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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- STATE LOTTERY

     Introduced By: Senators Ciccone, Lombardi, McCaffrey, Felag, and Lynch Prata

     Date Introduced: March 02, 2017

     Referred To: Senate Special Legislation and Veterans Affairs

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 42-61 of the General Laws entitled "State Lottery" is hereby

repealed in its entirety.

CHAPTER 42-61

State Lottery

     42-61-1. Division of state lottery established.

     There is established a state lottery division within the department of revenue.

     42-61-2. Repealed.

     42-61-3. Appointment of director of lotteries.

     The lotteries shall be under the immediate supervision and direction of a director, who

shall be a qualified person to administer an enterprise of the nature of a lottery. The director shall

be appointed by the governor with the advice and consent of the senate. The appointment shall be

reviewed or vetted by the permanent joint committee on state lottery according to Article 6

Section 15 of the Rhode Island Constitution. The director shall serve until his or her successor is

appointed and qualified. Any vacancy occurring in the office of the director shall be filled in the

same manner as the original appointment. Pursuant to § 42-6-4, in the case of a vacancy while the

senate is not in session, the governor shall appoint a director to hold the office until the next

session thereof; provided, that no person should serve in such a position for more than three (3)

legislative days after the senate convenes unless that person's name shall have been submitted to

the senate for its approval. The director shall devote his or her entire time and attention to the

duties of his or her office and shall not be engaged in any other profession or occupation. He or

she shall receive any salary that the director of the department of revenue shall determine and

shall be in the unclassified service.

     The director of lotteries shall be removable by the governor, pursuant to the provisions of

§ 36-1-7 and for cause only, and removal solely for partisan or personal reasons unrelated to

capacity or fitness for the office shall be unlawful.

     42-61-4. Powers and duties of director.

     The director shall have the power and it shall be his or her duty to:

     (1) Supervise and administer the operation of lotteries in accordance with this chapter,

chapter 61.2 of this title and with the rules and regulations of the division;

     (2) Act as the chief administrative officer having general charge of the office and records

and to employ necessary personnel to serve at his or her pleasure and who shall be in the

unclassified service and whose salaries shall be set by the director of the department of revenue,

pursuant to the provisions of § 42-61-3.

     (3) In accordance with this chapter and the rules and regulations of the division, license

as agents to sell lottery tickets those persons, as in his or her opinion, who will best serve the

public convenience and promote the sale of tickets or shares. The director may require a bond

from every licensed agent, in an amount provided in the rules and regulations of the division.

Every licensed agent shall prominently display his or her license, or a copy of their license, as

provided in the rules and regulations of the committee;

     (4) Confer regularly as necessary or desirable, and not less than nine (9) times per year,

with the permanent joint committee on state lottery on the operation and administration of the

lotteries; make available for inspection by the committee, upon request, all books, records, files,

and other information, and documents of the division; advise the committee and recommend

those matters that he or she deems necessary and advisable to improve the operation and

administration of the lotteries;

     (5) Suspend or revoke any license issued pursuant to this chapter, chapter 61.2 of this title

or the rules and regulations promulgated under this chapter and chapter 61.2 of this title;

     (6) Enter into contracts for the operation of the lotteries, or any part of the operation of

the lotteries, and into contracts for the promotion of the lotteries;

     (7) Ensure that monthly financial reports are prepared providing gross monthly revenues,

prize disbursements, other expenses, net income, and the amount transferred to the state general

fund for keno and for all other lottery operations; submit this report to the state budget officer, the

auditor general, the permanent joint committee on state lottery, the legislative fiscal advisors, and

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the governor no later than the twentieth business day following the close of the month; the

monthly report shall be prepared in a manner prescribed by the members of the revenues

estimating conference; at the end of each fiscal year the director shall submit an annual report

based upon an accrual system of accounting which shall include a full and complete statement of

lottery revenues, prize disbursements and expenses, to the governor and the general assembly,

which report shall be a public document and shall be filed with the secretary of state;

     (8) Carry on a continuous study and investigation of the state lotteries throughout the

state, and the operation and administration of similar laws, which may be in effect in other states

or countries;

     (9) Implement the creation and sale of commercial advertising space on lottery tickets as

authorized by § 42-61-4 of this chapter as soon as practicable after June 22, 1994;

     (10) Promulgate rules and regulations, which shall include, but not be limited to:

     (i) The price of tickets or shares in the lotteries;

     (ii) The number and size of the prizes on the winning tickets or shares;

     (iii) The manner of selecting the winning tickets or shares;

     (iv) The manner of payment of prizes to the holders of winning tickets or shares;

     (v) The frequency of the drawings or selections of winning tickets or shares;

     (vi) The number and types of location at which tickets or shares may be sold;

     (vii) The method to be used in selling tickets or shares;

     (viii) The licensing of agents to sell tickets or shares, except that a person under the age

of eighteen (18) shall not be licensed as an agent;

     (ix) The license fee to be charged to agents;

     (x) The manner in which the proceeds of the sale of lottery tickets or shares are

maintained, reported, and otherwise accounted for;

     (xi) The manner and amount of compensation to be paid licensed sales agents necessary

to provide for the adequate availability of tickets or shares to prospective buyers and for the

convenience of the general public;

     (xii) The apportionment of the total annual revenue accruing from the sale of lottery

tickets or shares and from all other sources for the payment of prizes to the holders of winning

tickets or shares, for the payment of costs incurred in the operation and administration of the

lotteries, including the expense of the division and the costs resulting from any contract or

contracts entered into for promotional, advertising, consulting, or operational services or for the

purchase or lease of facilities, lottery equipment, and materials, for the repayment of moneys

appropriated to the lottery fund;

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     (xiii) The superior court upon petition of the director after a hearing may issue subpoenas

to compel the attendance of witnesses and the production of documents, papers, books, records,

and other evidence in any matter over which it has jurisdiction, control or supervision. If a person

subpoenaed to attend in the proceeding or hearing fails to obey the command of the subpoena

without reasonable cause, or if a person in attendance in the proceeding or hearing refuses

without lawful cause to be examined or to answer a legal or pertinent question or to exhibit any

book, account, record, or other document when ordered to do so by the court, that person may be

punished for contempt of the court;

     (xiv) The manner, standards, and specification for a process of competitive bidding for

division purchases and contracts; and

     (xv) The sale of commercial advertising space on the reverse side of, or in other available

areas upon, lottery tickets provided that all net revenue derived from the sale of the advertising

space shall be deposited immediately into the state's general fund and shall not be subject to the

provisions of § 42-61-15.

     42-61-5. Sales agents.

     (a) For the purpose of this chapter, the term "person" shall be construed to mean and

include an individual, association, partnership, corporation, trust, estate, company, receiver,

trustee, referee, or other person acting in a fiduciary or representative capacity, whether appointed

by a court or otherwise, and any combination of individuals. "Person" shall be construed to mean

all departments, committees, commissions, agencies, and instrumentalities of the state, including

counties and municipalities and agencies and instrumentalities of the state.

     (b) (1) The director of lotteries may license any person as a lottery sales agent as

provided in this chapter. No license shall be issued to any person to engage in the sale of lottery

tickets as his or her sole occupation or business.

     (2) As part of its investigation as to whether to issue a lottery sales agent license, the

Rhode Island lottery shall require criminal background checks of the applicant for a retail sales

agent license as it deems appropriate and said individuals shall apply to the bureau of criminal

investigation of the Rhode Island state police or the Rhode Island department of the attorney

general for a national criminal records check with fingerprinting. The applicant whose criminal

records check is being conducted shall be responsible for the payment of the costs of said

criminal records check. The Rhode Island state police or the Rhode Island department of attorney

general, as applicable, shall send the results of such criminal records check to the Rhode Island

lottery. Once said results are sent to and received by the Rhode Island lottery, the Rhode Island

state police and the Rhode Island department of attorney general shall promptly destroy said

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fingerprint record(s). On or before February 1, 2011, the agency shall adopt rules and regulations

establishing criteria to be used in determining whether based upon a criminal records check an

application will be approved.

     (c) Before issuing any license to a lottery sales agent the director shall consider:

     (1) The financial responsibility and security of the person and his or her business or

activity;

     (2) The accessibility of his or her place of business or activity to the public;

     (3) The sufficiency of existing licensed agents to serve the public interest;

     (4) The volume of expected sales by the applicant;

     (5) Any other factors pertaining to the public interest, convenience or trust.

     (d) The director shall refuse to grant or shall suspend, pending a hearing before the

division, or recommend a revocation of a license if the applicant or licensee:

     (1) Has been convicted of a felony, or any crime involving moral turpitude;

     (2) Has been engaging in gambling as a significant source of income;

     (3) Has been convicted of violating any gambling statutes;

     (4) Has been convicted of fraud or misrepresentation in any connection;

     (5) Has been found to have violated any rule, regulation, or order of the state lottery

division.

     The license of an agent shall be suspended by the director for any charge which may

result in a conviction for conduct prescribed in subdivisions (d)(1) -- (d)(5); which suspension

shall be effective until a final judicial determination.

     (e) The director shall refuse to grant, or shall suspend, pending a hearing before the

division, or recommend revocation of a license if the applicant or licensee is a corporation:

     (1) Any of whose directors, officers, or controlling shareholders have been found guilty

of any of the activities specified in subsection (d);

     (2) In which it appears to the director of lotteries that due to the experience, character, or

general fitness of any director, officer, or controlling shareholder, the granting of a license as a

lottery sales agent would be inconsistent with the public interest, convenience, or trust;

     (3) Not the owner or lessee of the business at which it will conduct a lottery sales agency

pursuant to the license applied for, or that any person, firm, association, or corporation other than

the applicant shares or will share in the profits of the applicant, other than receiving dividends as

a shareholder, or will participate in the management of the affairs of the applicant.

     (f) Every holder of a license as a lottery sales agent shall renew the license annually

pursuant to the rules and regulations of the division. Licensees shall pay to the division a fee to be

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determined by the director upon receipt or renewal of a license.

     (g) Whenever requested by the director, the division of criminal identification of the

department of the attorney general, the superintendent of state police, any superintendent or chief

of police or sergeant of any city or town, shall furnish all information on convictions, arrests and

present investigations concerning any person who is an applicant for a license or who is a licensee

of the state lottery.

     (h) Notwithstanding any other provision of law, any person licensed as provided in this

chapter is authorized and empowered to act as a lottery sales agent.

