Arkansas Scholarship Lottery Act

Ark. Code Ann. tit. 23, ch. 115

in effect

Ark. Code Ann. § 23-115-101 Short title.

This chapter shall be known and may be cited as the “Arkansas Scholarship Lottery Act”.

Ark. Code Ann. § 23-115-102 Legislative intent.

It is found and declared by the General Assembly that: (1) Net proceeds of lotteries conducted under this chapter shall be used to: (A) Fund and provide for scholarships and grants to citizens of the State of Arkansas enrolled in public and private nonprofit two-year and four-year colleges and universities located within the state; and (B) Supplement, not supplant, nonlottery educational resources; (2) Lotteries shall be operated and managed in a manner that: (A) Provides continuing entertainment to the public; (B) Maximizes revenues for scholarships; and (C) Ensures that the lotteries are operated with integrity, dignity, and adequate internal controls and free of political influence; and (3) The Office of the Arkansas Lottery shall be accountable to the General Assembly and to the public through a system of audits and reports.

Ark. Code Ann. § 23-115-105 Data sharing with Department of Human Services.

The Office of the Arkansas Lottery and the Arkansas Racing Commission shall enter into a data matching agreement with the Department of Human Services for purposes under §§ 20-76-215 and 20-77-2104.

Ark. Code Ann. § 23-115-201 Office of the Arkansas Lottery — Creation — Venue.

(a) There is created within the Management Services Division of the Department of Finance and Administration the Office of the Arkansas Lottery to establish and oversee the operation of one (1) or more lotteries under this chapter. (b) The office is a self-supporting and revenue-raising agency of the state. (c) The office shall reimburse other governmental entities that provide goods or services to the office.

Ark. Code Ann. § 23-115-205 Office of the Arkansas Lottery powers.

