(20 ILCS 1605/9.1)
Private manager and management agreement.
(a) As used in this Section:
"Offeror" means a person or group of persons that responds to a request for qualifications under this Section.
"Request for qualifications" means all materials and documents prepared by the Department to solicit the following from offerors:
(1) Statements of qualifications.
(2) Proposals to enter into a management agreement,
including the identity of any prospective vendor or vendors that the offeror intends to initially engage to assist the offeror in performing its obligations under the management agreement.
"Final offer" means the last proposal submitted by an offeror in response to the request for qualifications, including the identity of any prospective vendor or vendors that the offeror intends to initially engage to assist the offeror in performing its obligations under the management agreement.
"Final offeror" means the offeror ultimately selected by the Governor to be the private manager for the Lottery under subsection (h) of this Section.
(b) By September 15, 2010, the Governor shall select a private manager for the total management of the Lottery with integrated functions, such as lottery game design, supply of goods and services, and advertising and as specified in this Section.
(c) Pursuant to the terms of this subsection, the Department shall endeavor to expeditiously terminate the existing contracts in support of the Lottery in effect on the effective date of this amendatory Act of the 96th General Assembly in connection with the selection of the private manager. As part of its obligation to terminate these contracts and select the private manager, the Department shall establish a mutually agreeable timetable to transfer the functions of existing contractors to the private manager so that existing Lottery operations are not materially diminished or impaired during the transition. To that end, the Department shall do the following:
(1) where such contracts contain a provision
authorizing termination upon notice, the Department shall provide notice of termination to occur upon the mutually agreed timetable for transfer of functions;
(2) upon the expiration of any initial term or
renewal term of the current Lottery contracts, the Department shall not renew such contract for a term extending beyond the mutually agreed timetable for transfer of functions; or
(3) in the event any current contract provides for
termination of that contract upon the implementation of a contract with the private manager, the Department shall perform all necessary actions to terminate the contract on the date that coincides with the mutually agreed timetable for transfer of functions.
If the contracts to support the current operation of the Lottery in effect on the effective date of this amendatory Act of the 96th General Assembly are not subject to termination as provided for in this subsection (c), then the Department may include a provision in the contract with the private manager specifying a mutually agreeable methodology for incorporation.
(c-5) The Department shall include provisions in the management agreement whereby the private manager shall, for a fee, and pursuant to a contract negotiated with the Department (the "Employee Use Contract"), utilize the services of current Department employees to assist in the administration and operation of the Lottery. The Department shall be the employer of all such bargaining unit employees assigned to perform such work for the private manager, and such employees shall be State employees, as defined by the Personnel Code. Department employees shall operate under the same employment policies, rules, regulations, and procedures, as other employees of the Department. In addition, neither historical representation rights under the Illinois Public Labor Relations Act, nor existing collective bargaining agreements, shall be disturbed by the management agreement with the private manager for the management of the Lottery.
(d) The management agreement with the private manager shall include all of the following:
(1) A term not to exceed 10 years, including any
(2) A provision specifying that the Department:
(A) shall exercise actual control over all
significant business decisions;
(A-5) has the authority to direct or countermand
operating decisions by the private manager at any time;
(B) has ready access at any time to information
regarding Lottery operations;
(C) has the right to demand and receive
information from the private manager concerning any aspect of the Lottery operations at any time; and
(D) retains ownership of all trade names,
trademarks, and intellectual property associated with the Lottery.
(3) A provision imposing an affirmative duty on the
private manager to provide the Department with material information and with any information the private manager reasonably believes the Department would want to know to enable the Department to conduct the Lottery.
(4) A provision requiring the private manager to
provide the Department with advance notice of any operating decision that bears significantly on the public interest, including, but not limited to, decisions on the kinds of games to be offered to the public and decisions affecting the relative risk and reward of the games being offered, so the Department has a reasonable opportunity to evaluate and countermand that decision.
