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1 Indicates Matter Stricken 2 Indicates New Matter 3 4 AMENDED 5 May 3, 2001 6 7 S. 496 8 9 Introduced by Judiciary Committee 10 11 S. Printed 5/3/01--H [SEC 5/8/01 12:53 PM] 12 Read the first time April 18, 2001. 13

1 [496-1] 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 12 1976, BY ADDING CHAPTER 57 TO TITLE 33, SO AS TO 13 ENACT THE “SOUTH CAROLINA EDUCATION LOTTERY 14 ACT”; TO PROVIDE FOR A STATE LOTTERY AND TO 15 CREATE THE SOUTH CAROLINA EDUCATION LOTTERY 16 CORPORATION TO CONDUCT THE STATE LOTTERY; TO 17 PROVIDE FOR THE CORPORATION’S BOARD 18 MEMBERSHIP, DUTIES, AND POWERS; TO PROVIDE FOR 19 THE CREATION OF A LOTTERY RETAILERS ADVISORY 20 COMMITTEE; TO PROVIDE FOR THE METHOD OF 21 CONTRACTING WITH VENDORS AND RETAILERS; TO 22 PROVIDE FOR THE SALE OF LOTTERY GAME TICKETS 23 AND THE DISTRIBUTION OF PRIZES; TO PROVIDE FOR 24 ALLOCATION OF LOTTERY PROCEEDS WHICH MUST BE 25 USED FOR EDUCATIONAL PURPOSES AND PROGRAMS; 26 TO PROVIDE CRIMINAL PENALTIES FOR SELLING A 27 LOTTERY TICKET TO A MINOR, PURCHASING A 28 LOTTERY TICKET AS A MINOR, AND DEFRAUDING OR 29 OTHERWISE TAMPERING WITH THE LOTTERY OR 30 MAKING MATERIAL REPRESENTATIONS IN AN 31 APPLICATION OR REPORT IN CONNECTION WITH THE 32 LOTTERY; TO CREATE A SOUTH CAROLINA EDUCATION 33 LOTTERY OVERSIGHT COMMITTEE; TO PROVIDE FOR 34 SET-OFF DEBT COLLECTION FROM PRIZE WINNINGS; TO 35 ESTABLISH THE SOUTH CAROLINA EDUCATION 36 LOTTERY ACCOUNT INTO WHICH THE NET PROCEEDS 37 RECEIVED FROM THE STATE EDUCATION LOTTERY 38 MUST BE DEPOSITED AND TO PROVIDE FOR SPECIFIED 39 PURPOSES FOR THE PROCEEDS; TO AMEND SECTION 40 1-3-240, RELATING TO THE REMOVAL OF OFFICERS BY 41 THE GOVERNOR UNDER CERTAIN CIRCUMSTANCES, SO 42 AS TO ADD THE SOUTH CAROLINA EDUCATION

1 [496] 1 1 LOTTERY CORPORATION TO THAT PROVISION; TO ADD 2 SECTION 2-15-63, SO AS TO PROVIDE THAT BEGINNING 3 IN DECEMBER 2004 AND EVERY THREE YEARS 4 THEREAFTER, THE LEGISLATIVE AUDIT COUNCIL MUST 5 CONDUCT A MANAGEMENT PERFORMANCE AUDIT OF 6 THE LOTTERY CORPORATION; TO AMEND SECTION 7 12-36-2120, RELATING TO THE EXEMPTIONS FROM THE 8 SALES TAX, SO AS TO INCLUDE THE SALE OF A 9 LOTTERY TICKET; AND TO AMEND SECTION 59-63-210, 10 RELATING TO THE GROUNDS FOR WHICH A STUDENT 11 MAY BE EXPELLED, SO AS TO PROVIDE THAT NO 12 STUDENT UNDER EIGHTEEN YEARS OF AGE WHO 13 UNLAWFULLY PURCHASES A LOTTERY TICKET MAY BE 14 EXPELLED FOR THAT REASON ONLY. 15 Amend Title To Conform 16 17 Be it enacted by the General Assembly of the State of South 18 Carolina: 19 20 SECTION 1. The General Assembly finds that: 21 22 (1) net proceeds of lottery games conducted pursuant to this 23 chapter must be used to support improvements and enhancements 24 for educational purposes and educational programs as provided by 25 the General Assembly and that the net proceeds must be used to 26 supplement, not supplant, existing resources for educational 27 purposes and programs; 28 (2) lottery games are an entrepreneurial enterprise and that the 29 State shall create an instrumentality of the State and public body, 30 corporate and politic, known as the South Carolina Lottery 31 Commission, with the comprehensive and extensive powers as 32 generally exercised by commissions engaged in entrepreneurial 33 pursuits; 34 (3) lottery games must be operated and managed in a manner 35 which ensures that the lottery is operated with integrity and dignity 36 and free of political influence, maximizes the use of revenues, and 37 provides continuing entertainment to the public; 38 (4) the South Carolina Lottery Commission must be 39 accountable to the General Assembly and to the public through a 40 system of audits and reports; and 41 (5) this act is not a bill appropriating money out of the State 42 Treasury as contemplated by Section 21 of Article IV of the 43 Constitution of this State and, therefore, is not subject to a line

1 [496] 2 1 item or section objection or veto by the Governor. It is the intent 2 of the General Assembly that this act merely specify the 3 educational purposes and programs, and parameters, for funding 4 by the General Assembly through the annual general 5 appropriations bill or any bill appropriating monies for previous or 6 current fiscal years. 7 8 SECTION 2. Title 59 of the 1976 Code is amended by adding: 9 10 “CHAPTER 150 11 12 South Carolina Education Lottery Act 13 14 Section 59-150-10. This chapter may be cited as the ‘South 15 Carolina Education Lottery Act’. 16 17 Section 59-150-20. As used in this chapter: 18 (1) ‘Administrative expenses’ means operating expenses, 19 excluding amounts set aside for prizes, regardless of whether the 20 prizes are claimed, and excluding amounts held as a fidelity fund 21 pursuant to Section 59-150-170. 22 (2) ‘Board’ means the board of commissioners of the South 23 Carolina Lottery Commission. 24 (3) ‘Commission’ means the South Carolina Lottery 25 Commission. 26 (4) ‘Educational purposes and programs’ means educational 27 expenses and scholarships as defined in Section 59-150-350(C). 28 (5) ‘Executive director’ means the executive director of the 29 South Carolina Lottery Commission or his designee. 30 (6) ‘Immediate family’ means a person who is: 31 (a) a spouse; 32 (b) a child residing in the same household; or 33 (c) claimed as a dependent for income tax purposes. 34 (7) ‘Lottery’, ‘lotteries’, ‘lottery game’, or ‘lottery games’ 35 means a game of chance approved by the General Assembly and 36 operated pursuant to this chapter including, but not limited to, 37 instant tickets, on-line lottery games and drawing numbers but 38 excluding keno, pari-mutuel betting, and casino gambling as 39 defined in this section. A lottery game may not exceed the price of 40 one dollar for one play. The operation of the lottery games 41 excludes machines and lottery games, including video poker 42 lottery games, prohibited by Sections 12-21-2710, 16-19-40, and 43 16-19-50. The access and use of an electronic or mechanical

1 [496] 3 1 machine designed for a lottery game authorized pursuant to this 2 chapter must be limited to a lottery retailer and his employees only 3 in order to facilitate retail sales of lottery tickets, and such a 4 machine must not dispense anything other than lottery tickets. 5 As used in this item, ‘casino gambling’ means a location or 6 business for the purpose of conducting unlawful gambling 7 activities, but excluding the sale and purchase of lottery game 8 tickets or shares; and ‘pari-mutuel betting’ means a method or 9 system of wagering on actual races including races involving 10 horses or dogs at tracks and the distribution of winnings by pools. 11 (8) ‘Lottery retailer’ means a person who sells lottery game 12 tickets or shares on behalf of the South Carolina Lottery 13 Commission pursuant to a contract. 14 (9) ‘Lottery vendor’ means a person who provides or proposes 15 to provide goods or services to the South Carolina Lottery 16 Commission pursuant to a procurement contract, but does not 17 include an employee of the commission, a lottery retailer, or a state 18 agency or instrumentality of the State. The term includes a 19 corporation whose shares are traded publicly and which is the 20 parent company of the contracting party in a procurement contract. 21 (10) ‘Major procurement contract’ means a gaming product or 22 service costing in excess of seventy-five thousand dollars 23 including, but not limited to, major advertising contracts, annuity 24 contracts, prize payment agreements, consulting services, 25 equipment, tickets, and other products and services unique to the 26 South Carolina lottery but not including materials, supplies, 27 equipment, and services common to the ordinary operations of a 28 business. 29 (11) ‘Member’ or ‘members’ means a commissioner or 30 commissioners of the board of the South Carolina Lottery 31 Commission. 32 (12) ‘Minority business’ means a business which meets the 33 definition of a socially and economically disadvantaged small 34 business as described in Article 21, Chapter 35, Title 11, 35 specifically a small business concern which: 36 (a) is at least fifty-one percent owned by one or more 37 citizens of the United States who are determined to be socially and 38 economically disadvantaged; 39 (b) in the case of a concern which is a corporation, at least 40 fifty-one percent of all classes of voting stock of such corporation 41 is owned by an individual determined to be socially and 42 economically disadvantaged; or

1 [496] 4 1 (c) in the case of a concern which is a partnership, at least 2 fifty-one percent of the partnership interest is owned by an 3 individual or individuals determined to be socially and 4 economically disadvantaged or whose management and daily 5 business operations are controlled by individuals determined to be 6 socially and economically disadvantaged. Those individuals must 7 be involved in the daily management and operations of the 8 business concerned. 9 ‘Small business’ as used in this item means a business which 10 meets the definition of a small business for purposes of the Small 11 Business Administration, an agency of the United States. 12 (13) ‘Net proceeds’ means all revenue derived from the sale of 13 lottery game tickets or shares and all other monies derived from 14 the lottery games, less operating expenses and prizes. 15 (14) ‘Operating expenses’ means all costs of doing business 16 including, but not limited to, prizes, commissions, and other 17 compensation paid to a lottery retailer, advertising and marketing 18 costs, rental fees, personnel costs, capital costs, depreciation of 19 property and equipment, funds for compulsive gambling education 20 and treatment, amounts held in or paid from a fidelity fund 21 pursuant to Section 59-150-170, and other operating costs, 22 including funds to the Commission on Higher Education and the 23 Administrative Law Judge Division toward their expenses incurred 24 in performance of their duties pursuant to this chapter. 25 (15) ‘Person’ means an individual, corporation, partnership, 26 unincorporated association, or other legal entity. 27 (16) ‘Prize’ means an award, gift, or anything of value 28 regardless of whether there are conditions or restrictions attached 29 to its receipt. 30 (17) ‘Proceeds’ means all lottery revenue derived from the sale 31 of lottery game tickets or shares and all other monies derived from 32 the lottery or received by the commission. 33 (18) ‘Share’ means an intangible interest in a lottery ticket, by 34 way of assignment, contractual participation, or other claim or 35 right, subject to proof. 36 (19) ‘Ticket’ means tangible evidence issued by the South 37 Carolina Lottery Commission to provide participation in a lottery 38 game. 39 (20) ‘Panel’ means the House and Senate members appointed by 40 the President Pro Tempore of the Senate and the Speaker of the 41 House of Representatives pursuant to the provisions of Section 42 59-150-40(B)(5). 43

1 [496] 5 1 Section 59-150-30. (A) There is created a commission to be 2 known as the South Carolina Lottery Commission, which is 3 deemed to be a public commission and an instrumentality of the 4 State. The commission and its employees are subject to the South 5 Carolina Consolidated Procurement Code, South Carolina 6 Administrative Procedures Act, South Carolina Ethics Reform Act, 7 and South Carolina Freedom of Information Act. Venue for the 8 commission is in Richland County. 9 (B) Beginning in December 2004 and every three years after 10 that, or by the request of five members of the House of 11 Representatives or five members of the Senate, the Legislative 12 Audit Council shall conduct a management performance audit of 13 the commission. The cost of this audit is an operating expense of 14 the commission. 15 (C) Jurisdiction for investigation of allegations of criminal 16 violations and for enforcement of criminal penalties for violations 17 of the provisions of this chapter lies with the Statewide Grand 18 Jury. 19 20 Section 59-150-40. (A) The commission is governed by a board 21 composed of nine members to be appointed as follows: three 22 members must be appointed by the Governor, three members must 23 be appointed by the President Pro Tempore of the Senate, and 24 three members must be appointed by the Speaker of the House of 25 Representatives. 26 (B) A member must: 27 (1) be a resident of the State of South Carolina; 28 (2) not have been convicted of a felony offense or 29 bookmaking or other form of unlawful gambling. A background 30 investigation must be conducted on each board nominee. The 31 commission shall pay for the cost of the investigation and may 32 contract with the State Law Enforcement Division (SLED) or 33 appropriate federal agency for the performance of the 34 investigation; 35 (3) meet the qualifications for electors as provided in 36 Section 7-5-120; 37 (4) not have been an elected public official, as provided in 38 Section 24, Article III, of the Constitution of this State and Section 39 2-1-100, for at least two years before appointment; and 40 (5) have been screened by a panel pursuant to procedures it 41 establishes and found by the panel to meet the statutory 42 qualifications and considerations for appointment to the board. 43 The Governor, Speaker of the House of Representatives, and the