(a) The Office of the Arkansas Lottery has all powers necessary or convenient to its usefulness in carrying out this chapter that are not in conflict with the Arkansas Constitution or the United States Constitution, including without limitation the following powers: (1) To adopt and alter a seal; (2) To adopt, amend, and repeal rules for the regulation of its affairs and the conduct of its business, to prescribe the duties of officers and employees of the office, and to perform other matters as the office determines; (3) To bring suits to enforce demands of the state under this chapter; (4) To procure or to provide insurance; (5) To hold copyrights, trademarks, and service marks and to enforce the office's rights with respect to those copyrights, trademarks, and service marks; (6) To initiate, supervise, and administer the operation of lotteries in accordance with this chapter and rules adopted under this chapter; (7) To enter into written agreements with one (1) or more other states or sovereigns for the operation, participation in marketing, and promotion of multistate or multisovereign games; (8) To conduct market research as necessary or appropriate; (9) To acquire or lease real property and make improvements to the real property and acquire by lease or by purchase personal property, including without limitation: (A) Computers; (B) Mechanical, electronic, and online equipment and terminals; (C) Intangible property, including without limitation computer programs, computer systems, and computer software; and (D) Broadcast equipment; (10) To administer oaths, take depositions, issue subpoenas, and compel the attendance of witnesses and the production of books, papers, documents, and other evidence relative to any investigation or proceeding conducted by the office; (11) To employ an internal auditor to perform the duties and responsibilities required under § 23-115-212; (12) To select and contract with vendors; (13) To select and license retailers; (14) To enter into contracts or agreements with state or local law enforcement agencies for the performance of law enforcement, background investigations, and security checks; (15) To conduct background investigations and, if considered necessary by the Director of the Office of the Arkansas Lottery, credit investigations on each potential vendor and retailer; (16) To supervise ticket or share validation and lottery drawings; (17) To inspect at times determined solely by the office the facilities of a vendor or a retailer to determine: (A) The integrity of the vendor's product or the operations of the retailer; and (B) Whether the vendor or the retailer is in compliance with its contract or license; (18) To report any suspected violation of this chapter to the appropriate prosecuting attorney or the Attorney General and to any law enforcement agencies having jurisdiction over the violation; (19) Upon request, to provide assistance to the Chief Fiscal Officer of the State, the Legislative Auditor, the appropriate prosecuting attorney, the Attorney General, or a law enforcement agency investigating a violation of this chapter; (20) To enter into contracts of terms and conditions that the office determines; (21) To establish and maintain banking relationships associated with the maintenance and investment of lottery proceeds, including without limitation the establishment of checking and savings accounts and trust funds; (22)(A) To advertise and promote lotteries and scholarships and grants funded by net proceeds. (B) The office shall seek the advice of the Division of Higher Education when advertising to promote scholarships and grants funded by net proceeds; (23) To act as a retailer and to establish and operate a sales facility to conduct promotions that involve the sale of tickets or shares and any related merchandise; (24)(A) To contract with one (1) or more independent testing laboratories to scientifically test and technically evaluate lottery games, lottery terminals, and lottery operating systems. (B) An independent testing laboratory shall: (i) Have a national reputation that is demonstrably competent; and (ii) Be qualified to scientifically test and evaluate all components of a lottery game, lottery terminal, or lottery operating system. (C) An independent testing laboratory shall not be owned or controlled by a vendor or a retailer; (25) To withhold state and federal income taxes as required by law; and (26) To adopt and amend rules necessary to carry out and implement the office's powers and duties, organize and operate the office, regulate the conduct of lotteries in general, and any other matters necessary or desirable for the efficient and effective operation of lotteries for the convenience of the public. (b) The powers enumerated in subsection (a) of this section: (1) Are in addition to those powers of the office enumerated elsewhere in this chapter; and (2) Do not limit or restrict any other powers of the office. (c) The office is responsible for maintaining the integrity of the lottery. (d) The director shall: (1) Assign personnel as agents of the office to conduct investigations related to violations of lottery-related laws or lottery- related administrative rules; and (2) Report on the investigations conducted under subdivision (d)(1) of this section on a regular basis to the office of the Attorney General and the Division of Arkansas State Police. (e) Personnel assigned as agents of the office shall: (1) Be considered law enforcement officers by the Arkansas Commission on Law Enforcement Standards and Training pursuant to § 12-9-101 et seq.; and (2) Have statewide law enforcement authority to conduct investigations related to violations of lottery-related laws or lottery- related administrative rules.

Ark. Code Ann. § 23-115-207 Rulemaking.

(a) The Office of the Arkansas Lottery may adopt rules regulating the conduct of lotteries in general, including without limitation rules specifying: (1) The types of lotteries to be conducted; (2)(A) The sale price of tickets or shares and the manner and method of sale. (B) [Repealed.] (3) The number and amount of prizes; (4) The method and location of selecting or validating winning tickets or shares; (5) The manner and time of payment of prizes, including without limitation lump-sum payments or installments over a period of years; (6)(A) The manner of payment of prizes to the holders of winning tickets or shares. (B) Winners of five hundred dollars ($500) or less may claim prizes from any of the following: (i) A retailer; or (ii) The office. (C) Winners of more than five hundred dollars ($500) but a dollar amount less than the threshold for federal tax withholding on gambling winnings may claim prizes from: (i) The office; or (ii) A super retailer. (D)(i) Winners of a dollar amount that exceeds the threshold for federal tax withholding on gambling winnings shall claim prizes from the office. (ii) The office may establish claim centers throughout the state; (7) The frequency of lotteries and drawings or selection of winning tickets or shares; (8) The means of conducting drawings; (9)(A) The method to be used in selling tickets or shares. (B) The selling of tickets or shares may include the use of electronic or mechanical devices. (C) If the office elects to use electronic or mechanical devices to sell tickets or shares, the office shall provide by rule: (i) Specifications and required features for electronic or mechanical devices that may be used to sell tickets or shares; and (ii) Procedures and requirements to prevent the use of electronic or mechanical devices by an individual under eighteen (18) years of age. (D) A retailer who knowingly allows a person under eighteen (18) years of age to purchase a lottery ticket from an electronic or mechanical device is subject to the penalties under § 23-115-901. (E) The office shall publish a notice on the office's public website that provides the location, including without limitation the street address, of each self-service lottery ticket vending machine in operation in this state; (10) The manner and amount of compensation to retailers; and (11) Any other matters necessary, desirable, or convenient toward ensuring the efficient and effective operation of lotteries, the continued entertainment and convenience of the public, and the integrity of the lotteries. (b) The office may adopt rules requiring the publication on a ticket or share of the odds of winning a particular lottery game. (c)(1)(A) Except as provided in subdivision (c)(1)(B) of this section, the promulgation of rules under this chapter shall comply with the Arkansas Administrative Procedure Act, § 25-15-201 et seq. (B) The office is not required to file rules under § 10-3-309. (2)(A) The promulgation of rules by the office is exempt from § 10-3-309. (B) The office shall file its rules with the Legislative Council for review and approval at least thirty (30) days before the expiration of the public comment period.