(5) A provision providing for compensation of the
private manager that may consist of, among other things, a fee for services and a performance based bonus as consideration for managing the Lottery, including terms that may provide the private manager with an increase in compensation if Lottery revenues grow by a specified percentage in a given year.
(7) A provision requiring the deposit of all Lottery
proceeds to be deposited into the State Lottery Fund except as otherwise provided in Section 20 of this Act.
(8) A provision requiring the private manager to
locate its principal office within the State.
(8-5) A provision encouraging that at least 20% of
the cost of contracts entered into for goods and services by the private manager in connection with its management of the Lottery, other than contracts with sales agents or technical advisors, be awarded to businesses that are a minority owned business, a female owned business, or a business owned by a person with disability, as those terms are defined in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act.
(9) A requirement that so long as the private manager
complies with all the conditions of the agreement under the oversight of the Department, the private manager shall have the following duties and obligations with respect to the management of the Lottery:
(A) The right to use equipment and other assets
used in the operation of the Lottery.
(B) The rights and obligations under contracts
with retailers and vendors.
(C) The implementation of a comprehensive
security program by the private manager.
(D) The implementation of a comprehensive system
(E) The implementation of a program by the
private manager to curb compulsive gambling by persons playing the Lottery.
(F) A system for determining (i) the type of
Lottery games, (ii) the method of selecting winning tickets, (iii) the manner of payment of prizes to holders of winning tickets, (iv) the frequency of drawings of winning tickets, (v) the method to be used in selling tickets, (vi) a system for verifying the validity of tickets claimed to be winning tickets, (vii) the basis upon which retailer commissions are established by the manager, and (viii) minimum payouts.
(10) A requirement that advertising and promotion
must be consistent with Section 7.8a of this Act.
(11) A requirement that the private manager market
the Lottery to those residents who are new, infrequent, or lapsed players of the Lottery, especially those who are most likely to make regular purchases on the Internet as permitted by law.
(12) A code of ethics for the private manager's
(13) A requirement that the Department monitor and
oversee the private manager's practices and take action that the Department considers appropriate to ensure that the private manager is in compliance with the terms of the management agreement, while allowing the manager, unless specifically prohibited by law or the management agreement, to negotiate and sign its own contracts with vendors.
(14) A provision requiring the private manager to
periodically file, at least on an annual basis, appropriate financial statements in a form and manner acceptable to the Department.
(15) Cash reserves requirements.
(16) Procedural requirements for obtaining the prior
approval of the Department when a management agreement or an interest in a management agreement is sold, assigned, transferred, or pledged as collateral to secure financing.
(17) Grounds for the termination of the management
agreement by the Department or the private manager.
(18) Procedures for amendment of the agreement.
(19) A provision requiring the private manager to
engage in an open and competitive bidding process for any procurement having a cost in excess of $50,000 that is not a part of the private manager's final offer. The process shall favor the selection of a vendor deemed to have submitted a proposal that provides the Lottery with the best overall value. The process shall not be subject to the provisions of the Illinois Procurement Code, unless specifically required by the management agreement.
(20) The transition of rights and obligations,
including any associated equipment or other assets used in the operation of the Lottery, from the manager to any successor manager of the lottery, including the Department, following the termination of or foreclosure upon the management agreement.
(21) Right of use of copyrights, trademarks, and
service marks held by the Department in the name of the State. The agreement must provide that any use of them by the manager shall only be for the purpose of fulfilling its obligations under the management agreement during the term of the agreement.
(22) The disclosure of any information requested by
the Department to enable it to comply with the reporting requirements and information requests provided for under subsection (p) of this Section.
