HB4087 102ND GENERAL ASSEMBLY

LRB102 18479 SMS 26618 b

102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB4087

Introduced 5/25/2021, by Rep. Jonathan Carroll

SYNOPSIS AS INTRODUCED:

230 ILCS 40/35
230 ILCS 45/25-70

Amends the Video Gaming Act. Provides that an applicant or licensee under the Act is not in violation of the Act or its rules and shall not be subject to disciplinary action for operating a game device if operation of the game device is in compliance with and not considered gambling under the Criminal Code of 2012. Amends the Sports Wagering Act. In provisions concerning the lottery sports wagering pilot program, provides that all lottery games, including sports wagering games and programs, are a part of the Department of the Lottery's private management agreement 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 the Department to implement and administer the program no later than June 30, 2021 and that sports lottery terminals be available for play within 90 days after the effective date of the amendatory Act. Makes changes in provisions concerning the placement of sports lottery terminals, wagers accepted, distribution of proceeds, and the Department's powers. Provides that the Department shall be responsible for facilitating the purchase or lease of all sports lottery terminals. Changes the repeal date of the pilot program to January 1, 2029 (rather than January 1, 2024). Makes other changes. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning gaming.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Video Gaming Act is amended by changing Section 35 as follows:

(230 ILCS 40/35)

Sec. 35. Display of license; confiscation; violation as felony.

(a) Each video gaming terminal shall be licensed by the Board before placement or operation on the premises of a licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment. The license of each video gaming terminal shall be maintained at the location where the video gaming terminal is operated. Failure to do so is a petty offense with a fine not to exceed $100. Any licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment used for the conduct of gambling games in violation of this Act shall be considered a gambling place in violation of Section 28-3 of the Criminal Code of 2012. Every gambling device found in a licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment operating gambling games in violation of this Act shall be subject to seizure, confiscation, and destruction as provided in Section 28-5 of the Criminal Code of 2012. Any license issued under the Liquor Control Act of 1934 to any owner or operator of a licensed establishment, licensed truck stop establishment, licensed large truck stop establishment, licensed fraternal establishment, or licensed veterans establishment that operates or permits the operation of a video gaming terminal within its establishment in violation of this Act shall be immediately revoked. No person may own, operate, have in his or her possession or custody or under his or her control, or permit to be kept in any place under his or her possession or control, any device that awards credits and contains a circuit, meter, or switch capable of removing and recording the removal of credits when the award of credits is dependent upon chance.

Nothing in this Section shall be deemed to prohibit the use of a game device only if the game device is used in an activity that is not gambling under subsection (b) of Section 28-1 of the Criminal Code of 2012. An applicant or licensee under this Act is not in violation of this Act or its rules and shall not be subject to disciplinary action for operating a game device if operation of the game device is in compliance with and not considered gambling under subsection (b) of Section 28-1 of the Criminal Code of 2012.

A violation of this Section is a Class 4 felony. All devices that are owned, operated, or possessed in violation of this Section are hereby declared to be public nuisances and shall be subject to seizure, confiscation, and destruction as provided in Section 28-5 of the Criminal Code of 2012.

The provisions of this Section do not apply to devices or electronic video game terminals licensed pursuant to this Act. A video gaming terminal operated for amusement only and bearing a valid amusement tax sticker shall not be subject to this Section until 30 days after the Board establishes that the central communications system is functional.

(b) (1) The odds of winning each video game shall be posted on or near each video gaming terminal. The manner in which the odds are calculated and how they are posted shall be determined by the Board by rule.

(2) No video gaming terminal licensed under this Act may be played except during the legal hours of operation allowed for the consumption of alcoholic beverages at the licensed establishment, licensed fraternal establishment, or licensed veterans establishment. A licensed establishment, licensed fraternal establishment, or licensed veterans establishment that violates this subsection is subject to termination of its license by the Board.

(Source: P.A. 101-31, eff. 6-28-19.)

Section 10. The Sports Wagering Act is amended by changing Section 25-70 as follows:

(230 ILCS 45/25-70)

(Section scheduled to be repealed on January 1, 2024)

Sec. 25-70. Lottery sports wagering pilot program.

(a) As used in this Section:

"Central lottery system" means the hardware, software, peripherals, platform, and network components provided by the Department's central system provider that link and support all required lottery games, programs, and terminals, including, but not limited to, sports wagering games and programs through sports lottery terminals and the central site and that are unique and separate from the lottery central system for draw and instant games.