     (i) Every licensed sales agent authorized pursuant to this section and every licensed,

video-lottery retailer authorized by chapter 61.2 of this title shall keep conspicuously posted on

his or her premises the name and telephone number of a council on problem gambling recognized

by an appropriate authority within state government or within the professional field of addiction

disorders and a statement of its availability to offer assistance. The lottery division shall supply

each licensee with the required notice.

     42-61-6. Proceeds of sales -- Segregated funds.

     (a) All proceeds from the sale of lottery tickets or shares received by a person in the

capacity of a sales agent shall constitute a trust fund until paid into the state lottery fund.

     (b) The sales agent shall be personally liable for all proceeds; and failure to pay the

lottery division moneys owed, upon demand, from the sales or misappropriation of the funds shall

constitute embezzlement under § 11-41-3.

     (c) The provisions of this section shall be enforced and prosecuted by the state police and

the attorney general's office.

     42-61-6.1. Repealed.

     42-61-6.2. Insolvency of sales agent.

     Whenever any person who receives proceeds from the sale of lottery tickets in the

capacity of a sales agent becomes insolvent, or dies insolvent, the proceeds due the state lottery

from that person or his or her estate shall have preference over all other debts or demands, except

as follows:

     (1) Those due for necessary funeral charges;

     (2) Those due for attendants and medicine during his or her last sickness;

     (3) Those debts due to the United States;

     (4) Those debts due to this state and all state and town taxes; and

     (5) Wages of labor performed within six (6) months next prior to the death of the

deceased person, not exceeding one thousand dollars ($1000) to any one person and provided

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further that the proceeds shall be non-dischargeable in insolvency proceedings instituted pursuant

to chapters 7, (11 U.S.C. § 701 et seq.), 11, (11 U.S.C. § 1101 et seq.), and 13 (11 U.S.C. § 1301

et seq.) of the Federal Bankruptcy Act and to any act of the Congress of the United States or

proceedings pursuant to the general laws of the state.

     42-61-7. Assignment of prizes.

     No right of any person to a prize drawn shall be assignable, except that payment of any

prize drawn may be paid to the estate of a deceased prize winner, and except that any person

pursuant to an appropriate judicial order may be paid the prize to which the winner is entitled.

The director shall be discharged of all further liability upon payment of a prize pursuant to this

section.

     42-61-7.1. Payment of prizes in excess of six hundred dollars ($600) -- Setoff for

child support debts and benefit of overpayments.

     Notwithstanding the provisions of § 42-61-7 relating to assignment of prizes, the

following setoff provisions shall apply to the payment of any prizes or winning ticket in excess of

six hundred dollars ($600).

     (1) With respect to a person entitled to receive the prize or winning ticket who has an

unpaid child support order(s) arrearage(s) in excess of five hundred ($500), as provided by the

department pursuant to § 42-61-7.1(3), or owes any sum in excess of five hundred dollars ($500)

for benefit overpayments and interest to the department of labor and training determined to be

recoverable under the provisions of chapters 39 -- 44 of title 28, the lottery director:

     (i) Shall set off against the amount due to that person after state and federal tax

withholding an amount up to the balance of the child support arrearage(s), and benefit

overpayments and interest owed to the department of labor and training, and the director shall

make payment of this amount directly to the Rhode Island family court in the case of child

support arrearage(s) which shall deposit the amount set off into the registry of the family court for

a period of forty-five (45) days, or if an application for review has been filed pursuant to § 27-57-

1(d), until final disposition of the application until further order of the court and in the case of

benefit overpayments and interest owed the director shall transfer the amounts owed to the

department of labor and training; and

     (ii) Shall pay to this person the remaining balance of the prize or winning ticket amount,

if any, after reduction of the amount set off above for child support and benefit overpayments and

interest owed. If any instance, the lottery director has received notice from more than one

claimant agency, the claim for child support arrearage(s) by the department of human services

shall receive first priority and the claim for benefit overpayments and interest owed by the

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department of labor and training the second priority.

     (2) The director shall be discharged of all further liability upon payment of a prize or

winning ticket pursuant to this section.

     (3) The department of human services shall periodically within each year furnish the

director with a list or compilation of names of individuals, together with any other identifying

information and in a form that the director shall require, who as of the date of the list or

compilation, have an unpaid child support order arrearage in excess of five hundred dollars

($500) as shown on the Rhode Island family court degrees department of human services child

support enforcement computer system ("CSE system"). For the purposes of this section, the terms

used in this section shall be given the meaning and definitions specified in § 15-16-2.

     (4) Any party aggrieved by any action taken under this section may within thirty (30)

days of the withholding of the payment by the lottery director seek judicial review in the family

court, in the case of withholding for child support or in the district court in the case of benefit

overpayments and interest owed, which may, in its discretion, issue a temporary order prohibiting

the disbursement of funds under this section, pending final adjudication.

     (5) The department of labor and training shall periodically within each year furnish the

director with a list or compilation of names of individuals, together with any identifying

information and in any form that the director requires, who as to the date of the list or

compilation, have unpaid benefit overpayments and interest in excess of five hundred dollars

($500) determined to be recoverable under the provisions of chapters 39 -- 44 of title 28.

     [See § 12-1-15 of the General Laws.]

     42-61-7.2. Payment of prizes in excess of six hundred dollars ($600) -- Setoff for

unpaid taxes.

     Notwithstanding the provisions of § 42-61-7 and § 42-61-7.1 relating to assignment of

prizes and setoff for child support debts and benefit overpayments, the following setoff provisions

shall apply to the payment of any prizes or winning ticket in excess of six hundred dollars ($600).

     (1) With respect to a person entitled to receive the prize or winning ticket who has unpaid

taxes owed to the tax administrator in excess of six hundred dollars ($600), as evidenced by the

tax administrator pursuant to subdivision 42-61-7.2(3), the lottery director:

     (i) Shall setoff against the amount due to that person after state and federal tax

withholding an amount up to the balance of the unpaid taxes owed as evidenced by the tax

administrator pursuant to subdivision 42-61-7.2(3), and the director shall make payment of this

amount directly to the tax administrator; and

     (ii) Shall pay to that person the remaining balance of the prize or winning ticket amount,

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if any, after reduction of the amount setoff above for taxes owed. If in any instance, the lottery

director has received notice from more than one claimant agency, the claim for child support

arrearage(s) owed to the department of human services shall receive first (1st) priority, the claim

for benefit overpayments and interest owed to the department of labor and training the second

(2nd) priority, and the claim for taxes owed to the tax administrator the third (3rd) priority.

     (2) The director shall be discharged of all further liability upon payment of a prize or

winning ticket pursuant to this section.

     (3) The tax administrator shall periodically within each year furnish the director with a

list or compilation of names of individuals, together with any other identifying information and in

a form that the director shall require, who as of the date of the list or compilation, have unpaid

taxes in excess of six hundred dollars ($600).

     (4) Any party aggrieved by any action taken under this section may, within thirty (30)

days of the withholding of the payment by the lottery director, seek a review with the tax

administrator, who may, in his or her discretion, issue a temporary order prohibiting the

disbursement of funds under this section, pending final decision.

     42-61-8. Sales above fixed price -- Unlicensed sales -- Gifts.

     No person shall sell a ticket or share at a price greater than that fixed by rule or regulation

of the division. No person other than a licensed lottery sales agent shall sell lottery tickets or

shares, except that nothing in this section shall be construed to prevent any individual purchaser

from giving lottery tickets or shares to another as a gift. Any person convicted of violating this

section shall be guilty of a misdemeanor.

     42-61-9. Sales to minors -- Gifts.

     No ticket or share shall be sold to any person under the age of eighteen (18) years, but

this shall not be deemed to prohibit the purchase of a ticket or share for the purpose of making a

gift by a person eighteen (18) years of age or older to a person less than that age. Any licensee

who knowingly sells or offers to sell a lottery ticket or share to any person under the age of

eighteen (18) shall, upon conviction, be guilty of a misdemeanor.

     42-61-10. Prizes to lottery employees.

     No lottery prize award shall be awarded to or for any officer or employee of the state

lottery division, or any blood relative of that officer or employee living as a member of that

officer or employee's household.

     42-61-11. Unclaimed prize money.

     Unclaimed prize money for the prize on a winning ticket or share shall be retained by the

director for the person entitled thereto for one year after the drawing in which the prize was won.

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If no claim is made for the money within that year, the prize money shall automatically revert to

the lottery fund and the winner shall have no claim to the prize.

     42-61-12. Deposit of receipts -- Reports.

     The director shall, in accordance with rules and regulations, require any and all lottery

sales agents to deposit to the credit of the state lottery fund in financial institutions designated by

the division all moneys received by those agents from the sale of lottery tickets or shares, less the

amount, if any, retained as compensation for the sale of tickets or shares and less any moneys

paid out as prizes by the agents, and to file with the director, or his or her designated agents,

reports of their receipts and transactions in the sale of lottery tickets in any form and containing

any information he or she may require. The director may make any arrangements for any person,

including a financial institution, to perform any functions, activities, or services in connection

with the operation of the lottery as he or she may deem advisable pursuant to this chapter and the

rules and regulations of the division, and the functions, activities, or services shall constitute

lawful functions, activities, and services of the person.

     42-61-13. Applicability of other laws.

     No other law providing any penalty or disability for the sale of lottery tickets, or any acts

done in connection with a lottery, shall apply to the sale of tickets or shares performed pursuant to

this chapter.

     42-61-14. Payment of prizes to minors and persons under legal disabilities.

     (a) If the person entitled to a prize or any winning ticket is under the age of eighteen (18)

years, the director shall direct payment to the minor by depositing the amount of the prize in any

financial institution to the credit of a member of the minor's family or legal guardian of the minor

as custodian for that minor. The person named as custodian shall have the same duties and

powers as a person designated as a custodian in a manner prescribed by the "Rhode Island

Uniform Gifts to Minors Act".

     (b) If a person entitled to a prize or any winning ticket is under any other legal disability,

the director shall direct payment to a fiduciary responsible for that person pursuant to the laws of

this state.

     (c) The director shall be relieved of all further liability upon payment of a prize to a

minor or person under a legal disability pursuant to this section.

     42-61-15. State lottery fund.

