97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB1212

 

Introduced 02/08/11, by Rep. LaShawn K. Ford

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 1605/2  from Ch. 120, par. 1152
20 ILCS 1605/9.1
20 ILCS 1605/20  from Ch. 120, par. 1170
20 ILCS 1605/21.9 new
30 ILCS 105/5.786 new

    Amends the Illinois Lottery Law. Requires the Department of Revenue, beginning on January 1, 2012 or as soon thereafter as is practical, to offer a special instant "After-School Rescue" scratch-off game. Requires the net revenue from that game to be deposited into the After-School Rescue Fund for appropriation by the General Assembly solely to the Illinois State Board of Education for the making of grants to at-risk schools for the promotion of extracurricular and after-school programs. Authorizes the Department, after consulting with the Illinois State Board of Education, to adopt rules necessary to implement and administer the game. Defines "net revenue". Amends the State Finance Act to create the After-School Rescue Fund. Effective immediately.


LRB097 08193 JDS 48318 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB1212LRB097 08193 JDS 48318 b

1    AN ACT concerning State government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Lottery Law is amended by changing
5Sections 2, 9.1, and 20 and by adding Section 21.9 as follows:
 
6    (20 ILCS 1605/2)  (from Ch. 120, par. 1152)
7    Sec. 2. This Act is enacted to implement and establish
8within the State a lottery to be conducted by the State through
9the Department. The entire net proceeds of the Lottery are to
10be used for the support of the State's Common School Fund,
11except as provided in subsection (o) of Section 9.1 and
12Sections 21.2, 21.5, 21.6, 21.7, and 21.8, and 21.9. The
13General Assembly finds that it is in the public interest for
14the Department to conduct the functions of the Lottery with the
15assistance of a private manager under a management agreement
16overseen by the Department. The Department shall be accountable
17to the General Assembly and the people of the State through a
18comprehensive system of regulation, audits, reports, and
19enduring operational oversight. The Department's ongoing
20conduct of the Lottery through a management agreement with a
21private manager shall act to promote and ensure the integrity,
22security, honesty, and fairness of the Lottery's operation and
23administration. It is the intent of the General Assembly that

 

 

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1the Department shall conduct the Lottery with the assistance of
2a private manager under a management agreement at all times in
3a manner consistent with 18 U.S.C. 1307(a)(1), 1307(b)(1),
41953(b)(4).
5(Source: P.A. 95-331, eff. 8-21-07; 95-673, eff. 10-11-07;
695-674, eff. 10-11-07; 95-876, eff. 8-21-08; 96-34, eff.
77-13-09.)
 
8    (20 ILCS 1605/9.1)
9    Sec. 9.1. Private manager and management agreement.
10    (a) As used in this Section:
11    "Offeror" means a person or group of persons that responds
12to a request for qualifications under this Section.
13    "Request for qualifications" means all materials and
14documents prepared by the Department to solicit the following
15from offerors:
16        (1) Statements of qualifications.
17        (2) Proposals to enter into a management agreement,
18    including the identity of any prospective vendor or vendors
19    that the offeror intends to initially engage to assist the
20    offeror in performing its obligations under the management
21    agreement.
22    "Final offer" means the last proposal submitted by an
23offeror in response to the request for qualifications,
24including the identity of any prospective vendor or vendors
25that the offeror intends to initially engage to assist the

 

 

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1offeror in performing its obligations under the management
2agreement.
3    "Final offeror" means the offeror ultimately selected by
4the Governor to be the private manager for the Lottery under
5subsection (h) of this Section.
6    (b) By September 15, 2010, the Governor shall select a
7private manager for the total management of the Lottery with
8integrated functions, such as lottery game design, supply of
9goods and services, and advertising and as specified in this
10Section.
11    (c) Pursuant to the terms of this subsection, the
12Department shall endeavor to expeditiously terminate the
13existing contracts in support of the Lottery in effect on the
14effective date of this amendatory Act of the 96th General
15Assembly in connection with the selection of the private
16manager. As part of its obligation to terminate these contracts
17and select the private manager, the Department shall establish
18a mutually agreeable timetable to transfer the functions of
19existing contractors to the private manager so that existing
20Lottery operations are not materially diminished or impaired
21during the transition. To that end, the Department shall do the
22following:
23        (1) where such contracts contain a provision
24    authorizing termination upon notice, the Department shall
25    provide notice of termination to occur upon the mutually
26    agreed timetable for transfer of functions;