Ark. Code Ann. § 23-115-208 Sovereign immunity.

(a) This chapter does not waive the sovereign immunity of the State of Arkansas. (b)(1) A claim in contract or in tort against the Office of the Arkansas Lottery or its employees shall be presented to the office. (2) The office shall promulgate rules concerning the consideration of claims in contract or in tort presented to the office, including without limitation rules concerning the conduct of hearings on claims in contract or in tort. (c)(1) A claimant may appeal the decision of the office under subsection (b) of this section to the Arkansas State Claims Commission. (2) The claimant may: (A) Within forty (40) days after the decision is rendered, file with the commission a notice of appeal of the decision of the office; (B) Within forty (40) days after the decision is rendered, file with the office a motion for reconsideration requesting the office to reconsider its decision; and (C) Within twenty (20) days after the office's reconsideration or denial of the motion for reconsideration, file with the commission a notice of appeal of the decision of the office. (3) When the office notifies parties of a decision of the office, it shall advise the parties of the right of appeal. (d)(1)(A) Except as provided in subdivisions (d)(2)-(4) of this section, appeals of claims in contract or in tort against the office or its employees shall be conducted by the commission in the same manner as a claim under § 25-44-201 et seq. (B) The commission shall consider an appeal de novo. (2) A decision of the commission relating to a claim in contract or in tort against the office or its employees shall not be appealed to the General Assembly. (3)(A) A valid claim in any amount against the office shall not be referred to the General Assembly for an appropriation. (B) The Clerk of the Arkansas State Claims Commission shall notify the office of the amount of the valid claim. (C) Upon receipt of notification from the clerk, the office shall deliver a check to the clerk, who shall deposit the sum as a nonrevenue receipt into the Miscellaneous Revolving Fund from which he or she shall disburse the amount of the claim to the claimant. (4) Written reports under § 25-44-212 shall be filed with the Legislative Council.

Ark. Code Ann. § 23-115-209 Appealing administrative orders of the Office of the Arkansas Lottery.

(a) A retailer, a vendor, or an applicant for a contract or a retailer license aggrieved by an administrative order of the Office of the Arkansas Lottery may appeal that decision to Pulaski County Circuit Court. (b) The circuit court shall hear appeals from administrative orders of the office, and based upon the record of the proceedings before the office, may reverse the administrative order of the office only if the person appealing the administrative order proves the administrative order to be: (1) Clearly erroneous; (2) Procured by fraud; (3) A result of substantial misconduct by the office; or (4) Contrary to the United States Constitution, the Arkansas Constitution, or this chapter. (c) The circuit court may remand an appeal to the office to conduct further hearings. (d)(1) A person who appeals the award of a contract, including without limitation a major procurement contract, is liable for all costs of appeal and defense if the appeal is denied or the contract award upheld. (2) If upon the motion of the office the circuit court finds the appeal to have been frivolous, the cost of appeal and defense shall include without limitation the following expenses of the office resulting from institution of the appeal: (A) Court costs; (B) Bond; (C) Legal fees; and (D) Loss of income. (3) A person appealing the award of a contract may be entitled to the reasonable costs incurred in connection with the contract solicitation, including without limitation bid preparation costs.

