103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3850

 

Introduced 2/17/2023, by Rep. Cyril Nichols

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Illinois Gambling Act. Provides that the Illinois Gaming Oversight Officer is created with the Illinois Gaming Board under the Administrator. Provides for: duties of the Oversight Officer; funding required; a disparity and availability study; and compiling, collecting, or otherwise gathering data necessary for the Administration of the Act. Provides that the Oversight Officer shall work with the General Assembly to establish a pilot program for minority-owned business enterprises that apply for a terminal operator license. Amends the Sports Wagering Act. In provisions concerning the lottery sports wagering pilot program, provides that lottery games are part of the private management and competitive bidding process under the Illinois Lottery Law (rather than the Department issuing a central system provider license pursuant to an open and competitive bidding process). Requires that every sports lottery terminal offered in this State for play shall conform to an approved model that shall be ready for play in this State within 90 days after the effective date of the amendatory Act and any system testing dates designated by the Department of the Lottery. Makes changes in provisions concerning the placement of sports lottery terminals, wagers accepted, and the Department's powers. Provides that the Department shall be responsible for facilitating the purchase or lease of all sports lottery terminals. Removes the repeal date of January 1, 2024. Amends the Prizes and Gifts Act. Provides that it is unlawful for a person to operate on any premises a prize and gift kiosk that fails to meet the required technical standard. Provides that no prize and gift kiosk shall be connected directly or indirectly to the Internet, either by cellular modem, hard wire, or wireless connection, or to a set of interconnected networked devices in order to participate in the game or contest or to receive or retrieve any data related to the kiosk or device unless the connected device is a redemption vault. Makes other and corresponding changes. Effective immediately.


LRB103 29616 AMQ 56012 b

 

 

A BILL FOR

 

HB3850LRB103 29616 AMQ 56012 b

1    AN ACT concerning gaming.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Gambling Act is amended by adding
5Section 5.5 as follows:
 
6    (230 ILCS 10/5.5 new)
7    Sec. 5.5. Illinois Gaming Oversight Officer.
8    (a) The position of Illinois Gaming Oversight Officer is
9created within the Illinois Gaming Board under the
10Administrator. The Oversight Officer shall be appointed by the
11Governor with recommendations given by the Speaker of the
12House of Representatives.
13    (b) The Oversight Officer may:
14        (1) maintain a staff;
15        (2) make recommendations for policy, statute, and rule
16    changes;
17        (3) collect data both in and outside this State
18    regarding the regulation of gaming and exempted or
19    quasi-gaming;
20        (4) compile or assist in the compilation of any
21    reports required by this Act;
22        (5) ensure the coordination of efforts between various
23    State agencies involved in regulating and taxing gaming

 

 

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1    and exempted or quasi-gaming in this State; and
2        (6) encourage, promote, suggest, and report best
3    practices for ensuring diversity in the gaming and
4    exempted or quasi-gaming industry in this State.
5    (c) Any funding required for the Oversight Officer, its
6staff, or its activities shall be appropriated as part of the
7funding for the Illinois Gaming Board.
8    (d) The Oversight Officer shall commission and publish a
9disparity and availability study on a biannual basis that: (i)
10evaluates whether there exists discrimination in the State's
11gaming industry; and (ii) if so, evaluates the impact of such
12discrimination on the State and includes recommendations to
13the Speaker of the House of Representatives for reducing or
14eliminating any identified barriers to entry in the gaming
15market. The Oversight Officer shall forward a copy of its
16findings and recommendations to the Illinois Gaming Board, the
17Department of Commerce and Economic Opportunity, the General
18Assembly, and the Governor.
19    (e) The Oversight Officer shall have a budget set by the
20General Assembly for the purpose of contracting with a third
21party to assist in completing the disparity study. The
22Oversight Officer shall have the authority to select and hire
23outside firms for the purpose of completing the disparity
24study.
25    (f) The Oversight Officer may compile, collect, or
26otherwise gather data necessary for the administration of this

 