 

 

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1        (2) upon the expiration of any initial term or renewal
2    term of the current Lottery contracts, the Department shall
3    not renew such contract for a term extending beyond the
4    mutually agreed timetable for transfer of functions; or
5        (3) in the event any current contract provides for
6    termination of that contract upon the implementation of a
7    contract with the private manager, the Department shall
8    perform all necessary actions to terminate the contract on
9    the date that coincides with the mutually agreed timetable
10    for transfer of functions.
11    If the contracts to support the current operation of the
12Lottery in effect on the effective date of this amendatory Act
13of the 96th General Assembly are not subject to termination as
14provided for in this subsection (c), then the Department may
15include a provision in the contract with the private manager
16specifying a mutually agreeable methodology for incorporation.
17    (c-5) The Department shall include provisions in the
18management agreement whereby the private manager shall, for a
19fee, and pursuant to a contract negotiated with the Department
20(the "Employee Use Contract"), utilize the services of current
21Department employees to assist in the administration and
22operation of the Lottery. The Department shall be the employer
23of all such bargaining unit employees assigned to perform such
24work for the private manager, and such employees shall be State
25employees, as defined by the Personnel Code. Department
26employees shall operate under the same employment policies,

 

 

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1rules, regulations, and procedures, as other employees of the
2Department. In addition, neither historical representation
3rights under the Illinois Public Labor Relations Act, nor
4existing collective bargaining agreements, shall be disturbed
5by the management agreement with the private manager for the
6management of the Lottery.
7    (d) The management agreement with the private manager shall
8include all of the following:
9        (1) A term not to exceed 10 years, including any
10    renewals.
11        (2) A provision specifying that the Department:
12            (A) shall exercise actual control over all
13        significant business decisions;
14            (A-5) has the authority to direct or countermand
15        operating decisions by the private manager at any time;
16            (B) has ready access at any time to information
17        regarding Lottery operations;
18            (C) has the right to demand and receive information
19        from the private manager concerning any aspect of the
20        Lottery operations at any time; and
21            (D) retains ownership of all trade names,
22        trademarks, and intellectual property associated with
23        the Lottery.
24        (3) A provision imposing an affirmative duty on the
25    private manager to provide the Department with material
26    information and with any information the private manager

 

 

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1    reasonably believes the Department would want to know to
2    enable the Department to conduct the Lottery.
3        (4) A provision requiring the private manager to
4    provide the Department with advance notice of any operating
5    decision that bears significantly on the public interest,
6    including, but not limited to, decisions on the kinds of
7    games to be offered to the public and decisions affecting
8    the relative risk and reward of the games being offered, so
9    the Department has a reasonable opportunity to evaluate and
10    countermand that decision.
11        (5) A provision providing for compensation of the
12    private manager that may consist of, among other things, a
13    fee for services and a performance based bonus as
14    consideration for managing the Lottery, including terms
15    that may provide the private manager with an increase in
16    compensation if Lottery revenues grow by a specified
17    percentage in a given year.
18        (6) (Blank).
19        (7) A provision requiring the deposit of all Lottery
20    proceeds to be deposited into the State Lottery Fund.
21        (8) A provision requiring the private manager to locate
22    its principal office within the State.
23        (8-5) A provision encouraging that at least 20% of the
24    cost of contracts entered into for goods and services by
25    the private manager in connection with its management of
26    the Lottery, other than contracts with sales agents or

 

 

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1    technical advisors, be awarded to businesses that are a
2    minority owned business, a female owned business, or a
3    business owned by a person with disability, as those terms
4    are defined in the Business Enterprise for Minorities,
5    Females, and Persons with Disabilities Act.
6        (9) A requirement that so long as the private manager
7    complies with all the conditions of the agreement under the
8    oversight of the Department, the private manager shall have
9    the following duties and obligations with respect to the
10    management of the Lottery:
11            (A) The right to use equipment and other assets
12        used in the operation of the Lottery.
13            (B) The rights and obligations under contracts
14        with retailers and vendors.
15            (C) The implementation of a comprehensive security
16        program by the private manager.
17            (D) The implementation of a comprehensive system
18        of internal audits.
19            (E) The implementation of a program by the private
20        manager to curb compulsive gambling by persons playing
21        the Lottery.
22            (F) A system for determining (i) the type of
23        Lottery games, (ii) the method of selecting winning
24        tickets, (iii) the manner of payment of prizes to
25        holders of winning tickets, (iv) the frequency of
26        drawings of winning tickets, (v) the method to be used