Ark. Code Ann. § 23-115-211 Certain sections inapplicable.

In addition to any provision of law expressly exempting the Office of the Arkansas Lottery, the following sections shall not apply to the office: (1) Section 14-1-111; (2) Section 19-4-1702; (3) Section 19-21-106; (4) Section 22-9-103; (5) Section 22-9-104; and (6) Section 25-27-104.

Ark. Code Ann. § 23-115-212 Duties and responsibilities of internal auditor.

(a) The internal auditor employed by the Office of the Arkansas Lottery shall report directly to the Secretary of the Department of Finance and Administration. (b) The secretary shall determine the duties and responsibilities of the internal auditor that: (1) Assist the office in the office's obligations under § 23-115-206; and (2) Are consistent with the suggested standards for the professional practice of internal auditing as adopted by the Institute of Internal Auditors, including without limitation: (A) Preparing a formal written three-year audit plan and presenting it to the secretary for the secretary's approval; (B) Conducting ongoing reviews of the internal procedures, records, and operating procedures of the office and the lotteries to: (i) Verify compliance with established policies, procedures, and control systems; (ii) Assure compliance with regulatory and statutory conditions; and (iii) Assure adherence to generally accepted accounting principles; and (C) Advising the secretary of inconsistencies within or improvements needed to the internal controls, operating procedures, or accounting procedures of the office or the lotteries. (c)(1) The internal auditor shall report to the Legislative Council one (1) time per month to: (A) Advise the Legislative Council concerning current issues and problems reported to the secretary under subsection (b) of this section; and (B) Update the Legislative Council concerning the resolution of any audit findings of Arkansas Legislative Audit. (2) The internal auditor is not required to file a report but shall include a statement in the monthly report of the office if: (A) There are no current issues or problems reported to the office; and (B) The office and Arkansas Legislative Audit agree that all audit findings are resolved.

Ark. Code Ann. § 23-115-301 Director — Appointment — Duties.

(a)(1)(A) The Governor shall appoint the Director of the Office of the Arkansas Lottery. (B) The director is an employee of the Office of the Arkansas Lottery and shall direct the day-to-day operations and management of the office. (2) The director is vested with powers and duties as specified by law. (3) The director serves at the pleasure of the Governor. (b)(1) An individual considered for appointment as director shall apply to the Identification Bureau of the Division of Arkansas State Police for a state and federal criminal background check to be conducted by the Identification Bureau of the Division of Arkansas State Police and the Federal Bureau of Investigation. (2) The state and federal criminal background check shall conform to the applicable federal standards and shall include the taking of fingerprints. (3) The applicant shall sign a consent to the release of information for the state and federal criminal background check. (4) The office shall be responsible for the payment of any fee associated with the state and federal criminal background check. (5) Upon completion of the state and federal criminal background check, the Identification Bureau of the Division of Arkansas State Police shall forward to the Governor and the office all releasable information obtained concerning the applicant. (c) The Governor shall not appoint as director an individual who has: (1) Been convicted of a felony or a gambling offense in a state or federal court of the United States; (2) Been convicted of a crime involving moral turpitude; or (3) Entered into a plea agreement to avoid felony prosecution.

Ark. Code Ann. § 23-115-302 Duties of director.