1 [496] 6 1 President Pro Tempore of the Senate each shall submit the names 2 of his potential board appointees to the panel. If the panel finds 3 the potential appointee meets or does not meet the statutory 4 qualifications, it shall notify the appointing authority who 5 submitted the name. A potential appointee found not statutorily 6 qualified by the panel may not be appointed to the board. The 7 screening panel is composed of ten members: five selected by the 8 President Pro Tempore of the Senate and five selected by the 9 Speaker of the House of Representatives. The President Pro 10 Tempore of the Senate and the Speaker of the House of 11 Representatives shall each select three members of their respective 12 bodies and two members from the public to serve on the screening 13 panel. The members of the panel serve four-year terms. The 14 investigation and consideration by the panel of a potential 15 appointee is limited to the statutory qualifications established 16 pursuant to this chapter. A panel member may be removed upon 17 unanimous vote of the appointing authorities, or for cause by his 18 appointing authority for malfeasance, incompetency, conflict of 19 interest, misconduct, persistent neglect of duty in office, or 20 incapacity. 21 (C) In making appointments to the board, the Governor, the 22 President Pro Tempore of the Senate, and the Speaker of the House 23 of Representatives, as appropriate, shall consider legal, financial, 24 accounting, and marketing experience and race, gender, and other 25 demographics factors to ensure nondiscrimination, inclusion, and 26 representation of all segments of the State to the greatest extent 27 possible. 28 (D) The members shall serve terms of three years, except that 29 of the initial appointments the Governor shall appoint two 30 members, each to serve a two-year term, and one member to serve 31 a four-year term; the Speaker of the House of Representatives 32 shall appoint three members, each to serve a two-year term, 33 co-terminus with the Speaker; and the President Pro Tempore of 34 the Senate shall appoint three members, each to serve an initial 35 four-year term. A vacancy that occurs on the board must be filled 36 by appointment by the Governor, the President Pro Tempore of the 37 Senate, or the Speaker of the House of Representatives, as 38 appropriate, for the remainder of the unexpired term. 39 (E) A member shall not serve on the board if he is an officer or 40 employee of the commission or if he has an immediate family 41 member employed by the commission.

1 [496] 7 1 (F) A member of the board may receive per diem, subsistence, 2 and mileage at the rate provided by law for members of state 3 boards, committees, and commissions. 4 (G) The board shall elect from their membership officers of the 5 board, including the chair. 6 (H) The board may delegate to the executive director of the 7 commission those powers and duties it considers proper. 8 (I) A majority of members in office or at least five members, 9 whichever is greater, constitutes a quorum for the transaction of 10 business and for the exercise of a power or function of the 11 commission. 12 (J) Action may be taken and motions and resolutions adopted 13 by the board at a board meeting by affirmative vote of a majority 14 of present and voting board members. This subsection does not 15 relieve the board from the requirements of the South Carolina 16 Freedom of Information Act. 17 (K) A vacancy in the membership of the board does not impair 18 the right of the members to exercise all the powers and perform all 19 the duties of the board. 20 (L) A member is appointed to the board for a term, but serves 21 at the pleasure of the official who appointed him. 22 (M) A member of the board shall not contribute to the campaign 23 of a candidate for the General Assembly or a statewide 24 constitutional office; to a political party, as defined in Section 25 8-13-1300(26); or to a committee, as defined in Section 26 8-13-1300(6); or make an independent expenditure to advance or 27 defeat a measure related to the lottery. 28 29 Section 59-150-50. The board shall: 30 (1) approve, disapprove, amend, or modify the budget 31 recommended by the executive director for the operation of the 32 commission; 33 (2) approve, disapprove, amend, or modify the terms of 34 procurements recommended by the executive director; 35 (3) hear appeals of hearings required by this chapter; 36 (4) promulgate regulations and adopt policies and procedures 37 regulating the conduct of lottery games pursuant to the 38 Administrative Procedures Act and as specified in Section 39 59-150-60(A)(19); and 40 (5) perform other functions specified by this chapter. 41 42 Section 59-150-60. (A) The commission has all the powers 43 necessary or convenient to carry out and effectuate the purposes

1 [496] 8 1 and provisions of this chapter which are not in conflict with the 2 Constitution and laws of this State and which generally are 3 exercised by commissions engaged in entrepreneurial pursuits on 4 behalf of the State including, but not limited to, the powers to: 5 (1) sue and be sued in contract and in tort and to complain 6 and defend in all courts, subject to the South Carolina Tort Claims 7 Act; 8 (2) adopt and alter a corporate seal and symbol; 9 (3) promulgate regulations and adopt policies and 10 procedures for the regulation of its affairs and the conduct of its 11 business; to elect and prescribe the duties of officers and 12 employees of the commission; and to perform other matters as the 13 commission may determine; 14 (4) procure or to provide self-insurance; 15 (5) hold copyrights, trademarks, and service marks and 16 enforce its rights with respect to them; 17 (6) organize, initiate, supervise, and administer the operation 18 of the lottery as provided by this chapter and regulations 19 promulgated and policies and procedures adopted pursuant to this 20 chapter; 21 (7) enter into written agreements with one or more other 22 states for the operation, participation in marketing, and promotion 23 of a joint lottery or joint lottery games, but such marketing and 24 promotion is subject to the restrictions on advertising and 25 promotion provided in item (17) of this section; 26 (8) conduct necessary or appropriate market research, which 27 may include an analysis of the demographic characteristics of the 28 players of the lottery game and an analysis of advertising, 29 promotion, public relations, incentives, and other aspects of 30 communication; 31 (9) acquire or lease real property and make improvements on 32 it and acquire by lease or by purchase personal property including, 33 but not limited to, computers; mechanical, electronic, and on-line 34 equipment and terminals; and intangible property including, but 35 not limited to, computer programs, systems, and software. To 36 achieve cost savings and efficiency, the commission shall use the 37 telecommunications network service of the Budget and Control 38 Board’s Office of Information Resources pursuant to Sections 39 1-11-430 and 11-35-1580 provided that the commission certifies 40 that the service is secure; 41 (10) administer oaths, take depositions, issue subpoenas, and 42 compel the attendance of witnesses and the production of books,

1 [496] 9 1 papers, documents, and other evidence relative to any investigation 2 or proceeding conducted by the commission; 3 (11) appoint, select, or hire officers, agents, and employees, 4 including professional and administrative staff, personnel, and 5 hearing officers to conduct hearings required by this chapter, and 6 to fix their compensation and pay their expenses. Notwithstanding 7 another provision of law, the commission has exclusive authority 8 to contract for legal services. All employees of the commission 9 are employees-at-will and are eligible for participation in the South 10 Carolina Retirement System and may elect optional retirement 11 program coverage in the same manner as provided in Section 12 9-20-10(2)(a), the State Health Insurance Group plans, and are 13 encompassed by the South Carolina Tort Claims Act; 14 (12) make pension payments to the South Carolina 15 Retirement System or other system approved by the State 16 Retirement System and pay contributions to the Office of 17 Insurance Services for dental and health plans on behalf of 18 personnel or employees employed by the commission who qualify 19 in the same manner as other state employees in the executive 20 branch of government; 21 (13) select and contract with lottery vendors and lottery 22 retailers; 23 (14) enter into contracts or agreements with state or other law 24 enforcement agencies for the performance of law enforcement, 25 background investigations, and security checks; 26 (15) enter into contracts on such terms and conditions as the 27 commission may determine, except that the commission shall not 28 enter into contracts to incur debt in its own name or enter into 29 financing agreements with the State, agencies, or instrumentalities 30 of the State, or with a commercial bank or credit provider; 31 however, necessary start-up monies may be borrowed from the 32 Insurance Reserve Fund of the Budget and Control Board, subject 33 to the loan repayment terms of the Budget and Control Board, for 34 effectuating its purpose, including payment of the initial expenses 35 of initiation, administration, and operation of the commission and 36 the lottery, if and only if sufficient start-up monies are not 37 appropriated from the general fund; 38 (16) enter into contracts of any type on the terms and 39 conditions the commission determines, except that it may not enter 40 into a contract with an entity for the purpose of having that entity 41 assume or otherwise undertake the organization and conduct of the 42 lottery;

1 [496] 10 1 (17) advertise and promote the lottery and lottery games in a 2 dignified manner befitting the State, but only in compliance with 3 the same state and federal standards of truth in advertising which 4 govern private advertisers engaged in interstate commerce and 5 including the restrictions described in this item. The board shall 6 review, at least quarterly, all past lottery advertising and proposed 7 concepts for major media campaigns to ensure that the advertising 8 did not and does not target with the intent to exploit specific ethnic 9 groups or economic classes of people, and that the content is 10 accurate and not misleading. The commission shall promote fair 11 and responsible play, including disclosure of the odds of winning, 12 and shall ensure that any advertising used does not exhort the 13 public to bet by misrepresenting, directly or indirectly, a person’s 14 chance of winning a prize. The commission may use interviews, 15 pictures, or statements from people who have won lottery prizes to 16 show that prizes are won and awarded. If the board finds that 17 advertising conflicts with these policies, the board shall cause the 18 cessation of that advertising; 19 advertising and promotion of the lottery and lottery games as 20 defined in Section 59-150-20(7) is restricted to: expenditure of not 21 more than one-half of one percent of gross lottery revenues; 22 contracts of one year or less and awarded by the board after 23 competitive bidding; information about how the game is played; 24 identification of amounts or recipients, or both of them, of funding 25 from the proceeds of ticket sales; explanation of the permitted uses 26 of lottery proceeds; probability of winning and losing; an 27 entertainment context; encouragement of responsible play; 28 information about recognizing and seeking treatment for 29 compulsive gambling; sites and methods designed to reach the 30 responsible adult player; and advertisements and promotions 31 placed exclusively by the commission in newspapers or periodicals 32 or on the commission official web site; 33 advertising and promotion of the lottery and lottery games must 34 not include: inducements to play; targeting with the intent to 35 exploit specific ethnic groups or economic classes of people; 36 representations of the game as an investment or the answer to 37 financial concerns; exaggeration of odds of winning; the name or 38 image, or both, of an elected official, or the State Seal or its 39 likeness; praise of a lottery player or denigration of a nonplayer; 40 implication that the game is one of skill; suggestion that the lottery 41 player is contributing money for the good of the State; any 42 advertising outside of the lottery retailer’s business premises; and 43 advertising in connection with or at the site of a public school or

1 [496] 11 1 institution of higher learning or sponsorship of an activity at a 2 public school or institution of higher learning; 3 lottery advertising and promotion also: must include posting of 4 warnings of the dangers and risks of gambling, and the odds of 5 winning, on a three by two foot sign in a conspicuous location in 6 all lottery retailer facilities; must otherwise encourage responsible 7 decision making regarding lottery play by adults, discourage 8 abusive use of the lottery product; and, other than as permitted in 9 the provisions of this chapter for the commission and the lottery 10 retailer, may not be undertaken by another entity or individual; 11 notwithstanding any other provision of law, advertising relating 12 to the lottery must not contain subliminal messages or images of 13 any kind; 14 (18) act as a lottery retailer, conduct promotions which 15 involve the dispensing of lottery game tickets or shares, and 16 establish and operate a sales facility to sell lottery game tickets or 17 shares and related merchandise, except that the commission shall 18 not establish, operate, or authorize a lottery sales facility at any 19 state Welcome Center or state rest area; and 20 (19) promulgate regulations and adopt and amend policies 21 and procedures as necessary to carry out and implement its powers 22 and duties, organize and operate the commission, regulate the 23 conduct of lottery games as defined in Section 59-150-20(7), and 24 other matters necessary or desirable for the efficient and effective 25 operation of the lottery for the convenience of the public. The 26 promulgation of the regulations and adoption of the policies and 27 procedures are subject to the requirements of the Administrative 28 Procedures Act. 29 (B) The powers enumerated in subsection (A) are cumulative of 30 and in addition to those powers enumerated elsewhere in this 31 chapter, and do not limit or restrict other powers of the 32 commission. 33 (C) The commission is prohibited from distributing monies 34 other than as prescribed by this chapter including, but not limited 35 to, the prohibition of contributing to the campaign of a candidate 36 for the General Assembly or a statewide constitutional office; to a 37 political party, as defined in Section 8-13-1300(26); or to a 38 committee, as defined in Section 8-13-1300(6); and the prohibition 39 of making an independent expenditure to advance or defeat a 40 measure related to the lottery. 41 (D) The commission is not authorized to use any machine 42 specifically prohibited by Sections 12-21-2710, 16-19-40, and 43 16-19-50.

