto, and upon timely payment of the an-
26 nual fee. Such fee shall not exceed:
27 (1) For a video lottery machine manufacturer, $20,000.
28 (2) For a video lottery machine distributor, $5,000.
29 (3) For a video lottery machine operator or video lottery machine
30 leasing company, $150 per machine or $5,000, whichever is greater.
31 (c) In addition to the annual fee provided by this section, the exec-
32 utive director may charge a one-time application fee to video lottery ma-
33 chine vendors. Such fee shall be established by rules and regulations of
34 the commission in an amount not to exceed $500.
35 (d) All moneys from fees collected pursuant to this section shall be
36 deposited into the state treasury and credited to the lottery operating
38 (e) Financial institutions providing loans to video lottery machine
39 vendors secured by video lottery machines shall secure the financial in-
40 stitution's interest in accordance with the provisions of the uniform com-
41 mercial code.
42 (f) If a financial institution or vendor takes possession of video lottery
43 machines to protect its interests, such financial institution or vendor shall
SB 330 2
1 notify the executive director by telephone and confirm in writing within
2 72 hours after its agent has taken possession, the following for each such
4 (1) The name of the entity that owns or has leased the machine;
5 (2) the financial institution's or vendor's name, address and repre-
6 sentative to contact;
7 (3) the serial number, model number and license number of the
8 machine and the name of the manufacturer of the machine;
9 (4) the name of the agent holding the machine;
10 (5) the location where the machine is being held;
11 (6) the plan for disposition of the machine; and
12 (7) any change in the above.
13 (g) The financial institution or vendor, or agent thereof, shall not
14 operate the video lottery machine, other than for testing or repair, while
15 the machine is in its possession. The financial institution or vendor, or
16 agent thereof, shall permit the executive director or the executive direc-
17 tor's representative and any Kansas law enforcement agency to enter the
18 financial institution's or vendor's premises at any time to inspect the
20 (h) The financial institution or agent thereof, shall not be required
21 to obtain a certificate from the Kansas lottery for:
22 (1) Providing loans for the financing of video lottery machines;
23 (2) taking possession of and holding video lottery machines to protect
24 the security or financial interest of the financial institution in the video
25 lottery machine;
26 (3) holding indicia of ownership of video lottery machines primarily
27 to protect the financial institution's security interest in the machines if
28 such financial institution does not participate in the management of the
29 video lottery machine vendor; or
30 (4) the sale, lease or other lawful disposition of video lottery ma-
31 chines following the taking of possession.
32 New Sec. 2. (a) A video lottery machine manufacturer shall not re-
33 ceive a certificate as, or own, manage, control or have any financial in-
34 terest in, any other video lottery machine vendor or a video lottery re-
35 tailer. A video lottery machine distributor shall not receive a certificate
36 as, or own, manage, control or have any financial interest, in any other
37 video lottery machine vendor or a video lottery retailer. A video lottery
38 machine operator shall not receive a certificate as, or own, manage, con-
39 trol or have any financial interest in, any other video lottery machine
40 vendor or a video lottery retailer. A video lottery retailer or an owner or
41 manager of a video lottery retailer shall not receive a certificate as, or
42 own, manage, control or have any financial interest in, a video lottery
43 machine vendor. A video lottery machine leasing company shall not re-
SB 330 3
1 ceive a certificate as, or own, manage, control or have any financial in-
2 terest in, any other video lottery machine vendor or a video lottery re-
3 tailer. A financial institution shall not receive a certificate as, or own, a
4 video lottery machine vendor or retailer.
5 (b) A video lottery machine vendor or video lottery retailer shall be
6 deemed in violation of the prohibitions of this section if its owner or any
7 of its substantial owners, directly or indirectly, also is the owner or sub-
8 stantial owner of any entity which the video lottery machine vendor or
9 video lottery retailer is prohibited by this section from owning, managing
10 or controlling or in which such vendor or retailer is prohibited by this
11 section from having any financial interest. A substantial owner is a person
12 who owns more than 5% of the stock of a corporation, owns more than
13 5% of the interest of a limited liability company or is a partner in a part-
14 nership and entitled to more than 5% of the net profits of the partnership.
15 New Sec. 3. (a) The executive director may enter into contracts for
16 the placement of video lottery machines with any lottery retailer who is:
17 (1) Licensed as a club or drinking establishment under the club and drink-
18 ing establishment act or licensed to serve cereal malt beverages and has
19 been so licensed for not less than four years at the same location; (2)
20 licensed to conduct games of bingo and has been so licensed for not less
21 than four years at that location; (3) an organization licensed to conduct
22 parimutuel dog or horse racing games; (4) an organization determined by
23 the executive director to be a bona fide nonprofit organization operating
24 a historical tourist attraction; or (5) the state fair board and if such games
25 are placed on the state fair grounds at locations established by rules and
26 regulations adopted by the commission.
27 The executive director shall allow no more than 5 video lottery ma-
28 chines per facility, plus one additional machine for every 1,000 square
29 feet of the overall operating premises, as defined by rules and regulations.
30 All such machines shall be placed in an area of the facility where the
31 admission of minors would be restricted.
32 (b) No person shall place a video lottery machine on the premises
33 of a video lottery retailer or licensed establishment or on premises used
34 for the operation and conduct of bingo unless the executive director first
35 issues a certificate for such machine. Such certificate shall be prominently
36 displayed on each machine. Any machine on which is not displayed the
37 certificate required by this section is contraband and a public nuisance
38 and shall be subject to confiscation by any law enforcement officer. Any
39 sale of contraband shall be subject to any lawful ownership or security
40 interest of a financial institution or video lottery machine vendor in the
41 video lottery machine. A violation of this subsection is a severity level 8,
42 nonperson felony.
43 (c) Only video lottery machines certified by the Kansas lottery shall
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1 be placed on the premises of a licensed establishment or on premises
2 used for the operation and conduct of bingo.
3 (d) A video lottery machine may not accept more than $2 to be
4 played on a single game or award free games or credits in excess of the
5 value of $1,000 per game.
6 (e) The Kansas lottery shall examine prototypes of video lottery ma-
7 chines and associated equipment prior to certification pursuant to this
8 section. The Kansas lottery shall require the person seeking the exami-
9 nation and certification of a video lottery machine or associated equip-
10 ment to pay in advance the estimated costs of the examination. After the
11 completion of the examination, the Kansas lottery shall refund overpay-
12 ments or charge and collect amounts sufficient to reimburse the Kansas
13 lottery for underpayments of actual costs. The Kansas lottery may contract
14 for the examination of video lottery machines and associated equipment
15 as required by this subsection, and may rely upon testing done by or for
16 other states regulating video lottery machines, if it deems such testing to
17 be reliable and in the best interests of the state of Kansas.
18 (f) Video lottery machine games shall pay out an average of not less
19 than 85% and not more than 95% of the amount wagered when played
20 at the level of skill that will provide the greatest return to the player over
21 a period of continuous play. The precise percentages shall be established
22 by the commission by rules and regulations.