 

 

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1        in selling tickets, (vi) a system for verifying the
2        validity of tickets claimed to be winning tickets,
3        (vii) the basis upon which retailer commissions are
4        established by the manager, and (viii) minimum
5        payouts.
6        (10) A requirement that advertising and promotion must
7    be consistent with Section 7.8a of this Act.
8        (11) A requirement that the private manager market the
9    Lottery to those residents who are new, infrequent, or
10    lapsed players of the Lottery, especially those who are
11    most likely to make regular purchases on the Internet as
12    permitted by law.
13        (12) A code of ethics for the private manager's
14    officers and employees.
15        (13) A requirement that the Department monitor and
16    oversee the private manager's practices and take action
17    that the Department considers appropriate to ensure that
18    the private manager is in compliance with the terms of the
19    management agreement, while allowing the manager, unless
20    specifically prohibited by law or the management
21    agreement, to negotiate and sign its own contracts with
22    vendors.
23        (14) A provision requiring the private manager to
24    periodically file, at least on an annual basis, appropriate
25    financial statements in a form and manner acceptable to the
26    Department.

 

 

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1        (15) Cash reserves requirements.
2        (16) Procedural requirements for obtaining the prior
3    approval of the Department when a management agreement or
4    an interest in a management agreement is sold, assigned,
5    transferred, or pledged as collateral to secure financing.
6        (17) Grounds for the termination of the management
7    agreement by the Department or the private manager.
8        (18) Procedures for amendment of the agreement.
9        (19) A provision requiring the private manager to
10    engage in an open and competitive bidding process for any
11    procurement having a cost in excess of $50,000 that is not
12    a part of the private manager's final offer. The process
13    shall favor the selection of a vendor deemed to have
14    submitted a proposal that provides the Lottery with the
15    best overall value. The process shall not be subject to the
16    provisions of the Illinois Procurement Code, unless
17    specifically required by the management agreement.
18        (20) The transition of rights and obligations,
19    including any associated equipment or other assets used in
20    the operation of the Lottery, from the manager to any
21    successor manager of the lottery, including the
22    Department, following the termination of or foreclosure
23    upon the management agreement.
24        (21) Right of use of copyrights, trademarks, and
25    service marks held by the Department in the name of the
26    State. The agreement must provide that any use of them by

 

 

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1    the manager shall only be for the purpose of fulfilling its
2    obligations under the management agreement during the term
3    of the agreement.
4    (e) Notwithstanding any other law to the contrary, the
5Department shall select a private manager through a competitive
6request for qualifications process consistent with Section
720-35 of the Illinois Procurement Code, which shall take into
8account:
9        (1) the offeror's ability to market the Lottery to
10    those residents who are new, infrequent, or lapsed players
11    of the Lottery, especially those who are most likely to
12    make regular purchases on the Internet;
13        (2) the offeror's ability to address the State's
14    concern with the social effects of gambling on those who
15    can least afford to do so;
16        (3) the offeror's ability to provide the most
17    successful management of the Lottery for the benefit of the
18    people of the State based on current and past business
19    practices or plans of the offeror; and
20        (4) the offeror's poor or inadequate past performance
21    in servicing, equipping, operating or managing a lottery on
22    behalf of Illinois, another State or foreign government and
23    attracting persons who are not currently regular players of
24    a lottery.
25    (f) The Department may retain the services of an advisor or
26advisors with significant experience in financial services or

 

 

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1the management, operation, and procurement of goods, services,
2and equipment for a government-run lottery to assist in the
3preparation of the terms of the request for qualifications and
4selection of the private manager. Any prospective advisor
5seeking to provide services under this subsection (f) shall
6disclose any material business or financial relationship
7during the past 3 years with any potential offeror, or with a
8contractor or subcontractor presently providing goods,
9services, or equipment to the Department to support the
10Lottery. The Department shall evaluate the material business or
11financial relationship of each prospective advisor. The
12Department shall not select any prospective advisor with a
13substantial business or financial relationship that the
14Department deems to impair the objectivity of the services to
15be provided by the prospective advisor. During the course of
16the advisor's engagement by the Department, and for a period of
17one year thereafter, the advisor shall not enter into any
18business or financial relationship with any offeror or any
19vendor identified to assist an offeror in performing its
20obligations under the management agreement. Any advisor
21retained by the Department shall be disqualified from being an
22offeror. The Department shall not include terms in the request
23for qualifications that provide a material advantage whether
24directly or indirectly to any potential offeror, or any
25contractor or subcontractor presently providing goods,
26services, or equipment to the Department to support the