(e) Notwithstanding any other law to the contrary, the Department shall select a private manager through a competitive request for qualifications process consistent with Section 20-35 of the Illinois Procurement Code, which shall take into account:
(1) the offeror's ability to market the Lottery to
those residents who are new, infrequent, or lapsed players of the Lottery, especially those who are most likely to make regular purchases on the Internet;
(2) the offeror's ability to address the State's
concern with the social effects of gambling on those who can least afford to do so;
(3) the offeror's ability to provide the most
successful management of the Lottery for the benefit of the people of the State based on current and past business practices or plans of the offeror; and
(4) the offeror's poor or inadequate past
performance in servicing, equipping, operating or managing a lottery on behalf of Illinois, another State or foreign government and attracting persons who are not currently regular players of a lottery.
(f) The Department may retain the services of an advisor or advisors with significant experience in financial services or the management, operation, and procurement of goods, services, and equipment for a government-run lottery to assist in the preparation of the terms of the request for qualifications and selection of the private manager. Any prospective advisor seeking to provide services under this subsection (f) shall disclose any material business or financial relationship during the past 3 years with any potential offeror, or with a contractor or subcontractor presently providing goods, services, or equipment to the Department to support the Lottery. The Department shall evaluate the material business or financial relationship of each prospective advisor. The Department shall not select any prospective advisor with a substantial business or financial relationship that the Department deems to impair the objectivity of the services to be provided by the prospective advisor. During the course of the advisor's engagement by the Department, and for a period of one year thereafter, the advisor shall not enter into any business or financial relationship with any offeror or any vendor identified to assist an offeror in performing its obligations under the management agreement. Any advisor retained by the Department shall be disqualified from being an offeror.
The Department shall not include terms in the request for qualifications that provide a material advantage whether directly or indirectly to any potential offeror, or any contractor or subcontractor presently providing goods, services, or equipment to the Department to support the Lottery, including terms contained in previous responses to requests for proposals or qualifications submitted to Illinois, another State or foreign government when those terms are uniquely associated with a particular potential offeror, contractor, or subcontractor. The request for proposals offered by the Department on December 22, 2008 as "LOT08GAMESYS" and reference number "22016176" is declared void.
(g) The Department shall select at least 2 offerors as finalists to potentially serve as the private manager no later than August 9, 2010. Upon making preliminary selections, the Department shall schedule a public hearing on the finalists' proposals and provide public notice of the hearing at least 7 calendar days before the hearing. The notice must include all of the following:
(1) The date, time, and place of the hearing.
(2) The subject matter of the hearing.
(3) A brief description of the management agreement
(4) The identity of the offerors that have been
selected as finalists to serve as the private manager.
(5) The address and telephone number of the
(h) At the public hearing, the Department shall (i) provide sufficient time for each finalist to present and explain its proposal to the Department and the Governor or the Governor's designee, including an opportunity to respond to questions posed by the Department, Governor, or designee and (ii) allow the public and non-selected offerors to comment on the presentations. The Governor or a designee shall attend the public hearing. After the public hearing, the Department shall have 14 calendar days to recommend to the Governor whether a management agreement should be entered into with a particular finalist. After reviewing the Department's recommendation, the Governor may accept or reject the Department's recommendation, and shall select a final offeror as the private manager by publication of a notice in the Illinois Procurement Bulletin on or before September 15, 2010. The Governor shall include in the notice a detailed explanation and the reasons why the final offeror is superior to other offerors and will provide management services in a manner that best achieves the objectives of this Section. The Governor shall also sign the management agreement with the private manager.
(i) Any action to contest the private manager selected by the Governor under this Section must be brought within 7 calendar days after the publication of the notice of the designation of the private manager as provided in subsection (h) of this Section.
(j) The Lottery shall remain, for so long as a private manager manages the Lottery in accordance with provisions of this Act, a Lottery conducted by the State, and the State shall not be authorized to sell or transfer the Lottery to a third party.
(k) Any tangible personal property used exclusively in connection with the lottery that is owned by the Department and leased to the private manager shall be owned by the Department in the name of the State and shall be considered to be public property devoted to an essential public and governmental function.