23 New Sec. 4. Each video lottery machine certified under section 3,
24 and amendments thereto, shall:
25 (a) Offer only games authorized by the Kansas lottery;
26 (b) not have any means of manipulation that affect the random prob-
27 abilities of winning credits;
28 (c) have one or more mechanisms that accept tokens, coins or cash
29 in the forms of bills, the mechanisms of which shall be designed to prevent
30 obtaining credits without payment by stringing, slamming, drilling or
31 other means and if those attempts involve physical tampering, the ma-
32 chine shall suspend itself from operation until reset;
33 (d) have nonresettable meters housed in any readily accessible
34 locked machine area that keeps a permanent record of all cash inserted
35 into the machine, all refunds of winnings made by the machine's printer,
36 credits played for games and credits won by players;
37 (e) be capable of awarding tokens or printing a ticket stating the
38 value of the prize for the player at the completion of each video lottery
39 machine game, the time of day in a 24-hour format showing hours and
40 minutes, the date, the machine serial number, the sequential number of
41 the ticket vouchers and an encrypted validation number from which the
42 validity of the prize may be determined;
43 (f) have accounting software that keeps an electronic record which
SB 330 5
1 includes, but is not limited to, the total cash inserted into the machine,
2 the value of winning tickets printed by the machine, the total credits
3 played and the total credits awarded;
4 (g) be linked through a central communications system to provide
5 auditing program and other information as required by the commission;
7 (h) not use any word or name suggesting any form of lottery or
8 gambling, any gambling establishment or any city, county, state, country
9 or other governmental entity to describe any video lottery machine cer-
10 tified under this act.
11 New Sec. 5. (a) Video lottery retailers shall not make any payments,
12 enhancements, loans or gifts, directly or indirectly, to any video lottery
13 machine vendor, the vendor's owners, officers, employees or family.
14 Video machine vendors shall not make any payments, enhancements,
15 loans or gifts, directly or indirectly, to any video lottery retailer or the
16 retailer's owners, officers, employees or family. Prohibited enhancements
17 include, but shall not be limited to, the following: Remodeling, bonuses,
18 incentives, furnishings and signage. Each video lottery retailer shall pro-
19 vide, without compensation or reimbursement, the retailer's own license
20 fees, electrical and telephone service to the machines, floor space and
21 labor to pay prizes and such other services as required pursuant to such
22 retailer's contract with the lottery. The cost of installation of electrical or
23 telephone service for the machines shall be paid by the retailer pursuant
24 to the contract with the lottery. A person violating the terms of this sub-
25 section is guilty of a severity level 8, nonperson felony and, upon convic-
26 tion, the person's certificate shall be terminated by the executive director
27 or the executive director's designee.
28 (b) The amount of video lottery machine income shall be reported
29 and 40% of such amount of video lottery machine income shall be re-
30 mitted by the video lottery retailer to the Kansas lottery within 15 days
31 after the 15th day of each month and within 15 days after the end of each
32 month unless rules and regulations of the commission require such in-
33 come to be reported and remitted more frequently. Each video lottery
34 retailer shall keep a record of video lottery machine income in the form
35 the Kansas lottery may require. A video lottery retailer who falsely reports
36 or fails to report the amount due required by this subsection is guilty of
37 a severity level 8, nonperson felony upon conviction is subject to termi-
38 nation by the executive director or executive director's designee. A video
39 lottery retailer shall be assessed a penalty for late payments at the rate of
40 11/2% per month on the unpaid balance.
41 (c) The video lottery retailer shall pay all credits resulting from video
42 lottery machine play as provided by the contract with the lottery or by
43 rules and regulations of the commission.
SB 330 6
1 Sec. 6. K.S.A. 1998 Supp. 21-4302 is hereby amended to read as
2 follows: 21-4302. (a) "Bet" means a bargain in which the parties agree
3 that, dependent upon chance, one stands to win or lose something of
4 value specified in the agreement. A bet does not include:
5 (1) Bona fide business transactions which are valid under the law of
6 contracts including, but not limited to, contracts for the purchase or sale
7 at a future date of securities or other commodities, and agreements to
8 compensation for loss caused by the happening of the chance including,
9 but not limited to, contracts of indemnity or guaranty and life or health
10 and accident insurance;
11 (2) offers of purses, prizes or premiums to the actual contestants in
12 any bona fide contest for the determination of skill, speed, strength, or
13 endurance or to the bona fide owners of animals or vehicles entered in
14 such a contest;
15 (3) a lottery as defined in this section;
16 (4) any bingo game by or for participants managed, operated or con-
17 ducted in accordance with the laws of the state of Kansas by an organi-
18 zation licensed by the state of Kansas to manage, operate or conduct
19 games of bingo;
20 (5) a lottery operated by the state pursuant to the Kansas lottery act;
21 (6) any system of parimutuel wagering managed, operated and con-
22 ducted in accordance with the Kansas parimutuel racing act; or
23 (7) tribal gaming.
24 (b) "Lottery" means an enterprise wherein for a consideration the
25 participants are given an opportunity to win a prize, the award of which
26 is determined by chance. A lottery does not include:
27 (1) A lottery operated by the state pursuant to the Kansas lottery act;
29 (2) tribal gaming.
30 (c) "Consideration" means anything which is a commercial or finan-
31 cial advantage to the promoter or a disadvantage to any participant.
32 Mere registration without purchase of goods or services; personal at-
33 tendance at places or events, without payment of an admission price or
34 fee; listening to or watching radio and television programs; answering the
35 telephone or making a telephone call and acts of like nature are not
37 As used in this subsection, consideration does not include:
38 (1) Sums of money paid by or for participants in any bingo game
39 managed, operated or conducted in accordance with the laws of the state
40 of Kansas by any bona fide nonprofit religious, charitable, fraternal, ed-
41 ucational or veteran organization licensed to manage, operate or conduct
42 bingo games under the laws of the state of Kansas and it shall be conclu-
43 sively presumed that such sums paid by or for such participants were
SB 330 7
1 intended by such participants to be for the benefit of the sponsoring
2 organizations for the use of such sponsoring organizations in furthering
3 the purposes of such sponsoring organizations, as set forth in the appro-
4 priate paragraphs of subsection (c) or (d) of section 501 of the federal
5 internal revenue code of 1986 and as set forth in K.S.A. 79-4701 and
6 amendments thereto;
7 (2) sums of money paid by or for participants in any lottery operated
8 by the state pursuant to the Kansas lottery act;
9 (3) sums of money paid by or for participants in any system of par-
10 imutuel wagering managed, operated and conducted in accordance with
11 the Kansas parimutuel racing act; or
12 (4) sums of money paid by or for a person to participate in tribal
14 (d) (1) "Gambling device" means:
15 (A) Any so-called "slot machine" or any other machine, mechanical
16 device, electronic device or other contrivance an essential part of which
17 is a drum or reel with insignia thereon, and (i) which when operated may
18 deliver, as the result of chance, any money or property, or (ii) by the
19 operation of which a person may become entitled to receive, as the result
20 of chance, any money or property;
21 (B) any other machine, mechanical device, electronic device or other
22 contrivance (including, but not limited to, roulette wheels and similar
23 devices) which is equipped with or designed to accommodate the addition
24 of a mechanism that enables accumulated credits to be removed, is
25 equipped with or designed to accommodate a mechanism to record the
26 number of credits removed or is otherwise designed, manufactured or
27 altered primarily for use in connection with gambling, and (i) which when
28 operated may deliver, as the result of chance, any money or property, or
29 (ii) by the operation of which a person may become entitled to receive,
30 as the result of chance, any money or property;
31 (C) any subassembly or essential part intended to be used in con-
32 nection with any such machine, mechanical device, electronic device or
33 other contrivance, but which is not attached to any such machine, me-
34 chanical device, electronic device or other contrivance as a constituent
36 (D) any token, chip, paper, receipt or other document which evi-
37 dences, purports to evidence or is designed to evidence participation in
38 a lottery or the making of a bet
39 (E) any device that awards credits and contains a circuit, meter,
40 switch or electronic computer program capable of removing and record-
41 ing the removal of credits when the award of credits is dependent upon
43 The fact that the prize is not automatically paid by the device does
SB 330 8
1 not affect its character as a gambling device.
