HB3850 103RD GENERAL ASSEMBLY

LRB103 29616 AMQ 56012 b

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.

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 Illinois Gambling Act is amended by adding Section 5.5 as follows:

(230 ILCS 10/5.5 new)

Sec. 5.5. Illinois Gaming Oversight Officer.

(a) The position of Illinois Gaming Oversight Officer is created within the Illinois Gaming Board under the Administrator. The Oversight Officer shall be appointed by the Governor with recommendations given by the Speaker of the House of Representatives.

(b) The Oversight Officer may:

(1) maintain a staff;

(2) make recommendations for policy, statute, and rule changes;

(3) collect data both in and outside this State regarding the regulation of gaming and exempted or quasi-gaming;

(4) compile or assist in the compilation of any reports required by this Act;

(5) ensure the coordination of efforts between various State agencies involved in regulating and taxing gaming and exempted or quasi-gaming in this State; and

(6) encourage, promote, suggest, and report best practices for ensuring diversity in the gaming and exempted or quasi-gaming industry in this State.

(c) Any funding required for the Oversight Officer, its staff, or its activities shall be appropriated as part of the funding for the Illinois Gaming Board.

(d) The Oversight Officer shall commission and publish a disparity and availability study on a biannual basis that: (i) evaluates whether there exists discrimination in the State's gaming industry; and (ii) if so, evaluates the impact of such discrimination on the State and includes recommendations to the Speaker of the House of Representatives for reducing or eliminating any identified barriers to entry in the gaming market. The Oversight Officer shall forward a copy of its findings and recommendations to the Illinois Gaming Board, the Department of Commerce and Economic Opportunity, the General Assembly, and the Governor.

(e) The Oversight Officer shall have a budget set by the General Assembly for the purpose of contracting with a third party to assist in completing the disparity study. The Oversight Officer shall have the authority to select and hire outside firms for the purpose of completing the disparity study.

(f) The Oversight Officer may compile, collect, or otherwise gather data necessary for the administration of this Act and to carry out the Officer's duty relating to the recommendation of policy changes. The Oversight Officer may direct the Illinois Gaming Board and Department of Commerce and Economic Opportunity to assist in the compilation, collection, and data gathering authorized pursuant to this Section. The Oversight Officer shall compile all of the data into a single report and submit the report to the Governor and the General Assembly and publish the report on its website.

(g) The Oversight Officer shall pair eligible minority businesses with terminal operator licensees or casino licensees for mentoring. The Oversight Officer shall develop a mentorship program to assist minority-owned businesses to transition into gaming opportunities under the Illinois Gambling Act and Video Gaming Act. An eligible minority-owned business is one that operates or has applied to operate any activity covered under subsection (b) of Section 28-1 of the Criminal Code of 2012, like bingo, charitable games, lottery, poker runs, raffles, and prize and gift kiosks.

(h) 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. The pilot program shall establish a reduction in fees to apply for and receive a license and set a limit for the Illinois Gaming Board of up to 6 months from the date an application is submitted for a determination on suitability and licensure. The pilot program shall also create the process for and terms related to subsidized or guaranteed loans for video gaming terminals, redemption vaults, and related equipment to licensed minority terminal operators as funded and secured by the revenues from the sports lottery kiosk program.

Section 10. 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.

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. 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 or denial or non-renewal for operating a game device if operation of the gaming device is in compliance with and not considered gambling under subsection (b) of Section 28-1 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 15. 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 lottery terminals, including, but not limited to, sports betting games in this State 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, lottery sports betting games in this State and program 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 State lottery, including, but not limited to, sports betting games in this State and program 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 any licensed retail establishment where alcoholic liquor is drawn, poured, mixed, or otherwise served for consumption on premises, 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 system provider consisting of sports wagering products, risk management, operations, and support services.

"Sports lottery terminal" means a terminal linked to the central 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 platform.

(b) Lottery games are a part of the private management agreement and competitive bidding process as defined in Section 9.1 of the Illinois Lottery Law. 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 that shall be ready for play in this State within 90 days after the effective date of this amendatory Act of the 103rd 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 lottery 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 payouts for the sports lottery program shall be as follows: The Department shall, by rule, establish the total amount, as a percentage, of all wagers placed that a lottery retailer may retain.