(a) The Director of the Office of the Arkansas Lottery shall direct and supervise all administrative and technical activities related to the operation of a lottery in accordance with this chapter and with rules adopted by the Office of the Arkansas Lottery. (b) The director shall: (1) Facilitate the initiation and supervise and administer the operation of the lotteries; (2) Direct personnel as deemed necessary; (3) Employ and compensate persons and firms as deemed necessary; (4) Appoint, select, and employ officers, agents, and employees, including professional and administrative staff and personnel and hearing officers, and fix their compensation and pay their expenses as authorized by Arkansas law; (5) Promote or provide for the promotion of lotteries and any functions related to the operation of a lottery; (6)(A) Prepare a budget of the office with the information and in the form and manner required by the Chief Fiscal Officer of the State. (B) The budget shall be presented to the Legislative Council before each regular session for presession budget meetings with Joint Budget Committee members attending under § 10-3-507; (7) Require bond from retailers and vendors in amounts as required by the office; (8) Report monthly to the office and the Legislative Council a complete statement of lottery revenues and expenses for the preceding month and an accompanying statement of net assets; (9) Annually by November 15, report to the Legislative Council the following: (A) For the immediately preceding fiscal year the total amount of net proceeds from the state lottery; and (B) The office's projection for net proceeds from the state lottery for the current fiscal year; and (10) Perform other duties generally associated with a director of an organization of an entrepreneurial nature. (c) The director may for good cause suspend, revoke, or refuse to renew any contract or license entered into in accordance with this chapter and the rules of the office. (d) The director or his or her designee may conduct hearings and administer oaths to persons to assure the security and integrity of lottery operations or to determine the qualifications of or compliance by vendors and retailers.

Ark. Code Ann. § 23-115-303 Employees — Background investigation.

(a) As required by Arkansas Constitution, Article 16, § 4, the General Assembly shall fix the salaries of all employees of the Office of the Arkansas Lottery, including without limitation the Director of the Office of the Arkansas Lottery. (b) An office employee shall not have a financial interest in a vendor doing business or proposing to do business with the office. (c) An office employee with decisionmaking authority shall not participate in a decision involving a retailer with whom the office employee has a financial interest. (d)(1) An office employee who leaves the employment of the office shall not: (A) Represent a vendor or retailer before the office for a period of two (2) years after leaving the employment of the office; or (B) Engage in lobbying on any matter related to the operation or conduct of a lottery for a period of two (2) years after leaving the employment of the office. (2)(A) Subdivision (d)(1) of this section is supplemental to § 19-64-101 et seq. (B) If any provision of § 19-64-101 et seq. would impose a restriction on a specific employee greater than the restrictions under subdivision (d)(1) of this section, the provision of § 19-64-101 et seq. shall apply. (e)(1) Each person considered for employment by the office shall apply to the Identification Bureau of the Division of Arkansas State Police for a state and federal criminal background check to be conducted by the Identification Bureau of the Division of Arkansas State Police and the Federal Bureau of Investigation. (2) The state and federal criminal background check shall conform to the applicable federal standards and shall include the taking of fingerprints. (3) The applicant shall sign a consent to the release of information for the state and federal criminal background check. (4) The office shall be responsible for the payment of any fee associated with the state and federal criminal background check. (5) Upon completion of the state and federal criminal background check, the Identification Bureau of the Division of Arkansas State Police shall forward to the office all releasable information obtained concerning the applicant. (f) The office shall not employ an individual who has: (1) Been convicted of a felony or a gambling offense in a state or federal court of the United States; (2) Been convicted of a crime involving moral turpitude; or (3) Entered into a plea agreement to avoid felony prosecution. (g)(1) The office shall bond an office employee with access to office funds or lottery revenue in an amount as provided by the office and may bond other office employees as deemed necessary. (2) Bonds under subdivision (g)(1) of this section shall be fidelity bonds in excess of the amount provided by the Governmental Bonding Board.

Ark. Code Ann. § 23-115-304 Office of the Arkansas Lottery employees — Participation in Arkansas Public Employees' Retirement System.

(a) Employees of the Office of the Arkansas Lottery shall be members of the Arkansas Public Employees' Retirement System. (b) An office employee's compensation for retirement purposes includes the base salary of the employee under § 23-115-305 and any special salary allowances under § 23-115-306.

Ark. Code Ann. § 23-115-305 Regular salaries.