2 (2) Gambling device does not include:
3 (A) Any machine, mechanical device, electronic device or other con-
4 trivance used or for use by a licensee of the Kansas racing commission as
5 authorized by law and rules and regulations adopted by the commission
6 or by the Kansas lottery or Kansas lottery retailers as authorized by law
7 and rules and regulations adopted by the Kansas lottery commission;
8 (B) any machine, mechanical device, electronic device or other con-
9 trivance, such as a coin-operated bowling alley, shuffleboard, marble ma-
10 chine (a so-called pinball machine), or mechanical gun, which is not de-
11 signed and manufactured primarily for use in connection with gambling,
12 and (i) which when operated does not deliver, as a result of chance, any
13 money, or (ii) by the operation of which a person may not become entitled
14 to receive, as the result of the application of an element of chance, any
16 (C) any so-called claw, crane, or digger machine and similar devices
17 which are designed and manufactured primarily for use at carnivals or
18 county or state fairs; or
19 (D) any machine, mechanical device, electronic device or other con-
20 trivance used in tribal gaming.
21 (e) A "gambling place" is any place, room, building, vehicle, tent or
22 location which is used for any of the following: Making and settling bets;
23 receiving, holding, recording or forwarding bets or offers to bet; con-
24 ducting lotteries; or playing gambling devices. Evidence that the place
25 has a general reputation as a gambling place or that, at or about the time
26 in question, it was frequently visited by persons known to be commercial
27 gamblers or known as frequenters of gambling places is admissible on the
28 issue of whether it is a gambling place.
29 (f) "Tribal gaming" has the meaning provided by K.S.A. 1998 Supp.
30 74-9802 and amendments thereto.
31 (g) "Tribal gaming commission" has the meaning provided by K.S.A.
32 1998 Supp. 74-9802 and amendments thereto.
33 (h) "Something of value" includes credits or free replays when
34 awarded to a player of a gambling device.
35 Sec. 7. K.S.A. 1998 Supp. 38-1602 is hereby amended to read as
36 follows: 38-1602. As used in this code, unless the context otherwise
38 (a) "Juvenile" means a person 10 or more years of age but less than
39 18 years of age.
40 (b) "Juvenile offender" means a person who
does an act commits an
41 offense while a juvenile which if
done committed by an adult would con-
42 stitute the commission of a felony or misdemeanor as defined by K.S.A.
43 21-3105, and amendments thereto, or who violates the provisions of
SB 330 9
1 K.S.A. 21-4204a
or K.S.A., 41-727, subsection (b) or (c) of K.S.A. 74-7819
2 or subsection (j) of K.S.A. 74-8810, and amendments thereto, but does
3 not include:
4 (1) A person 14 or more years of age who commits a traffic offense,
5 as defined in subsection (d) of K.S.A. 8-2117 and amendments thereto;
6 (2) a person 16 years of age or over who commits an offense defined
7 in chapter 32 of the Kansas Statutes Annotated;
8 (3) a person
whose prosecution as an adult is authorized pursuant to
K.S.A. 38-1636 and amendments thereto and whose prosecution results
in the conviction of an adult crime; or
(4) a person who has been found to be an extended jurisdiction
juvenile pursuant to subsection (a)(2) of K.S.A. 38-1636, and amendment
thereto, and whose stay of adult sentence execution has been revoked
14 under 18 years of age who previously has been:
15 (A) Convicted as an adult under the Kansas code of criminal
17 (B) sentenced as an adult under the Kansas code of criminal proce-
18 dure following termination of status as an extended jurisdiction juvenile
19 pursuant to K.S.A. 38-16,126, and amendments thereto; or
20 (C) convicted or sentenced as an adult in another state or foreign
21 jurisdiction under substantially similar procedures described in K.S.A. 38-
22 1636, and amendments thereto, or because of attaining the age of majority
23 designated in that state or jurisdiction.
24 (c) "Parent," when used in relation to a juvenile or a juvenile of-
25 fender, includes a guardian, conservator and every person who is by law
26 liable to maintain, care for or support the juvenile.
27 (d) "Law enforcement officer" means any person who by virtue of
28 that person's office or public employment is vested by law with a duty to
29 maintain public order or to make arrests for crimes, whether that duty
30 extends to all crimes or is limited to specific crimes.
31 (e) "Youth residential facility" means any home, foster home or
32 structure which provides twenty-four-hour-a-day care for juveniles and
33 which is licensed pursuant to article 5 of chapter 65 of the Kansas Statutes
35 (f) "Juvenile detention facility" means any secure public or private
36 facility which is used for the lawful custody of accused or adjudicated
37 juvenile offenders and which
must shall not be a jail.
38 (g) "Juvenile correctional facility" means a facility operated by the
39 commissioner for juvenile offenders.
40 (h) "Warrant" means a written order by a judge of the court directed
41 to any law enforcement officer commanding the officer to take into cus-
42 tody the juvenile named or described therein.
43 (i) "Commissioner" means the commissioner of juvenile justice.
SB 330 10
1 (j) "Jail" means:
2 (1) An adult jail or lockup; or
3 (2) a facility in the same building as an adult jail or lockup, unless
4 the facility meets all applicable licensure requirements under law and
5 there is (A) total separation of the juvenile and adult facility spatial areas
6 such that there could be no haphazard or accidental contact between
7 juvenile and adult residents in the respective facilities; (B) total separation
8 in all juvenile and adult program activities within the facilities, including
9 recreation, education, counseling, health care, dining, sleeping, and gen-
10 eral living activities; and (C) separate juvenile and adult staff, including
11 management, security staff and direct care staff such as recreational, ed-
12 ucational and counseling.
13 (k) "Court-appointed special advocate" means a responsible adult,
14 other than an attorney appointed pursuant to K.S.A. 38-1606 and amend-
15 ments thereto, who is appointed by the court to represent the best inter-
16 ests of a child, as provided in K.S.A. 1998 Supp. 38-1606a, and amend-
17 ments thereto, in a proceeding pursuant to this code.