1 [496] 12 1 (E) The commission is subject to the limitations upon, and 2 exemptions from, liability and damages provided in the South 3 Carolina Tort Claims Act. 4 (F) The commission shall not issue, sell, or authorize the sale 5 of lottery tickets or shares at a location licensed to provide 6 deferred presentment services pursuant to Chapter 39 of Title 34. 7 (G) The commission shall not enter into a contract for the 8 purpose of influencing a political decision in connection with the 9 operation of the lottery, and the commission may not employ, 10 contract with, or otherwise authorize a lobbyist, as defined in 11 Section 2-17-10(13), to engage in lobbying, as defined in Section 12 2-17-10(12), on behalf of the commission. 13 (H) The commission may not sell or give away tickets for 14 promotional purposes. 15 16 Section 59-150-70. In accordance with the Administrative 17 Procedures Act, the board may promulgate regulations and adopt 18 policies and procedures regulating the conduct of lottery games in 19 general; except the commission may promulgate temporary 20 regulations and adopt policies and procedures to implement the 21 provisions of this chapter which must be consistent with this 22 chapter, except as otherwise provided in this section. The 23 commission shall have tickets available for purchase by the public 24 no later than November 1, 2001, or as soon as practicable. These 25 temporary regulations, polices, and procedures are not considered 26 regulations as defined by the Administrative Procedures Act; 27 however, these temporary regulations, policies, and procedures 28 have the force and effect of law. The temporary regulations must 29 include all policies and procedures deemed by the commission to 30 be necessary to fully implement the games included in Section 59- 31 150-70. The only lottery games that may be played pursuant to 32 these temporary regulations, policies, and procedures are instant 33 tickets and dollar tickets. The commission shall submit regulations 34 to the General Assembly for review in accordance with the 35 Administrative Procedures Act at the January 15, 2002, legislative 36 session. The temporary regulations authorized in this section are 37 repealed on July 15, 2004, or on the effective date of regulations 38 promulgated pursuant to the Administrative Procedures Act, 39 whichever date occurs first. If regulations promulgated pursuant to 40 the Administrative Procedures Act have not taken effect by July 41 15, 2004, the commission may promulgate the temporary 42 regulations authorized by this section as emergency regulations 43 pursuant to Section 1-23-130. For purposes of this section, the

1 [496] 13 1 circumstances required for emergency regulations in Section 2 1-23-130(A) do not apply, but all other provisions of Section 3 1-23-130 are applicable. The regulations, policies, and procedures 4 must specify, but are not limited to specifying, the: 5 (1) type of lottery games as described in Section 59-150-20(7). 6 The lottery games may include the selling of lottery game tickets 7 or shares or the use of electronic or mechanical devices, except 8 those electronic or mechanical devices prohibited by Section 9 59-150-20(7), and except that the game or activity in which the 10 winner is selected must not be based upon the outcome of a 11 football, basketball, baseball, or similar game or sports event; 12 (2) sale price of lottery game tickets or shares and the manner 13 of sale, except that all sales must be for no more than one dollar 14 and cash only. Payment by checks, credit cards, charge cards, or 15 other form of deferred payment and payment by debit card are 16 prohibited; 17 (3) number and amount of prizes; 18 (4) method and location of selecting or validating winning 19 lottery game tickets or shares; 20 (5) manner and time of payment of prizes, which may include 21 lump sum payments or installments over a period of years, except 22 that the State is not liable for the nonpayment of a prize; 23 (6) manner of payment of prizes by a lottery retailer to the 24 holders of a winning lottery game ticket or share including, 25 without limitation, provision for payment of prizes not exceeding 26 six hundred dollars after deducting the price of the lottery game 27 ticket or share and after performing validation procedures 28 appropriate to the game and as specified by the board; 29 (7) frequency of lottery games and drawings or selection of 30 winning lottery game tickets or shares; 31 (8) means of conducting drawings, except that an elected or 32 appointed official, other than the members of the board or its 33 designee, must not preside or appear at a drawing, and except that 34 the drawing may be aired publicly only by means of a public 35 service announcement and carried by any news outlet that makes 36 public service time available for that purpose; 37 (9) method to be used in selling lottery game tickets or shares, 38 which may include the use of electronic or mechanical devices, but 39 the devices must be placed on the premises of the lottery retailer in 40 a location which is only accessible to the lottery retailer or his 41 employees; 42 (10) manner and amount of compensation to a lottery retailer 43 within the limits of this chapter;

1 [496] 14 1 (11) other matters necessary or desirable toward ensuring the 2 efficient and effective operation of lottery games as defined in 3 Section 59-150-20(7), the continued entertainment and 4 convenience of the public, and the integrity of the lottery. 5 6 Section 59-150-80. (A) The board shall appoint and provide for 7 the compensation of an executive director which must not be based 8 upon or a function of profitability or percentage of sales. The 9 executive director must be an employee of the commission who 10 directs the day-to-day operations and management of the 11 commission and is vested with powers and duties specified by the 12 board and by law. The executive director serves at the pleasure of 13 the board. 14 (B) The board shall hire and provide for the compensation of an 15 internal auditor and necessary staff who must be employees of the 16 commission and who are vested with the powers and duties 17 specified by the board and by law. The internal auditor shall 18 report directly to the board. 19 20 Section 59-150-90. (A) The executive director of the 21 commission shall direct and supervise all administrative and 22 technical activities as provided for in this chapter, according to the 23 terms and conditions as may be established by the General 24 Assembly in its annual general appropriations bill or any bill 25 appropriating monies for previous or current fiscal years and with 26 the regulations promulgated and policies and procedures adopted 27 by the board. It is the duty of the executive director to facilitate 28 the initiation and supervise and administer the operation of the 29 lottery games as defined in Section 59-150-20(7); employ and 30 direct necessary personnel; employ by contract and compensate 31 necessary persons and firms, except that the contract may not be 32 with an entity for the purpose of having that entity undertake the 33 organization and conduct of the lottery; promote or provide for 34 promotion of the lottery and functions related to the commission; 35 prepare a budget for the approval of the board; require bond from a 36 lottery retailer and a lottery vendor in amounts required by the 37 board; report monthly to the State Auditor and the board a full and 38 complete statement of lottery revenues and expenses for the 39 preceding month; and perform other duties generally associated 40 with an executive director of a commission of an entrepreneurial 41 nature. 42 (B) The executive director for good cause may suspend, 43 revoke, or refuse to renew a contract entered into as provided by

1 [496] 15 1 the provisions of this chapter or the regulations, policies, and 2 procedures of the board. 3 (C) The executive director or his designee may conduct 4 hearings and administer oaths to persons for the purpose of 5 assuring the security or integrity of lottery operations or to 6 determine the qualifications of or compliance by a lottery vendor 7 and a lottery retailer. 8 (D) The executive director shall not contribute to the campaign 9 of a candidate for the General Assembly or a statewide 10 constitutional office; to a political party, as defined in Section 11 8-13-1300(26); or to a committee, as defined in Section 12 8-13-1300(6); or make an independent expenditure to advance or 13 defeat a measure related to the lottery. 14 15 Section 59-150-100. (A) The commission shall establish and 16 maintain a personnel program for its employees and fix the 17 compensation and terms of compensation of its employees. 18 (B) An employee of the commission or an immediate family 19 member of an employee of the commission, as defined in Section 20 59-150-20(6), may not have a financial interest in a lottery vendor 21 doing business or proposing to do business with the commission 22 and is otherwise subject to the South Carolina Ethics Reform Act. 23 (C) An employee of the commission who has decision-making 24 authority shall not participate in a decision involving a lottery 25 retailer with whom the employee has an economic interest as 26 defined in the South Carolina Ethics Reform Act. 27 (D) Notwithstanding any other provision of law, an employee 28 of the commission who leaves his employment may not represent a 29 lottery vendor or lottery retailer before the commission for a period 30 of two years following termination of employment with the 31 commission. 32 (E) A background investigation must be conducted on each 33 applicant who has reached the final selection process before 34 employment by the commission at the level of division director 35 and above and at any level within any division of security and as 36 otherwise required by the board. The commission shall pay for the 37 actual cost of the investigations and may contract with SLED for 38 the performance of the investigations. The results of a background 39 investigation are not a record open to the public pursuant to the 40 Freedom of Information Act. 41 (F) A person who has been convicted of a felony or 42 bookmaking or other forms of illegal gambling or of a crime

1 [496] 16 1 involving moral turpitude may not be employed by the 2 commission. 3 (G) The commission shall bond commission employees who 4 have access to commission funds or lottery revenue in an amount 5 provided by the board and may bond other employees as 6 necessary. 7 8 Section 59-150-110. (A) The Governor shall appoint a Lottery 9 Retailer Advisory Board to be composed of ten lottery retailers, 10 representing the broadest possible spectrum of geographical, 11 racial, gender, and business characteristics of a lottery retailer. 12 The Governor also shall appoint the chairman of the advisory 13 board. The function of the advisory board is to advise the lottery 14 board on retail aspects of the lottery and to present the concerns of 15 a lottery retailer throughout the State. The advisory board may 16 establish a consumer representatives committee to help provide 17 additional insight on other aspects of lottery retail sales. 18 (B) Members appointed to the advisory board serve terms of 19 two years, except that four of the initial lottery retailer appointees 20 serve initial terms of one year and five serve initial terms of two 21 years. The chairman of the advisory board serves co-terminus 22 with the Governor. 23 (C) The advisory board shall establish its own rules and 24 internal operating procedures. Members of the advisory board 25 serve without compensation or the per diem, subsistence, or 26 mileage provided by law for members of state boards, committees, 27 and commissions. The advisory board may report to the board of 28 commissioners in writing at any time. The board of 29 commissioners may invite the advisory board to make an oral 30 presentation to the commissioners at regular meetings of the board. 31 32 Section 59-150-120. The commission shall provide training 33 programs and other educational activities to enable small and 34 minority businesses to compete for contracts on an equal basis. 35 The board shall monitor the results of small and minority business 36 participation and shall report the results of small and minority 37 business participation to the State Human Affairs Commission on 38 at least an annual basis pursuant to Section 1-13-110. 39 40 Section 59-150-130. (A) In coordination with SLED, the 41 commission shall investigate the financial responsibility, security, 42 and integrity of a lottery vendor who is a finalist in submitting a 43 bid, proposal, or offer as part of a procurement. To defray a

1 [496] 17 1 portion of the expense of this investigation, each lottery vendor 2 finalist shall submit a certified check for five thousand dollars to 3 the commission. This sum must be placed in an escrow account 4 from which SLED must be paid to conduct the investigation 5 pursuant to this section. If five thousand dollars is not sufficient to 6 complete the investigation, the commission shall require the lottery 7 vendor finalist to remit additional funds. Any funds remaining in 8 the escrow account after the investigation is complete must be 9 returned to the lottery vendor finalist. At the time of submitting 10 the bid, proposal, or offer to the commission, the commission shall 11 require disclosure of the: 12 (1) lottery vendor’s name and address and, as applicable, the 13 names and addresses of the following, if the lottery vendor is: 14 (a) a corporation, the officers and directors and each 15 stockholder in the corporation, except that in the case of owners of 16 equity securities of a publicly-traded corporation, the names and 17 addresses of only those known to the corporation to own 18 beneficially five percent or more of the securities must be 19 disclosed; 20 (b) a trust, the trustee and all persons entitled to receive 21 income or benefits from the trust; 22 (c) an association, the members, officers, and directors; 23 and 24 (d) a partnership or joint venture, all of the general 25 partners, limited partners, or joint venturers; 26 (2) states and jurisdictions in which the lottery vendor does 27 business and the nature of the business for each such state or 28 jurisdiction; 29 (3) states and jurisdictions in which the lottery vendor has 30 contracts to supply gaming goods or services including, but not 31 limited to, lottery goods and services, and the nature of the goods 32 or services involved for each state or jurisdiction; 33 (4) states and jurisdictions in which the lottery vendor has 34 applied for, sought renewal of, received, been denied, or had 35 revoked, or has issuance pending of, a lottery or gaming license of 36 any kind or had fines or penalties assessed to his license, contract, 37 or operation and the disposition of each in each state or 38 jurisdiction. If a lottery or gaming license or contract has been 39 revoked or has not been renewed or a lottery or gaming license or 40 application has been denied or is pending and has remained 41 pending for more than six months, all of the facts and 42 circumstances underlying the failure to receive a license must be 43 disclosed;

1 [496] 18 1 (5) details of a finding or any plea, conviction, or 2 adjudication of guilt in a state or federal court of the lottery vendor 3 for a felony or other criminal offense other than a traffic violation. 4 A fingerprint exemplar may be required to satisfy this item; 5 (6) details of any bankruptcy, insolvency, reorganization, or 6 corporate or individual purchase or takeover of another 7 corporation, including bonded indebtedness, or pending litigation 8 of the lottery vendor; 9 (7) contributions made to the campaign of a candidate for 10 the General Assembly or statewide constitutional office, to any 11 political party, as defined in Section 8-13-1300(26), or to a 12 committee, as defined in Section 8-13-1300(6), or independent 13 expenditures made to advance or defeat a measure related to the 14 lottery for the twelve-month period before the application and up 15 to the date of disqualification of the applicant or the awarding of 16 the contract, whichever occurs first; and 17 (8) additional information the commission determines 18 appropriate for the procurement involved. If at least twenty 19 percent of the cost of a lottery vendor’s contract is subcontracted, 20 the lottery vendor shall disclose all of the information required by 21 this section for the subcontractor as if the subcontractor were itself 22 a lottery vendor. 23 (B) A lottery procurement contract must not be entered into 24 with a lottery vendor who has not complied with the disclosure 25 requirements described in subsection (A), and a contract with a 26 noncomplying lottery vendor is voidable at the option of the 27 commission. The commission may terminate a contract with a 28 lottery vendor who does not comply with the requirements for 29 periodically updating the disclosures during the time specified in 30 the contract. The provisions of this section must be construed 31 broadly and liberally to achieve the ends of full disclosure of all 32 information necessary to allow for a full and complete evaluation 33 by the commission of the competence, integrity, background, and 34 character of a lottery vendor for procurements. 35 (C) A procurement contract must not be entered into with a 36 lottery vendor if he or it has: 37 (1) been convicted of a criminal offense related to the 38 security or integrity of the lottery in this or another jurisdiction; 39 (2) been convicted of unlawful gambling activity, false 40 statements, false swearing, or perjury in this or another jurisdiction 41 or convicted of a crime punishable by more than one year of 42 imprisonment or a fine of more than one thousand dollars, or both, 43 unless the person’s civil rights have been restored and at least five