 

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1Act and to carry out the Officer's duty relating to the
2recommendation of policy changes. The Oversight Officer may
3direct the Illinois Gaming Board and Department of Commerce
4and Economic Opportunity to assist in the compilation,
5collection, and data gathering authorized pursuant to this
6Section. The Oversight Officer shall compile all of the data
7into a single report and submit the report to the Governor and
8the General Assembly and publish the report on its website.
9    (g) The Oversight Officer shall pair eligible minority
10businesses with terminal operator licensees or casino
11licensees for mentoring. The Oversight Officer shall develop a
12mentorship program to assist minority-owned businesses to
13transition into gaming opportunities under the Illinois
14Gambling Act and Video Gaming Act. An eligible minority-owned
15business is one that operates or has applied to operate any
16activity covered under subsection (b) of Section 28-1 of the
17Criminal Code of 2012, like bingo, charitable games, lottery,
18poker runs, raffles, and prize and gift kiosks.
19    (h) The Oversight Officer shall work with the General
20Assembly to establish a pilot program for minority-owned
21business enterprises that apply for a terminal operator
22license. The pilot program shall establish a reduction in fees
23to apply for and receive a license and set a limit for the
24Illinois Gaming Board of up to 6 months from the date an
25application is submitted for a determination on suitability
26and licensure. The pilot program shall also create the process

 

 

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1for and terms related to subsidized or guaranteed loans for
2video gaming terminals, redemption vaults, and related
3equipment to licensed minority terminal operators as funded
4and secured by the revenues from the sports lottery kiosk
5program.
 
6    Section 10. The Video Gaming Act is amended by changing
7Section 35 as follows:
 
8    (230 ILCS 40/35)
9    Sec. 35. Display of license; confiscation; violation as
10felony.
11    (a) Each video gaming terminal shall be licensed by the
12Board before placement or operation on the premises of a
13licensed establishment, licensed truck stop establishment,
14licensed large truck stop establishment, licensed fraternal
15establishment, or licensed veterans establishment. The license
16of each video gaming terminal shall be maintained at the
17location where the video gaming terminal is operated. Failure
18to do so is a petty offense with a fine not to exceed $100. Any
19licensed establishment, licensed truck stop establishment,
20licensed large truck stop establishment, licensed fraternal
21establishment, or licensed veterans establishment used for the
22conduct of gambling games in violation of this Act shall be
23considered a gambling place in violation of Section 28-3 of
24the Criminal Code of 2012. Every gambling device found in a

 

 

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1licensed establishment, licensed truck stop establishment,
2licensed large truck stop establishment, licensed fraternal
3establishment, or licensed veterans establishment operating
4gambling games in violation of this Act shall be subject to
5seizure, confiscation, and destruction as provided in Section
628-5 of the Criminal Code of 2012. Any license issued under the
7Liquor Control Act of 1934 to any owner or operator of a
8licensed establishment, licensed truck stop establishment,
9licensed large truck stop establishment, licensed fraternal
10establishment, or licensed veterans establishment that
11operates or permits the operation of a video gaming terminal
12within its establishment in violation of this Act shall be
13immediately revoked. No person may own, operate, have in his
14or her possession or custody or under his or her control, or
15permit to be kept in any place under his or her possession or
16control, any device that awards credits and contains a
17circuit, meter, or switch capable of removing and recording
18the removal of credits when the award of credits is dependent
19upon chance.
20    Nothing in this Section shall be deemed to prohibit the
21use of a game device only if the game device is used in an
22activity that is not gambling under subsection (b) of Section
2328-1 of the Criminal Code of 2012.
24    A violation of this Section is a Class 4 felony. All
25devices that are owned, operated, or possessed in violation of
26this Section are hereby declared to be public nuisances and

 

 