18 (l) "Juvenile intake and assessment worker" means a responsible
19 adult authorized to perform intake and assessment services as part of the
20 intake and assessment system established pursuant to K.S.A.
21 7023, and amendments thereto.
22 (m) "Institution" means the following institutions: The Atchison ju-
23 venile correctional facility, the Beloit juvenile correctional facility, the
24 Larned juvenile correctional facility and the Topeka juvenile correctional
26 (n) "
Sanction Sanctions house" means a facility which is operated or
27 structured so as to ensure that all entrances and exits from the facility are
28 under the exclusive control of the staff of the facility, whether or not the
29 person being detained has freedom of movement within the perimeters
30 of the facility, or which relies on locked rooms and buildings, fences, or
31 physical restraint in order to control the behavior of its residents. Upon
32 an order from the court, a licensed juvenile detention facility may serve
33 as a
sanction sanctions house. A sanction sanctions house may be physi-
cally connected physically to a nonsecure shelter facility provided the
sanction sanctions house is not a licensed juvenile detention facility.
36 (o) "Sentencing risk assessment tool" means an instrument admin-
37 istered to juvenile offenders which delivers a score, or group of scores,
38 describing, but not limited to describing, the juvenile's potential risk to
39 the community.
40 (p) "Educational institution" means all schools at the elementary and
41 secondary levels.
42 (q) "Educator" means any administrator, teacher or other profes-
43 sional or paraprofessional employee of an educational institution who has
SB 330 11
1 exposure to a pupil specified in subsection (a)(1) through (5) of K.S.A.
2 1998 Supp. 72-89b03, and amendments thereto.
3 Sec. 8. K.S.A. 41-308 is hereby amended to read as follows: 41-308.
4 (a) A retailer's license shall allow the licensee to sell and offer for sale at
5 retail and deliver in the original package, as therein prescribed, alcoholic
6 liquor for use or consumption off of and away from the premises specified
7 in such license. A retailer's license shall permit sale and delivery of al-
8 coholic liquor only on the licensed premises and shall not permit sale of
9 alcoholic liquor for resale in any form, except that a licensed retailer may:
10 (1) Sell alcoholic liquor to a temporary permit holder for resale by
11 such permit holder; and
12 (2) sell and deliver alcoholic liquor to a caterer or to the licensed
13 premises of a club or drinking establishment, if such premises are in the
14 county where the retailer's premises are located or in an adjacent county,
15 for resale by such club, establishment or caterer.
16 (b) Except as otherwise provided, the holder of a retailer's license
17 shall not sell, offer for sale, give away or permit to be sold, offered for
18 sale or given away in or from the premises specified in such license any
19 service or thing of value whatsoever except alcoholic liquor in the original
, except that. A licensed retailer may:
21 (1) Charge a delivery fee for delivery to a club, drinking establish-
22 ment or caterer pursuant to subsection (a);
23 (2) sell lottery tickets and shares and video lottery machine games to
24 the public in accordance with the Kansas lottery act, if the retailer is
25 selected as a lottery retailer;
26 (3) include in the sale of alcoholic liquor any goods included by the
27 manufacturer in packaging with the alcoholic liquor, subject to the ap-
28 proval of the director; and
29 (4) distribute to the public, without charge, consumer advertising
30 specialties bearing advertising matter, subject to rules and regulations of
31 the secretary limiting the form and distribution of such specialties so that
32 they are not conditioned on or an inducement to the purchase of alcoholic
34 (c) No licensed retailer shall furnish any entertainment in or on such
35 premises or permit the placement or operation of any pinball machine or
36 game of skill or chance
to be located in or on such premises except a
37 video lottery machine authorized pursuant to subsection (b)(2).
38 (d) A retailer's license shall allow the licensee to store alcoholic liquor
39 in refrigerators, cold storage units, ice boxes or other cooling devices, and
40 the licensee may sell such alcoholic liquor to consumers in a chilled
42 Sec. 9. K.S.A. 74-8701 is hereby amended to read as follows: 74-
43 8701. K.S.A. 74-8701 through 74-8721 and sections 1 through 5, and
SB 330 12
1 amendments thereto, shall be known as and may be cited as the Kansas
2 lottery act.
3 Sec. 10. K.S.A. 74-8702 is hereby amended to read as follows: 74-
4 8702. As used in this act, unless the context otherwise requires:
5 (a) "Commission" means the Kansas lottery commission.
6 (b) "Executive director" means the executive director of the Kansas
8 (c) "Gaming equipment" means any electric, electronic or mechan-
9 ical device or other equipment unique to the Kansas lottery used directly
10 in the operation of any lottery and in the determination of winners pur-
11 suant to this act.
12 (d) "Kansas lottery" means the state agency created by this act to
13 operate a lottery or lotteries pursuant to this act.
14 (e) "Lottery retailer" means:
15 (1) Any person with whom the Kansas lottery has contracted to sell
16 lottery tickets or shares, or both, to the public
17 (2) a video lottery retailer.
18 (f) "Lottery" or "state lottery" means the lottery or lotteries operated
19 pursuant to this act.
20 (g) "Major procurement" means any gaming product or service, in-
21 cluding but not limited to facilities, advertising and promotional services,
22 annuity contracts, prize payment agreements, consulting services, equip-
23 ment, tickets and other products and services unique to the Kansas lot-
24 tery, but not including materials, supplies, equipment and services com-
25 mon to the ordinary operations of state agencies.
26 (h) "Person" means any natural person, association, corporation or
28 (i) "Prize" means any prize paid directly by the Kansas lottery pur-
29 suant to
its rules and regulations.
30 (j) "Share" means any intangible manifestation authorized by the
31 Kansas lottery to prove participation in a lottery game.
32 (k) "Ticket" means any tangible evidence issued by the Kansas lottery
33 to prove participation in a lottery game.
34 (l) "Vendor" means any person who has entered into a major pro-
35 curement contract with the Kansas lottery or a video lottery machine
37 (m) "Returned ticket" means any ticket which was transferred to a
38 lottery retailer, which was not sold by the lottery retailer and which was
39 returned to the Kansas lottery for refund by issuance of a credit or
41 (n) "Video lottery machine" means any electronic video game ma-
42 chine that, upon insertion of cash, coins or tokens is available to play or
43 simulate the play of a video game authorized by the commission, including
SB 330 13
1 but not limited to bingo, poker, black jack and keno, and which uses a
2 video display and microprocessors and in which, by chance, the player
3 may receive free games or credits that can be redeemed for cash. A video
4 lottery machine does not include a machine that directly dispenses coins
5 or cash.
6 (o) "Associated equipment" means any proprietary device, machine
7 or part used in the manufacture or maintenance of a video lottery ma-
8 chine, including but not limited to, integrated circuit chips, printed wired
9 assembly, printed wired boards, printing mechanisms, video display mon-
10 itors and metering devices.
11 (p) "Bingo" means games of bingo managed, operated and conducted
12 in accordance with K.S.A. 79-4701 and amendments thereto.