1 [496] 19 1 years have elapsed from the date of the completion of the sentence 2 without a subsequent conviction of a crime described in this 3 subitem; or 4 (3) been found to have violated the provisions of this chapter 5 or a regulation, policy, or procedure of the commission, unless 6 either ten years have passed since the violation or the board finds 7 the violation both minor and unintentional in nature. 8 (D) A procurement contract must not be entered into with a 9 lottery vendor if the lottery vendor has an ownership interest in an 10 entity that supplied consultation services under contract to the 11 commission regarding the request for proposals pertaining to those 12 particular goods or services. 13 (E) A lottery vendor or applicant for a major procurement 14 contract may not pay, give, or otherwise make available an 15 economic opportunity, gift, loan, gratuity, special discount, favor, 16 hospitality, or service, excluding food and beverages having an 17 aggregate value not exceeding twenty-five dollars in one day or 18 two hundred dollars in a calendar year, or any other thing of value, 19 to the executive director, a board member, or an employee of the 20 commission or to a member of his immediate family residing in 21 the same household. For purposes of this subsection all terms are 22 used as defined in Section 8-13-100. 23 (F) A lottery vendor who has entered into the competitive 24 solicitation process for a procurement contract or has been 25 awarded a procurement contract with the commission shall not 26 contribute, for a period of twelve months before entering into the 27 procurement process, except that during the first twelve months the 28 period must be from the date of enactment, and during the term of 29 the contract, to the campaign of a candidate for the General 30 Assembly or a statewide constitutional office; to a political party, 31 as defined in Section 8-13-1300(26); or to a committee, as defined 32 in Section 8-13-1300(6); or make an independent expenditure to 33 advance or defeat a measure related to the lottery. 34 (G) A former public official holding public office, a former 35 public member holding public membership, or a former public 36 employee having public employment on or after the effective date 37 of this chapter may not serve a lottery vendor for a period of two 38 years after terminating his public service or employment. 39 (H) A lottery vendor may not enter into a contract for the 40 purpose of influencing a political decision in connection with the 41 operation of the lottery, and a lottery vendor may not employ, 42 contract with, or otherwise authorize a lobbyist, as defined in

1 [496] 20 1 Section 2-17-10(13), to engage in lobbying, as defined in Section 2 2-17-10(12), on behalf of the lottery vendor. 3 (I) A lottery vendor may not advertise or promote the lottery 4 or its business relationship with the commission. 5 (J) A lottery vendor that is a contractor with the State or any 6 agency, commission, or department of the State shall disclose, 7 upon written inquiry, the amount of any commission, referral fee, 8 finder’s fee, consulting fee, contingency fee, or other monies paid 9 in connection with obtaining the contract and the name of the 10 person to whom the monies were paid. 11 (K) The prohibitions and restrictions described in item (A)(7) 12 and subsections (F) and (H) specifically apply to a lottery vendor 13 as defined in Section 59-150-20(9) and its employees, members of 14 its board, and holders of an interest in it of more than ten percent, 15 and their immediate family members, as defined in Section 16 59-150-20(6). 17 (L) The commission is prohibited from contracting with a 18 lottery vendor if the fee or commission payable in connection with 19 the service or product is contingent, in whole or in part, upon 20 performance of lottery sales or other lottery profitability measure. 21 Section 59-150-140. (A) At the execution of the contract with 22 the commission, a lottery vendor shall post a performance bond or 23 letter of credit from a bank or credit provider acceptable to the 24 commission in an amount determined by the commission for that 25 particular bid or contract. Instead of the bond, a lottery vendor, to 26 assure the faithful performance of its obligations, may deposit and 27 maintain with the commission securities that are interest bearing or 28 accruing and that are rated in one of the three highest 29 classifications by an established nationally recognized investment 30 rating service. Securities eligible pursuant to this section are 31 limited to: 32 (1) certificates of deposit issued by solvent banks or savings 33 associations which are organized and existing under the laws of 34 this State or under the laws of the United States and are approved 35 by the commission; 36 (2) United States bonds, notes, and bills for which the full 37 faith and credit of the government of the United States is pledged 38 for the payment of principal and interest; and 39 (3) corporate bonds approved by the commission. The 40 corporation that issued the bonds must not be an affiliate or 41 subsidiary of the depositor. The securities must be held in trust 42 and must have at all times a market value equal at least to the full

1 [496] 21 1 amount estimated to be paid annually to the lottery vendor under 2 contract. 3 (B) Each lottery vendor must be qualified to do business in this 4 State and shall file appropriate tax returns as provided by the laws 5 of this State. All contracts pursuant to this section are governed by 6 the laws of this State. 7 (C) A contract may not be let with a lottery vendor in which a 8 public official has an ownership interest unless the letting of the 9 contract complies with Section 8-13-775. 10 (D) Procurement contracts must be handled in accordance with 11 the South Carolina Consolidated Procurement Code. 12 (E) In all contracts entered into in connection with this chapter, 13 the resident lottery vendor preference provided in Section 14 11-35-1524 must apply to procurements made by the commission, 15 except that the following additional provisions apply: 16 (1) the preference also must apply to the procurement of 17 services, as defined in Section 11-35-310(29), and advertising; 18 (2) with respect to the procurement of services or 19 advertising, the definition of the term ‘resident lottery vendor’ 20 must be modified as provided in this item. Section 11-35-1524(B) 21 (6)(c) does not apply to a lottery vendor providing services or 22 advertising. Instead of Section 11-35-1524(B)(6)(c), the lottery 23 vendor shall provide services or advertising which are 24 representative of the general type of services or advertising on 25 which the bid is submitted; 26 (3) with respect to the procurement of services or 27 advertising, instead of providing the certifications provided in 28 Section 11-35-1524(C), the lottery vendor shall certify in writing 29 in the bid: 30 (a) that he is resident of the State; 31 (b) the services or advertising is available; and 32 (c) the cost of the services or advertising is not 33 unreasonable. 34 35 Section 59-150-150. (A) The commission shall develop and 36 maintain a statewide network of lottery retailers to serve the public 37 convenience and promote the sale of tickets or shares and the 38 playing of lottery games as defined in Section 59-150-20(7) while 39 ensuring the integrity of the lottery operations, games, and 40 activities. A lottery retailer’s sales of lottery tickets or shares may 41 not exceed sixty percent annually of its total business as measured 42 by gross revenues. The Department of Revenue shall provide data 43 concerning a lottery retailer’s gross revenues to assist the

1 [496] 22 1 commission in verifying compliance with this provision. The 2 commission also shall provide a small retailer a chance to 3 participate in the sales of lottery tickets or shares; provide for 4 compensation to a lottery retailer in the form of commissions in an 5 amount of not more than seven percent of gross sales and not more 6 than a one percent incentive for cashing winning tickets for prizes 7 less than six hundred dollars; and issue a license to each person 8 with whom it contracts as a lottery retailer for purposes of display. 9 Each lottery retailer shall post and display conspicuously its 10 license on the disclosure sign required by Section 59-150-60(A) 11 (17). A license is not assignable or transferable. 12 (B) The board shall develop a list of objective criteria upon 13 which the qualification of a lottery retailer must be based. 14 Separate criteria must be developed to govern the selection of a 15 lottery retailer of instant tickets and an on-line lottery retailer. In 16 developing these criteria, the board shall consider factors such as 17 the applicant’s financial responsibility, integrity, and reputation, 18 and the security of the applicant’s place of business or activity, and 19 accessibility to the public. The board shall not consider political 20 affiliation or activities or monetary contributions to political 21 organizations or candidates for public office. The criteria must 22 include, but is not limited to, the following: 23 (1) The applicant must be current in filing all applicable tax 24 returns to the State of South Carolina and in payment of all taxes, 25 interest, and penalties owed to the State of South Carolina, 26 excluding items under formal appeal pursuant to applicable 27 statutes. The Department of Revenue shall provide this 28 information to the commission. 29 (2) A person, partnership, unincorporated association, 30 corporation, or other business entity must not be selected as a 31 lottery retailer if he or it: 32 (a) has been convicted of a criminal offense related to the 33 security or integrity of the lottery in this or another jurisdiction; 34 (b) has been convicted of unlawful gambling activity, 35 false statements, false swearing, or perjury in this or another 36 jurisdiction or convicted of a crime punishable by more than one 37 year of imprisonment or a fine of more than one thousand dollars, 38 or both, unless the person’s civil rights have been restored and at 39 least five years have elapsed from the date of the completion of the 40 sentence without a subsequent conviction of a crime described in 41 this subitem; 42 (c) has been found to have violated the provisions of this 43 chapter or a regulation, policy, or procedure of the commission,

1 [496] 23 1 unless either ten years have passed since the violation or the board 2 finds the violation both minor and unintentional in nature; 3 (d) is a lottery vendor or an employee or agent of a lottery 4 vendor doing business with the commission; 5 (e) resides in the same household as an officer of the 6 commission; 7 (f) has made a statement of material fact to the 8 commission knowing the statement is false; 9 (g) has a business of selling lottery tickets or shares that 10 accounts for more than sixty percent annually of its gross 11 revenues, except that the commission may not sell or give away 12 lottery tickets or shares as a lottery retailer, as provided in Section 13 59-150-210; 14 (h) has not attained the age of twenty-one years, except 15 that this age restriction applies only to the lottery retailer or lottery 16 retailer applicant and not to a bona fide employee of the lottery 17 retailer; and 18 (i)has its place of business located within three hundred 19 feet of a church, school, or playground situated within a 20 municipality or within five hundred feet of a church, school, or 21 playground situated outside of a municipality. These distances 22 must be measured in a straight line, without regard to intervening 23 structures or objects, from the nearest property line of the lot on 24 which a building or structure is used as a lottery retailer to the 25 nearest property line of the location of the church, school, or 26 playground, which are defined as follows: 27 ( i) ‘church’ means an establishment, other than a 28 private dwelling, where religious services are usually conducted; 29 ( ii) ‘school’ means an establishment, other than a 30 private dwelling, where the usual processes of education are 31 usually conducted; and 32 (iii) ‘playground’ means a place, other than grounds at a 33 private dwelling, which is provided by the public or members of a 34 community for recreation. 35 The restrictions in subitem (i) do not apply to the renewal of a 36 license or to a new application for a location that is licensed at the 37 time the new application is filed with the commission. 38 (3) A person applying to become a lottery retailer must be 39 charged a uniform application fee for each lottery outlet. A lottery 40 retailer who participates in on-line lottery games must be charged a 41 uniform application fee for each on-line outlet. 42 (4) A lottery retailer contract executed pursuant to this 43 chapter may be suspended, revoked, or terminated for good cause

1 [496] 24 1 by the executive director or his designee if the lottery retailer is 2 found to have violated a provision of this chapter or the 3 regulations, policies, and procedures established by the board. 4 Review of activities is subject to the Administrative Procedures 5 Act. 6 (5) Lottery retailer contracts may be renewable annually at 7 the discretion of the commission, unless sooner canceled or 8 terminated. 9 (6) A lottery retailer or lottery retailer applicant shall not 10 pay, give, or otherwise make available anything of value to a 11 member of the board of directors of the commission in violation of 12 provisions of the South Carolina Ethics Reform Act. 13 (7) A lottery retailer who enters into a contract with the 14 commission shall file an initial certified report with the State 15 Ethics Commission showing all contributions or donations made to 16 a committee, as defined in Section 8-13-1300(6). The lottery 17 retailer shall file additional certified reports within ten days 18 following the end of each calendar quarter and for the duration of 19 the contract with the commission. 20 21 Section 59-150-160. (A) A lottery retailer contract is not 22 transferable or assignable. A lottery retailer shall not contract with 23 a person for lottery goods or services except with the approval of 24 the board. 25 (B) Lottery game tickets and shares must be sold only by the 26 lottery retailer named on the lottery retailer certificate. 27 (C) A lottery retailer may not advertise or promote the lottery 28 outside of the lottery retailer’s business premises, and is restricted 29 to the advertising and promotion as permitted in Section 30 59-150-60(A)(17). 31 32 Section 59-150-170. (A) The commission shall establish a 33 fidelity fund separate from all other funds and shall assess each 34 lottery retailer a one-time fee not to exceed one hundred dollars for 35 each sales location. Monies deposited into the fund may be used 36 to cover losses the commission may experience due to 37 nonfeasance, misfeasance, or malfeasance of a lottery retailer. The 38 monies may be invested by the commission pursuant to state 39 investment practices. All earnings attributable to the investments 40 accrue to the fund. In addition, the funds may be used to purchase 41 blanket bonds covering the commission against losses from all a 42 lottery retailer. At the end of each fiscal year, the commission 43 shall pay to the Education Lottery Account any amount in the