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1shall be subject to seizure, confiscation, and destruction as
2provided in Section 28-5 of the Criminal Code of 2012. An
3applicant or licensee under this Act is not in violation of
4this Act or its rules and shall not be subject to disciplinary
5action or denial or non-renewal for operating a game device if
6operation of the gaming device is in compliance with and not
7considered gambling under subsection (b) of Section 28-1 of
8the Criminal Code of 2012.
9    The provisions of this Section do not apply to devices or
10electronic video game terminals licensed pursuant to this Act.
11A video gaming terminal operated for amusement only and
12bearing a valid amusement tax sticker shall not be subject to
13this Section until 30 days after the Board establishes that
14the central communications system is functional.
15    (b) (1) The odds of winning each video game shall be posted
16on or near each video gaming terminal. The manner in which the
17odds are calculated and how they are posted shall be
18determined by the Board by rule.
19    (2) No video gaming terminal licensed under this Act may
20be played except during the legal hours of operation allowed
21for the consumption of alcoholic beverages at the licensed
22establishment, licensed fraternal establishment, or licensed
23veterans establishment. A licensed establishment, licensed
24fraternal establishment, or licensed veterans establishment
25that violates this subsection is subject to termination of its
26license by the Board.

 

 

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1(Source: P.A. 101-31, eff. 6-28-19.)
 
2    Section 15. The Sports Wagering Act is amended by changing
3Section 25-70 as follows:
 
4    (230 ILCS 45/25-70)
5    (Section scheduled to be repealed on January 1, 2024)
6    Sec. 25-70. Lottery sports wagering pilot program.
7    (a) As used in this Section:
8    "Central lottery system" means the hardware, software,
9peripherals, platform, and network components provided by the
10Department's central system provider that link and support all
11required lottery games, programs, and lottery terminals,
12including, but not limited to, sports betting games in this
13State and programs through sports lottery terminals and the
14central site and that are unique and separate from the lottery
15central system for draw and instant games.
16    "Central lottery system provider" means an individual,
17partnership, corporation, or limited liability company that
18provides the hardware, software, peripherals, platform, risk
19management, operations, support services, and network
20components that link and support all required lottery games
21and lottery terminals, including, but not limited to, lottery
22sports betting games in this State and program through has
23been licensed for the purpose of providing and maintaining a
24central system and the related management facilities

 

 

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1specifically for the management of sports lottery terminals.
2    "Electronic card" means a card purchased from a lottery
3retailer.
4    "Lottery game" means any game provided for sale or
5distribution by the State lottery, including, but not limited
6to, sports betting games in this State and program through
7sports lottery terminals.
8    "Lottery retailer" means a location licensed by the
9Department or otherwise eligible for a license to sell lottery
10tickets or shares, including any licensed retail establishment
11where alcoholic liquor is drawn, poured, mixed, or otherwise
12served for consumption on premises, whether the establishment
13operates on a nonprofit or for-profit basis, any location or
14establishment that is licensed to operate video gaming
15terminals, and any other retail food establishment.
16    "Sports lottery systems" means systems provided by the
17central system provider consisting of sports wagering
18products, risk management, operations, and support services.
19    "Sports lottery terminal" means a terminal linked to the
20central system in which bills or coins are deposited or an
21electronic card is inserted in order to place wagers on a
22sports event and lottery offerings and includes sports
23wagering conducted over the Internet or through mobile
24applications or other digital platform.
25    (b) Lottery games are a part of the private management
26agreement and competitive bidding process as defined in

 

 

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1Section 9.1 of the Illinois Lottery Law. The Department shall
2issue one central system provider license pursuant to an open
3and competitive bidding process that uses the following
4procedures:
5        (1) The Department shall make applications for the
6    central system provider license available to the public
7    and allow a reasonable time for applicants to submit
8    applications to the Department.
9        (2) During the filing period for central system
10    provider license applications, the Department may retain
11    professional services to assist the Department in
12    conducting the open and competitive bidding process.
13        (3) After receiving all of the bid proposals, the
14    Department shall open all of the proposals in a public
15    forum and disclose the prospective central system provider
16    names and venture partners, if any.
17        (4) The Department shall summarize the terms of the
18    bid proposals and may make this summary available to the
19    public.
20        (5) The Department shall evaluate the bid proposals
21    within a reasonable time and select no more than 3 final
22    applicants to make presentations of their bid proposals to
23    the Department.
24        (6) The final applicants shall make their
25    presentations to the Department on the same day during an
26    open session of the Department.