     (a) There is created the state lottery fund, into which shall be deposited all revenues

received by the division from the sales of lottery tickets and license fees. The fund shall be in the

custody of the general treasurer, subject to the direction of division for the use of the division, and

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money shall be disbursed from it on the order of the controller of the state, pursuant to vouchers

or invoices signed by the director and certified by the director of administration. The moneys in

the state lottery fund shall be allotted in the following order, and only for the following purposes:

     (1) Establishing a prize fund from which payments of the prize awards shall be disbursed

to holders of winning lottery tickets on checks signed by the director and countersigned by the

controller of the state or his or her designee.

     (i) The amount of payments of prize awards to holders of winning lottery tickets shall be

determined by the division, but shall not be less than forty-five percent (45%) nor more than

sixty-five percent (65%) of the total revenue accruing from the sale of lottery tickets.

     (ii) For the lottery game commonly known as "Keno", the amount of prize awards to

holders of winning Keno tickets shall be determined by the division, but shall not be less than

forty-five percent (45%) nor more than seventy-two percent (72%) of the total revenue accruing

from the sale of Keno tickets.

     (2) Payment of expenses incurred by the division in the operation of the state lotteries

including, but not limited to, costs arising from contracts entered into by the director for

promotional, consulting, or operational services, salaries of professional, technical, and clerical

assistants, and purchases or lease of facilities, lottery equipment, and materials; provided

however, solely for the purpose of determining revenues remaining and available for transfer to

the state's general fund, beginning in fiscal year 2015, expenses incurred by the division in the

operation of state lotteries shall reflect the actuarially determined employer contribution to the

Employees' Retirement System consistent with the state's adopted funding policy. For financial

reporting purposes, the state lottery fund financial statements shall be prepared in accordance

with generally accepted accounting principles as promulgated by the Governmental Accounting

Standards Board; and

     (3) Payment into the general revenue fund of all revenues remaining in the state lottery

fund after the payments specified in subdivisions (a)(1) -- (a)(2) of this section.

     (b) The auditor general shall conduct an annual post audit of the financial records and

operations of the lottery for the preceding year in accordance with generally accepted auditing

standards and government auditing standards. In connection with the audit, the auditor general

may examine all records, files, and other documents of the division, and any records of lottery

sales agents that pertain to their activities as agents, for purposes of conducting the audit. The

auditor general, in addition to the annual post audit, may require or conduct any other audits or

studies he or she deems appropriate, the costs of which shall be borne by the division.

     (c) Payments into the state's general fund specified in subsection (a)(3) of this section

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shall be made on an estimated quarterly basis. Payment shall be made on the tenth business day

following the close of the quarter except for the fourth quarter when payment shall be on the last

business day.

     42-61-16. Penalties for forgery and counterfeiting.

     Any person who, with intent to defraud, shall falsely make, alter, forge, utter, pass, or

counterfeit a state lottery ticket or share shall be guilty of a felony punishable by imprisonment

for not more than ten (10) years or by a fine of not more than one thousand dollars ($1,000) or

both.

     42-61-17. Prizes exempt from taxation.

     The prizes received pursuant to this chapter shall be exempt from the state sales or use

tax.

     42-61-18. Repealed.

     SECTION 2. Title 42 of the General Laws entitled "STATE AFFAIRS AND

GOVERNMENT" is hereby amended by adding thereto the following chapter:

CHAPTER 61.4

STATE LOTTERY AND LOTTERY COMMISSION

     42-61.4-1. Lottery commission established.

     (a) There is established a state lottery commission hereinafter referred to as the

commission which shall consist of nine (9) members, all of whom shall be citizens and residents

of this state: three (3) of whom shall be members of the senate, not more than two (2) from the

same political party, to be appointed by the president of the senate; three (3) of whom shall be

members of the house of representatives, not more than two (2) from the same political party, to

be appointed by the speaker of the house; and three (3) of whom shall be representatives of the

general public to be appointed by the governor.

     (b) The members shall be appointed for terms of three (3) years except for the three (3)

members originally appointed by each of the appointing authorities; one shall be appointed for a

term of one year, one shall be appointed for a term of two (2) years and one for a term of three (3)

years. The members shall annually elect one of them as chairperson of the commission.

     (c) Any vacancy on the commission, occurring for any reason prior to the expiration of

the term, including, but not limited to, termination of active membership in the general assembly,

shall be filled for the unexpired term by the appointing authority in the same manner as the

original appointment.

     (d) Any member of the commission may, for cause, be summarily removed from office

by the appointing authority, which removal shall be subject to judicial review by the superior

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court and pending that review the member shall not carry out any duties as a commission

member.

     (e) The members of the commission shall receive no salaries, but shall be allowed

reasonable expenses in the performance of their official duties.

     (f) The commission shall meet with the director of lotteries hereinafter referred to as the

director appointed under §42-61.4-2 not less than nine (9) times each year, for the purpose of

promulgating and reviewing rules and regulations relating to the lotteries, to make

recommendations and set policy for lotteries, to approve or reject actions of the director, and to

transact other business that may be properly brought before the commission. The rules and

regulations promulgated by the commission shall include, but not be limited to:

     (1) The types of lotteries to be conducted;

     (2) The price of tickets or shares in the lotteries;

     (3) The number and size of the prizes on the winning tickets or shares;

     (4) The manner of selecting the winning tickets or shares;

     (5) The manner of payment of prizes to the holders of winning tickets or shares;

     (6) The frequency of the drawings or selections of winning tickets or shares;

     (7) The number and types of location at which tickets or shares may be sold;

     (8) The method to be used in selling tickets or shares;

     (9) The licensing of agents to sell tickets or shares, except that a person under the age of

eighteen (18) shall not be licensed as an agent;

     (10) The license fee to be charged to agents;

     (11) The manner in which the proceeds of the sale of lottery tickets or shares are

maintained, reported, and otherwise accounted for;

     (12) The manner and amount of compensation to be paid licensed sales agents necessary

to provide for the adequate availability of tickets or shares to prospective buyers and for the

convenience of the general public;

     (13) The apportionment of the total annual revenue accruing from the sale of lottery

tickets or shares and from all other sources for the payment of prizes to the holders of winning

tickets or shares, for the payment of costs incurred in the operation and administration of the

lotteries, including the expense of the commission and the costs resulting from any contract or

contracts entered into for promotional, advertising, consulting, or operational services or for the

purchase or lease of facilities, lottery equipment, and materials, for the repayment of monies

appropriated to the lottery fund;

     (14) The superior court, upon petition of the majority of the commission, after a hearing,

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may issue subpoenas to compel the attendance of witnesses and the production of documents,

papers, books, records, and other evidence before it in any matter over which it has jurisdiction,

control or supervision. If a person subpoenaed to attend in the proceeding or hearing fails to obey

the command of the subpoena without reasonable cause, or if a person in attendance in the

proceeding or hearing refuses without lawful cause to be examined or to answer a legal or

pertinent question or to exhibit any book, account, record, or other document when ordered to do

so by the court, that person may be punished for contempt of the court;

     (15) No action of the commission shall be binding unless taken at a meeting at which at

least five (5) of the members are present and a majority of those present and voting are in favor of

the action of the commission. The rules and regulations promulgated by the commission or any

amendments, revisions, supplements, or repeal thereof, shall be immediately transmitted, and

under the certification of the executive secretary of the commission, to the secretary of state for

filing;

     (16) The manner, standards, and specifications for a process of competitive bidding for

commission purchases and contracts;

     (17) The sale of commercial advertising space on the reverse side of, or in other available

areas upon, lottery tickets provided that all net revenue derived from the sale of the advertising

space shall be deposited immediately into the state's general fund;

     (18) Establish job descriptions, employment qualifications, and salaries for necessary

personnel to serve the director; and

     (19) Establish standards for suspension and revocation of licenses issued pursuant to this

chapter or the rules and regulations promulgated under this chapter and guidelines for periods of

suspension.

     42-61.4-2. Appointment of director of lotteries.

     The lotteries shall be under the immediate supervision and direction of a director, who

shall be a qualified person to administer an enterprise of the nature of a lottery. The director shall

be appointed by the governor with the majority approval of the commission and shall serve at the

pleasure of the commission. Any vacancy occurring in the office of the director shall be filled in

the same manner as the original appointment. The director shall devote the director's entire time

and attention to the duties of their office and shall not be engaged in any other profession or

occupation. The director shall receive any salary that the commission shall determine and shall be

in the unclassified service.

     42-61.4-3. Powers and duties of director.

     The director shall have the power and it shall be the director's duty to:

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     (1) Supervise and administer the operation of lotteries in accordance with this chapter and

with the rules and regulations of the commission;

     (2) Act as the chief administrative officer having general charge of the office and records

and to employ temporarily, subject to the requirements set forth by the commission, necessary

personnel to serve at the director's pleasure and who shall be in the unclassified service and

whose salaries shall be set by the commission;

     (3) Act as executive secretary of the commission;

     (4) In accordance with this chapter and the rules and regulations of the commission,

license as agents to sell lottery tickets those persons, as in the director's opinion, who will best

serve the public convenience and promote the sale of tickets or shares. The director may require a

bond from every licensed agent, in an amount provided in the rules and regulations of the

commission. Every licensed agent shall prominently display their license, or a copy of their

license, as provided in the rules and regulations of the commission;

     (5) Confer regularly as necessary or desirable, and not less than once each month, with

the commission on the operation and administration of the lotteries; make available for inspection

by the commission, upon request, all books, records, files, and other information, and documents

of the commission; advise the commission and recommend those matters that the director deems

necessary and advisable to improve the operation and administration of the lotteries;

     (6) Suspend or revoke any license issued pursuant to this chapter or the rules and

regulations promulgated under this chapter in conformity with standards and guidelines set forth

by the commission;

     (7) Subject to the rules and regulations set forth by the commission, enter into contracts

for the operation of the lotteries, or any part of the operation of the lotteries, and into contracts for

the promotion of the lotteries. No contract awarded or entered into by the director may be

assigned by the holder except by specific written approval of the director;

     (8) Ensure that monthly financial reports are prepared providing gross monthly revenues,

prize disbursements, other expenses, net income, and the amount transferred to the state general

fund for keno and for all other lottery operations; submit this report to the state budget officer, the

auditor general, the commission, the legislative fiscal advisors, and the governor no later than the

twentieth business day following the close of the month; the monthly report shall be prepared in a

manner prescribed by the members of the revenues estimating conference; at the end of each

fiscal year the director shall submit an annual report based upon an accrual system of accounting

which shall include a full and complete statement of lottery revenues, prize disbursements and

expenses, to the governor and the general assembly, which report shall be a public document and

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shall be filed with the secretary of state;

     (9) Carry on a continuous study and investigation of the state lotteries throughout the

country, and the operation and administration of similar laws which may be in effect in other

states or countries; and

     (10) Implement and maintain the creation and sale of commercial advertising space on

lottery tickets.