13 (q) "Credit" means the smallest unit of payment entitling a player to
14 play a video lottery machine game.
15 (r) "Financial institution" means any savings and loan association,
16 federally chartered savings bank, bank, trust company, credit union, in-
17 surance company or other organization which is authorized to make loans
18 and which is regulated by law.
19 (s) "Licensed establishment" means a:
20 (1) Retailer licensed pursuant to the Kansas liquor control act;
21 (2) club or drinking establishment licensed pursuant to the club and
22 drinking establishment act; or
23 (3) retailer licensed pursuant to the provisions of article 27 of chapter
24 41 of the Kansas Statutes Annotated.
25 (t) "Video lottery machine income" means cash put into a video lot-
26 tery machine minus credits redeemed for cash.
27 (u) "Video lottery machine leasing company" means any person
28 which owns and leases video lottery machines to video lottery machine
29 distributors or video lottery machine operators and which receives con-
30 sideration in the form of fixed regular payments and does not receive
31 additional payments or reductions directly or indirectly based upon the
32 profits or losses generated from the machines it leases.
33 (v) "Video lottery machine manufacturer" means any person that
34 assembles or produces video lottery machines or associated equipment for
35 sale or use in this state.
36 (w) "Video lottery machine distributor" means any person that dis-
37 tributes or sells video lottery machines or associated equipment for use in
38 this state, other than a video lottery machine leasing company.
39 (x) "Video lottery machine operator" means any person that places,
40 maintains, owns or leases video lottery machines or associated equipment
41 for use in this state.
42 (y) "Video lottery retailer" means the state fair board, with regard
43 to video lottery machines placed on the state fairgrounds, or any person
SB 330 14
1 with whom the Kansas lottery has contracted for the placement of video
2 lottery machines.
3 (z) "Video lottery machine vendor" means a video lottery machine
4 leasing company, video lottery machine manufacturer, video lottery ma-
5 chine distributor and video lottery machine operator.
6 Sec. 11. K.S.A. 74-8704 is hereby amended to read as follows: 74-
7 8704. (a) The executive director shall have the power to:
8 (1) Supervise and administer the operation of the state lottery in
9 accordance with the provisions of this act and such rules and regulations
as adopted hereunder pursuant thereto.
11 (2) Appoint, subject to the Kansas civil service act and within the
12 limitations of appropriations therefor, all other employees of the Kansas
13 lottery, which employees shall be in the classified service unless otherwise
14 specifically provided by this act.
15 (3) Enter into contracts for advertising and promotional services,
16 subject to the provisions of subsection (b); annuities or other methods
17 deemed appropriate for the payment of prizes; data processing and other
18 technical products, equipment and services; and facilities as needed to
19 operate the Kansas lottery, including but not limited to gaming equip-
20 ment, tickets and other services involved in major procurement contracts,
21 in accordance with K.S.A. 74-8705, and amendments thereto.
22 (4) Enter into contracts with persons for the sale of lottery tickets
23 or shares to the public or the placement of video lottery machines, as
24 provided by this act and rules and regulations adopted pursuant
act, which thereto. Such contracts shall not be subject to the provisions
26 of K.S.A. 75-3738 through 75-3744, and amendments thereto.
27 (5) Require lottery retailers to furnish proof of financial stability or
28 furnish surety in an amount based upon the expected volume of sales of
29 lottery tickets or shares or video lottery machine games.
30 (6) Examine, or cause to be examined by any agent or representative
31 designated by the executive director, any books, papers, records or mem-
32 oranda of any lottery retailer for the purpose of ascertaining compliance
33 with the provisions of this act or rules and regulations adopted
34 pursuant thereto.
35 (7) Issue subpoenas to compel access to or for the production of any
36 books, papers, records or memoranda in the custody or control of any
37 lottery retailer, or to compel the appearance of any lottery retailer or
38 employee of any lottery retailer, for the purpose of ascertaining compli-
39 ance with the provisions of this act or rules and regulations adopted
under pursuant thereto. Subpoenas issued under the provisions of this
41 subsection may be served upon natural persons and corporations in the
42 manner provided in K.S.A. 60-304, and amendments thereto, for the serv-
43 ice of process by any officer authorized to serve subpoenas in civil actions
SB 330 15
1 or by the executive director or an agent or representative designated by
2 the executive director. In the case of the refusal of any person to comply
3 with any such subpoena, the executive director may make application to
4 the district court of any county where such books, papers, records, mem-
5 oranda or person is located for an order to comply.
6 (8) Administer oaths and take depositions to the same extent and
7 subject to the same limitations as would apply if the deposition were in
8 aid of a civil action in the district court.
9 (9) Require fingerprinting of employees and such other persons who
10 work in sensitive areas within the lottery as deemed appropriate by the
11 director. The director may submit such fingerprints to the Kansas bureau
12 of investigation and to the federal bureau of investigation for the purposes
13 of verifying the identity of such employees and persons and obtaining
14 records of their criminal arrests and convictions.
15 (b) The Kansas lottery shall not engage in on-site display advertising
16 or promotion of the lottery at any amateur athletic or sporting event
17 including, but not limited to, amateur athletic sporting events at institu-
18 tions under the jurisdiction and control of the state board of regents.
19 Sec. 12. K.S.A. 74-8708 is hereby amended to read as follows: 74-
20 8708. (a) The executive director shall select
as lottery retailers such per-
sons as deemed best able to serve the public convenience and promote
22 the sale of lottery tickets or shares or video lottery machine games in
23 accordance with marketing plans developed by the Kansas lottery. In the
24 selection of lottery retailers, the executive director shall consider factors
25 such as financial responsibility, security of the applicant's place of business
26 or activity, accessibility of the applicant's place of business or activity,
27 integrity, reputation, volume of expected sales and such other factors as
28 the executive director may deem appropriate. The executive director may
29 select the state fair board as a lottery retailer
to sell lottery tickets or
shares. If selected as a lottery retailer, the state fair board shall be au-
31 thorized to sell lottery tickets or shares or place video lottery machines
32 only on the state fairgrounds and only during the time of the annual state
33 fair. Other persons lawfully engaged in nongovernmental business on
34 state property may be selected as lottery retailers.
35 (b) The executive director may charge an application fee to persons
36 applying to become lottery retailers. The application fee for video lottery
37 retailers shall be $50 for each machine to be placed on the premises. The
38 application fee for all other lottery retailers shall be established by rules
39 and regulations of the commission. All moneys from fees collected pur-
40 suant to this subsection shall be deposited in the state treasury and cred-
41 ited to the lottery operating fund.
42 (c) All lottery retailer contracts awarded by the Kansas lottery under
43 this act shall be renewable annually after issuance unless sooner canceled
SB 330 16
1 or terminated.
2 (d) No lottery retailer contract awarded under this act shall be trans-
3 ferred or assignable.