(l) The Department may exercise any of its powers under this Section or any other law as necessary or desirable for the execution of the Department's powers under this Section.
(m) Neither this Section nor any management agreement entered into under this Section prohibits the General Assembly from authorizing forms of gambling that are not in direct competition with the Lottery.
(n) The private manager shall be subject to a complete investigation in the third, seventh, and tenth years of the agreement (if the agreement is for a 10-year term) by the Department in cooperation with the Auditor General to determine whether the private manager has complied with this Section and the management agreement. The private manager shall bear the cost of an investigation or reinvestigation of the private manager under this subsection.
(o) The powers conferred by this Section are in addition and supplemental to the powers conferred by any other law. If any other law or rule is inconsistent with this Section, including, but not limited to, provisions of the Illinois Procurement Code, then this Section controls as to any management agreement entered into under this Section. This Section and any rules adopted under this Section contain full and complete authority for a management agreement between the Department and a private manager. No law, procedure, proceeding, publication, notice, consent, approval, order, or act by the Department or any other officer, Department, agency, or instrumentality of the State or any political subdivision is required for the Department to enter into a management agreement under this Section. This Section contains full and complete authority for the Department to approve any contracts entered into by a private manager with a vendor providing goods, services, or both goods and services to the private manager under the terms of the management agreement, including subcontractors of such vendors.
Upon receipt of a written request from the Chief Procurement Officer, the Department shall provide to the Chief Procurement Officer a complete and un-redacted copy of the management agreement or any contract that is subject to the Department's approval authority under this subsection (o). The Department shall provide a copy of the agreement or contract to the Chief Procurement Officer in the time specified by the Chief Procurement Officer in his or her written request, but no later than 5 business days after the request is received by the Department. The Chief Procurement Officer must retain any portions of the management agreement or of any contract designated by the Department as confidential, proprietary, or trade secret information in complete confidence pursuant to subsection (g) of Section 7 of the Freedom of Information Act. The Department shall also provide the Chief Procurement Officer with reasonable advance written notice of any contract that is pending Department approval.
Notwithstanding any other provision of this Section to the contrary, the Chief Procurement Officer shall adopt administrative rules, including emergency rules, to establish a procurement process to select a successor private manager if a private management agreement has been terminated. The selection process shall at a minimum take into account the criteria set forth in items (1) through (4) of subsection (e) of this Section and may include provisions consistent with subsections (f), (g), (h), and (i) of this Section. The Chief Procurement Officer shall also implement and administer the adopted selection process upon the termination of a private management agreement. The Department, after the Chief Procurement Officer certifies that the procurement process has been followed in accordance with the rules adopted under this subsection (o), shall select a final offeror as the private manager and sign the management agreement with the private manager.
Except as provided in Sections 21.2, 21.5, 21.6, 21.7, 21.8, and 21.9, the Department shall distribute all proceeds of lottery tickets and shares sold in the following priority and manner:
(1) The payment of prizes and retailer bonuses.
(2) The payment of costs incurred in the operation
and administration of the Lottery, including the payment of sums due to the private manager under the management agreement with the Department.
(3) On the last day of each month or as soon
thereafter as possible, the State Comptroller shall direct and the State Treasurer shall transfer from the State Lottery Fund to the Common School Fund an amount that is equal to the proceeds transferred in the corresponding month of fiscal year 2009, as adjusted for inflation, to the Common School Fund.
(4) On or before the last day of each fiscal year,
deposit any remaining proceeds, subject to payments under items (1), (2), and (3) into the Capital Projects Fund each fiscal year.