"Central lottery system provider" means an individual, partnership, corporation, or limited liability company that provides the hardware, software, peripherals, platform, risk management, operations, support services, and network components that link and support all required lottery games and lottery terminals, including, but not limited to, sports wagering games and programs through has been licensed for the purpose of providing and maintaining a central system and the related management facilities specifically for the management of sports lottery terminals.

"Electronic card" means a card purchased from a lottery retailer.

"Lottery game" means any game provided for sale or distribution by the Illinois Lottery, including, but not limited to, sports wagering games and programs through sports lottery terminals.

"Lottery retailer" means a location licensed by the Department, or otherwise eligible for a license, to sell lottery tickets or shares, including a licensed retail establishment where alcoholic liquor is drawn, poured, mixed, or otherwise served for consumption on premises, regardless of whether the establishment operates on a nonprofit or for-profit basis, any location or establishment that is licensed to operate video gaming terminals, and any other retail food establishment.

"Sports lottery systems" means systems provided by the central lottery system provider consisting of sports wagering products, risk management, operations, and support services.

"Sports lottery terminal" means a terminal linked to the central lottery system in which bills or coins are deposited or an electronic card is inserted in order to place wagers on a sports event and lottery offerings and includes sports wagering conducted over the Internet or through mobile applications or other digital platforms.

(b) Lottery games are a part of the private management agreement and competitive bidding process provided in Section 9.1 of the Illinois Lottery Law. The central lottery system provider shall pay $10,000,000, payable in equal installments over the course of its contract, to the Department upon being issued the central lottery system provider license authorizing sports wagering games and programs under this Section. The fee, however, shall be deducted from the central lottery system provider's operational costs related to the sports lottery infrastructure up to the pro rata amount paid each year. The Department shall issue one central system provider license pursuant to an open and competitive bidding process that uses the following procedures:

(1) The Department shall make applications for the central system provider license available to the public and allow a reasonable time for applicants to submit applications to the Department.

(2) During the filing period for central system provider license applications, the Department may retain professional services to assist the Department in conducting the open and competitive bidding process.

(3) After receiving all of the bid proposals, the Department shall open all of the proposals in a public forum and disclose the prospective central system provider names and venture partners, if any.

(4) The Department shall summarize the terms of the bid proposals and may make this summary available to the public.

(5) The Department shall evaluate the bid proposals within a reasonable time and select no more than 3 final applicants to make presentations of their bid proposals to the Department.

(6) The final applicants shall make their presentations to the Department on the same day during an open session of the Department.

(7) As soon as practicable after the public presentations by the final applicants, the Department, in its discretion, may conduct further negotiations among the 3 final applicants. At the conclusion of such negotiations, the Department shall select the winning bid.

(8) Upon selection of the winning bid, the Department shall evaluate the winning bid within a reasonable period of time for licensee suitability in accordance with all applicable statutory and regulatory criteria.

(9) If the winning bidder is unable or otherwise fails to consummate the transaction, (including if the Department determines that the winning bidder does not satisfy the suitability requirements), the Department may, on the same criteria, select from the remaining bidders.

(10) The winning bidder shall pay $20,000,000 to the Department upon being issued the central system provider license.

(c) Every sports lottery terminal offered in this State for play shall first be tested and approved pursuant to the rules of the Department, and each sports lottery terminal offered in this State for play shall conform to an approved model. Sports lottery terminals shall be available for play within 90 days after the effective date of this amendatory Act of the 102nd General Assembly and any system testing dates designated by the Department. For the examination of sports lottery terminals and associated equipment as required by this Section, the central lottery system provider may utilize the services of one or more independent outside testing laboratories that have been accredited by a national accreditation body and that, in the judgment of the Department, are qualified to perform such examinations. Every sports lottery terminal offered in this State for play must meet minimum standards set by an independent outside testing laboratory approved by the Department.

(d) Sports During the first 360 days after the effective date of this Act, sport lottery terminals may be placed in any no more than 2,500 Lottery retail location locations in the State. Sports lottery terminals may be placed in an additional 2,500 Lottery retail locations during the second year after the effective date of this Act.