 

 

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1        (7) As soon as practicable after the public
2    presentations by the final applicants, the Department, in
3    its discretion, may conduct further negotiations among the
4    3 final applicants. At the conclusion of such
5    negotiations, the Department shall select the winning bid.
6        (8) Upon selection of the winning bid, the Department
7    shall evaluate the winning bid within a reasonable period
8    of time for licensee suitability in accordance with all
9    applicable statutory and regulatory criteria.
10        (9) If the winning bidder is unable or otherwise fails
11    to consummate the transaction, (including if the
12    Department determines that the winning bidder does not
13    satisfy the suitability requirements), the Department may,
14    on the same criteria, select from the remaining bidders.
15        (10) The winning bidder shall pay $20,000,000 to the
16    Department upon being issued the central system provider
17    license.
18    (c) Every sports lottery terminal offered in this State
19for play shall first be tested and approved pursuant to the
20rules of the Department, and each sports lottery terminal
21offered in this State for play shall conform to an approved
22model that shall be ready for play in this State within 90 days
23after the effective date of this amendatory Act of the 103rd
24General Assembly and any system testing dates designated by
25the Department. For the examination of sports lottery
26terminals and associated equipment as required by this

 

 

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1Section, the central lottery system provider may utilize the
2services of one or more independent outside testing
3laboratories that have been accredited by a national
4accreditation body and that, in the judgment of the
5Department, are qualified to perform such examinations. Every
6sports lottery terminal offered in this State for play must
7meet minimum standards set by an independent outside testing
8laboratory approved by the Department.
9    (d) Sports During the first 360 days after the effective
10date of this Act, sport lottery terminals may be placed in any
11lottery no more than 2,500 Lottery retail location locations
12in the State. Sports lottery terminals may be placed in an
13additional 2,500 Lottery retail locations during the second
14year after the effective date of this Act.
15    (e) A sports lottery terminal may not directly dispense
16coins, cash, tokens, or any other article of exchange or value
17except for receipt tickets. Tickets shall be dispensed by
18pressing the ticket dispensing button on the sports lottery
19terminal at the end of the placement of one's wager or wagers.
20The ticket shall indicate the total amount wagered, odds for
21each wager placed, and the cash award for each bet placed, the
22time of day in a 24-hour format showing hours and minutes, the
23date, the terminal serial number, the sequential number of the
24ticket, and an encrypted validation number from which the
25validity of the prize may be determined. The player shall turn
26in this ticket to the appropriate person at a lottery retailer

 

 

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1to receive the cash award.
2    (f) No lottery retailer may cause or permit any person
3under the age of 21 years to use a sports lottery terminal or
4sports wagering application. A lottery retailer who knowingly
5causes or permits a person under the age of 21 years to use a
6sports lottery terminal or sports wagering application is
7guilty of a business offense and shall be fined an amount not
8to exceed $5,000.
9    (g) A sports lottery terminal shall only accept any wagers
10as determined by rule by the Department parlay wagers and
11fixed odds parlay wagers. The payouts for the sports lottery
12program shall be as follows: The Department shall, by rule,
13establish the total amount, as a percentage, of all wagers
14placed that a lottery retailer may retain.
15        (1) 80% or less of gross dollars played to be
16    distributed as prizes and awards; this amount to be
17    calculated as an average based on a 2-year anniversary
18    date to be determined by the Department and guaranteed by
19    the central lottery system provider; and
20        (2) the remaining 20% gross gaming revenue, which is
21    gross dollars played minus prizes paid, to be distributed
22    as follows:
23            (A) 8% to the central lottery system provider; and
24            (B) except as provided in items (1) and (2), 12% to
25        the State, of which the local municipality shall
26        receive 0.5% if the State is responsible for the