     42-61.4-4. Sales agents.

     (a) For the purpose of this chapter, the term "person" shall be construed to mean and

include an individual, association, partnership, corporation, trust, estate, company, receiver,

trustee, referee, or other person acting in a fiduciary or representative capacity, whether appointed

by a court or otherwise, and any combination of individuals. "Person" shall be construed to mean

all departments, commissions, agencies, and instrumentalities of the state, including

municipalities.

     (b) The director of the state lottery commission may license any person as a lottery sales

agent as provided in this chapter. No license shall be issued to any person to engage in the sale of

lottery tickets as their sole occupation or business.

     (c) Before issuing any license to a lottery sales agent the director shall consider:

     (1) The financial responsibility and security of the person and their business or activity;

     (2) The accessibility of their place of business or activity to the public;

     (3) The sufficiency of existing licensed agents to serve the public interest;

     (4) The volume of expected sales by the applicant;

     (5) Any other factors pertaining to the public interest, convenience or trust.

     (d) The director shall refuse to grant or shall suspend, or recommend a revocation of a

license if the applicant or licensee:

     (1) Has been convicted of a felony, or any crime involving moral turpitude;

     (2) Has been engaging in gambling as a significant source of income;

     (3) Has been convicted of violating any gambling statutes;

     (4) Has been convicted of fraud or misrepresentation in any connection; or

     (5) Has been found to have violated any rule, regulation, or order of the state lottery

commission.

     (e) The license of an agent shall be suspended by the director for any charge which may

result in a conviction for conduct prescribed in subsections (d)(1) through (d)(5) of this section,

which suspension shall be effective until a final judicial determination.

     (f) The director shall refuse to grant, or shall suspend, pending a hearing before the

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commission, or recommend revocation of a license if the applicant or licensee is a corporation:

     (1) Any of whose directors, officers, or controlling shareholders have been found guilty

of any of the activities specified in subsections (d) of this section;

     (2) In which it appears to the director of the state lottery commission that due to the

experience, character, or general fitness of any director, officer, or controlling shareholder, the

granting of a license as a lottery sales agent would be inconsistent with the public interest,

convenience, or trust;

     (3) Not the owner or lessee of the business at which it will conduct a lottery sales agency

pursuant to the license applied for, or that any person, firm, association, or corporation other than

the applicant shares or will share in the profits of the applicant, other than receiving dividends as

a shareholder, or will participate in the management of the affairs of the applicant.

     (g) Every holder of a license as a lottery sales agent shall renew the license annually

pursuant to the rules and regulations of the commission. Licensees shall pay to the commission a

fee to be determined by the commission upon receipt or renewal of a license.

     (h) Whenever requested by the director, the division of criminal identification of the

department of the attorney general, the superintendent of state police, any superintendent or chief

of police or sergeant of any city or town, shall furnish all information on convictions, arrests and

present investigations concerning any person who is an applicant for a license or who is a licensee

of the state lottery.

     (i) Notwithstanding any other provision of law, any person licensed as provided in this

chapter is authorized and empowered to act as a lottery sales agent.

     (j) Every licensed sales agent authorized pursuant to this section and every licensed video

lottery retailer authorized by chapter 61.2 of this title shall keep conspicuously posted on their

premises the name and telephone number of a council on problem gambling recognized by an

appropriate authority within state government or within the professional field of addiction

disorders and a statement of its availability to offer assistance. The lottery commission shall

supply each licensee with the required notice.

     42-61.4-5. Proceeds of sales -- Segregated funds.

     (a) All proceeds from the sale of lottery tickets or shares received by a person in the

capacity of a sales agent shall constitute a trust fund until paid into the state lottery fund.

     (b) The sales agent shall be personally liable for all proceeds; and failure to pay the

lottery commission monies owed, upon demand, from the sales or misappropriation of the funds

shall constitute embezzlement under §11-41-3.

     (c) The provisions of this section shall be enforced and prosecuted by the state police and

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the attorney general's office.

     42-61.4-6. Insolvency of sales agent.

     Whenever any person who receives proceeds from the sale of lottery tickets in the

capacity of a sales agent becomes insolvent, or dies insolvent, the proceeds due the state lottery

from that person or their estate shall have preference over all other debts or demands, except as

follows:

     (1) Those due for necessary funeral charges;

     (2) Those due for attendants and medicine during their last sickness;

     (3) Those debts due to the United States;

     (4) Those debts due to this state and all state and town taxes; and

     (5) Wages of labor performed within six (6) months next prior to the death of the

deceased person, not exceeding one thousand dollars ($1000) to any one person and provided

further that the proceeds shall be non-dischargeable in insolvency proceedings instituted pursuant

to chapters 7, (11 U.S.C. §701 et seq.), 11, (11 U.S.C. §1101 et seq.), and 13 (11 U.S.C. §1301 et

seq.) of the Federal Bankruptcy Act and to any act of the Congress of the United States or

proceedings pursuant to the general laws of the state.

     42-61.4-7. Assignment of prizes.

     No right of any person to a prize drawn shall be assignable, except that payment of any

prize drawn may be paid to the estate of a deceased prize winner, and except that any person

pursuant to an appropriate judicial order may be paid the prize to which the winner is entitled.

The director shall be discharged of all further liability upon payment of a prize pursuant to this

section.

     42-61.4-8. Payment of prizes in excess of six hundred dollars ($600) – Setoff for child

support debts and benefit of overpayments.

     Notwithstanding the provisions of §42-61.4-7 relating to assignment of prizes, the

following setoff provisions shall apply to the payment of any prizes or winning ticket in excess of

six hundred dollars ($600).

     (1) With respect to a person entitled to receive the prize or winning ticket who has an

unpaid child support order(s) arrearage(s) in excess of five hundred ($500), as provided by the

department of human services pursuant to §42-61.4-8(3), or owes any sum in excess of five

hundred dollars ($500) for benefit overpayments and interest to the department of labor and

training determined to be recoverable under the provisions of chapters 39 through 44 of title 28,

the lottery director:

     (i) Shall set off against the amount due to that person after state and federal tax

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withholding an amount up to the balance of the child support arrearage(s), and benefit

overpayments and interest owed to the department of labor and training, and the director shall

make payment of this amount directly to the Rhode Island family court in the case of child

support arrearage(s) which shall deposit the amount set off into the registry of the family court for

a period of forty-five (45) days, or if an application for review has been filed pursuant to §27-57-

1(d), until final disposition of the application until further order of the court and in the case of

benefit overpayments and interest owed the director shall transfer the amounts owed to the

department of labor and training; and

     (ii) Shall pay to this person the remaining balance of the prize or winning ticket amount,

if any, after reduction of the amount set off above for child support and benefit overpayments and

interest owed. If any instance, the lottery director has received notice from more than one

claimant agency, the claim for child support arrearage(s) by the department of human services

shall receive first priority and the claim for benefit overpayments and interest owed by the

department of labor and training the second priority.

     (2) The director shall be discharged of all further liability upon payment of a prize or

winning ticket pursuant to this section.

     (3) The department of human services shall periodically within each year furnish the

director with a list or compilation of names of individuals, together with any other identifying

information and in a form that the director shall require, who as of the date of the list or

compilation, have an unpaid child support order arrearage in excess of five hundred dollars

($500) as shown on the Rhode Island family court degrees department of human services child

support enforcement computer system ("CSE system"). For the purposes of this section, the terms

used in this section shall be given the meaning and definitions specified in §15-16-2.

     (4) Any party aggrieved by any action taken under this section may within thirty (30)

days of the withholding of the payment by the lottery director seek judicial review in the family

court, in the case of withholding for child support or in the district court in the case of benefit

overpayments and interest owed, which may, in its discretion, issue a temporary order prohibiting

the disbursement of funds under this section, pending final adjudication.

     (5) The department of labor and training shall periodically within each year furnish the

director with a list or compilation of names of individuals, together with any identifying

information and in any form that the director requires, who as to the date of the list or

compilation, have unpaid benefit overpayments and interest in excess of five hundred dollars

($500) determined to be recoverable under the provisions of chapters 39 through 44 of title 28.

     [See §12-1-15 of the general laws.]

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     42-61.4-9. Payment of prizes in excess of six hundred dollars ($600) – Setoff for

unpaid taxes.

     Notwithstanding the provisions of §42-61-7 and §42-61-7.1 relating to assignment of

prizes and setoff for child support debts and benefit overpayments, the following setoff provisions

shall apply to the payment of any prizes or winning ticket in excess of six hundred dollars ($600).

     (1) With respect to a person entitled to receive the prize or winning ticket who has unpaid

taxes owed to the tax administrator in excess of six hundred dollars ($600), as evidenced by the

tax administrator pursuant to §42-61-7.2(3), the lottery director:

     (i) Shall setoff against the amount due to that person after state and federal tax

withholding an amount up to the balance of the unpaid taxes owed as evidenced by the tax

administrator pursuant to §42-61-7.2(3), and the director shall make payment of this amount

directly to the tax administrator; and

     (ii) Shall pay to that person the remaining balance of the prize or winning ticket amount,

if any, after reduction of the amount setoff above for taxes owed. If in any instance, the lottery

director has received notice from more than one claimant agency, the claim for child support

arrearage(s) owed to the department of human services shall receive first priority, the claim for

benefit overpayments and interest owed to the department of labor and training the second

priority, and the claim for taxes owed to the tax administrator the third priority.

     (2) The director shall be discharged of all further liability upon payment of a prize or

winning ticket pursuant to this section.

     (3) The tax administrator shall periodically within each year furnish the director with a

list or compilation of names of individuals, together with any other identifying information and in

a form that the director shall require, who as of the date of the list or compilation, have unpaid

taxes in excess of six hundred dollars ($600).

     (4) Any party aggrieved by any action taken under this section may, within thirty (30)

days of the withholding of the payment by the lottery director, seek a review with the tax

administrator, who may, in their discretion, issue a temporary order prohibiting the disbursement

of funds under this section, pending final decision.