There are established for the Office of the Arkansas Lottery the following titles and grades for each position. The salary for the positions assigned to grades shall be determined in accordance with the pay level for the grade assigned in this section, as established in § 21-5-209. LLO13C OAL DIRECTOR 1 EXE02 LLO16C OAL GAMING DIRECTOR 1 EXE01 LLO04P OAL CHIEF FISCAL OFFICER 1 SPC09 LLO05P OAL CHIEF LEGAL COUNSEL 1 SPC09 LLO18P OAL INTERNAL AUDITOR 1 SPC09 LLO12P OAL DIR SECURITY & COMPLIANCE 1 SPC07 LLO24P OAL MARKETING & ADVERTISING DIR 1 SPC07 LLO33P OAL SALES DIRECTOR 1 SPC07 LLO10P OAL CONTROLLER 1 SPC06 LLO38P OAL TREASURER 1 SPC06 LLO34P OAL SECURITY DEPUTY DIR 1 SPC04 LLO01P OAL ACCOUNTANT 1 SPC02 LLO11P OAL DEPUTY IT GAMING DIRECTOR 1 IST10 IIS11P IT SUPERVISOR/EXPERT 1 IST09 LLO37P OAL SR. DATABASE ADMINISTRATOR 1 IST08 IIE02P IT SECURITY ANALYST I 1 IST06 LLO30P OAL QA SYSTEMS ANALYST 1 IST06 LLO02P OAL APPLICATION SUPP SPECIALIST 1 IST05 IUS01P USER SUPPORT ANALYST 1 IST04 LLO09P OAL COMPUTER OPERATOR 2 IST01 LLO20P OAL KEY CHAIN ACCOUNT MANAGER 1 SGS10 LLO28P OAL PRODUCT MANAGER 3 SGS10 LLO32P OAL REGIONAL SALES MANAGER 2 SGS10 LLO14P OAL FINANCIAL ANALYST 1 SGS09 LLO26P OAL OFFICE CAMPAIGN COORDINATOR 2 SGS09 PAS08I EXECUTIVE ASSISTANT 1 SGS07 LLO03P OAL AUDITOR 1 SGS07 LLO17P OAL GRAPHIC SPECIALIST 1 SGS07 PPR02P PROCUREMENT COORDINATOR 1 SGS07 LLO07P OAL CLAIMS CENTER MANAGER 1 SGS06 LLO08P OAL COLLECTIONS SPECIALIST 1 SGS06 LLO36P OAL SENIOR SECURITY SPECIALIST 1 SGS06 CPR07P PUBLIC INFORMATION SPECIALIST 1 SGS06 PAS01P ADMINISTRATIVE ANALYST 1 SGS05 LLO22P OAL LICENSING MANAGER 1 SGS05 LLO25P OAL MARKETING SALES REP 20 SGS05 PAS02P ADMINISTRATIVE COORDINATOR 1 SGS04 LLO15P OAL FISCAL SPECIALIST 1 SGS04 LLO23P OAL LICENSING SPECIALIST 3 SGS04 LLO35P OAL SECURITY SPECIALIST 3 SGS04 LLO06P OAL CLAIMS ASSISTANT 3 SGS03 LLO31P OAL RECEPTIONIST 1 SGS03

Ark. Code Ann. § 23-115-306 Special salary allowances.

(a) With the approval of the Legislative Council or, if the General Assembly is in session, the Joint Budget Committee, the Governor may establish the salary of the Director of the Office of the Arkansas Lottery, the salary of the office's gaming director, and the salary of the office's internal auditor, that is up to fifty percent (50%) above the maximum pay level for the grade assigned to the title. (b) With the approval of the Legislative Council or, if the General Assembly is in session, the Joint Budget Committee, the director may establish salaries that exceed the maximum pay level for the grade assigned to the title by no more than twenty-five percent (25%) for no more than ten percent (10%) of the positions authorized in § 23-115-305. (c) Salaries established under this section above the maximum pay level for the grade assigned to the title shall be approved by the Legislative Council or, if the General Assembly is in session, the Joint Budget Committee. (d)(1) The requirement of approval by the Legislative Council or, if the General Assembly is in session, the Joint Budget Committee, before granting a special salary allowance under this section is not a severable part of this section. (2) If the requirement of approval by the Legislative Council or, if the General Assembly is in session, the Joint Budget Committee, is ruled unconstitutional by a court of competent jurisdiction, this section is void.