 

 

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1        retailer commissions and payment of the sports lottery
2        terminal;
3                (i) if a terminal operator under the Video
4            Gaming Act purchases and distributes the sports
5            lottery terminal, then 4% to the State, 3% to the
6            lottery retailer, 4.5% to the licensed terminal
7            operator, and 0.5% to the local municipality; or
8                (ii) if a Lottery retail location purchases
9            the sports lottery terminal, then 7.% goes to the
10            lottery retailer and 4% to the State, of which the
11            local municipality shall receive 0.5%.
12    (h) The Department shall have jurisdiction over and shall
13supervise all lottery sports wagering operations governed by
14this Section. The Department shall implement and administer
15the lottery sports wagering program no later than June 30,
162023. The Department shall have all powers necessary and
17proper to fully and effectively execute the provisions of this
18Section, including, but not limited to, the following:
19        (1) To investigate applicants and determine the
20    eligibility of applicants for licenses with a goal of
21    advancing minority business opportunities including
22    lottery retailer ownership of sports lottery terminals and
23    to select among competing applicants the applicants which
24    best serve the interests of the citizens of Illinois.
25        (2) To have jurisdiction and supervision over all
26    lottery sports wagering operations in this State.

 

 

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1        (3) To adopt rules for the purpose of administering
2    the provisions of this Section and to adopt rules and
3    conditions under which all lottery sports wagering in the
4    State shall be conducted. Such rules are to provide for
5    the prevention of practices detrimental to the public
6    interest and for the best interests of lottery sports
7    wagering, including rules (i) regarding the inspection of
8    such licensees necessary to operate a lottery retailer
9    under any laws or rules applicable to licensees, (ii) to
10    impose penalties for violations of the Act and its rules,
11    and (iii) establishing standards for advertising lottery
12    sports wagering, (iv) to effectuate policies that advance
13    minority business ownership and participation in the
14    sports lottery program, and (v) on apportionment of the
15    total revenues accruing from the lottery sports wagering
16    program for the purchase or lease of the hardware.
17    (i) The Department shall adopt emergency rules to
18administer this Section in accordance with Section 5-45 of the
19Illinois Administrative Procedure Act. For the purposes of the
20Illinois Administrative Procedure Act, the General Assembly
21finds that the adoption of rules to implement this Section is
22deemed an emergency and necessary to the public interest,
23safety, and welfare.
24    (j) For the privilege of operating lottery sports wagering
25under this Section, all proceeds minus net of proceeds
26returned to players shall be electronically transferred daily

 

 

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1or weekly, at the discretion of the Director of the Lottery,
2into the State Lottery Fund. After amounts owed to the central
3system provider and licensed agents, as determined by the
4Department, are paid from the moneys deposited into the State
5Lottery Fund under this subsection, the remainder shall be
6transferred on the 15th of each month to the Capital Projects
7Fund.
8    (k) The Department shall be responsible for facilitating
9either the purchase or lease of all sports lottery terminals
10including opportunities for minority business lottery
11retailers to obtain suitable financing. The Department shall
12allow for any licensed video gambling terminal operator to
13purchase or lease the sports lottery terminals and also allow
14for a lottery retail location to own or lease the sports
15lottery terminals. In addition, a percentage of the revenue
16generated by the Department from this program shall be
17allocated to funding through low interest loans or guarantee
18of loans for equipment needed for minority-owned terminal
19operators. This Section is repealed on January 1, 2024.
20(Source: P.A. 101-31, eff. 6-28-19.)
 