4 (e) Each lottery retailer shall be issued a lottery retailer certificate
which shall be conspicuously displayed at the place for each location
6 where the lottery retailer is authorized to sell lottery tickets or shares
7 video lottery machine games. The certificate shall be displayed conspic-
8 uously at such location. The commission shall establish by rules and reg-
9 ulations an annual fee for each certificate issued to a video lottery retailer,
10 which fee shall not exceed $500.
11 (f) Lottery tickets or shares shall
only be sold only by the lottery
12 retailer at the location stated on the lottery retailer certificate. Video lot-
13 tery machine games shall be placed only by the video lottery retailer at
14 the location stated on the video lottery retailer certificate.
15 (g) To be selected as a lottery retailer or a video lottery machine
16 vendor, a natural person acting as a sole proprietor
17 (1) Be at least 18 years of age;
18 (2) have sufficient financial resources to support the activities re-
19 quired to sell lottery tickets or shares or video lottery machine games;
20 (3) be current in payment of all taxes, interest and penalties owed
21 to any taxing subdivision where the lottery retailer will sell lottery tickets
22 or shares or video lottery machine games;
23 (4) be current in filing all applicable tax returns and in payment of
24 all taxes, interest and penalties owed to the state of Kansas, excluding
25 items under formal appeal pursuant to applicable statutes; and
26 (5) not be engaged exclusively in the sale of lottery tickets and shares
27 or video lottery machine games.
28 (h) No natural person shall be selected as a lottery retailer or a video
29 lottery machine vendor who:
30 (1) Has been convicted of a felony in this or any other jurisdiction,
31 unless at least 10 years have passed since satisfactory completion of the
32 sentence or probation imposed by the court for each such felony;
33 (2) has been convicted of an illegal gambling activity in this or any
34 other jurisdiction;
35 (3) has been found to have violated the provisions of this act or any
36 rule and regulation adopted
hereunder pursuant thereto;
37 (4) is
a another vendor or an employee or agent of any other vendor
38 doing business with the Kansas lottery;
39 (5) resides in the same household of an employee of the Kansas
40 lottery or of a member of the commission; or
41 (6) has made a statement of material fact to the Kansas lottery, know-
42 ing such statement to be false.
43 (i) For a partnership to be selected as a lottery retailer or a video
SB 330 17
1 lottery machine vendor, the partnership
must shall meet the require-
2 ments of subsections (g)(2), (g)(3), (g)(4) and (g)(5) and each partner
3 shall meet the requirements of subsections (g)(1), (g)(3), (g)(4) and (h)(1)
4 through (h)(6).
5 (j) For a corporation to be selected as a lottery retailer or a video
6 lottery machine vendor, the corporation
must shall meet the require-
7 ments of subsections (g)(2), (g)(3), (g)(4) and (g)(5) and each officer or
8 director and each stockholder who owns 5% or more of the stock of such
must or of any parent or subsidiary corporation shall meet
10 the requirements of subsections (g)(3), (g)(4) and (h)(1) through (h)(6).
11 (k) For an unincorporated association to be selected as a lottery
12 retailer or a video lottery machine vendor, the association
must shall meet
13 the requirements of subsections (g)(2), (g)(3), (g)(4) and (g)(5) and each
14 officer or director
must shall meet the requirements of subsections (g)(1),
15 (g)(3), (g)(4) and (h)(1) through (h)(6).
16 (l) For a limited liability company to be selected as a video lottery
17 machine vendor, the company shall meet the requirements of subsections
18 (g)(2), (g)(3), (g)(4) and (g)(5) and each member having a 5% or more
19 interest in the company, or any parent or subsidiary of such company
20 shall meet the requirements of subsections (g)(3), (g)(4) and (h)(1) through
(l) (m) The executive director may terminate the certificate of any
23 lottery retailer or a video lottery machine vendor who fails to meet any
24 of the applicable qualifying standards for selection as a retailer or vendor
25 provided in this section or on the grounds for termination provided in
26 the contract pursuant to rules and regulations adopted by the commission.
(m) (n) If a lottery retailer's rental payments for the business prem-
28 ises are contractually computed, in whole or in part, on the basis of a
29 percentage of retail sales, and such computation of retail sales is not ex-
30 plicitly defined to include sale of lottery tickets or shares
in a state-op-
erated lottery or sales of video lottery machine games, the compensation
32 received by the lottery retailer from the Kansas lottery, other than re-
33 imbursement of prizes paid by the lottery retailer, shall be considered the
34 amount of the retail sale for purposes of computing the rental payment.
35 (n) For a limited liability company to be selected as a video lottery
36 machine vendor, the company must meet the requirements of subsections
37 (g)(2), (g)(3), (g)(4) and (g)(5) and each member having a 5% or more
38 interest in the company, or any parent or subsidiary of such company
39 must meet the requirements of subsections (g)(3), (g)(4) and (h)(1)
40 through (h)(6).
41 (o) Each person entering a contract with the Kansas lottery as a video
42 lottery machine vendor or video lottery retailer shall submit to a back-
43 ground investigation, including: (1) Each partner of a partnership; (2)
SB 330 18
1 each officer and director of a corporation or of a parent or subsidiary
2 corporation; (3) each stockholder owning 5% or more of the stock of a
3 corporation or of a parent or subsidiary corporation; (4) each officer and
4 director of an unincorporated association; and (5) each member having a
5 5% or more ownership interest in a limited liability company. The com-
6 mission may adopt rules and regulations concerning the nature and extent
7 of background investigations required by this subsection.
8 (p) In addition to the requirements of subsections (a) through (o):
9 (1) A natural person shall not receive a certificate as a video lottery
10 machine vendor unless such person is a resident of this state;
11 (2) a partnership shall not receive a certificate as a video lottery
12 machine vendor unless each partner is a resident of this state;
13 (3) a corporation shall not receive a certificate as a video lottery
14 vendor unless such a corporation is a Kansas corporation; and
15 (4) an unincorporated association shall not receive a certificate as a
16 video lottery machine vendor unless each officer or director is a resident
17 of this state.
18 Sec. 13. K.S.A. 1998 Supp. 74-8710 is hereby amended to read as
19 follows: 74-8710. (a) The commission, upon the recommendation of the
20 executive director, shall adopt rules and regulations governing the estab-
21 lishment and operation of a state lottery as necessary to carry out the
22 purposes of this act. Temporary rules and regulations may be adopted by
23 the commission without being subject to the provisions and requirements
24 of K.S.A. 77-415 through 77-438, and amendments thereto, but shall be
25 subject to approval by the attorney general as to legality and shall be filed
26 with the secretary of state and published in the Kansas register. Tem-
27 porary and permanent rules and regulations may include but shall not be
28 limited to:
29 (1) Subject to the provisions of subsection (b), the types of lottery
30 games to be conducted, including but not limited to instant lottery, on-
31 line and traditional games
, but not including games on and video lottery
machines machine games.
33 (2) The manner of selecting the winning tickets or shares, except
34 that, if a lottery game utilizes a drawing of winning numbers, a drawing
35 among entries or a drawing among finalists, such drawings shall always
36 be open to the public and shall be recorded on both video and audio tape.
37 (3) The manner of payment of prizes to the holders of winning tickets
38 or shares and winners of video lottery machine games.