1 [496] 25 1 fidelity fund which exceeds five hundred thousand dollars, and the 2 funds paid must be treated as net proceeds from the lottery. 3 (B) A reserve account may be established as a general 4 operating expense to cover amounts considered uncollectible from 5 the a lottery retailer. The commission shall establish procedures 6 for minimizing losses that may be experienced by reason of 7 nonfeasance, misfeasance, or malfeasance of a lottery retailer, and 8 shall exercise and exhaust all available options in the procedures 9 before amounts are written off to this account. 10 (C) The commission may require a lottery retailer to post an 11 appropriate bond, as determined by the commission, using an 12 insurance company acceptable to the commission. The amount 13 must not exceed the applicable district sales average of lottery 14 game tickets for two billing periods. 15 (D)(1) In its discretion, the commission may allow a lottery 16 retailer to deposit and maintain with the commission securities that 17 are interest bearing or accruing. Securities eligible pursuant to this 18 item are limited to: 19 (a) certificates of deposit issued by solvent banks or 20 savings associations organized and existing under the laws of this 21 State or under the laws of the United States; 22 (b) United States bonds, notes, and bills for which the full 23 faith and credit of the United States is pledged for the payment of 24 principal and interest; and 25 (c) federal agency securities by an agency or 26 instrumentality of the United States government. 27 (2) The securities must be held in trust in the name of the 28 commission. 29 30 Section 59-150-180. (A) A retail contract executed by the 31 commission pursuant to this chapter must specify the reasons for 32 which the contract may be canceled, suspended, revoked, or 33 terminated by the commission including, but not be limited to: 34 (1) a violation of this chapter, a regulation, or a policy or 35 procedure of the commission; 36 (2) failure to account accurately or timely for lottery game 37 tickets, lottery games, revenues, or prizes as required by the 38 commission; 39 (3) fraud, deceit, or misrepresentation; 40 (4) insufficient sales; 41 (5) conduct prejudicial to public confidence in the lottery; 42 (6) filing for or placement in bankruptcy or receivership of 43 the lottery retailer;

1 [496] 26 1 (7) a material change, as determined in the sole discretion of 2 the commission, in a matter considered material by the 3 commission in executing the contract with the lottery retailer; or 4 (8) failure to meet any of the objective criteria established by 5 the commission pursuant to this chapter. 6 (B) If cancellation, denial, revocation, suspension, or rejection 7 of renewal of a lottery retailer contract is in the best interest of the 8 lottery, the public welfare, or the State of South Carolina, the 9 executive director or his designee, in his discretion, may cancel, 10 suspend, revoke, or terminate, after notice and a right to a hearing, 11 a contract issued pursuant to this chapter. A hearing must be held 12 within sixty days of notice of cancellation, suspension, revocation, 13 or termination and conducted by the executive director or his 14 designee. A party to the contract aggrieved by the decision of the 15 executive director or his designee may appeal the adverse decision 16 to the board, and then to the Administrative Law Judge Division, 17 pursuant to the Administrative Procedures Act. 18 19 Section 59-150-190. (A) All proceeds from the sale of the 20 lottery game tickets or shares constitute a trust fund until paid to 21 the commission either directly or through the commission’s 22 authorized collection representative. A lottery retailer and officers 23 of a lottery retailer’s business have a fiduciary duty to preserve and 24 account for lottery proceeds, and a lottery retailer personally is 25 liable for all proceeds. Proceeds include unsold instant tickets 26 received by a lottery retailer and cash proceeds of the sale of 27 lottery products, net of allowable sales commissions and credit for 28 lottery prizes sold or paid to winners by a lottery retailer. Sales 29 proceeds and unused instant tickets must be delivered to the 30 commission or its authorized collection representative upon 31 demand. 32 (B) The commission shall require a lottery retailer to place all 33 lottery proceeds due the commission in accounts in institutions 34 insured by the Federal Deposit Insurance Corporation (FDIC) no 35 later than the close of the next banking day after the date of their 36 collection by the lottery retailer until the date they are paid over to 37 the commission. At the time of the deposit, lottery proceeds are 38 considered the property of the commission, and a lottery retailer 39 personally is liable for those proceeds due the commission. The 40 commission may require a lottery retailer to establish a single 41 separate electronic funds transfer account where available for the 42 purpose of receiving monies from ticket or share sales, making 43 payments to the commission, and receiving payments for the

1 [496] 27 1 commission. Unless otherwise authorized in writing by the 2 commission, each lottery retailer shall establish a separate bank 3 account for lottery proceeds which must be kept separate and apart 4 from all other funds and assets, and must not be commingled with 5 any other funds or assets. A lottery retailer, upon the deposit of 6 lottery proceeds in excess of insurance coverage by the FDIC, 7 shall furnish an indemnity bond from a responsible surety 8 company authorized to do business in this State in an amount 9 sufficient to protect the State against loss in the event of 10 insolvency or liquidation of the institution or for another cause. A 11 lottery retailer, instead of the indemnity bond, may pledge as 12 collateral for the deposits, obligations of the United States, 13 obligations fully guaranteed both as to principal and interest by the 14 United States, obligations of the Federal National Mortgage 15 Association, the Federal Home Loan Bank, Federal Farm Credit 16 Bank, the Federal Home Loan Mortgage Corporation, or general 17 obligations of this State or a political subdivision of it. The State 18 Treasurer shall exercise prudence in accepting the securities listed 19 as collateral. The surety or collateral must be filed with the State 20 Treasurer at time of deposit. 21 (C) Proceeds from the sale of lottery game tickets or shares 22 received by a lottery retailer who becomes insolvent or dies 23 insolvent, are due the commission from the person or his estate in 24 preference over all debts or demands. 25 (D) A lottery retailer is not required to pay for lottery tickets or 26 shares until the tickets or shares have been activated by the 27 commission. 28 29 Section 59-150-200. If a lottery retailer’s rental payments for 30 the business premises are contractually computed, in whole or in 31 part, on the basis of a percentage of retail sales and the 32 computation of retail sales is not defined explicitly to include sales 33 of lottery game tickets or shares in a state operated or state 34 managed lottery, only the compensation received by the lottery 35 retailer from the commission may be considered the amount of the 36 lottery retail sale for purposes of computing the rental payment. 37 Section 59-150-210. (A) A person shall not sell a lottery game 38 ticket or share at a price other than that established by the 39 commission. A person, other than a duly certified lottery retailer, 40 shall not sell lottery game tickets, but a person may purchase 41 lawfully lottery game tickets or shares and make a gift of the 42 lottery game tickets or shares to another. The commission may

1 [496] 28 1 designate certain agents and employees to sell lottery game tickets 2 or shares directly to the public. 3 (B) A lottery retailer shall not sell a lottery game ticket or share 4 except from the locations listed in the lottery retailer’s contract and 5 as evidenced by the lottery retailer’s certificate of authorization 6 unless the commission authorizes, in writing, a temporary location 7 not listed in the lottery retailer’s contract. 8 (C) Lottery game tickets or shares must not be sold to persons 9 under eighteen years of age, but a person eighteen years of age or 10 older may purchase lawfully lottery game tickets or shares and 11 make a gift to a person of any age. If a minor lawfully receives a 12 winning lottery game ticket, the commission may direct payment 13 of proceeds of a lottery prize in an amount not exceeding two 14 thousand five hundred dollars to the parent or guardian of the 15 minor without court approval and without appointment of a 16 conservator. In the case of a lottery prize greater than two 17 thousand five hundred dollars and not exceeding twenty-five 18 thousand dollars, payment must be made in accordance with the 19 procedures outlined in Section 62-5-103 as they relate to 20 distribution. In the case of a prize in an amount greater than 21 twenty-five thousand dollars, payment must be made to a duly 22 appointed conservator to be held for the benefit of the minor, 23 pursuant to Section 62-5-433. 24 (D) A lottery ticket or share may not be sold on the date of any 25 general elections or on any Sunday; within three hundred feet of a 26 church, school, or playground, as provided in Section 27 59-150-150(B)(2)(i); to a lottery game other than that defined in 28 Section 59-150-20(7); or to a lottery game with corporate 29 sponsorship. A lottery ticket or share may not be sold at a location 30 that serves alcohol for on-premise consumption. 31 (E) a lottery ticket or share may not be sold on the campus of a 32 public institution of higher learning as defined in Section 33 59-103-5. 34 35 Section 59-150-220. (A)(1) Upon the theft of instant tickets, a 36 lottery retailer shall report immediately the theft to both the local 37 law enforcement authority and to the commission’s division of 38 security. 39 (2) If tickets are stolen before the book is activated, and no 40 tickets within the book have been sold: 41 (a) the lottery retailer must be charged a nonrefundable 42 service fee for each incident in an amount determined by the 43 commission to cover its costs only, so long as the name of the local

1 [496] 29 1 law enforcement agency contacted and the assigned case number 2 are furnished promptly to the commission; 3 (b) if the name of the local law enforcement agency and 4 the assigned case number are not provided to the commission 5 within thirty calendar days after the discovery by the lottery 6 retailer of the theft, the commission shall charge the lottery retailer 7 in accordance with subsection (3)(b). 8 (3) If tickets are stolen after the book has been activated or 9 tickets within the book have been sold: 10 (a) a lottery retailer must be charged the net sales value 11 (retail sales value less commission) for each book, less the low 12 tier prize values of stolen tickets not paid at the time of the 13 incident, so long as the lottery retailer furnished the name of the 14 local law enforcement agency and the assigned case number to the 15 commission; 16 (b) if the name of a law enforcement agency and case 17 number are not provided to the commission within thirty calendar 18 days after the discovery by the lottery retailer of the theft, credit 19 for the unpaid low tier prizes must not be given and the lottery 20 retailer must be charged the net sales value (retail sales value less 21 commission) for each book. 22 (4) The commission shall adjust charges described in item 23 (3) for the following reasons: 24 (a) the commission shall charge a lottery retailer the low 25 tier prize value of tickets that are presented to the commission as 26 claims subsequent to the date of the incident. The commission 27 shall determine which prizes must be subsequently paid based 28 upon the facts of the incident, and that amount must be charged to 29 the lottery retailer; 30 (b) the commission shall provide credit for recovered 31 stolen tickets as follows: 32 (i)the net sales value of the tickets recovered must be 33 compared to the total value of the uncashed low tier prizes for each 34 book of tickets. The lottery retailer shall receive credit for the 35 greater of these two values; 36 (ii) recovered tickets must be returned to the 37 commission by the declared end of game redemption deadline or 38 one hundred eighty days from the date of the incident, whichever 39 is later. The game, book, and ticket number must be legible on 40 each ticket for the lottery retailer to receive credit. If tickets are 41 being held as evidence in a criminal investigation by a law 42 enforcement agency, the commission shall accept a property report 43 from that agency by the declared end of the game redemption

1 [496] 30 1 deadline or one hundred eighty days from the date of the incident, 2 whichever is later, detailing the game, book, and ticket number or 3 Void If Removed Number (VIRN) for the tickets being held, as 4 documentation to provide credit; 5 (iii) recovered scratched tickets may be accepted for 6 credit only if that condition of the tickets is identified in 7 documentation provided to the commission by the local law 8 enforcement agency; 9 (iv) the lottery retailer shall receive no credit for 10 recovered tickets that have been validated; 11 (v) the commission shall determine the credits provided 12 based upon the facts of the incident, and that amount must be 13 credited to the lottery retailer. 14 (5) Books reported to the commission as stolen must be 15 marked in the commission’s records to prevent validation and 16 payment of prizes within the book. 17 (B)(1) Upon the loss or damage of instant tickets, a lottery 18 retailer immediately shall report the loss or damage to the both the 19 local law enforcement authority and to the commission’s division 20 of security. 21 (2) If tickets are damaged before the book is activated, no 22 tickets within the book are sold, and all tickets in the book are 23 returned to the commission, a lottery retailer may not be charged a 24 service fee. If tickets are lost before the book is activated and no 25 tickets within the book have been sold, a lottery retailer must be 26 charged a nonrefundable service fee of twenty-five dollars for each 27 incident for up to four books and five dollars for each book over 28 four books. 29 (3) If tickets are lost or damaged after the book is activated 30 or if tickets within the book are sold, a lottery retailer must be 31 charged the net sales value (retail sales value less commission) for 32 each book. 33 (4) Upon the written approval by the commission, the 34 commission shall provide credit for recovered lost or damaged 35 tickets for the net sales value of the tickets recovered. 36 (a) To receive approval, the lottery retailer shall provide 37 the facts of the incident in writing to the commission for 38 consideration. 39 (b) The written request and recovered tickets must be 40 returned to the commission by the redemption deadline and the 41 game, book, and ticket number must be legible on each ticket in 42 order for the lottery retailer to receive credit.