21    Section 20. The Prizes and Gifts Act is amended by
22changing Section 10 and by adding Sections 33 and 45 as
23follows:
 
24    (815 ILCS 525/10)

 

 

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1    Sec. 10. Definitions. As used in this Act:
2    "Catalog seller" means an entity (and its subsidiaries) or
3a person at least 50% of whose annual revenues are derived from
4the sale of products sold in connection with the distribution
5of catalogs of at least 24 pages, which contain written
6descriptions or illustrations and sale prices for each item of
7merchandise and which are distributed in more than one state
8with a total annual distribution of at least 250,000.
9    "Person" means a corporation, partnership, limited
10liability company, sole proprietorship, or natural person.
11    "Prize" means a gift, award, or other item or service of
12value that is offered or awarded to a participant in a real or
13purported contest, competition, sweepstakes, scheme, plan, or
14other selection process that involves an element of chance.
15    "Prize and gift kiosk" means a device that: (i) is used to
16promote the purchase of a bona fide product and offers or
17awards a prize, including cash, without requiring payment or
18purchase to participate in compliance with paragraph (12) of
19subsection (a) and paragraph (13) of subsection (b) of Section
2028-1 of the Criminal Code of 2012; (ii) contains a fill system
21which permits the operation of the device solely determined on
22a fee basis or the amount of revenue generated but does not
23include a system based on time, number of spins or spin
24equivalent, or other non-revenue based system and
25automatically ceases to operate upon the completion of a
26predetermined cycle; and (iii) is not connected directly or

 

 

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1indirectly to the Internet, either by cellular modem,
2hardwire, or wireless connection, or to a set of
3interconnected networked devices in order to participate in
4the game or contest or to receive or retrieve any data related
5to the device unless the connected device is a redemption
6vault that is for the sole purpose of redeeming a prize or
7award.
8    "Retail value" of a prize means:
9        (1) a price at which the sponsor can substantiate that
10    a substantial quantity of the item or service offered as a
11    prize has been sold to the public; or
12        (2) if the sponsor is unable to satisfy the
13    requirement in subdivision (1), no more than 3 times the
14    amount the sponsor paid for the prize in a bona fide
15    purchase from an unaffiliated seller.
16    "Sponsor" means a person on whose behalf a promotion is
17conducted to promote or advertise goods, services, or property
18of that person. "Sponsor" includes a person who conducts a
19promotion on behalf of another sponsor.
20(Source: P.A. 92-436, eff. 1-1-02.)
 
21    (815 ILCS 525/33 new)
22    Sec. 33. Prize and gift kiosk operation.
23    (a) It is unlawful for a person to operate on any premises
24a prize and gift kiosk that fails to meet the technical
25standard set in the definition.

 

 

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1    (b) No prize and gift kiosk shall be connected directly or
2indirectly to the Internet, either by cellular modem, hard
3wire, or wireless connection, or to a set of interconnected
4networked devices in order to participate in the game or
5contest or to receive or retrieve any data related to the kiosk
6or device unless the connected device is a redemption vault.
7    (c) It is unlawful for a prize and gift kiosk to offer the
8sale of anything other than a bona fide product.
9    (d) It is unlawful to operate a prize and gift kiosk
10without a self-contained fill system which permits the
11operation of the device solely determined on a fee basis or the
12amount of revenue generated but does not include a system
13based on time, number of spins or spin equivalent, or other
14non-revenue based system and automatically ceases to operate
15upon the completion of a predetermined cycle.
 
16    (815 ILCS 525/45 new)
17    Sec. 45. Fee. A prize and gift kiosk shall be registered
18with the Department of Revenue under section 8i ("other
19devices") of the REG-1A form of the Coin Operated Amusement
20Device (COAD) accounts and remit the annual fee as set by the
21Department. Filing for a device other than a prize and gift
22kiosk as defined in this Act shall be deemed a violation of
23filing a false report or form with the State. Violators shall
24be subject to any and all penalties for such violation
25including, but not limited to, the seizure of the device. The

 

 

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1Department of Revenue and the Illinois Liquor Control
2Commission or its designee, including any public-private task
3force, shall have jurisdiction.
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    230 ILCS 10/5.5 new
4    230 ILCS 40/35
5    230 ILCS 45/25-70
6    815 ILCS 525/10
7    815 ILCS 525/33 new
8    815 ILCS 525/45 new