     42-61.4-10. Sales above fixed price – Unlicensed sales -- Gifts.

     No person shall sell a ticket or share at a price greater than that fixed by rule or regulation

of the division. No person other than a licensed lottery sales agent shall sell lottery tickets or

shares, except that nothing in this section shall be construed to prevent any individual purchaser

from giving lottery tickets or shares to another as a gift. Any person convicted of violating this

section shall be guilty of a misdemeanor.

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     42-61.4-11. Sales to minors -- Gifts.

     No ticket or share shall be sold to any person under the age of eighteen (18) years, but

this shall not be deemed to prohibit the purchase of a ticket or share for the purpose of making a

gift by a person eighteen (18) years of age or older to a person less than that age. Any licensee

who knowingly sells or offers to sell a lottery ticket or share to any person under the age of

eighteen (18) shall, upon conviction, be guilty of a misdemeanor.

     42-61.4-12. Prizes to lottery employees.

     No lottery prize award shall be awarded to or for any officer or employee of the

commission, or any blood relative of that officer or employee living as a member of that officer

or employee's household.

     42-61.4-13. Unclaimed prize money.

     Unclaimed prize money for the prize on a winning ticket or share shall be retained by the

director for the person entitled thereto for one year after the drawing in which the prize was won.

If no claim is made for the money within that year, the prize money shall automatically revert to

the lottery fund and the winner shall have no claim to the prize.

     42-61.4-14. Deposit of receipts -- Reports.

     The director shall, in accordance with rules and regulations, require any and all lottery

sales agents to deposit to the credit of the state lottery fund in financial institutions designated by

the division all moneys received by those agents from the sale of lottery tickets or shares, less the

amount, if any, retained as compensation for the sale of tickets or shares and less any monies paid

out as prizes by the agents, and to file with the director, or their designated agents, reports of their

receipts and transactions in the sale of lottery tickets in any form and containing any information

they may require. The director may make any arrangements for any person, including a financial

institution, to perform any functions, activities, or services in connection with the operation of the

lottery as they may deem advisable pursuant to this chapter and the rules and regulations of the

commission, and the functions, activities, or services shall constitute lawful functions, activities,

and services of the person.

     42-61.4-15. Applicability of other laws.

     No other law providing any penalty or disability for the sale of lottery tickets, or any acts

done in connection with a lottery, shall apply to the sale of tickets or shares performed pursuant to

this chapter.

     42-61.4-16. Payment of prizes to minors and persons under legal disabilities.

     (a) If the person entitled to a prize or any winning ticket is under the age of eighteen (18)

years, the director shall direct payment to the minor by depositing the amount of the prize in any

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financial institution to the credit of a member of the minor's family or legal guardian of the minor

as custodian for that minor. The person named as custodian shall have the same duties and

powers as a person designated as a custodian in a manner prescribed by chapter 7 of title 18

("uniform transfer to minors act").

     (b) If a person entitled to a prize or any winning ticket is under any other legal disability,

the director shall direct payment to a fiduciary responsible for that person pursuant to the laws of

this state.

     (c) The director shall be relieved of all further liability upon payment of a prize to a

minor or person under a legal disability pursuant to this section.

     42-61.4-17. State lottery fund.

     (a) There is created the state lottery fund, into which shall be deposited all revenues

received from the sales of lottery tickets and license fees. The fund shall be in the custody of the

general treasurer, and money shall be disbursed from it on the order of the controller of the state,

pursuant to vouchers or invoices signed by the director. The monies in the state lottery fund shall

be allotted in the following order, and only for the following purposes:

     (1) Establishing a prize fund from which payments of the prize awards shall be disbursed

to holders of winning lottery tickets on checks signed by the director and countersigned by the

controller of the state or their designee.

     (i) The amount of payments of prize awards to holders of winning lottery tickets shall be

determined by the division, but shall not be less than forty-five percent (45%) nor more than

sixty-five percent (65%) of the total revenue accruing from the sale of lottery tickets.

     (ii) For the lottery game commonly known as "Keno", the amount of prize awards to

holders of winning Keno tickets shall be determined by the commission, but shall not be less than

forty-five percent (45%) nor more than seventy-two percent (72%) of the total revenue accruing

from the sale of Keno tickets.

     (2) Payment of expenses incurred by the commission in the operation of the state lotteries

including, but not limited to, costs arising from contracts entered into by the director for

promotional, consulting, or operational services, salaries of professional, technical, and clerical

assistants, and purchases or lease of facilities, lottery equipment, and materials; provided

however, solely for the purpose of determining revenues remaining and available for transfer to

the state's general fund, beginning in fiscal year 2018, expenses incurred by the commission in

the operation of state lotteries shall reflect the actuarially determined employer contribution to the

employees' retirement system consistent with the state's adopted funding policy. For financial

reporting purposes, the state lottery fund financial statements shall be prepared in accordance

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with generally accepted accounting principles as promulgated by the Governmental Accounting

Standards Board; and

     (3) Payment into the general revenue fund of all revenues remaining in the state lottery

fund after the payments specified in subsections (a)(1) through (a)(2) of this section.

     (b) The auditor general shall conduct an annual post audit of the financial records and

operations of the lottery for the preceding year in accordance with generally accepted auditing

standards and government auditing standards. In connection with the audit, the auditor general

may examine all records, files, and other documents of the division, and any records of lottery

sales agents that pertain to their activities as agents, for purposes of conducting the audit. The

auditor general, in addition to the annual post audit, may require or conduct any other audits or

studies they deem appropriate, the costs of which shall be borne by the division.

     (c) Payments into the state's general fund specified in subsection (a)(3) of this section

shall be made on an estimated quarterly basis. Payment shall be made on the tenth business day

following the close of the quarter except for the fourth quarter when payment shall be on the last

business day.

     42-61.4-18. Penalties for forgery and counterfeiting.

     Any person who, with intent to defraud, shall falsely make, alter, forge, utter, pass, or

counterfeit a state lottery ticket or share shall be guilty of a felony punishable by imprisonment

for not more than ten (10) years or by a fine of not more than one thousand dollars ($1,000) or

both.

     42-61.4-19. Prizes exempt from taxation.

     The prizes received pursuant to this chapter shall be exempt from the state sales or use

tax.

     42-61.4-20. Severability.

     If any provision of this chapter or the application thereof to any person, entity, or

circumstance is held invalid, such invalidity shall not affect other provisions or applications of

this chapter, which can be given effect without the invalid provision(s) or application, and to this

end the provisions of this chapter are declared to be severable.

     SECTION 3. Sections 42-61.2-1, 42-61.2-2, 42-61.2-2.1, 42-61.2-2.2, 42-61.2-2.3, 42-

61.2-3, 42-61.2-3.1, 42-61.2-3.2, 42-61.2-4, 42-61.2-7, 42-61.2-12, 42-61.2-13 and 42-61.2-14 of

the General Laws in Chapter 42-61.2 entitled "Video-Lottery Terminal" are hereby amended to

read as follows:

     42-61.2-1. Definitions. [Contingent effective date; see note.]

     For the purpose of this chapter, the following words shall mean:

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     (1) "Central communication system" means a system approved by the lottery division

which is in compliance with the rules and regulations set forth by the commission, linking all

video-lottery machines at a licensee location to provide auditing program information and any

other information determined by the lottery. In addition, the central communications system must

provide all computer hardware and related software necessary for the establishment and

implementation of a comprehensive system as required by the division commission. The central

communications licensee may provide a maximum of fifty percent (50%) of the video-lottery

terminals.

     (2) "Commission" means the state lottery commission.

     (2)(3) "Licensed, video-lottery retailer" means a pari-mutuel licensee specifically

licensed by the director subject to the approval of the division in compliance with the rules and

regulations set forth by the commission to become a licensed, video-lottery retailer.

     (3)(4) "Net terminal income" means currency placed into a video-lottery terminal less

credits redeemed for cash by players.

     (4)(5) "Pari-mutuel licensee" means:

     (i) An entity licensed pursuant to § 41-3.1-3; and/or

     (ii) An entity licensed pursuant to § 41-7-3.

     (5)(6) "Technology provider" means any individual, partnership, corporation, or

association that designs, manufactures, installs, maintains, distributes, or supplies video-lottery

machines or associated equipment for the sale or use in this state.

     (6)(7) "Video-lottery games" means lottery games played on video-lottery terminals

controlled by the lottery division director in compliance with the rules and regulations set forth by

the commission.

     (7)(8) "Video-lottery terminal" means any electronic computerized video game machine

that, upon the insertion of cash or any other representation of value that has been approved

authorized by the division of lotteries commission via the established rules and regulations, is

available to play a video game authorized by the lottery division commission, and that uses a

video display and microprocessors in which, by chance, the player may receive free games or

credits that can be redeemed for cash. The term does not include a machine that directly dispenses

coins, cash, or tokens.

     (8)(9) "Casino gaming" means any and all table and casino-style games played with

cards, dice, or equipment, for money, credit, or any representative of value; including, but not

limited to, roulette, blackjack, big six, craps, poker, baccarat, paigow, any banking or percentage

game, or any other game of device included within the definition of Class III gaming as that term

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is defined in Section 2703(8) of Title 25 of the United States Code and that is approved by the

state through the division of state lottery rules and regulations set forth by the commission.

     (9)(10) "Net, table-game revenue" means win from table games minus counterfeit

currency.

     (10)(11) "Rake" means a set fee or percentage of cash and chips representing cash

wagered in the playing of a nonbanking table game assessed by a table games retailer for

providing the services of a dealer, gaming table or location, to allow the play of any nonbanking

table game.

     (11)(12) "Table game" or "Table gaming" means that type of casino gaming in which

table games are played for cash or chips representing cash, or any other representation of value

that has been approved by the division of lotteries authorized by the commission via the rules and

regulations set forth under this chapter, using cards, dice, or equipment and conducted by one or

more live persons.

     (12)(13) "Table-game retailer" means a retailer authorized to conduct table gaming

pursuant to §§ 42-61.2-2.1 or 42-61.2-2.3.

     (13)(14) "Credit facilitator" means any employee of a licensed, video-lottery retailer

approved in writing by the division director, in conformity with the rules and regulations set forth

by the commission, whose responsibility is to, among other things, review applications for credit

by players, verify information on credit applications, grant, deny, and suspend credit, establish

credit limits, increase and decrease credit limits, and maintain credit files, all in accordance with

this chapter and rules and regulations approved by the division set forth by the commission.