1 [496] 31 1 (c) Scratched tickets must not be accepted for credit. A 2 scratched ticket is one that in the commission’s judgment has been 3 compromised as to the security and integrity of the ticket due to 4 removal of latex. 5 (d) Tickets identified as validated before the recovery 6 result in no credit to the lottery retailer. 7 (5) Books reported to the commission as lost or damaged 8 must be marked as such in the commission’s records to prevent 9 validation and payment of prizes within the book. 10 (6) In the event of acts of God, occurrences of nature, or 11 other natural disasters, the commission may waive the 12 requirements of this subsection. 13 14 Section 59-150-230. (A) Lottery prizes are subject to the 15 South Carolina state income tax. Residents and nonresidents of 16 this State who receive a lottery prize in excess of five hundred 17 dollars are subject to a mandatory withholding of state income tax 18 as required by law. Federal income tax must be withheld from 19 lottery prizes in excess of five thousand dollars. Neither the State 20 nor a county, municipality, or other political subdivision of this 21 State may impose a tax, other than the state sales tax imposed 22 pursuant to Chapter 36 of Title 12 and local sales taxes authorized 23 by state law, on the sale of a lottery ticket or share or on the 24 payment of a prize pursuant to this chapter; nor may a county, 25 municipality, or other political or public subdivision assess an ad 26 valorem tax against a lottery ticket or share bought or sold 27 pursuant to this chapter. 28 (B) Except as otherwise provided in this chapter, attachments, 29 garnishments, or executions authorized and issued pursuant to law 30 must be withheld if timely served upon the commission. This 31 subsection does not apply to a lottery retailer. 32 (C) The commission shall promulgate regulations and adopt 33 policies and procedures to establish a system of verifying the 34 validity of lottery games tickets or shares claimed to win prizes 35 and to effect payment of prizes. 36 (1) A prize, a portion of a prize, or a right of a person to a 37 prize awarded is not assignable except as provided in this section. 38 A prize or a portion of a prize remaining unpaid at the death of a 39 prize winner must be paid to the estate of the deceased prize 40 winner or to the trustee of a trust established by the deceased prize 41 winner as settlor if a copy of the trust document or instrument has 42 been filed with the commission with a notarized letter of direction 43 from the settlor and no written notice of revocation has been

1 [496] 32 1 received by the commission before the settlor’s death. Following a 2 settlor’s death and before payment to a trustee, the commission 3 shall obtain from the trustee a written agreement to indemnify and 4 hold the commission harmless with respect to claims that may be 5 asserted against the commission arising from payment to or 6 through the trust. Notwithstanding any other provisions of this 7 section, a person, pursuant to an appropriate judicial order, may be 8 paid the prize to which a winner is entitled. 9 (2) (a) If the winner of a lottery game prize elects to 10 receive his prize by way of deferred payments, the commission 11 must deposit, in the same quarter as the prize was won and in a 12 restricted account, the total amount of the prize. The deferred 13 payments to the winner of the lottery game prize must be paid out 14 only from that restricted account. 15 (b) The restricted account provided in subitem (a) must be 16 known as the ‘Deferred Lottery Prize Payment Account’. The 17 monies in the restricted account may be used only for the purpose 18 of making deferred payments of a lottery game prize as elected by 19 a prize winner. The monies in the Deferred Lottery Prize Payment 20 Account may not be used to determine the assets of the 21 commission, except to manifest them as encumbered. 22 (c) The State Treasurer may invest the monies deposited 23 in the Deferred Lottery Prize Payment Account as provided by 24 law. 25 (3) A prize must not be paid if it: 26 (a) arises from claimed lottery game tickets that are 27 stolen, counterfeit, altered, fraudulent, unissued, produced or 28 issued in error, unreadable, not received, or not recorded by the 29 commission within applicable deadlines; 30 (b) lacks captions that conform and agree with the play 31 symbols as appropriate to the particular lottery game involved; or 32 (c) fails to comply with additional specific regulations and 33 public or confidential validation and security tests of the 34 commission appropriate to the particular lottery game involved. 35 (4) A particular prize in a lottery game must not be paid 36 more than once, and if more than one person is entitled to a 37 particular prize, the sole remedy of those persons is the award to 38 each of them of an equal share in the prize. 39 (5) A holder of a winning lottery game ticket or share from a 40 lottery game must claim a cash prize within one hundred eighty 41 days after the drawing in which the cash prize was won. In a 42 South Carolina lottery game in which the player may determine 43 instantly if he has won or lost, he must claim a cash prize within

1 [496] 33 1 ninety days after the end of the lottery game. If a valid claim is not 2 made for a cash prize within the applicable period, the cash prize is 3 an unclaimed prize for purposes of this chapter. 4 (D) A prize must not be paid upon a lottery game ticket or share 5 purchased or sold in violation of this chapter and is an unclaimed 6 prize for purposes of this section. 7 (E) The commission is discharged of all liability upon payment 8 of a prize. 9 (F) A lottery game ticket or share must not be purchased by 10 and a prize must not be paid to a member of the board, an officer 11 or employee of the commission, or a spouse, child, brother, sister, 12 or parent residing as a member of the same household in his 13 principal place of residence. A lottery game ticket or share must 14 not be purchased by and a prize must not be paid to an officer, 15 employee, agent, or a subcontractor of a lottery vendor, or a 16 spouse, child, brother, sister, or parent residing as a member of the 17 same household in his principal place of residence if he has access 18 to confidential information that may compromise the integrity of 19 the lottery. 20 (G) A lottery prize may not be paid to a person who is 21 incarcerated or on probation or parole. A lottery prize payment 22 received in violation of this subsection must be returned 23 immediately and in full to the commission. 24 (H) The use of an electronic or mechanical machine designed 25 for a lottery game authorized pursuant to this chapter must be 26 limited to a lottery retailer and their employees only in order to 27 facilitate retail sales of lottery tickets, and such a machine must not 28 dispense as a prize coins or currency. The operation of the lottery 29 games excludes machines and lottery games, including video 30 poker lottery games, prohibited by Sections 12-21-2710, 16-19-40 31 and 16-19-50. 32 (I) Unclaimed prize money must be deposited in the Education 33 Lottery Account each year. A portion of the unclaimed prize 34 money, in an amount to be determined by the General Assembly in 35 its annual general appropriations bill and other bills appropriating 36 monies for previous or current fiscal years, must be allocated to the 37 Department of Education for the purchase of new school buses. A 38 portion, in an amount to be determined by the General Assembly, 39 of the unclaimed prize money in the Education Lottery Account, 40 must be allocated by the General Assembly in its annual general 41 appropriations bill or any bill appropriating monies for previous or 42 current fiscal years to the South Carolina Department of Alcohol 43 and Other Drug Abuse Services for the treatment of compulsive

1 [496] 34 1 gambling disorder and educational programs related to that 2 disorder, including a gambling hotline. The director of the 3 DAODAS shall report to the board on the programs implemented 4 with these funds, and provide a copy of the report to the General 5 Assembly. 6 7 Section 59-150-240. (A) The commission is subject to the 8 provisions of Chapter 4, Title 30, the South Carolina Freedom of 9 Information Act. 10 (B) The commission shall perform full criminal background 11 investigations before the execution of a lottery vendor contract. 12 (C) The commission or its authorized agent shall: 13 (1) conduct criminal background investigations and credit 14 investigations on all potential a lottery retailer and employees; 15 (2) supervise lottery game ticket or share validation and 16 lottery drawings; 17 (3) inspect, at times determined solely by the commission, 18 the facilities or operations of a lottery vendor or lottery retailer to 19 determine the integrity of the lottery vendor’s product or 20 compliance by the lottery retailer or lottery vendor with its 21 contract; 22 (4) report suspected violations of this chapter to the 23 appropriate investigative and prosecutorial agency having 24 jurisdiction over the violation; and 25 (5) upon request, provide assistance to a solicitor, the 26 Attorney General, or a law enforcement agency investigating a 27 violation of this chapter. 28 29 Section 59-150-250. (A) A person who knowingly sells a 30 lottery game ticket or share to a person under eighteen years of age 31 or permits a person under eighteen years of age to play a lottery 32 game is guilty of a misdemeanor and, upon conviction, must be 33 fined not less than one hundred dollars nor more than five hundred 34 dollars or be imprisoned not less than thirty days nor more than 35 sixty days, or both, in the discretion of the court. It is an 36 affirmative defense to a charge of a violation of this section that 37 the lottery retailer reasonably and in good faith relied upon 38 representation of proof of age in making the sale. 39 (B) A person under eighteen years of age who knowingly 40 purchases a lottery game ticket is guilty of a misdemeanor and, 41 upon conviction, must perform twenty hours of community service 42 or must be fined not less than one hundred dollars and not more 43 than five hundred dollars.

1 [496] 35 1 (C) A lottery ticket or share must bear a conspicuous label 2 prohibiting the play of the game by a person under eighteen years 3 of age. 4 (D) A lottery game using an electronic or mechanical device 5 must bear a conspicuous label prohibiting the use of the device by 6 a person under eighteen years of age. Electronic or mechanical 7 device does not include machines and other gaming devices 8 including video poker and games prohibited by Sections 9 12-21-2710, 16-19-40, and 16-19-50. 10 (E) A person who is incarcerated or on probation or parole who 11 knowingly accepts a lottery prize is guilty of a misdemeanor and, 12 upon conviction, must be fined not less than ten dollars nor more 13 than one hundred dollars or imprisoned for not less than two days 14 nor more than thirty days, or both. 15 (F) A person who is convicted of a violation of subsection (A) 16 subjects his employer, for a first violation, to a fine not less than 17 one hundred dollars nor more than two hundred fifty dollars; for a 18 second violation, to a fine not less than two hundred fifty-one 19 dollars nor more than five hundred dollars; and for a third and 20 subsequent violation, to a fine not less than five hundred and one 21 dollars and immediate license revocation by the commission. 22 23 Section 59-150-260. (A) A person who, with intent to defraud, 24 falsely makes, alters, forges, utters, passes, or counterfeits a state 25 lottery game ticket is guilty of a felony and, upon conviction, must 26 be fined not more than fifty thousand dollars or imprisoned not 27 more than five years, or both. 28 (B) A person who influences or attempts to influence the 29 winning of a prize through the use of coercion, fraud, deception, or 30 tampering with lottery equipment or materials is guilty of a felony 31 and, upon conviction, must be fined not more than fifty thousand 32 dollars or imprisoned not more than five years, or both. 33 (C) A person who is convicted of a violation of subsection (A) 34 or (B) must not be the recipient of an award of a lottery prize or a 35 portion of a lottery prize, and is ineligible for employment by the 36 commission. 37 38 Section 59-150-270. (A) A person must not knowingly or 39 intentionally make a material false statement in an application for a 40 license or proposal to conduct lottery activities or a material false 41 entry in a book or record which is compiled or maintained or 42 submitted to the board or its designee pursuant to the provisions of 43 this chapter. A person who violates the provisions of this section

1 [496] 36 1 is guilty of a felony and, upon conviction, must be fined not more 2 than twenty-five thousand dollars or the dollar amount of the false 3 entry or statement, whichever is greater, or imprisoned for not 4 more than five years, or both. 5 (B) A person who is convicted of a violation of subsection (A) 6 also must surrender his license immediately and is ineligible to be 7 issued a license by the commission. 8 9 Section 59-150-275. A person who specifically is made subject 10 to the South Carolina Ethics Reform Act by this chapter and who 11 knowingly violates a provision of this chapter that prohibits 12 contributions to political campaigns or parties, independent 13 expenditures to advance or defeat a lottery-related issue, 14 employment of a lobbyist, representation of a client before the 15 board as a former employee, or other prohibitions or restrictions 16 relating to the unfair receipt of a pecuniary benefit from his 17 association with the lottery, is guilty of a felony and, upon 18 conviction, must be fined not more than twenty-five thousand 19 dollars or imprisoned for not more than five years, or both. 20 21 Section 59-150-280. (A) The commission may enter into 22 intelligence sharing, reciprocal use, or restricted use agreements 23 with the federal government, law enforcement agencies, lottery 24 regulation agencies, and gaming enforcement agencies of other 25 jurisdictions which provide for and regulate the use of information 26 provided and received pursuant to the agreement. 27 (B) Records, documents, and information in the possession of 28 the commission received pursuant to an intelligence sharing, 29 reciprocal use, or restricted use agreement entered into by the 30 commission with a federal department or agency, a law 31 enforcement agency, or the lottery regulation or gaming 32 enforcement agency of a jurisdiction are considered investigative 33 records of a law enforcement agency and are subject to the 34 confidentiality and disclosure policies, and must not be released 35 without the permission of the person or agency providing the 36 record or information, except as may be required by the Freedom 37 of Information Act. 38 39 Section 59-150-290. The commission shall enter into its 40 contracts for procurements in compliance with the South Carolina 41 Consolidated Procurement Code. 42

1 [496] 37 1 Section 59-150-300. (A) Any lottery retailer, lottery vendor, 2 applicant for a lottery retailer license, or lottery game ticket holder 3 aggrieved by an action of the board may appeal that decision to the 4 Administrative Law Judge Division. The action is subject to 5 review by an administrative law judge on the record of the board, 6 upon petition of the aggrieved person within ten days from receipt 7 of official notice from the board of the action of which review is 8 sought. Service of notice is presumed conclusively ten days after 9 mailing by registered or certified mail to the applicant or licensee 10 of notice at his last known address. An appeal to the 11 Administrative Law Judge Division pursuant to this section is not a 12 contested case as defined by the Administrative Procedures Act; 13 however, the appeal is subject to the procedural due process 14 requirements provided for in Article 5, Chapter 23, Title 1 and the 15 Rules of Procedure of the Administrative Law Judge Division. 16 Appeals regarding lottery vendor contracts must be brought 17 pursuant to the South Carolina Procurement Code. 18 (B) The Administrative Law Judge Division shall hear appeals 19 from decisions of the board and, based upon the record of the 20 proceedings before the board, may reverse the decision of the 21 board only if the appellant proves the decision to be: 22 (1) in violation of constitutional or statutory provisions; 23 (2) in excess of the statutory authority of the board; 24 (3) made upon unlawful procedure; 25 (4) affected by other error of law; 26 (5) clearly erroneous in view of the reliable, probative, and 27 substantial evidence on the whole record; or 28 (6) arbitrary or capricious or characterized by abuse of 29 discretion or clearly unwarranted exercise of discretion. 30 (C) The Administrative Law Judge Division may remand an 31 appeal to the board to conduct further hearings. 32 (D) For judicial review of a final decision of an administrative 33 law judge in a case involving the commission, the petition by an 34 aggrieved party must be filed with the circuit court and served on 35 the opposing party not more than thirty days after the aggrieved 36 party receives the final decision and order of the administrative 37 law judge. Appeal in these matters is by right. 38 (E) A lottery vendor who appeals the award of a procurement 39 contract for the supply of a lottery game ticket system, share 40 system, or an on-line or other mechanical or electronic system is 41 liable for all costs of appeal and defense if the appeal is denied or 42 the contract award is upheld. Cost of appeal and defense 43 specifically includes, but is not limited to, administrative