 

 

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1Lottery, including terms contained in previous responses to
2requests for proposals or qualifications submitted to
3Illinois, another State or foreign government when those terms
4are uniquely associated with a particular potential offeror,
5contractor, or subcontractor. The request for proposals
6offered by the Department on December 22, 2008 as
7"LOT08GAMESYS" and reference number "22016176" is declared
8void.
9    (g) The Department shall select at least 2 offerors as
10finalists to potentially serve as the private manager no later
11than August 9, 2010. Upon making preliminary selections, the
12Department shall schedule a public hearing on the finalists'
13proposals and provide public notice of the hearing at least 7
14calendar days before the hearing. The notice must include all
15of the following:
16        (1) The date, time, and place of the hearing.
17        (2) The subject matter of the hearing.
18        (3) A brief description of the management agreement to
19    be awarded.
20        (4) The identity of the offerors that have been
21    selected as finalists to serve as the private manager.
22        (5) The address and telephone number of the Department.
23    (h) At the public hearing, the Department shall (i) provide
24sufficient time for each finalist to present and explain its
25proposal to the Department and the Governor or the Governor's
26designee, including an opportunity to respond to questions

 

 

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1posed by the Department, Governor, or designee and (ii) allow
2the public and non-selected offerors to comment on the
3presentations. The Governor or a designee shall attend the
4public hearing. After the public hearing, the Department shall
5have 14 calendar days to recommend to the Governor whether a
6management agreement should be entered into with a particular
7finalist. After reviewing the Department's recommendation, the
8Governor may accept or reject the Department's recommendation,
9and shall select a final offeror as the private manager by
10publication of a notice in the Illinois Procurement Bulletin on
11or before September 15, 2010. The Governor shall include in the
12notice a detailed explanation and the reasons why the final
13offeror is superior to other offerors and will provide
14management services in a manner that best achieves the
15objectives of this Section. The Governor shall also sign the
16management agreement with the private manager.
17    (i) Any action to contest the private manager selected by
18the Governor under this Section must be brought within 7
19calendar days after the publication of the notice of the
20designation of the private manager as provided in subsection
21(h) of this Section.
22    (j) The Lottery shall remain, for so long as a private
23manager manages the Lottery in accordance with provisions of
24this Act, a Lottery conducted by the State, and the State shall
25not be authorized to sell or transfer the Lottery to a third
26party.

 

 

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1    (k) Any tangible personal property used exclusively in
2connection with the lottery that is owned by the Department and
3leased to the private manager shall be owned by the Department
4in the name of the State and shall be considered to be public
5property devoted to an essential public and governmental
6function.
7    (l) The Department may exercise any of its powers under
8this Section or any other law as necessary or desirable for the
9execution of the Department's powers under this Section.
10    (m) Neither this Section nor any management agreement
11entered into under this Section prohibits the General Assembly
12from authorizing forms of gambling that are not in direct
13competition with the Lottery.
14    (n) The private manager shall be subject to a complete
15investigation in the third, seventh, and tenth years of the
16agreement (if the agreement is for a 10-year term) by the
17Department in cooperation with the Auditor General to determine
18whether the private manager has complied with this Section and
19the management agreement. The private manager shall bear the
20cost of an investigation or reinvestigation of the private
21manager under this subsection.
22    (o) The powers conferred by this Section are in addition
23and supplemental to the powers conferred by any other law. If
24any other law or rule is inconsistent with this Section,
25including, but not limited to, provisions of the Illinois
26Procurement Code, then this Section controls as to any

 

 

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1management agreement entered into under this Section. This
2Section and any rules adopted under this Section contain full
3and complete authority for a management agreement between the
4Department and a private manager. No law, procedure,
5proceeding, publication, notice, consent, approval, order, or
6act by the Department or any other officer, Department, agency,
7or instrumentality of the State or any political subdivision is
8required for the Department to enter into a management
9agreement under this Section. This Section contains full and
10complete authority for the Department to approve any contracts
11entered into by a private manager with a vendor providing
12goods, services, or both goods and services to the private
13manager under the terms of the management agreement.
14    Except as provided in Sections 21.2, 21.5, 21.6, 21.7, and
1521.8, and 21.9, the Department shall distribute all proceeds of
16lottery tickets and shares sold in the following priority and
17manner:
18        (1) The payment of prizes and retailer bonuses.
19        (2) The payment of costs incurred in the operation and
20    administration of the Lottery, including the payment of
21    sums due to the private manager under the management
22    agreement with the Department and payment of sums due to
23    the private vendor for lottery tickets and shares sold on
24    the Internet via the pilot program as compensation under
25    its contract with the Department.
26        (3) On the last day of each month or as soon thereafter