39 (4) The frequency of the drawings or selections of winning tickets
40 or shares.
41 (5) The type or types of locations at which tickets or shares may be
42 sold or at which video lottery machines may be placed.
43 (6) The method or methods to be used in selling tickets or shares or
SB 330 19
1 video lottery machine games.
2 (7) Additional qualifications for the selection of lottery retailers and
3 the amount of application fees to be paid by each.
4 (8) The amount and method of compensation to be paid to lottery
5 retailers, including special bonuses and incentives.
6 (9) Deadlines for claims for prizes by winners of each lottery game
7 or video lottery machine game.
8 (10) Provisions for confidentiality of information submitted by ven-
9 dors pursuant to K.S.A. 74-8705, and amendments thereto.
10 (11) Information required to be submitted by vendors, in addition
11 to that required by K.S.A. 74-8705, and amendments thereto.
12 (12) The major procurement contracts or portions thereof to be
13 awarded to minority business enterprises pursuant to subsection (a) of
14 K.S.A. 74-8705, and amendments thereto, and procedures for the award
16 (13) Provisions to prevent direct and indirect payment by manufac-
17 turers, distributors or operators to video lottery retailers or shareholders
18 and owners of video lottery retailers, other than payments expressly per-
19 mitted by contract.
20 (14) Provisions to prohibit lottery retailers from holding themselves
21 out to the public as gambling establishments, casinos or other terms sug-
22 gesting any form of lottery or gambling.
23 (b) No new lottery game shall commence operation after the effec-
24 tive date of this act unless first approved by the governor or, in the gov-
25 ernor's absence or disability, the lieutenant governor.
26 Sec. 14. K.S.A. 74-8711 is hereby amended to read as follows: 74-
27 8711. (a) There is hereby established in the state treasury the lottery
28 operating fund.
29 (b) The executive director shall remit at least weekly to the state
30 treasurer all moneys collected from the sale of lottery tickets and shares
31 and video lottery machine games and any other moneys received by or
32 on behalf of the Kansas lottery. Upon receipt of any such remittance, the
33 state treasurer shall deposit the entire amount thereof in the state treasury
34 and credit it to the lottery operating fund. Moneys credited to the fund
35 shall be expended or transferred only as provided by this act. Expendi-
36 tures from such fund shall be made in accordance with appropriations
37 acts upon warrants of the director of accounts and reports issued pursuant
38 to vouchers approved by the executive director or by a person designated
39 by the executive director.
40 (c) Moneys in the lottery operating fund shall be used for:
41 (1) The payment of expenses of the lottery, which shall include all
42 costs incurred in the operation and administration of the Kansas lottery;
43 all costs resulting from contracts entered into for the purchase or lease
SB 330 20
1 of goods and services needed for operation of the lottery, including but
2 not limited to equipment supplies, materials, tickets, independent studies
3 and surveys, data transmission, advertising, printing, promotion, incen-
4 tives, public relations, communications, and distribution of tickets and
5 shares and video lottery machines; and reimbursement of costs of facilities
6 and services provided by other state agencies;
7 (2) the payment of compensation to lottery retailers;
8 (3) transfers of moneys to the lottery prize payment fund pursuant
9 to K.S.A. 74-8712, and amendments thereto;
10 (4) transfers to the state general fund pursuant to K.S.A. 74-8713,
11 and amendments thereto;
12 (5) transfers to the state gaming revenues fund pursuant to subsec-
13 tion (d)
of this section and as otherwise provided by law; and
14 (6) the transfers to the county reappraisal fund as prescribed by law.
15 (d) The director of accounts and reports shall transfer moneys in the
16 lottery operating fund to the state gaming revenues fund created by
17 K.S.A. 79-4801, and amendments thereto, on or before the 15th day of
18 each month
, for fiscal years commencing on or after July 1, 1988. The
19 transfer shall be in an amount certified monthly by the executive director
20 and determined as follows, whichever is greater:
21 (1) In an amount equal to the moneys in the lottery operating fund
22 in excess of those needed for the purposes described in subsections (c)(1)
23 through (c)(4); or
24 (2) an amount equal to not less than 30% of total monthly revenues
25 from the sales of lottery tickets and shares less estimated returned tickets
26 and video lottery machine income.
27 Sec. 15. K.S.A. 74-8712 is hereby amended to read as follows: 74-
28 8712. (a) There is hereby established in the state treasury the lottery prize
29 payment fund.
30 (b) The executive director shall certify periodically to the director of
31 accounts and reports such amounts as the executive director determines
32 necessary to pay prizes to the holders of valid winning lottery tickets or
33 shares and such amounts as the executive director determines necessary
34 to pay prizes to winners of video lottery machine games, other than prizes
35 paid by video lottery retailers in the ordinary course of business as a video
36 lottery retailer. Upon receipt of such certification, the director of accounts
37 and reports shall promptly transfer the amount certified from the lottery
38 operating fund to the lottery prize payment fund. Moneys credited to the
39 fund shall be expended only for the payment of prizes to the holders of
40 valid winning lottery tickets or shares or winners of video lottery machine
41 games, for the reimbursement of retailers who have paid holders of win-
42 ning tickets or shares or winners of video lottery machine games or as
43 otherwise authorized by law. Prior to making any expenditure for reim-
SB 330 21
1 bursement of a retailer or payment of a prize of $50 or more, the executive
2 director shall cause all proposed prize payments to be matched against
3 the state debtor files maintained by the director of accounts and reports
4 and shall certify and pay or deliver any matched prize or the cash amount
5 thereof to the director of accounts and reports for setoff as prescribed
6 under K.S.A. 75-6201 et seq. and amendments thereto. Expenditures
7 from such fund shall be made in accordance with appropriations acts upon
8 warrants of the director of accounts and reports, or a person designated
9 by the director of accounts and reports pursuant to K.S.A. 75-3732 and
10 amendments thereto, issued pursuant to vouchers approved by the ex-
11 ecutive director, or a person designated by the executive director.
12 Sec. 16. K.S.A. 1998 Supp. 74-8717 is hereby amended to read as
13 follows: 74-8717. (a) It is unlawful to:
14 (1) Falsely make, alter, forge, pass or counterfeit, with intent to de-
15 fraud, a lottery ticket or share, or receipt for the purchase thereof, issued
16 or purported to have been issued by the Kansas lottery under this act
17 (2) tamper with a video lottery machine with intent to interfere with
18 the proper operation of such machine;
19 (3) intentionally manipulate the outcome, payoff or operation of a
20 video lottery machine by physical tampering or any other means; or
21 (4) possess or control, or permit to be kept in a person's possession
22 or control, a video lottery machine or device identified as a gambling
23 device pursuant to K.S.A. 21-4302 and amendments thereto, but not in-
24 cluding a video lottery machine certified by the Kansas lottery.
25 (b) Violation of this section is a severity level 8, nonperson felony.