1 [496] 38 1 proceedings, court costs, bond, legal fees, and loss of income to 2 the commission resulting from institution of the appeal if, upon the 3 motion of the commission, the court finds the appeal was 4 frivolous. 5 (F) All actions and proceedings for review pursuant to this 6 chapter, and all actions and proceedings to which the commission 7 may be a party and in which a question arises pursuant to this 8 chapter or pursuant to or concerning any order or decision of the 9 commission must be given priority of hearing in all courts and 10 reviewing entities over all other civil causes except election cases 11 irrespective of position on the calendar. 12 13 Section 59-150-310. (A) The commission may expend, 14 pursuant to the provisions of this chapter, monies received from 15 any source, including income from the commission’s operations, 16 for effectuating its purposes, including the payment of the initial 17 expenses of organization, administration, and operation of the 18 commission and the lottery. 19 (B) The commission must be self-sustaining and self-funded. 20 Monies in the state general fund may not be used or obligated to 21 pay the expenses of the commission or prizes of the lottery, and a 22 claim for the payment of an expense of the lottery or prizes of the 23 lottery may not be made against monies other than monies credited 24 to the commission operating account. 25 (C) The commission may purchase, lease, or lease-purchase 26 goods or services necessary for effectuating the purposes of this 27 chapter. The commission may make procurements which integrate 28 functions such as lottery game design, lottery ticket distribution to 29 a lottery retailer, supply of goods and services, and advertising. In 30 all procurement decisions, the commission shall act to promote and 31 ensure security, honesty, fairness, and integrity in the operation 32 and administration of the lottery and the objectives of raising net 33 proceeds for the benefit of educational programs and purposes. 34 35 Section 59-150-320. To ensure the financial integrity of the 36 lottery, the commission, through its board, shall: 37 (1) submit quarterly and annual reports to the Governor, the 38 President Pro Tempore of the Senate, the Speaker of the House of 39 Representatives, the State Auditor, the Comptroller General, the 40 State Treasurer, and the Chairmen of the House Ways and Means 41 Committee and the Senate Finance Committee disclosing the total 42 lottery revenues, prize disbursements, operating expenses, and 43 administrative expenses of the commission during the reporting

1 [496] 39 1 period. The annual report additionally must describe the 2 organizational structure of the commission, summarize the 3 functions performed by each organizational division within the 4 commission, and contain a detailed budget for the next fiscal year. 5 The quarterly reports must be submitted within fifteen days of the 6 end of the quarter, and the annual report must be submitted by 7 October fifteenth; 8 (2) adopt a system of internal audits; 9 (3) maintain weekly or more frequently records of lottery 10 transactions including the distribution of lottery game tickets or 11 shares to a lottery retailer, revenues received, claims for prizes, 12 prizes paid, prizes forfeited, and other financial transactions of the 13 commission; 14 (4) authorize the State Auditor to contract with a certified 15 public accountant or firm for an independently audited financial 16 statement prepared in accordance with generally accepted 17 accounting principles, to be submitted to the Comptroller 18 General’s office each year no later than October fifteenth. The 19 certified public accountant or firm shall not have a financial 20 interest in a lottery vendor with whom the commission is under 21 contract. The certified public accountant or firm shall evaluate the 22 internal auditing controls in effect during the audit period. The 23 cost of this annual financial audit is an operating expense of the 24 commission. The State Auditor may at any time conduct an audit 25 of any phase of the operations of the commission at the expense of 26 the State and shall receive a copy of the annual independent 27 financial audit. A copy of an interim audit performed by the 28 certified public accountant or firm or the State Auditor must be 29 transmitted after the close of the commission’s fiscal year to the 30 Governor, the President Pro Tempore of the Senate, the Speaker of 31 the House of Representatives, the State Auditor, the State 32 Treasurer, the Comptroller General, and the Chairmen of the 33 House Ways and Means Committee and the Senate Finance 34 Committee; 35 (5) submit, for informational purposes only, to the Office of 36 State Budget of the Budget and Control Board and the State 37 Auditor by June thirtieth of each year a copy of the annual 38 operating budget for the commission for the next fiscal year. This 39 annual operating budget must be approved by the South Carolina 40 Lottery Commission Board; 41 (6) submit, for informational purposes only, to the Office of 42 State Budget on November tenth of each year a proposed operating 43 budget for the commission for the upcoming fiscal year;

1 [496] 40 1 (7) adopt the same fiscal year as that used by state government; 2 and 3 (8) authorize the Legislative Audit Council to contract with an 4 independent firm experienced in security procedures including, but 5 not limited to, computer security and systems security, to 6 periodically conduct a comprehensive study and evaluation of all 7 aspects of security in the operation of the commission and the 8 lottery. This firm may not have a financial interesting a lottery 9 vendor with whom the commission is under contract The cost of 10 this evaluation is an operating expense of the commission. The 11 commission shall pay directly to the Legislative Audit Council the 12 cost of the evaluation. 13 14 Section 59-150-330. (A) All claimant agencies of this State 15 and persons on whose behalf the State and its claimant agencies 16 act, in conjunction with the commission, shall cooperate in 17 identifying debtors who owe money to the State and who qualify 18 for prizes pursuant to this chapter from the commission; and the 19 sum of any debt owed to the State or to persons on whose behalf 20 the State and its claimant agencies act must be set off against a 21 prize awarded pursuant to this chapter. This section must be 22 liberally construed to effectuate these purposes. 23 (B) As used in this section: 24 (1) ‘Claimant agency’ means any state or local agency, 25 department, board, bureau, commission, or authority to which an 26 individual owes a debt or which acts on behalf of an individual to 27 collect a debt. 28 (2) ‘Debt’ means a liquidated sum due and owing a claimant 29 agency, which sum has accrued through contract, subrogation, tort, 30 or operation of law regardless of whether there is an outstanding 31 judgment for the sum, or a sum which is due and owing a person 32 and is enforceable by the State or any of its agencies or 33 departments. 34 (3) ‘Debtor’ means an individual owing money to or having 35 a delinquent account with a claimant agency, which obligation has 36 not been adjudicated as satisfied by court order, set aside by court 37 order, or discharged in bankruptcy. 38 (4) ‘Prize’ means the proceeds of a lottery prize awarded 39 pursuant to this chapter. 40 (C) The collection remedy authorized by this section is in 41 addition to and not in substitution for any other remedy available 42 by law.

1 [496] 41 1 (D)(1) A claimant agency may submit to the commission a list 2 of the names of all persons owing debts in excess of one hundred 3 dollars to the claimant agency or to persons on whose behalf the 4 claimant agency acts. The full amount of the debt is collectible 5 from lottery winnings without regard to limitations on the amounts 6 that may be collectible in increments through garnishment or other 7 proceedings. The list constitutes a valid lien upon and claim of 8 lien against the lottery winnings of a debtor named in the list. The 9 list must contain the names of the debtors, their Social Security 10 numbers if available, and other information which would assist the 11 commission in identifying the debtors named in the list. 12 (2) The commission shall withhold winnings subject to the 13 lien created by this section and send notice to the winner by 14 certified mail, return receipt requested, of such action and the 15 reason why the winnings were withheld. If the winner appears and 16 claims winnings in person, the commission shall notify the winner 17 at that time, by hand delivery, of the action. If the debtor does not 18 protest, in writing, the withholding of the funds within thirty days 19 of notice, the commission shall pay the funds over to the claimant 20 agency. If the debtor protests the withholding of funds, in writing, 21 within thirty days of the notice, the commission shall file an action 22 in interpleader in the circuit court of the county in which the debtor 23 resides, pay the disputed sum into the court, and give notice to the 24 claimant agency and debtor of the initiation of the action. 25 (3) The liens created by this section rank among themselves 26 as follows: 27 (a) taxes due the State; 28 (b) delinquent child support; 29 (c) delinquent student loans; and 30 (d) all other judgments and liens in order of the date 31 entered or perfected. 32 (4) The commission is not required to deduct claimed debts 33 from prizes paid out by a lottery retailer or entities other than the 34 commission. 35 (5) A list of debtors and debts must be provided, pursuant to 36 this section, periodically as the commission determines by rules 37 and regulations, and the commission is not obligated to retain the 38 lists or deduct debts appearing on the lists beyond the period 39 determined by the rules and regulations. 40 (6) The commission may prescribe forms, propose rules, and 41 promulgate regulations necessary to carry out the provisions of this 42 section.

1 [496] 42 1 (7) The commission and a claimant agency do not incur civil 2 or criminal liability for good faith adherence to the provisions of 3 this section. 4 (8) The claimant agency shall pay the commission for all 5 costs incurred by the commission in setting off debts in the manner 6 provided in this section. The commission may retain this fee as 7 part of administrative expenses. 8 (E)(1) Notwithstanding Section 59-150-240 or other 9 confidentiality law, the commission may provide to a claimant 10 agency all information necessary to accomplish and effectuate the 11 intent of this section. 12 (2) The information obtained by a claimant agency from the 13 commission pursuant to this section must retain its confidentiality 14 and may be used only by a claimant agency in the pursuit of its 15 debt collection duties and practices. An employee or former 16 employee of a claimant agency who unlawfully discloses this 17 information for another purpose, except as otherwise specifically 18 authorized by law, is subject to penalties as provided by law. 19 (F) The provisions of this section apply to prizes of six hundred 20 dollars or more. 21 22 Section 59-150-340. The net proceeds received from the state 23 lottery for education as provided by law must be deposited by the 24 State Treasurer in a fund separate and distinct from the state 25 general fund entitled the ‘Education Lottery Account’. All interest 26 or income earned by the fund must be retained in the account and 27 used for its stated purposes. However, all revenue received by the 28 Education Lottery Account in any fiscal year together with 29 earnings on it for that year must be disbursed as required by 30 Section 59-150-350 and as appropriated by the General Assembly 31 in its annual general appropriations bill or any bill appropriating 32 monies for previous or current fiscal years. It is the intent of the 33 General Assembly in creating this Education Lottery Account that 34 its funds be managed so as to establish and fund these programs 35 permanently. Upon receipt of monies transferred to the Education 36 Lottery Account held by the State Treasurer, these monies must be 37 appropriated by the General Assembly in its annual general 38 appropriations bill or any bill appropriating monies for previous or 39 current fiscal years to the programs and for the purposes stipulated 40 in Section 59-150-350. The Comptroller General shall record 41 these revenues received on a cash basis, and disbursements for the 42 purposes provided also must be on a cash basis; however, 43 unexpended funds at the end of a fiscal year after disbursement to

1 [496] 43 1 the programs authorized to receive the funds as provided in 2 Section 59-150-350 and as appropriated by the General Assembly 3 in its annual general appropriations bill or any bill appropriating 4 monies for previous or current fiscal years may be carried forward 5 to future years and expended for the same purposes. 6 7 Section 59-150-350. (A) All lottery proceeds are the property 8 of the commission, to be held in a separate and distinct account, 9 apart from the State Treasury. Annual administrative expenses 10 may not exceed fifteen percent of gross lottery revenues for the 11 year, including lottery retailer commissions and incentives. The 12 General Assembly shall consider, in the allocation of funds from 13 the Education Lottery Account, the allocation of monies in the 14 amount the General Assembly determines for the Commission on 15 Higher Education and for the Administrative Law Judge Division, 16 both to help defray their expenses incurred in the performance of 17 their duties pursuant to this chapter; except that the amount of 18 funding for the Commission on Higher Education and the 19 Administrative Law Judge Division must be allocated by the 20 General Assembly in its annual general appropriations bill or any 21 bill appropriating monies for previous or current fiscal years. As 22 nearly as practical, an amount no less than forty-five percent of the 23 amount of money from the actual sale of lottery tickets or shares 24 must be made available as prize money, except that this item does 25 not create a lien, an entitlement, a cause of action, or other private 26 right, and rights of holders of tickets or shares must be determined 27 by the commission in setting the terms of its lottery or lotteries. 28 (B) Before the sixteenth day of each month, the commission 29 shall deposit to the State Treasurer, for credit to the Education 30 Lottery Account for the preceding month, the amount of all net 31 proceeds from the preceding month. The State Comptroller 32 General shall account separately for net proceeds by establishing 33 and maintaining a restricted account known as the Education 34 Lottery Account. Upon their deposit with the State, monies 35 representing a deposit of net proceeds become the unencumbered 36 property of the State of South Carolina and the commission may 37 not agree or undertake otherwise. The monies may be invested by 38 the State Treasurer pursuant to state investment practices. All 39 earnings attributable to the investments are also the unencumbered 40 property of the State and accrue to the credit of the Education 41 Lottery Account. 42 (C) At the beginning of the first fiscal year after the state 43 lottery becomes operational, the Comptroller General shall certify

