To repeal sections 313.205, 313.270, 313.300 and 313.321, RSMo 1994, relating to the state lottery, and to enact in lieu thereof four new sections relating to the same subject.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF MISSOURI, AS FOLLOWS:

     Section A. Sections 313.205, 313.270, 313.300 and 313.321, RSMo 1994, are repealed and four new sections enacted in lieu thereof, to be known as sections 313.205, 313.270, 313.300 and 313.321, to read as follows:

     313.205. As used in sections 313.200 to 313.350, the following words and terms shall have the meanings ascribed to them in this section unless the context clearly requires otherwise:

     (1) "Commission" or "lottery commission", the [three-member] five-member body appointed by the governor to manage and oversee the lottery and to appoint a director;

     (2) "Commissioner", one of the members of the lottery commission appointed by the governor pursuant to the provisions of sections 313.200 to 313.350;

     (3) "Director", the director of the state lottery appointed by the commission as the chief administrator of the state lottery;

     (4) "Division", the division of the state lottery authorized by sections 313.200 to 313.350;

     (5) "Lottery" or "state lottery", the state lottery established and operated pursuant to the provisions of sections 313.200 to 313.350;

     (6) "Lottery contractor" or "lottery vendor", a person with whom the division has contracted to provide goods or services for the state lottery;

     (7) "Lottery game" or "game", any procedure authorized by written rule of the commission whereby prizes are distributed among persons who have paid, or have unconditionally agreed to pay, for tickets or shares which provide the opportunity to win such prizes;

     (8) "Lottery game retailer", any person with whom the lottery commission has contracted to sell tickets or shares in lottery games to the public;

     (9) "Person", any natural person, firm, corporation, or other legal entity possessing a department of revenue retail sales license, as provided by law.

     313.270. 1. The director, pursuant to rules and regulations issued by the commission, may directly purchase or lease such goods or services as are necessary for effectuating the purposes of sections 313.200 to 313.350, including procurements which integrate functions such as lottery game design, supply of goods and services, and advertising. The lottery commission by approved rule may purchase goods made in the [state of] United States and sold by a Missouri business to be given away as prizes within the provisions of section 313.321. Contracts shall be awarded to lottery contractors or lottery vendors on the basis of lowest and best bid on an evaluated basis in order to maximize revenues to the lottery fund. The director may also utilize state purchasing procedures. The director shall award at least ten percent of the aggregate dollar amount of all contracts to provide goods and services to the lottery to minority business enterprises as defined by the office of administration and shall award at least five percent of the aggregate dollar amount of all contracts to provide goods and services to the lottery to women business enterprises as defined by the office of administration. No contract awarded or entered into by the director may be assigned by the holder thereof except by specific approval of the commission.

     2. Any contract awarded to any lottery contractor or vendor shall provide that such contractor or vendor shall award a minimum of ten percent of his or her subcontracted business to minority business enterprises as defined by the office of administration and shall award a minimum of five percent of his or her subcontracted business to women business enterprises as defined by the office of administration. This section shall not apply to multistate lottery.

     3. Any lottery vendor which enters into a contract to supply lottery materials, services or equipment for use in the operation of the state lottery shall first disclose such information as the commission may require, by rule and regulation, concerning the selection of lottery vendors.

     4. The costs of any investigation into the background of the applicant seeking a contract shall be assessed against the applicant and shall be paid by the applicant at the time of billing by the state.

     5. Performance bonds shall be posted by each contractor with the commission with a surety acceptable to the commission in an amount as may be required by the commission, but not to exceed the expected total value of the contract. The contract of any lottery contractor who does not comply with such requirements may be terminated by the commission. The commission may terminate the contract of any lottery vendor who:

     (1) Is convicted of any felony;

     (2) Is convicted of any gambling-related offense;

     (3) Is convicted of any crime involving fraud or misrepresentation;

     (4) Fails to comply with the rules and regulations of the commission existing at the time the contract was entered into; or

     (5) Fails to periodically update any disclosure requirements.

     6. The provisions in this section requiring that certain percentages of lottery contracts and subcontracts be awarded to businesses owned and controlled by women or ethnic and racial minorities shall expire on January 1, 2000.

     313.300. Unclaimed prize money shall be retained by the commission for the person entitled thereto for one [year] hundred eighty days after the time at which the prize was awarded. If no claim is made for the prize within [such year] one hundred eighty days, the prize money shall be reverted to the state lottery fund.

     313.321. 1. The money received by the Missouri state lottery commission from the sale of Missouri lottery tickets and from all other sources shall be deposited in the "State Lottery Fund", which is hereby created in the state treasury. At least forty-five percent, in the aggregate, of the money received from the sale of Missouri lottery tickets shall be appropriated to the Missouri state lottery commission and shall be used to fund prizes to lottery players. Amounts in the state lottery fund may be appropriated to the Missouri state lottery commission for administration, advertising, promotion, and retailer compensation. The general assembly shall appropriate remaining moneys not previously allocated from the state lottery fund by transferring such moneys to the [general revenue] lottery proceeds fund. The lottery commission shall make monthly transfers of moneys not previously allocated from the state lottery fund to the [general revenue] lottery proceeds fund as provided by appropriation.

     2. The commission may also purchase and hold title to any securities issued by the United States government or its agencies and instrumentalities thereof that mature within the term of the prize for funding multi-year payout prizes.

     3. The "Missouri State Lottery Imprest Prize Fund" is hereby created. This fund is to be established by the state treasurer and funded by warrants drawn by the office of administration from the state lottery fund in amounts specified by the commission. The commission may write checks and disburse moneys from this fund for the payment of lottery prizes only and for no other purpose. All expenditures shall be made in accordance with rules and regulations established by the office of administration. Prize payments may also be made from the state lottery fund. Prize payouts made pursuant to this section shall be subject to the provisions of section 143.781, RSMo; and prize payouts made pursuant to this section shall be subject to set off for delinquent child support payments as assessed by a court of competent jurisdiction or pursuant to section 454.410, RSMo.

     4. Funds of the state lottery commission not currently needed for prize money, administration costs, commissions and promotion costs shall be invested by the state treasurer in interest-bearing investments in accordance with the investment powers of the state treasurer contained in chapter 30, RSMo. All interest earned by funds in the state lottery fund shall accrue to the credit of that fund.

     5. No state or local sales tax shall be imposed upon the sale of lottery tickets or shares of the state lottery or on any prize awarded by the state lottery. No state income tax or local earnings tax shall be imposed upon any lottery game prizes which accumulate to an amount of less than six hundred dollars during a prize winner's tax year. The state of Missouri shall withhold for state income tax purposes from a lottery game prize or periodic payment of six hundred dollars or more an amount equal to four percent of the prize.

     6. The director of revenue is authorized to enter into agreements with the lottery commission, in conjunction with the various state agencies pursuant to sections 143.782 to 143.788, RSMo, in an effort to satisfy outstanding debts to the state from the lottery winning of any person entitled to receive lottery payments which are subject to federal withholding.

     7. In addition to the restrictions provided in section 313.260, no person, firm, or corporation whose primary source of income is derived from the sale or rental of sexually oriented publications or sexually oriented materials or property shall be licensed as a lottery game retailer and any lottery game retailer license held by any such person, firm, or corporation shall be revoked.