(e) A sports lottery terminal may not directly dispense coins, cash, tokens, or any other article of exchange or value except for receipt tickets. Tickets shall be dispensed by pressing the ticket dispensing button on the sports lottery terminal at the end of the placement of one's wager or wagers. The ticket shall indicate the total amount wagered, odds for each wager placed, and the cash award for each bet placed, the time of day in a 24-hour format showing hours and minutes, the date, the terminal serial number, the sequential number of the ticket, and an encrypted validation number from which the validity of the prize may be determined. The player shall turn in this ticket to the appropriate person at a lottery retailer to receive the cash award.

(f) No lottery retailer may cause or permit any person under the age of 21 years to use a sports lottery terminal or sports wagering application. A lottery retailer who knowingly causes or permits a person under the age of 21 years to use a sports lottery terminal or sports wagering application is guilty of a business offense and shall be fined an amount not to exceed $5,000.

(g) A sports lottery terminal shall only accept any wagers as determined by rule by the Department. parlay wagers and fixed odds parlay wagers. The Department shall, by rule, establish the total amount, as a percentage, of all wagers placed that a lottery retailer may retain.

(g-5) The payouts for the lottery sports wagering pilot program shall be as follows:

(1) 80% or less of gross dollars played to be distributed as prizes and awards; this amount shall be calculated as an average based on a 2-year anniversary date to be determined by the Department and guaranteed by the central lottery system provider; and

(2) 20% gross gaming revenue remaining (gross dollars played minus prizes paid) to be distributed as follows:

(A) 8% to the central lottery system provider; and

(B) except as provided in subparagraphs (i) and (ii), 11.5% to the State of Illinois, of which the local municipality shall receive .5%. if the State is responsible for the retailer commissions and payment of the sports lottery terminal;

(i) if a terminal operator under the Video Gaming Act purchases and distributes the sports lottery terminal, then 4% to the State, 3% to the lottery retailer, 4.5% to the terminal operator, and .5% to the local municipality; and

(ii) if a Lottery retail location purchases the sports lottery terminal, then 7.5% goes to the Lottery retail location and 4% to the State, of which the local municipality shall receive .5%.

(h) The Department shall have jurisdiction over and shall supervise all lottery sports wagering operations governed by this Section. The Department shall implement and administer the lottery sports wagering pilot program no later than June 30, 2021. The Department shall have all powers necessary and proper to fully and effectively execute the provisions of this Section, including, but not limited to, the following:

(1) To investigate applicants and determine the eligibility of applicants for licenses with a goal of advancing minority business opportunities, including lottery retailer ownership of sports lottery terminals and to select among competing applicants the applicants which best serve the interests of the citizens of Illinois.

(2) To have jurisdiction and supervision over all lottery sports wagering operations in this State.

(3) To adopt rules for the purpose of administering the provisions of this Section and to adopt rules and conditions under which all lottery sports wagering in the State shall be conducted. Such rules are to provide for the prevention of practices detrimental to the public interest and for the best interests of lottery sports wagering, including rules (i) regarding the inspection of such licensees necessary to operate a lottery retailer under any laws or rules applicable to licensees, (ii) to impose penalties for violations of the Act and its rules, and (iii) establishing standards for advertising lottery sports wagering, (iv) to effectuate policies that advance minority business ownership and participation in the sports lottery program, and (v) regarding apportionment of the total revenues accruing from the lottery sports wagering pilot program for the purchase or lease of the hardware.

(i) The Department shall adopt emergency rules to administer this Section in accordance with Section 5-45 of the Illinois Administrative Procedure Act. For the purposes of the Illinois Administrative Procedure Act, the General Assembly finds that the adoption of rules to implement this Section is deemed an emergency and necessary to the public interest, safety, and welfare.

(j) For the privilege of operating lottery sports wagering under this Section, all proceeds minus net of proceeds returned to players shall be electronically transferred daily or weekly, at the discretion of the Director of the Lottery, into the State Lottery Fund. After amounts owed to the central system provider and licensed agents, as determined by the Department, are paid from the moneys deposited into the State Lottery Fund under this subsection, the remainder shall be transferred on the 15th of each month to the Capital Projects Fund.

(j-5) The Department shall be responsible for facilitating either the purchase or lease of all sports lottery terminals, including providing opportunities for minority business lottery retailers to obtain suitable financing. The Department shall allow for any terminal operator under the Video Gaming Act and Lottery retail location to purchase or lease the sports lottery terminals.

(k) This Section is repealed on January 1, 2029 2024.

(Source: P.A. 101-31, eff. 6-28-19.)

Section 99. Effective date. This Act takes effect upon becoming law.