1 [496] 44 1 the amount of net proceeds including investment earnings on the 2 net proceeds credited to and accrued in the Education Lottery 3 Account during the preceding fiscal year. The sum of certified net 4 proceeds and investment earnings must be designated as annual 5 lottery proceeds. Appropriations from the Education Lottery 6 Account must be allocated only for educational purposes and 7 educational programs by the General Assembly in its annual 8 general appropriations bill or any bill appropriating monies for 9 previous or current fiscal years. Funds made available from the 10 Education Lottery Account may not exceed the previous year’s net 11 proceeds and investment earnings as certified by the Comptroller 12 General and first must be used to provide Palmetto Fellows 13 Scholarships to all eligible applicants, then used to provide Life 14 scholarships for eligible resident students attending two-year or 15 four-year public institutions or technical colleges in those amounts 16 provided by law, up to one percent of net proceeds to the South 17 Carolina State Library for public library state aid, to be distributed 18 to county public libraries on a per capita basis and to be used for 19 educational technology delivery, upgrade, and maintenance, except 20 that a public library that offers public access to the internet must 21 use an internet screening or filtering program to receive this 22 funding, and funding with all the remaining revenues for: 23 elementary and secondary public education as determined pursuant 24 to the Education Accountability Act of 1998 and education 25 improvement legislation enacted into law after the effective date of 26 this chapter, new programs enacted by the General Assembly for 27 public institutions of higher learning, including public four-year 28 colleges and universities and their branches and two-year colleges, 29 as defined in Section 59-103-5, and state technical schools, which 30 programs may include the creation of endowed chairs at the state’s 31 universities, with an emphasis in the areas of, but not limited to, 32 engineering, computer science, and the sciences, and Youth 33 Education Scholarships of up to and not to exceed one thousand 34 dollars, to be determined in the annual general appropriations bill, 35 to resident parents of a four-year-old who attains the age of four 36 years by September first of the school year the scholarship is 37 received and who attends a public or private, for profit or nonprofit 38 kindergarten, preschool, home school, or child development center 39 program provided in this State. The scholarship is payable from 40 the lottery proceeds through the Department of Education directly 41 to the school in the name of the attending child after the 42 department confirms that the program meets the following criteria 43 that include, but are not limited to, language and literacy programs

1 [496] 45 1 that help the child understand and tell stories, recognize pictures 2 and words, learn the alphabet, and understand that writing is 3 communication; math concepts that teach the child to count and 4 sort objects into groups, recognize shapes, and make comparisons 5 of size, shape, length, and weight; science concepts that teach the 6 child to explore the natural environment, observe seasonal 7 changes, communicate observations, and use tools to measure; art 8 concepts that help the child express ideas and thoughts in creative 9 ways, paint, draw, and sculpt, listen to music and sing songs, and 10 recognize colors; and physical development activities that help the 11 child move with balance and coordination, participate in indoor 12 and outdoor physical activity, and use writing tools, puzzles, 13 scissors, blocks, clay, and computers. The proportion of total 14 recurring general fund and special fund revenues of the State 15 expended for the total of public elementary, secondary, and higher 16 education allocations in any fiscal year may not be less than the 17 proportions in the fiscal year immediately before the fiscal year in 18 which education revenues are first received from a state lottery, 19 and may not be reduced or supplanted later by revenues received 20 from a state lottery. 21 (D) Appropriations by the General Assembly in its annual 22 general appropriations bill or any bill appropriating monies for 23 previous or current fiscal years for educational purposes and 24 programs from the account not committed during the fiscal year 25 must be credited to the Education Lottery Account. 26 (E)(1) A program or project started specifically from lottery 27 proceeds may not be continued from the general fund, but the 28 programs must be adjusted or discontinued according to available 29 lottery proceeds, unless the General Assembly by general law 30 establishes eligibility requirements and later appropriates specific 31 funds within the general appropriations act. The provisions of this 32 subsection do not prohibit the providing of supplemental funding 33 to programs or projects in existence on the effective date of this 34 chapter from lottery proceeds; provided, that funding for these 35 existing programs or projects from the state general fund, the 36 Education Improvement Act, or other nonlottery sources may not 37 be reduced below that provided on the effective date of this 38 chapter. 39 (2) A surplus in the Education Lottery Account may not be 40 reduced by the General Assembly to correct any nonlottery 41 deficiencies in sums available for general appropriations and vice 42 versa, and a surplus in the Education Lottery Account may not be 43 included in a surplus calculated for setting aside any nonlottery

1 [496] 46 1 reserve, specifically, without limitation, the General Reserve Fund 2 or the Capital Reserve Fund.” 3 4 SECTION 3. Section 59-149-10 of the 1976 Code is amended by 5 adding at the end to read: 6 7 “(E)(1)Beginning with school year 2002-2003, the annual 8 amount of a LIFE Scholarship for eligible resident students 9 attending a four-year or two-year public institution or technical 10 college as defined in this chapter is increased to the cost of tuition 11 for thirty credit hours a year or its equivalent plus a three hundred 12 dollar a year book allowance. Tuition for this purpose means the 13 amount charged for registering for credit hours of instruction and 14 shall not include other fees, charges, or costs of textbooks except 15 for the referenced three hundred dollar book allowance. 16 (2) Beginning with school year 2002-2003, the annual 17 amount of a LIFE Scholarship for eligible resident students 18 attending a four-year independent institution must be the cost of 19 attendance up to a maximum of the average annual cost of tuition 20 at the state’s four-year public institutions of higher learning in the 21 corresponding academic year, and the annual amount for eligible 22 resident students attending a two-year independent institution must 23 increase to the cost of attendance up to a maximum of the cost of 24 tuition at a two-year regional public institution, both for thirty 25 credit hours a year or its equivalent. 26 (3) Beginning with the school year 2002-2003, the 27 requirement that high school completion be accomplished on or 28 after May 1995, for eligibility for the LIFE Scholarship is waived.” 29 30 SECTION 4. Section 59-149-50 of the 1976 Code is amended by 31 adding subsections (D), (E), and (F) to read: 32 33 (D) Beginning with school year 2002-2003, an entering 34 freshman at a four-year institution to be eligible for a LIFE 35 Scholarship in addition to the other requirements of this chapter 36 shall meet two of the following three criteria: 37 (1) have the grade point average required by this section; 38 (2) have the Scholastic Aptitude Test (SAT) or equivalent 39 ACT score required by this section; 40 (3) be in the top thirty percent of his high school graduating 41 class. 42 For home school students and students whose high school 43 graduating class is less than fifty students, the Commission on

1 [496] 47 1 Higher Education may define alternative criteria for students to 2 meet the requirement of item (3). 3 After receipt of a LIFE Scholarship by an entering freshman 4 beginning with school year 2002-2003, a student shall meet the 5 criteria established in this chapter to retain or regain the 6 scholarship. 7 For an exceptionally gifted student who is accepted into college 8 without having attended high school, the Commission on Higher 9 Education shall define alternative criteria for the student to qualify 10 for a LIFE Scholarship. 11 (E) Notwithstanding the provisions of this section and the other 12 requirements of this chapter, beginning with school year 13 2002-2003, students attending a technical college of this State 14 taking not less than eighteen credit hours of instruction a year but 15 less than thirty credit hours a year who are otherwise eligible for a 16 LIFE scholarship shall receive a LIFE scholarship equal to 17 one-half the amount that eligible students receive at the technical 18 college who take at least thirty credit hours of instruction a year. 19 (F) In the absence of official school records to document the 20 required grade point average for students attending a technical 21 college, a satisfactory score on an admissions exam administered 22 by the technical college is sufficient to meet the grade point 23 average requirement.” 24 25 SECTION 5. The 1976 Code is amended by adding: 26 27 “Section 59-149-56. Notwithstanding any other provision of 28 law, students attending a technical college of this State after 29 having received a GED certificate who have a 3.0 average on a 4.0 30 scale after the first semester meet the requirements for receiving a 31 life scholarship under this chapter.” 32 33 SECTION 6. Section 12-36-110(1) of the 1976 Code is amended 34 by adding an appropriately lettered subitem at the end to read: 35 36 “( ) sales of lottery tickets pursuant to Chapter 150 of Title 59.” 37 38 SECTION 7. The 1976 Code is amended by adding: 39 40 “Section 2-15-63. (A) Beginning in December 2004 and every 41 three years after that, the Legislative Audit Council shall conduct a 42 management performance audit of the South Carolina Lottery

1 [496] 48 1 Commission. The cost of this audit is an operating expense of the 2 commission. 3 (B) Nothing in this section limits, abridges, or otherwise affects 4 the provisions of Section 2-15-60. 5 (C) The Legislative Audit Council may contract with an 6 independent firm experienced in security procedures including, but 7 not limited to, computer security and systems security, to 8 periodically conduct a comprehensive study and evaluation of all 9 aspects of security in the operation of the commission and the 10 lottery. This firm may not have a financial interest in a lottery 11 vendor with whom the commission is under contract. The cost of 12 this evaluation is an operating expense of the commission. The 13 commission shall pay directly to the Legislative Audit Council the 14 cost of the evaluation.” 15 16 SECTION 8. Section 12-36-2120 of the 1976 Code is amended 17 by adding an appropriately numbered item to read: 18 19 “( ) a lottery ticket sold pursuant to Chapter 150 of Title 59;” 20 21 SECTION 9. Section 59-63-210 of the 1976 Code is amended to 22 read: 23 24 “Section 59-63-210. (A) Any district board of trustees may 25 authorize or order the expulsion, suspension, or transfer of any 26 pupil for a the commission of any crime, gross immorality, gross 27 misbehavior, persistent disobedience, or for violation of written 28 rules and promulgated regulations established by the district board, 29 county board, or the State Board of Education, or when the 30 presence of the pupil is detrimental to the best interest of the 31 school. Every Each expelled pupil shall have has the right to 32 petition for readmission for the succeeding school year. Expulsion 33 or suspension shall must be construed to prohibit a pupil from 34 entering the school, or school grounds, except for a prearranged 35 conference with an administrator, attending any day or night 36 school functions, or riding a school bus. The provisions of this 37 section shall do not preclude enrollment and attendance in any 38 adult or night school. 39 (B) A district board of trustees shall not authorize or order the 40 expulsion, suspension, or transfer of any pupil for a violation of 41 Section 59 - 150 - 250(B).” 42

1 [496] 49 1 SECTION 10. Except for Section 59-150-350(C), (D), and (E), 2 provisions of this chapter relating to guidelines for the 3 appropriation of lottery proceeds must not be amended in a general 4 appropriations act, but only in a separate piece of legislation solely 5 for that purpose and by a majority vote of those present and voting 6 in both houses of the General Assembly. 7 8 SECTION 11. The General Assembly shall review and evaluate, 9 on a regular basis but at least biannually, the operation of the 10 South Carolina Education Lottery and the success and efficiency 11 with which the South Carolina Lottery Commission has 12 undertaken that responsibility. The General Assembly, after each 13 review and evaluation, may determine to: 14 15 (1) transfer the whole or any part of the functions of the 16 commission to the jurisdiction and control of any other agency; 17 (2) consolidate, coordinate, or combine the functions of the 18 commission with any other agency; 19 (3) redirect any mission of the commission; 20 (4) abolish any mission of the commission in whole or any 21 part; or 22 (5) abolish all or any part of the functions of the commission. 23 24 SECTION 12. Criminal penalties contained in Chapter 150, Title 25 59 apply only to offenses committed on or after the effective date 26 of this Act. 27 28 SECTION 13. The repeal or amendment by this act of any law, 29 whether temporary or permanent or civil or criminal, does not 30 affect pending actions, rights, duties, or liabilities founded thereon, 31 or alter, discharge, release, or extinguish any penalty, forfeiture, or 32 liability incurred under the repealed or amended law, unless the 33 repealed or amended provision so expressly provides. After the 34 effective date of this act, all laws repealed or amended by this act 35 must be taken and treated as remaining in full force and effect for 36 the purpose of sustaining any pending or vested right, civil action, 37 special proceeding, criminal prosecution, or appeal existing as of 38 the effective date of this act, and for the enforcement of rights, 39 duties, penalties, forfeitures, and liabilities as they stood under the 40 repealed or amended laws. 41 42 SECTION 14. If any section, subsection, paragraph, 43 subparagraph, sentence, clause, phrase, or word of this act is for

1 [496] 50 1 any reason held to be unconstitutional or invalid, such holding 2 does not affect the constitutionality or validity of the remaining 3 portions of this act, the General Assembly hereby declaring that it 4 would have passed this chapter, and each and every section, 5 subsection, paragraph, subparagraph, sentence, clause, phrase, and 6 word thereof, irrespective of the fact that any one or more other 7 sections, subsections, paragraphs, subparagraphs, sentences, 8 clauses, phrases, or words hereof may be declared to be 9 unconstitutional, invalid, or otherwise ineffective. 10 11 SECTION 15. A statewide advisory referendum shall be held at 12 the same time as the November 2004 general election as to 13 whether or not the qualified electors of this State want to continue 14 a State Education Lottery. Ballots must be provided at the various 15 voting precincts with the following words printed or written on the 16 ballot: 17 18 “Do you favor continuing the Sate Education Lottery? 19 20 Yes  21 22 No  23 24 Those voting in favor of the question shall deposit a ballot with 25 a check or cross mark in the square after the word ‘Yes’, and those 26 voting against the question shall deposit a ballot with a check or 27 cross mark in the square after the word ‘No’.” 28 The results of the advisory referendum shall be reported by the 29 State Election Commission to the General Assembly and the 30 Governor in January 2005. The cost of this statewide advisory 31 referendum shall be paid by the State. 32 33 SECTION 16. This act takes effect upon approval by the 34 Governor. 35 ----XX----

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