(p) The Department shall be subject to the following reporting and information request requirements:
(1) the Department shall submit written quarterly
reports to the Governor and the General Assembly on the activities and actions of the private manager selected under this Section;
(2) upon request of the Chief Procurement Officer,
the Department shall promptly produce information related to the procurement activities of the Department and the private manager requested by the Chief Procurement Officer; the Chief Procurement Officer must retain confidential, proprietary, or trade secret information designated by the Department in complete confidence pursuant to subsection (g) of Section 7 of the Freedom of Information Act; and
(3) at least 30 days prior to the beginning of the
Department's fiscal year, the Department shall prepare an annual written report on the activities of the private manager selected under this Section and deliver that report to the Governor and General Assembly.
(Source: P.A. 97-464, eff. 8-19-11; 98-463, eff. 8-16-13; 98-649, eff. 6-16-14.)
(20 ILCS 1605/10.1)
(from Ch. 120, par. 1160.1)
The following are ineligible for any license under this Act:
(a) any person who has been convicted of a felony;
(b) any person who is or has been a professional
gambler or gambling promoter;
(c) any person who has engaged in bookmaking or other
forms of illegal gambling;
(d) any person who is not of good character and
reputation in the community in which he resides;
(e) any person who has been found guilty of any fraud
or misrepresentation in any connection;
(f) any firm or corporation in which a person defined
in (a), (b), (c), (d) or (e) has a proprietary, equitable or credit interest of 5% or more.
(g) any organization in which a person defined in
(a), (b), (c), (d) or (e) is an officer, director, or managing agent, whether compensated or not;
(h) any organization in which a person defined in
(a), (b), (c), (d), or (e) is to participate in the management or sales of lottery tickets or shares.
However, with respect to persons defined in (a), the Department may grant
any such person a license under this Act when:
1) at least 10 years have elapsed since the date when
the sentence for the most recent such conviction was satisfactorily completed;
2) the applicant has no history of criminal activity
subsequent to such conviction;
3) the applicant has complied with all conditions of
probation, conditional discharge, supervision, parole or mandatory supervised release; and
4) the applicant presents at least 3 letters of
recommendation from responsible citizens in his community who personally can attest that the character and attitude of the applicant indicate that he is unlikely to commit another crime.
The Department may revoke, without notice or a hearing, the license of
any agent who violates this Act or any rule or regulation promulgated
pursuant to this Act. However, if the Department does revoke a license
without notice and an opportunity for a hearing, the Department shall, by
appropriate notice, afford the person whose license has been revoked an
opportunity for a hearing within 30 days after the revocation order has
been issued. As a result of any such hearing, the Department may confirm
its action in revoking the license, or it may order the restoration of such
(Source: P.A. 97-464, eff. 10-15-11.)
(20 ILCS 1605/13.1)
Assignment of prizes payable in installments.
(a) The right of any person to receive payments under a prize that is paid
in installments over time by the Department may be voluntarily assigned, in
whole or in part, if the assignment is made to a person or entity designated
pursuant to an order of a court of competent jurisdiction located in the
judicial circuit where the assigning prize winner resides or where the
headquarters of the Department is located. A court may issue an order approving
a voluntary assignment and directing the Department to make prize payments in
whole or in part to the designated assignee, if the court finds that all of the
following conditions have been met:
(1) The assignment is in writing, is executed by the
assignor, and is, by its terms, subject to the laws of this State.
(2) The purchase price being paid for the payments
being assigned represents a present value of the payments being assigned, discounted at an annual rate that does not exceed 10 percentage points over the Wall Street Journal prime rate published on the business day prior to the date of execution of the contract.
(3) The contract of assignment expressly states that
the assignor has 3 business days after the contract was signed to cancel the assignment.