     (14)(15) "Newport Grand" means Newport Grand, LLC, a Rhode Island limited-liability

company, successor to Newport Grand Jai Alai, LLC, and each permitted successor to and

assignee of Newport Grand, LLC under the Newport Grand Master Contract, including, but not

limited to, Premier Entertainment II, LLC and/or Twin River-Tiverton, LLC, provided it is a pari-

mutuel licensee as defined in § 42-61.2-1 et seq.; provided, further, however, where the context

indicates that the term is referring to the physical facility, then it shall mean the gaming and

entertainment facility located at 150 Admiral Kalbfus Road, Newport, Rhode Island.

     (15)(16) "Newport Grand Marketing Year" means each fiscal year of the state or a

portion thereof between November 23, 2010, and the termination date of the Newport Grand

Master Contract.

     (16)(17) "Newport Grand Master Contract" means that certain master video-lottery

terminal contract made as of November 23, 2005, by and between the Division of Lotteries of the

Rhode Island department of administration and Newport Grand, as amended and extended from

LC001155/SUB A/2 - Page 25 of 59

time to time as authorized therein and/or as such Newport Grand Master Contract may be

assigned as permitted therein.

     (17)(18) "Premier" means Premier Entertainment II, LLC and/or its successor in interest

by reason of the acquisition of the stock, membership interests, or substantially all of the assets of

such entity.

     (18)(19) "Twin River-Tiverton" means Twin River-Tiverton, LLC and/or its successor in

interest by reason of the acquisition of the stock, membership interests, or substantially all of the

assets of such entity.

     42-61.2-2. Division of state lottery authorized to operate video lotteries. [Contingent

effective date; see note.] Division of state lottery commission authorized to operate video

lotteries. [Contingent effective date; see note.]

     (a) Notwithstanding the provisions of any other law, the division of state lottery

commission is authorized to maintain oversight as set forth herein conduct and control video-

lottery games under its authority.

     (b) Video-lottery terminals may only be installed and operated at the facilities of pari-

mutuel licensees, as defined in § 42-61.2-1(4), which are specifically approved by the state lottery

director to be licensed, video-lottery retailers according to rules and regulations set forth by the

director commission. At any one time, there shall be no more than two (2) pari-mutuel licensee

facilities in which video-lottery games are conducted, one located in the town of Lincoln, and one

located either in the city of Newport or in the town of Tiverton.

     (c) Commencing July 1, 2005, the number of video-lottery terminals to be installed at

pari-mutuel license facilities shall be established by the general assembly.

     (d) Pursuant to R.I. Const., Art. VI, Sec. XV, the general assembly shall determine the

type of lotteries conducted.

     (e) The commission shall set forth rules and regulations for the operation of video

lotteries.

     42-61.2-2.1. State authorized to operate casino gaming. [Contingent effective date;

see note.]

     (a) State-operated casino gaming shall be authorized at the facility of the licensed, video-

lottery terminal retailer known as "Twin River" located in the town of Lincoln; provided, that the

requirements of R.I. Const., Art. VI, Sec. XXII are met with respect to said facility at the general

election next held after enactment of this section.

     (1) With respect to the "Twin River" facility, the authorization of this section shall be

effective upon: (i) The certification by the secretary of state that the qualified voters of the state

LC001155/SUB A/2 - Page 26 of 59

have approved the expansion of gambling at such facility to include casino gaming; and (ii) The

certification by the board of canvassers of the town of Lincoln that qualified electors of the town

of Lincoln have approved the expansion of gambling at such facility to include casino gaming.

     (b) The general assembly finds that:

     (1) The operation of casino gaming at Twin River will play a critical role in the economy

of the state and enhance state and local revenues;

     (2) Pursuant to R.I. Const., Art. VI, Sec. XV and the specific powers, authorities, and

safeguards set forth in subsection (c) herein in connection with the operation of casino gaming,

the state shall have full operational control over the specified location at which casino gaming

shall be conducted;

     (3) It is in the best interest of the state to have the authorization to operate casino gaming

as specified at Twin River; and

     (4) It is in the best interest of the state to conduct an extensive analysis and evaluation of

competitive casino gaming operations and thereafter for the general assembly to enact

comprehensive legislation during the 2012 legislative session to determine the terms and

conditions pursuant to which casino gaming would be operated in the state if it is authorized as

set forth herein.

     (c) Notwithstanding the provisions of any other law and pursuant to R.I. Const., Art. VI,

Sec. XV, the state is authorized to operate, conduct, and control casino gaming at Twin River,

subject to subsection (a). In furtherance thereof, the state, through the division of state lottery

commission, shall have full operational control to operate the foregoing facility, the authority to

make all decisions promulgate rules and regulations about all aspects of the functioning of the

business enterprise, including, without limitation, the power and authority to:

     (1) Determine the number, type, placement, and arrangement of casino gaming games,

tables, and sites within the facility;

     (2) Establish, with respect to casino gaming, one or more systems for linking, tracking,

depositing, and reporting of receipts, audits, annual reports, prohibitive conduct, and other such

matters determined from time to time;

     (3) Establish policies and procedures for the collection of all Collect receipts from casino

gaming, require that Twin River collect casino gaming gross receipts in trust for the state through

the division of state lottery commission, deposit such receipts into an account or accounts of its

choice, allocate such receipts according to law, and otherwise maintain custody and control over

all casino gaming receipts and funds;

     (4) Establish policies and procedures for the director to Hold and exercise sufficient

LC001155/SUB A/2 - Page 27 of 59

powers over Twin River's accounting and finances to allow for adequate oversight and

verification of the financial aspects of casino gaming at the facility, including, without limitation:

     (i) The right to require Twin River to maintain an annual balance sheet, profit-and-loss

statement, and any other necessary information or reports; and

     (ii) The authority and power to conduct periodic compliance or special or focused audits

of the information or reports provided, as well as the premises with the facility containing records

of casino gaming or in which the business of Twin River's casino gaming operations are

conducted;

     (5) Establish policies and procedures for the director to monitor Monitor all casino

gaming operations, and have the power to terminate or suspend any casino gaming activities in

the event of an integrity concern or other threat to the public trust, and in furtherance thereof,

require the licensed, video-lottery retailer to provide a specified area or areas from which to

conduct such monitoring activities;

     (6) Define and limit the rules of play and odds of authorized casino gaming games,

including, without limitation, the minimum and maximum wagers for each casino gaming game;

     (7) Establish compulsive gambling treatment programs;

     (8) Promulgate, or propose for promulgation, any legislative, interpretive, and procedural

rules necessary for the successful implementation, administration, and enforcement of this

chapter; and

     (9) Hold Any and all other powers matters necessary and proper to fully effectively

execute and administer effectuate the provisions of this chapter for its purpose of allowing the

state to operate a casino gaming facility through a licensed, video-lottery retailer hosting said

casino gaming on behalf of the State of Rhode Island. ; and

     (10) Establish employment qualification guidelines with respect to employment of

individuals to be involved, directly or indirectly, with the operation of casino gaming at Twin

River.

     (d) Subject to subsection (a), the state, through the division of state lottery the director in

accordance with the rules and regulations set forth by the commission, may expand Twin River

existing video-lottery license issued, or issue Twin River a new casino gaming license, to permit

casino gaming to the extent authorized by this act.

     (e) Subject to subsection (a), all rules and regulations shall be promulgated by the state,

through the division of state lottery commission, in accordance with the authority conferred upon

the general assembly pursuant to R.I. Const., Art. VI, Sec. XV. In accord therewith, subject to

subsection (a), the state, through the division of state lottery commission, shall have authority to

LC001155/SUB A/2 - Page 28 of 59

issue such regulations as it deems appropriate pertaining to control, operation and management of

casino gaming as specifically set forth in subsections (b) and (c) herein.

     (f) The Rhode Island state police, through its gaming enforcement unit, shall have the

authority to monitor and investigate criminal violations related to casino gaming activities

consistent with chapter 42-61.3.

     (g) The state, through the department of revenue, division of state lottery, and/or the

department of business regulation, and the director, in conformity with the rules and regulations

set forth by the commission, shall have approval rights over matters relating to the employment of

individuals to be involved, directly or indirectly, with the operation of casino gaming at Twin

River.

     (h) The director shall have full operational control to operate the facility enumerated in

§42-61.2-2.1(c) in compliance with the rules and regulations set forth by the commission.

     42-61.2-2.2. State authorized to operate casino gaming at Newport Grand. [See

Compiler's notes.]

     (a) State-operated casino gaming shall be authorized at the facility of the licensed video

lottery terminal retailer known as "Newport Grand" located in the town of Newport; provided,

that the requirements of Article VI, Section 22 of the Rhode Island Constitution are met with

respect to said facility at the general election next held after enactment of this section.

     (b) With respect to the Newport Grand facility, the authorization of this section 2.2 shall

be effective upon:

     (1) The certification by the secretary of state that the qualified voters of the state have

approved the expansion of gambling at such facility to include casino gaming; and

     (2) The certification by the board of canvassers of the city of Newport that the qualified

electors of the city of Newport have approved the expansion of gambling at such facility to

include casino gaming.

     (c) The general assembly finds that:

     (1) The operation of casino gaming at Newport Grand will play a critical role in the

economy of the state and enhance local revenues;

     (2) Pursuant to Article VI, Section 15 of the Rhode Island Constitution and the specific

powers, authorities and safeguards set forth in subsection (c) herein in connection with the

operation of casino gaming, the state shall have full operational control over the specified

location at which casino gaming shall be conducted;

     (3) It is in the best interest of the state to have the authorization to operate casino gaming

as specified at Newport Grand;

LC001155/SUB A/2 - Page 29 of 59

     (4) Pursuant to the provisions of subdivision 42-61.2-2.1(b)(4), and by action of the

governor, an extensive analysis and evaluation of competitive casino-gaming operations was

completed, which concluded that the viability of Newport Grand as a video-lottery terminal

facility is threatened by the location of casino gaming in Southeast Massachusetts.

     (5) The legislature shall, by enactment of comprehensive legislation during the 2012

session, determine the terms and conditions pursuant to which casino gaming would be operated

in the state if it is authorized as set forth herein.

