565.02 Lottery operations.

(1)

(a) Prior to appointing an administrator, the department shall conduct a nationwide search to find the best, most qualified appointee and consider the business management experience, marketing experience, computer experience and lottery management experience of the applicants.

(b) Notwithstanding s. 111.321, no person may serve as the administrator if he or she has been convicted of, or entered a plea of guilty or no contest to, any of the following:

1. A felony, other than a felony conviction for an offense under subds. 2. to 4., during the immediately preceding 10 years, unless the person has been pardoned.

2. A gambling-related offense.

3. Fraud or misrepresentation in any connection.

4. A violation of a provision of this chapter or rule of the department relating to the state lottery.

(c) Before appointment of an administrator is made, the department, with the assistance of the department of justice, shall conduct a background investigation of the proposed administrator. The department shall require the proposed administrator to be photographed and fingerprinted. The department of justice may submit the fingerprints to the federal bureau of investigation for the purposes of verifying the identity of the person fingerprinted and obtaining records of his or her criminal arrests and convictions. The department, with the assistance of the department of justice, shall repeat the background investigation of the administrator every 5 years. The department shall reimburse the department of justice for the department of justice's services under this paragraph.

(2)

(a) The administrator shall perform the duties assigned to the administrator under this chapter and by the secretary of revenue.

(b) The administrator shall appoint and supervise employees, as specified by the department by rule under sub. (3) (a), as necessary to carry out the duties of the administrator.

(c) Notwithstanding s. 111.321, no person may be employed under par. (b) if he or she has been convicted of, or entered a plea of guilty or no contest to, any of the following:

1. A felony, other than a felony conviction for an offense under subd. 2. or 3., during the immediately preceding 10 years, unless the person has been pardoned.

2. A gambling-related offense.

3. A violation of a provision of this chapter or rule of the department relating to the state lottery.

(d) Before appointment of employees is made under par. (b), the department, with the assistance of the department of justice, shall conduct a background investigation of the proposed employees. The department shall require the persons proposed as employees to be photographed and fingerprinted. The department of justice may submit the fingerprints to the federal bureau of investigation for the purposes of verifying the identity of the person fingerprinted and obtaining records of his or her criminal arrests and convictions. The department, with the assistance of the department of justice, shall repeat the background investigation of each employee every 5 years. The department shall reimburse the department of justice for the department of justice's services under this paragraph.

(e) If requested by a lottery prize winner to provide a certification that lists the amounts of the lottery prize payments, if any, that the administrator is required to withhold under s. 565.30 (4), (5), (5m) and (5r), the administrator shall provide the certification.

(2m) No applicant for employment or appointment under sub. (1) or (2) may intentionally make a false statement or material omission in an application for employment or appointment.

(2r) The department may require a fidelity bond from the administrator or any other employee of the lottery division in the department.

(3) The department shall promulgate all of the following rules:

(a) Establishing a plan of organizational structure for lottery division employees.

(b) For the selection of retailers for contract which shall be based on objective criteria. The rule may not limit the number of retailers solely on the basis of the population of the city, town or village in which the retailers are located and shall include requirements relating to all of the following:

1. The financial responsibility of the retailer.

2. The security of the retailer and the retailer's business.

3. The accessibility of the location from which the retailer will sell lottery tickets or lottery shares to the public. Restrictions under s. 125.07 relating to presence of underage persons on premises licensed to sell alcohol beverages may not be used under this subdivision to deny a person a lottery retailer contract.

4. The sufficiency of existing retailers to serve public convenience.

5. The volume of expected lottery ticket and lottery shares sales.

6. Qualifications for retailers, in addition to those under this section, as determined by the department.

7. Ensuring that there will not be an undue concentration of retailers in any geographic area of the state.

(c) Establishing requirements for information to be submitted with a bid or proposal by a person proposing to contract under s. 565.25.

(d) Determining the types of lottery games to be offered under s. 565.27.

(f) Defining “advertising" for the purposes of s. 565.32 (3).

(g) Defining “lottery shares" for the purposes of this chapter.

(h) Establishing the circumstances and procedures under which a retailer may not be reimbursed if he or she accepts and directly pays a prize on an altered or forged lottery ticket or lottery share.

(i) Providing for terms of lottery retailer contracts for periods that are shorter than 3 years.

(j) Requiring retailers to display a sign provided by the department under s. 565.27 (5) that provides notice that the top prizes in a scratch-off game have been claimed.

(4) The department may promulgate all of the following rules:

(a) Implementing the provisions of this chapter.

(b) Establishing an amount to be charged as an initial application fee, as an annual fee for contract continuation or as a fee for issuance of a certificate of authority under s. 565.10 (8).

(c) Establishing qualifications for vendors in addition to those specified under s. 565.25 (3).

(d) Requiring fidelity bonds from retailers.

(e) Establishing requirements for advertising of the state lottery, and any multijurisdictional lotteries in which the state participates, that are in addition to those specified under s. 565.32.

(f) Providing for payment of a rate of compensation that is higher than the basic compensation under s. 565.10 (14) (b) for retailers that are nonprofit organizations.

(g) Establishing a program to provide for additional compensation, above the compensation provided under s. 565.10 (14) (b) 1. or 2., to be paid to retailers who meet certain performance goals identified by the department. Under this program, the total compensation provided to retailers may not exceed 1.0 percent of the gross revenues from the sale of lottery tickets and lottery shares.

(6) The department shall deposit all gross lottery revenues, as defined in s. 25.75 (1) (b), in the lottery fund.

(7) Not later than March 1 of each year, the department shall submit to the joint committee on finance a report that includes an estimate for that fiscal year and for the subsequent fiscal year of the gross revenues from the sale of lottery tickets and lottery shares, the total amount paid as prizes and the prize payout ratio for each type of lottery game offered, and an evaluation of the effect of prize payout ratios of lottery games on lottery sales, lottery operating costs and on maximizing the revenue available for the lottery and gaming property tax credit. If, within 14 working days after the date on which the committee receives the report, the cochairpersons of the committee notify the department that the committee has scheduled a meeting for the purpose of reviewing the department's proposed prize payouts, the department may proceed with its plans for the prize payouts for the subsequent fiscal year only upon approval of the plans by the committee. If the cochairpersons of the committee do not notify the department within 14 working days after the date on which the committee receives the report that the committee has scheduled a meeting for the purpose of reviewing the department's proposed prize payouts, the department's plans for the prize payouts for the subsequent fiscal year are considered approved by the committee.

(8) The department shall do all of the following:

(a) Subject to s. 565.25, provide all of the security services for the gaming operations under this chapter.

(b) Monitor the regulatory compliance of gaming operations under this chapter.

(c) Audit the gaming operations under this chapter.

(d) Investigate suspected violations of this chapter.

(e) Report suspected gaming-related criminal activity to the division of criminal investigation in the department of justice for investigation by that division.

(f) If the division of criminal investigation in the department of justice chooses not to investigate a report under par. (e), coordinate an investigation of the suspected criminal activity with local law enforcement officials and district attorneys.

History: 1987 a. 119, 399; 1989 a. 31; 1991 a. 39, 269, 323; 1993 a. 16; 1995 a. 27; 1997 a. 27; 1999 a. 5, 9; 2005 a. 25; 2017 a. 17.