(1) 80% or less of gross dollars played to be distributed as prizes and awards; this amount to 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) the remaining 20% gross gaming revenue, which is 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 items (1) and (2), 12% to the State, of which the local municipality shall receive 0.5% 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 licensed terminal operator, and 0.5% to the local municipality; or

(ii) if a Lottery retail location purchases the sports lottery terminal, then 7.% goes to the lottery retailer and 4% to the State, of which the local municipality shall receive 0.5%.

(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 program no later than June 30, 2023. 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) on apportionment of the total revenues accruing from the lottery sports wagering 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.

(k) The Department shall be responsible for facilitating either the purchase or lease of all sports lottery terminals including opportunities for minority business lottery retailers to obtain suitable financing. The Department shall allow for any licensed video gambling terminal operator to purchase or lease the sports lottery terminals and also allow for a lottery retail location to own or lease the sports lottery terminals. In addition, a percentage of the revenue generated by the Department from this program shall be allocated to funding through low interest loans or guarantee of loans for equipment needed for minority-owned terminal operators. This Section is repealed on January 1, 2024.

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

Section 20. The Prizes and Gifts Act is amended by changing Section 10 and by adding Sections 33 and 45 as follows:

(815 ILCS 525/10)

Sec. 10. Definitions. As used in this Act:

"Catalog seller" means an entity (and its subsidiaries) or a person at least 50% of whose annual revenues are derived from the sale of products sold in connection with the distribution of catalogs of at least 24 pages, which contain written descriptions or illustrations and sale prices for each item of merchandise and which are distributed in more than one state with a total annual distribution of at least 250,000.

"Person" means a corporation, partnership, limited liability company, sole proprietorship, or natural person.

"Prize" means a gift, award, or other item or service of value that is offered or awarded to a participant in a real or purported contest, competition, sweepstakes, scheme, plan, or other selection process that involves an element of chance.

"Prize and gift kiosk" means a device that: (i) is used to promote the purchase of a bona fide product and offers or awards a prize, including cash, without requiring payment or purchase to participate in compliance with paragraph (12) of subsection (a) and paragraph (13) of subsection (b) of Section 28-1 of the Criminal Code of 2012; (ii) contains a fill system which permits the operation of the device solely determined on a fee basis or the amount of revenue generated but does not include a system based on time, number of spins or spin equivalent, or other non-revenue based system and automatically ceases to operate upon the completion of a predetermined cycle; and (iii) is not connected directly or indirectly to the Internet, either by cellular modem, hardwire, 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 device unless the connected device is a redemption vault that is for the sole purpose of redeeming a prize or award.

"Retail value" of a prize means:

(1) a price at which the sponsor can substantiate that a substantial quantity of the item or service offered as a prize has been sold to the public; or

(2) if the sponsor is unable to satisfy the requirement in subdivision (1), no more than 3 times the amount the sponsor paid for the prize in a bona fide purchase from an unaffiliated seller.

"Sponsor" means a person on whose behalf a promotion is conducted to promote or advertise goods, services, or property of that person. "Sponsor" includes a person who conducts a promotion on behalf of another sponsor.

(Source: P.A. 92-436, eff. 1-1-02.)

(815 ILCS 525/33 new)

Sec. 33. Prize and gift kiosk operation.

(a) It is unlawful for a person to operate on any premises a prize and gift kiosk that fails to meet the technical standard set in the definition.

(b) 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.

(c) It is unlawful for a prize and gift kiosk to offer the sale of anything other than a bona fide product.

(d) It is unlawful to operate a prize and gift kiosk without a self-contained fill system which permits the operation of the device solely determined on a fee basis or the amount of revenue generated but does not include a system based on time, number of spins or spin equivalent, or other non-revenue based system and automatically ceases to operate upon the completion of a predetermined cycle.

(815 ILCS 525/45 new)

Sec. 45. Fee. A prize and gift kiosk shall be registered with the Department of Revenue under section 8i ("other devices") of the REG-1A form of the Coin Operated Amusement Device (COAD) accounts and remit the annual fee as set by the Department. Filing for a device other than a prize and gift kiosk as defined in this Act shall be deemed a violation of filing a false report or form with the State. Violators shall be subject to any and all penalties for such violation including, but not limited to, the seizure of the device. The Department of Revenue and the Illinois Liquor Control Commission or its designee, including any public-private task force, shall have jurisdiction.

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