     (d) Notwithstanding the provisions of any other law and pursuant to Article VI, Section

15 of the Rhode Island Constitution, the state is authorized to operate, conduct and control casino

gaming at Newport Grand subject to subsection (a) above. In furtherance thereof, the state,

through the division of state lottery commission and/or the department of business regulation,

shall have full operational control to operate the foregoing facilities, has the authority to make all

decisions promulgate rules and regulations about all aspects of the functioning of the business

enterprise, including, without limitation, the power and authority to:

     (1) Determine the number, type, placement and arrangement of casino-gaming games,

tables and sites within the facility;

     (2) Establish with respect to casino gaming one or more systems for linking, tracking,

deposit and reporting of receipts, audits, annual reports, prohibitive conduct and other such

matters determined from time to time;

     (3) Establish policies and procedures for collection of Collect all receipts from casino

gaming, require that Newport Grand collect casino-gaming gross receipts in trust for the state

through the division of state lottery commission, deposit such receipts into an account or accounts

of its choice, allocate such receipts according to law, and otherwise maintain custody and control

over all casino-gaming receipts and funds;

     (4) Establish policies and procedures for the director to Hold and exercise sufficient

powers over Newport Grand's accounting and finances to allow for adequate oversight and

verification of the financial aspects of casino gaming at the facility, including, without limitation:

     (i) The right to require Newport Grand to maintain an annual balance sheet, profit and

loss, and any other necessary information or reports; and

     (ii) The authority and power to conduct periodic compliance or special or focused audits

of the information or reports provided, as well as the premises with the facility containing records

of casino gaming or in which the business of Newport Grand's casino-gaming operations are

conducted;

     (5) Establish policies and procedures for the director to monitor Monitor all casino-

LC001155/SUB A/2 - Page 30 of 59

gaming operations, and have the power to terminate or suspend any casino-gaming activities in

the event of an integrity concern or other threat to the public trust, and in furtherance thereof,

require the licensed, video-lottery retailer licensed casino facility to provide a specified area or

areas from which to conduct such monitoring activities;

     (6) Define and limit the rules of play and odds of authorized casino-gaming games,

including, without limitation, the minimum and maximum wagers for each casino-gaming game;

     (7) Establish employment qualification guidelines for Have approval rights over matters

relating to the employment of individuals to be involved, directly or indirectly, with the operation

of casino gaming at Newport Grand, which shall be administered by the director;

     (8) Establish compulsive gambling treatment programs;

     (9) Promulgate, or propose for promulgation, any legislative, interpretive and procedural

rules necessary for the successful implementation, administration and enforcement of this

chapter; and

     (10) Any and all Hold all other powers necessary and proper to fully effectively execute

and administer effectuate the provisions of this chapter for its purpose of allowing the state to

operate a casino-gaming facility through a licensed, video-lottery retailer hosting said casino

gaming on behalf of the state of Rhode Island.

     (e) Subject to subsection (a) above, the state, through the division of state lottery and/or

the department of business regulation director, in compliance with the rules and regulations set

forth by the commission, may expand Newport Grand's existing video lottery license issued, or

issue Newport Grand a new casino-gaming license, to permit casino gaming to the extent

authorized by this act.

     (f) Subject to subsection (a) above, all rules and regulations shall be promulgated by the

state, through the division of state lottery commission and the department of business regulation,

in accordance with the authority conferred upon the general assembly pursuant to Article VI,

Section 15 of the Rhode Island Constitution. In accord therewith, subject to subsection (a) above,

the state, through the division of state lottery commission and/or the department of business

regulation, shall have authority to issue such regulations as it deems appropriate pertaining to

control, operation and management of casino gaming as specifically set forth in subsections (b),

(c) and (d).

     42-61.2-2.3. State authorized to operate casino gaming in Tiverton. [Contingent

effective date; see note.]

     (a) State-operated casino gaming shall be authorized at the Tiverton facility of Twin

River-Tiverton, a licensed, video-lottery retailer, which facility is located in the town of Tiverton

LC001155/SUB A/2 - Page 31 of 59

at the intersection of William S. Canning Boulevard and Stafford Road, provided that the

requirements of R.I. Const., Art. VI, Sec. XXII are met with respect to said facility, namely that:

     (1) The secretary of state certifies that the qualified voters of the state have approved

authorizing a facility owned by Twin River-Tiverton located at the intersection of William S.

Canning Boulevard and Stafford Road in the town of Tiverton to be licensed as a pari-mutuel

facility and offer state-operated video-lottery games and state-operated casino gaming, such as

table games;

     (2) The board of canvassers of the town of Tiverton certifies (or there is certified on its

behalf) that the qualified electors of the town of Tiverton have approved authorizing a facility

owned by Twin River-Tiverton and located at the intersection of William S. Canning Boulevard

and Stafford Road in the town of Tiverton to be licensed as a pari-mutuel facility and offer state-

operated video lottery games and state-operated casino gaming, such as table games; and

     (3) The department of business regulation, division of gaming and athletics licensing,

issues to Twin River-Tiverton a license as a pari-mutuel facility, and the department of revenue,

state lottery division the commission issues to Twin River-Tiverton a license to offer state-

operated video lottery games and a license to offer state-operated casino gaming, such as table

games.

     (b) With respect to the facility owned by Twin River-Tiverton located at the intersection

of William S. Canning Boulevard and Stafford Road in the town of Tiverton, the authorization of

this section shall be effective upon the requirements set forth in subsection (a) of this section

having been met with respect to such facility.

     (c) The general assembly finds that:

     (1) The operation of casino gaming in the town of Tiverton will play a critical role in the

economy of the state and enhance state and local revenues;

     (2) Replacing the state-operated gaming facility in the city of Newport with a state-

operated gaming facility in the town of Tiverton is desirable to maximize state and local

revenues;

     (3) Pursuant to R.I. Const., Art. VI, Sec. XV and the specific powers, authorities and

safeguards set forth in subsection (d) of this section in connection with the operation of casino

gaming, the state shall have full operational control over casino gaming at the specified location

in the town of Tiverton; and

     (4) It is in the best interest of the state to have the authorization to operate casino gaming

as specified in the town of Tiverton.

     (d) Notwithstanding the provisions of any other law and pursuant to R.I. Const., Art. VI,

LC001155/SUB A/2 - Page 32 of 59

Sec. XV, the state is authorized to operate, conduct and control casino gaming at the facility of

Twin River-Tiverton located in the town of Tiverton at the intersection of William S. Canning

Boulevard and Stafford Road, subject to the provisions of subsection (a). In furtherance thereof,

the state, through the division of state lottery commission, shall have full operational control to

operate the foregoing facility, the authority to make all decisions promulgate rules and regulations

about all aspects of the functioning of the business enterprise, including, without limitation, the

power and authority to:

     (1) Determine the number, type, placement, and arrangement of casino gaming games,

tables and sites within the facility;

     (2) Establish with respect to casino gaming one or more systems for linking, tracking,

deposit, and reporting of receipts, audits, annual reports, prohibitive conduct, and other such

matters determined from time to time;

     (3) Establish policies and procedures for the collection of Collect all receipts from casino

gaming, require that Twin River-Tiverton collect casino gaming gross receipts in trust for the

state through the division of state lottery commission, deposit such receipts into an account or

accounts of its choice, allocate such receipts according to law, and otherwise maintain custody

and control over all casino gaming receipts and funds;

     (4) Establish policies and procedures for the director to Hold and exercise sufficient

powers over Twin River-Tiverton's accounting and finances to allow for adequate oversight and

verification of the financial aspects of casino gaming at the facility, including, without limitation:

     (i) The right to require Twin River-Tiverton to maintain an annual balance sheet, profit-

and-loss statement, and any other necessary information or reports; and

     (ii) The authority and power to conduct periodic compliance or special or focused audits

of the information or reports provided, as well as the premises with the facility containing records

of casino gaming or in which the business of Twin River-Tiverton's casino gaming activities are

conducted;

     (5) Establish policies and procedures for the monitoring of Monitor all casino gaming

operations, and have the power to terminate or suspend any casino gaming activities in the event

of an integrity concern or other threat to the public trust and in furtherance thereof, require Twin

River-Tiverton to provide a specified area or areas from which to conduct such monitoring

activities;

     (6) Define and limit the rules of play and odds of authorized casino gaming games,

including, without limitation, the minimum and maximum wagers for each casino gaming game;

     (7) Establish compulsive gambling treatment programs;

LC001155/SUB A/2 - Page 33 of 59

     (8) Promulgate, or propose for promulgation, any legislative, interpretive, and procedural

rules necessary for the successful implementation, administration, and enforcement of this

chapter; and

     (9) Any and all other Hold all other powers necessary and proper to fully effectively

execute and administer effectuate the provisions of this chapter for its purpose of allowing the

state to operate a casino gaming facility through a licensed, video-lottery retailer hosting said

casino gaming on behalf of the state of Rhode Island. ; and

     (10) Establish employment qualification guidelines with respect to the employment of

individuals to be involved, directly or indirectly, with the operation of casino gaming in the town

of Tiverton.

     (e) The state, through the department of revenue, division of state lottery, and/or the

department of business regulation and/ or director in conformity with the rules and regulations set

forth by the commission, shall have approval rights over matters relating to the employment of

individuals to be involved, directly or indirectly, with the operation of casino gaming in the town

of Tiverton.

     (f) Subject to subsection (a), the state, through the division of state lottery director in

conformity with the rules and regulations set forth by the commission, may issue Twin River-

Tiverton new video lottery and casino gaming licenses to permit video lottery and casino gaming

to the extent authorized by this chapter 61.2 of this title.

     (g) Subject to subsection (a), all rules and regulations shall be promulgated by the state,

through the division of state lottery commission, in accordance with the authority conferred upon

the general assembly pursuant to R.I. Const., Art. VI, Sec. XV. In accordance therewith, subject

to subsection (a), the state, through the division of state lottery commission, shall have authority

to issue such regulations as it deems appropriate pertaining to control, operation and management

of casino gaming as specifically set forth in subsections (b), (c) and (d).

     (h) The Rhode Island state police through its gaming enforcement unit shall have the

authority to monitor and investigate criminal violations related to casino gaming activities

consistent with chapter 61.3 of this title.

     (i) Notwithstanding any law or regulation to the contrary, Twin River-Tiverton shall not

commence video lottery or casino gaming activities prior to the completion, by the department of

transportation, of the already planned roundabout, DOT project #0103S, and funds for such

project shall be allocated such that the project is scheduled to be completed, and is completed, by

July 1, 2018.