26 Sec. 17. K.S.A. 1998 Supp. 74-8718 is hereby amended to read as
27 follows: 74-8718. (a) It is unlawful for:
28 (1) Any person to sell a lottery ticket or share or a video lottery
29 machine game at a price other than that fixed by rules and regulations
30 adopted pursuant to this act;
31 (2) any person other than the Kansas lottery or a lottery retailer
32 authorized by the Kansas lottery to sell or resell any lottery ticket or share;
34 (3) any person to sell a lottery ticket or share to any person, knowing
35 such person to be under 18 years of age
36 (4) any person other than the Kansas lottery to have a video lottery
37 machine on premises owned by or under the control of such person unless
38 such person is the Kansas lottery; a video lottery machine vendor; a fi-
39 nancial institution or its agent, or a video lottery machine leasing company
40 or its agent, who has taken possession and advised the executive director
41 of its possession; or a video lottery retailer operating with a certificate
42 from the Kansas lottery;
43 (5) any video lottery retailer or any employee of such retailer, to
SB 330 22
1 permit an individual under 18 years of age to play a video lottery machine
2 game, knowing such individual to be under 18 years of age; or
3 (6) any person who owns or controls premises where a video lottery
4 machine is placed, or any employee of such person, to permit an individual
5 under 18 years of age to be in an area where video lottery machines are
6 located knowing such individual to be under 18 years of age.
7 (b) (1) Violation of this section is a class A nonperson misdemeanor
8 upon conviction for a first offense; and
9 (2) violation of this section is a severity level 9, nonperson felony
10 upon conviction for a second or subsequent offense.
11 Sec. 18. K.S.A. 1998 Supp. 74-8719 is hereby amended to read as
12 follows: 74-8719. (a) It is unlawful for any person to purchase a lottery
13 ticket or share or play a video lottery machine game, or to share in the
14 lottery winnings of a person, knowing that such person is:
15 (1) The executive director, a member of the commission or an em-
16 ployee of the Kansas lottery;
17 (2) an officer or employee of a vendor contracting with the Kansas
18 lottery to supply gaming equipment or tickets to the Kansas lottery for
19 use in the operation of any lottery conducted pursuant to this act;
20 (3) a spouse, child, stepchild, brother, stepbrother, sister, stepsister,
21 parent or stepparent of a person described by subsection (a)(1) or (2); or
22 (4) a person who resides in the same household as any person de-
23 scribed by subsection (a)(1) or (2).
24 (b) It is unlawful for any person to play a video lottery machine game
25 at any time when the licensed establishment where the machine is located
26 is not open to the public.
27 (c) It is unlawful for any person under 18 years of age to:
28 (1) Play a video lottery machine game; or
29 (2) be in an area where video lottery machines are located.
30 (d) (1) Violation of subsection (a) is a class A nonperson misde-
31 meanor upon conviction for a first offense.
32 (2) Violation of subsection (a) is a severity level 9, nonperson felony
33 upon conviction for a second or subsequent offense. Violation of subsec-
34 tion (b) or (c) by a person 18 or more years of age is a class A nonperson
35 misdemeanor. Violation of subsection (b) or (c) by a person less than 18
36 years of age shall render the person subject to adjudication as a juvenile
37 offender under the Kansas juvenile justice code.
(c) (e) Notwithstanding subsection (a), the executive director may
39 authorize in writing any employee of the Kansas lottery and any employee
40 of a lottery vendor to purchase a lottery ticket or play a video lottery
41 machine game for the purposes of verifying the proper operation of the
42 state lottery with respect to security, systems operation and lottery retailer
43 contract compliance. Any prize awarded as a result of such ticket or share
SB 330 23
1 purchase or playing such game shall become the property of the Kansas
2 lottery and be added to the prize pools of subsequent lottery games.
(d) (f) Certain classes of persons who, because of the unique nature
4 of the supplies or services they provide for use directly in the operation
5 of a lottery pursuant to this act, may be prohibited, in accordance with
6 rules and regulations adopted by the commission, from participating in
7 any lottery in which such supplies or services are used.
(e) (g) Except as provided by subsection (b) and (c), nothing in this
9 section shall prohibit lottery retailers or their employees from purchasing
10 lottery tickets
and or shares or playing video lottery machine games or
11 from being paid a prize
of for a winning ticket or share or game.
(f) (h) Each person who purchases a lottery ticket or share or plays
13 a video lottery machine game thereby agrees to be bound by rules and
14 regulations adopted by the commission and by the provisions of this act.
15 Sec. 19. K.S.A. 74-8720 is hereby amended to read as follows: 74-
16 8720. (a) As nearly as practical, an amount equal to not less than 45% of
17 the total sales of lottery tickets or shares, computed on an annual basis,
18 shall be allocated for payment of lottery prizes for winning tickets or
20 (b) The prize to be paid or awarded for each winning ticket or share
21 or game shall be paid to one natural person who is adjudged by the ex-
22 ecutive director, the director's designee or the retailer paying the prize,
23 to be the holder of such winning ticket or share or the winner of the game,
24 or the person designated in writing by
the holder of the winning ticket
or share such holder or winner on a form satisfactory to the executive
26 director, except that the prize of a deceased holder or winner shall be
27 paid to the duly appointed representative of the estate of such holder or
28 winner or to such other person or persons appearing to be legally entitled
30 (c) The executive director shall award the designated prize to the
31 holder of the ticket or share or the winner of the game upon the validation
32 of a claim or confirmation of a winning share. The executive director shall
33 have the authority to make payment for prizes by any means deemed
34 appropriate upon the validation of winning tickets or shares or games.
35 (d) The right of a person to a prize drawn or awarded is not
37 (e) All prizes awarded shall be taxed as Kansas source income and
38 shall be subject to all state and federal income tax laws and rules and
39 regulations. State income taxes shall be withheld from prizes paid when-
40 ever federal income taxes are required to be withheld under current fed-
41 eral law.
42 (f) Unclaimed prize money not payable directly by lottery retailers
43 shall be retained for the period established by rules and regulations and
SB 330 24
1 if no claim is made within such period, then such unclaimed prize money
2 shall be added to the prize pools of subsequent lottery games.
3 (g) The state of Kansas, members of the commission and employees
4 of the Kansas lottery shall be discharged of all further liability upon pay-
5 ment of a prize pursuant to this section.
6 (h) The Kansas lottery shall not publicly disclose the identity of any
7 person awarded a prize except upon written authorization of such person.
8 Sec. 20. K.S.A. 74-8721 is hereby amended to read as follows: 74-
9 8721. All sales of lottery tickets and shares and video lottery machine
10 games shall be exempt from retailers' sales taxes imposed pursuant to
11 K.S.A. 12-187 et seq., and amendments thereto, and from the tax imposed
12 by the Kansas retailers' sales tax act.
13 Sec. 21. K.S.A. 41-308, 74-8701, 74-8702, 74-8704, 74-8708, 74-
14 8711, 74-8712, 74-8720 and 74-8721 and K.S.A. 1998 Supp. 21-4302, 38-
15 1602, 38-1602a, 74-8710, 74-8717, 74-8718 and 74-8719 are hereby
17 Sec. 22. This act shall take effect and be in force from and after its
18 publication in the statute book.