(4) The assignor provides a sworn affidavit attesting
(i) is of sound mind, is in full command of his
or her faculties, and is not acting under duress;
(ii) has been advised regarding the assignment by
his or her own independent legal counsel, who is unrelated to and is not being compensated by the assignee or any of the assignee's affiliates, and has received independent financial or tax advice concerning the effects of the assignment from a lawyer or other professional who is unrelated to and is not being compensated by the assignee or any of the assignee's affiliates;
(iii) understands that he or she will not receive
the prize payments or portions thereof for the years assigned;
(iv) understands and agrees that, with regard to
the assigned payments, the Department and its officials and employees will have no further liability or responsibility to make the assigned payments to him or her;
(v) has been provided with a one-page written
disclosure statement setting forth, in bold type of not less than 14 points, the payments being assigned, by amounts and payment dates; the purchase price being paid; the rate of discount to present value, assuming daily compounding and funding on the contract date; and the amount, if any, of any origination or closing fees that will be charged to him or her; and
(vi) was advised in writing, at the time he or
she signed the assignment contract, that he or she had the right to cancel the contract, without any further obligation, within 3 business days following the date on which the contract was signed.
(5) Written notice of the proposed assignment and any
court hearing concerning the proposed assignment is provided to the Department's counsel at least 30 days prior to any court hearing. The Department is not required to appear in or be named as a party to any such action seeking judicial confirmation of an assignment under this Section, but may intervene as of right in any such proceeding.
(b) A certified copy of a court order approving a voluntary assignment must
be provided to the Department no later than 30 days before the date on which
the payment is to be made.
(c) A court order obtained pursuant to this Section, together with all such
prior orders, shall not require the Department to divide any single prize
payment among more than 3 different persons. Nothing in this Section shall
prohibit substituting assignees as long as there are no more than 3 assignees
at any one time for any one prize payment.
(d) If a husband and wife are co-owners of a prize, any assignment of the
prize must be made jointly.
(e) A voluntary assignment may not include portions of
payments that are subject to offset on account of a defaulted or delinquent
child support obligation, non-wage garnishment, or criminal restitution
obligation or on account of a
debt owed to a State agency. Each court order issued under subsection (a) shall
provide that any delinquent child support or criminal restitution obligations
of the assigning prize winner and any debts owed to a State agency by the
assigning prize winner, as of the date of the court order, shall be set off by
the Department first against remaining payments or portions thereof due the
prize winner and then against payments due the assignee.
(f) The Department and its respective officials and employees shall be
discharged of all liability upon payment of an assigned prize under this
Section. The assignor and assignee shall hold harmless and indemnify the
Department, the State of Illinois, and its employees and agents from all
claims, actions, suits, complaints, and liabilities related to the assignment.
(g) The Department may establish a reasonable fee to defray any
administrative expenses associated with assignments made under this Section,
including the cost to the Department of any processing fee that may be imposed
by a private annuity provider. The fee amount shall reflect the direct and
indirect costs associated with processing assignments.
(h) If at any time the Internal Revenue Service or a court of competent
jurisdiction issues a determination letter, revenue ruling, other public ruling
of the Internal Revenue Service, or published decision to the Department or to
any lottery prize winner declaring that the voluntary assignment of prizes will
affect the federal income tax treatment of prize winners who do not assign
their prizes, the Department shall immediately file a copy of that letter,
ruling, or published decision with the Attorney General, the Secretary of
State, and the Administrative Office of the Illinois Courts. A court may not
issue an order authorizing a voluntary assignment under this Section after the
date any such ruling, letter, or published decision is filed.
(i) A contract of assignment in which the assignor is a lottery winner
shall include a sworn affidavit from the assignee. The form of the affidavit
shall be established by the Department and shall include:
(1) a summary of assignee contacts with the winner;
(2) a summary of any lawsuits, claims, and other
legal actions from lottery winners regarding conduct of the assignee or its agents;
(3) a statement that the assignee is in good standing
in its state of domicile and with any other licensing or regulatory agency as may be required in the conduct of its business;
(4) a brief business history of the assignee;
(5) a statement describing the nature of the business
(6) a statement of the assignee's privacy and
non-harassment policies and express affirmation that the assignee has followed those policies in Illinois.
(j) The assignee shall notify the Department of its business location and
mailing address for payment purposes during the entire course of the
(Source: P.A. 93-465, eff. 1-1-04.)