     42-61.2-3. Additional powers and duties of the director.

LC001155/SUB A/2 - Page 34 of 59

     In addition to the powers and duties of the state lottery director under § 42-61-4, the

director commission shall promulgate reasonable rules and regulations relating to video-lottery

games and to make recommendations and set policy for these games. These rules and regulations

and shall include, but not be limited to:

     (1) The division director shall license technology providers capable of interfacing with a

central communications system controlled by the division director. In making its their licensing

decision, the division director shall select providers based on the following factors: providers

experienced in performing comparable projects, financial stability, technical and management

abilities, the quality of the product and service capabilities, likelihood of timely performance,

maximum revenue generation, its ability to pass a law enforcement background investigation, and

any other factors found to be relevant to performance. As part of its investigation as to whether to

issue a license hereunder, the Rhode Island lottery director shall require criminal background

checks of individuals as it deems they deem appropriate and said individuals shall apply to the

bureau of criminal investigation of the Rhode Island state police or the Rhode Island department

of the attorney general for a national criminal records check with fingerprinting. The applicant

whose criminal records check is being conducted shall be responsible for the payment of the costs

of said criminal records check. The Rhode Island state police or the Rhode Island department of

attorney general, as applicable, shall send the results of such criminal records check to the Rhode

Island lottery director. Once said results are sent to and received by the Rhode Island lottery

director, the Rhode Island state police and the Rhode Island department of attorney general shall

promptly destroy said fingerprint record(s). On or before February 1, 2011, the agency director

shall adopt rules and regulations establishing criteria to be used in determining whether based

upon a criminal records check an application will be approved.

     The award of a license to technology providers under this section shall satisfy the

requirements of chapter 2 of title 37. An outside independent testing laboratory may be utilized

by the division director at the expense of the individual provider;

     (2) Accounting procedures for determining the net terminal income from lottery video

terminals, and unclaimed prizes and credits;

     (3) The type of video-lottery games to be conducted;

     (4) The price to play each game and the prizes or credits to be awarded;

     (5) Financial reporting procedures for licensed, video-lottery retailers and control

procedures in the event that any of these retailers should become insolvent;

     (6) Insurance and bonding by:

     (i) Licensed, video-lottery retailers; and

LC001155/SUB A/2 - Page 35 of 59

     (ii) Technology provider;

     (7) The licensing of licensed, video-lottery retailers;

     (8) The contracting with technology providers;

     (9) All video-lottery machines shall be linked under a central communications system to

provide auditing program information as approved required by the division commission. The

communications system approved required by the division commission may not limit

participation to only one manufacturer of video-lottery machines by either cost of implementing

the necessary program modifications to communicate or the inability to communicate with the

central communication system;

     (10) Establishment of information system, operating procedures, reporting and

accounting criteria in order to comply with the provisions of § 42-61.2-12; and

     (11) Any other matters necessary for video-lottery terminals or for the convenience of the

public.

     42-61.2-3.1. Table-game regulation.

     (a) In addition to the powers and duties of the commission Division director under §§ 42-

61-4, 42-61.2-3 and 42-61.2-4, and pursuant to § 42-61.2-2.1 and § 42-61.2-2.2, the commission

Division director shall promulgate reasonable rules and regulations relating to state-operated table

gaming and set policy for these table games. These rules and regulations shall include, but not be

limited to:

     (1) Establishing standards and procedures for table gaming and associated equipment.

     (2) Establishing standards, rules and regulations to govern the conduct of table games and

the system of wagering associated with table games, including without limitation:

     (i) The object of the table game and method of play, including what constitutes win, loss

or tie bets;

     (ii) Physical characteristics of the table games and table-game equipment;

     (iii) Wager and payout odds for each type of available wager;

     (iv) The applicable inspection procedures for any of the following, as required by a table

game:

     (A) Cards;

     (B) Dice;

     (C) Wheels and balls; and

     (D) Other devices, equipment and accessories related to table games.

     (v) Procedures for the collection of bets and payouts, including requirements for internal

revenue service purposes;

LC001155/SUB A/2 - Page 36 of 59

     (vi) Procedures for handling suspected cheating or table-gaming irregularities; and

     (vii) Procedures for handling any defective or malfunctioning table-game equipment.

     (3) Establishing the method for calculating net table-game revenue and standards for the

daily counting and recording of cash received in the conduct of table games, and ensuring that

internal controls are followed, including the maintenance of financial books and records and the

conduct of annual audits at the expense of the table game retailer.

     (4) Establishing the number and type of table games authorized at a table-game retailer's

facility, and all rules related thereto.

     (5) Establishing any table-game rule changes, table-game minimum and maximum wager

changes, and changes to the type of table game being offered at a particular gaming table,

including any notice by the table-game retailer to the public.

     (6) Requiring the table-game retailer to:

     (i) Provide written information at each table game about game rules, payoffs or winning

wagers and other information as the Division commission may require.

     (ii) Provide specifications approved by the Division to integrate and update the table-

game retailer's surveillance system to cover all areas where table games are conducted and other

areas as required by the lottery division director. The specifications shall include provisions

providing the Division commission and other persons authorized by the Division director in

conformity with the rules and regulations set forth by the commission with onsite access to the

system.

     (iii) Designate one or more locations within the table-game retailer's facility to conduct

table games.

     (iv) Ensure that visibility in a table-game retailer's facility is not obstructed in any way

that could interfere with the ability of the Division director, the table-game retailer or other

persons authorized under this section or by the Division director in conformity with the rules and

regulations set forth by the commission to oversee the surveillance of the conduct of table games.

     (v) Ensure that the count room for table gaming has appropriate security for the counting

and storage of cash.

     (vi) Furnish each table game with a sign acceptable to the division director in conformity

with the rules and regulations set forth by the commission indicating the permissible minimum

and maximum wagers at the table game.

     (vii) Adopt policies or procedures to prohibit any table-game equipment from being

possessed, maintained or exhibited by any person on the premises of a table-game retailer's

facility except in the areas of such facility where the conduct of table games is authorized or in a

LC001155/SUB A/2 - Page 37 of 59

restricted area designated to be used for the inspection, service, repair or storage of table-game

equipment by the table-game retailer or in an area used for employee training and instruction by

the table-game retailer.

     (viii) Ensure that drop boxes are brought into or removed from an area where table games

are conducted or locked or unlocked in accordance with procedures established by the Division

commission.

     (ix) Designate secure locations for the inspection, service, repair or storage of table-game

equipment and for employee training and instruction to be approved by the Division director in

conformity with the rules and regulations set forth by the commission.

     (7) Establishing the size and uniform color by denomination of table-game chips used in

the conduct of table games, including tournaments, and a policy for the use of promotional or

commemorative chips used in the conduct of certain table games. All types of table-game chips

shall be approved by the Division director prior to being used for play at a table game.

     (8) Establishing the procedure to be used by a table-game retailer to determine and

extract a rake for the purposes of generating net, table-game revenue from nonbanking games.

     (9) Establishing minimum standards relating to the acceptance of tips or gratuities by

dealers at a table game, which shall include:

     (i) The requirement that tips or gratuities accepted by dealers at banking table games be

placed in a common pool for complete distribution pro rata among all dealers based on the daily

collection of such tips or gratuities; provided however, the Division commission may establish an

alternative distribution method for tips or gratuities at a banking table game upon submission by

the table-game retailer of a proposal acceptable to the division commission to modify the existing

distribution method for tips or gratuities.

     (ii) The requirement that tips or gratuities accepted by dealers at nonbanking table games

are not required to be pooled and may be retained by the dealers; provided however, the Division

commission may establish an alternative distribution method for tips or gratuities at a nonbanking

table game upon submission by the table-game retailer of a proposal acceptable to the division

commission to modify the existing distribution method for tips or gratuities.

     (10) Establishing the minimal proficiency requirements for table-game personnel,

including without limitation table-game dealers. The foregoing requirements of this subsection

(10) shall not affect any rules or regulations of the Rhode Island Department of Business

Regulation requiring licensing of personnel of state-operated gaming facilities.

     (11) Establishing the practices and procedures governing the conduct of table-game

tournaments.

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     (12) Establishing appropriate eligibility requirements and standards for traditional table-

game equipment suppliers.

     (13) Any other matters necessary for conducting table games.

     (b) The Division commission shall promulgate the table-game regulations authorized by

this section on or before March 31, 2013 2018.

     (c) A table-game retailer shall reimburse and pay to the Division director (or to such

other entities as the Division director may identify) all reasonable costs and expenses associated

with the Division's director's review of the business or operations of the table-game retailer,

including, but not limited to, such items as ongoing auditing, legal, investigation services,

compulsive and problem gambling programs, and other related matters.

     (d) The table-game retailer shall provide secure, segregated facilities as required by the

Division commission on the premises for the exclusive use of the Lottery staff director or their

personnel and the State Police. Such space shall be located proximate to the gaming floor and

shall include surveillance equipment, monitors with full camera control capability, as well as

other office equipment that may be deemed necessary by the Division commission. The location

and size of the space shall be subject to the approval of the Division specifications set forth by the

commission.

     42-61.2-3.2. Gaming credit authorized. [Contingent effective date; see note.]

     (a) Authority. In addition to the powers and duties of the state lottery director under §§

42-61-4, 42-61.2-3, 42-61.2-3.1 and 42-61.2-4, the division commission shall authorize each

licensed, video-lottery retailer to extend credit to players pursuant to the terms and conditions of

this chapter.

     (b) Credit. Notwithstanding any provision of the general laws to the contrary, including,

without limitation, § 11-19-17, except for applicable licensing laws and regulations, each

licensed, video-lottery retailer may extend interest-free, unsecured credit to its patrons for the sole

purpose of such patrons making wagers at table games and/or video-lottery terminals at the

licensed, video-lottery retailer's facility subject to the terms and conditions of this chapter.

     (c) Regulations. Each licensed, video-lottery retailer shall be subject to rules and

regulations submitted by licensed, video-lottery retailers, which shall be in conformity with the

rules and regulations set forth by the commission and subject to the approval of the division of

lotteries director regarding procedures governing the extension of credit and requirements with

respect to a credit applicant's financial fitness, including, without limitation: annual income; debt-

to-income ratio; prior credit history; average monthly bank balance; and/or level of play. The

division of lotteries director may approve, approve with modification, or disapprove any portion

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of the policies and procedures submitted for review and approval.