 

 

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1    as possible, the State Comptroller shall direct and the
2    State Treasurer shall transfer from the Lottery Fund to the
3    Common School Fund an amount that is equal to the proceeds
4    transferred in the corresponding month of fiscal year 2009,
5    as adjusted for inflation, to the Common School Fund.
6        (4) On or before the last day of each fiscal year,
7    deposit any remaining proceeds, subject to payments under
8    items (1), (2), and (3) into the Capital Projects Fund each
9    fiscal year.
10(Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09; 96-840,
11eff. 12-23-09.)
 
12    (20 ILCS 1605/20)  (from Ch. 120, par. 1170)
13    Sec. 20. State Lottery Fund.
14    (a) There is created in the State Treasury a special fund
15to be known as the "State Lottery Fund". Such fund shall
16consist of all revenues received from (1) the sale of lottery
17tickets or shares, (net of commissions, fees representing those
18expenses that are directly proportionate to the sale of tickets
19or shares at the agent location, and prizes of less than $600
20which have been validly paid at the agent level), (2)
21application fees, and (3) all other sources including moneys
22credited or transferred thereto from any other fund or source
23pursuant to law. Interest earnings of the State Lottery Fund
24shall be credited to the Common School Fund.
25    (b) The receipt and distribution of moneys under Section

 

 

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121.5 of this Act shall be in accordance with Section 21.5.
2    (c) The receipt and distribution of moneys under Section
321.6 of this Act shall be in accordance with Section 21.6.
4    (d) The receipt and distribution of moneys under Section
521.7 of this Act shall be in accordance with Section 21.7.
6    (e) The receipt and distribution of moneys under Section
721.8 of this Act shall be in accordance with Section 21.8.
8    (f) The receipt and distribution of moneys under Section
921.9 of this Act shall be in accordance with Section 21.9.
10(Source: P.A. 94-120, eff. 7-6-05; 94-585, eff. 8-15-05;
1195-331, eff. 8-21-07; 95-673, eff. 10-11-07; 95-674, eff.
1210-11-07; 95-876, eff. 8-21-08.)
 
13    (20 ILCS 1605/21.9 new)
14    Sec. 21.9. "After-School Rescue" scratch-off game.
15    (a) The Department shall offer a special instant
16"After-School Rescue" scratch-off game, which shall commence
17on January 1, 2012, or as soon thereafter as is, in the view of
18the Director, reasonably practical. The operation of the game
19shall be governed by this Act and any rules adopted by the
20Department. If any provision of this Section is inconsistent
21with any other provision of this Act, then this Section
22governs.
23    (b) The After-School Rescue Fund is created as a special
24fund in the State treasury. The net revenue from the
25"After-School Rescue" scratch-off game shall be deposited into

 

 

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1the Fund for appropriation by the General Assembly solely to
2the Illinois State Board of Education for the making of grants
3to at-risk schools for the promotion of extracurricular and
4after-school programs.
5    Moneys received for the purposes of this Section,
6including, without limitation, net revenue from the special
7instant scratch-off game and from gifts, grants, and awards
8from any public or private entity, must be deposited into the
9Fund. Any interest attributable to moneys in the Fund must be
10deposited into the Fund.
11    For purposes of this subsection, "net revenue" means the
12total amount for which tickets have been sold less the sum of
13the amount paid out in the prizes and the actual administrative
14expenses of the Department solely related to the scratch-off
15game under this Section.
16    (c) During the time that tickets are sold for the
17"After-School Rescue" scratch-off game, the Department shall
18not unreasonably diminish the efforts devoted to marketing any
19other instant scratch-off lottery game.
20    (d) The Department may, after consulting with the Illinois
21State Board of Education, adopt any rules necessary to
22implement and administer the provisions of this Section.
 
23    Section 10. The State Finance Act is amended by adding
24Section 5.786 as follows:
 

 

 

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1    (30 ILCS 105/5.786 new)
2    Sec. 5.786. The After-School Rescue Fund.
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.