Ark. Code Ann. § 23-115-307 Expansion pool.

(a) The Office of the Arkansas Lottery is authorized a pool of ten (10) positions to be used to establish additional positions with the proper title and pay grade if the office does not have sufficient positions available to address growth needs. (b) A position established under this section may exceed the highest salary rate established for the grade in this subchapter. (c) A position shall not be authorized from the expansion pool until the specific position that is requested by the office is reviewed by the Legislative Council or, if the General Assembly is in session, the Joint Budget Committee. (d) When seeking review of a position by the Legislative Council or, if the General Assembly is in session, the Joint Budget Committee, under this section, the office shall provide an organizational chart indicating the current structure of the office and its employees. (e)(1) The requirement of review by the Legislative Council or, if the General Assembly is in session, the Joint Budget Committee, before authorizing a position from the expansion pool is not a severable part of this section. (2) If the requirement of review by the Legislative Council or, if the General Assembly is in session, the Joint Budget Committee, is ruled unconstitutional by a court of competent jurisdiction, this section is void.

Ark. Code Ann. § 23-115-308 Participation in Arkansas Administrative Statewide Information System.

(a) The Office of the Arkansas Lottery may participate in the Arkansas Administrative Statewide Information System. (b) The Department of Finance and Administration shall be reimbursed under § 23-115-201 for services it provides to the office under subsection (a) of this section.

Ark. Code Ann. § 23-115-401 Minority-owned businesses and female-owned businesses.

(a) It is the intent of the General Assembly that the Office of the Arkansas Lottery encourage participation by minority-owned businesses and female-owned businesses in one (1) or more of the lotteries under this chapter. (b) The office shall adopt a plan that encourages to the greatest extent possible a level of participation in the lotteries by minority-owned businesses and female-owned businesses and takes into account the total number of all retailers and vendors that may participate, including any subcontractors. (c) The office shall provide training programs and other educational activities to encourage minority-owned businesses and female-owned businesses to compete for contracts on an equal basis. (d) The office shall employ staff to develop and implement the plans and programs under subsections (b) and (c) of this section and to assist prospective vendors and retailers in entering into and competing for contracts. (e) The office shall monitor the results of minority-owned business and female-owned business participation and shall report the results of minority-owned business and female-owned business participation to the Governor and the Legislative Council on at least an annual basis.

Ark. Code Ann. § 23-115-402 Restriction on sales — Definition.

(a)(1) Unless authorized to do so in writing by the Director of the Office of the Arkansas Lottery, a person shall not sell a ticket or share at a price other than the price established by the Office of the Arkansas Lottery. (2)(A) Only a retailer holding a valid certificate of authority from the office shall sell a ticket. (B) This subsection does not prevent an individual who may lawfully purchase a ticket or share from making a gift of the ticket or share to another individual. (b) This chapter does not prohibit the office from designating certain of its agents and employees to sell or give tickets or shares directly to the public. (c) Subject to prior approval by the office, retailers may give away tickets or shares as a means of promoting goods or services to customers or prospective customers. (d) A retailer shall not sell a ticket or share except from the locations evidenced by the retailer's license issued by the office unless the office authorizes in writing any temporary location not listed in the retailer's license. (e)(1) A ticket or share shall not be sold or given to an individual under eighteen (18) years of age. (2) An individual under eighteen (18) years of age is not eligible to win a lottery prize. (f) An individual is not eligible to win a lottery prize while the individual is incarcerated in: (1) The Division of Correction; (2) The Division of Community Correction; or (3) A county or municipal jail or detention facility. (g)(1) A ticket or share shall not be sold by use of in-store credit, credit cards, charge cards, checks, or any form of deferred payment. (2)(A) A retailer may choose whether to accept as a form of payment: (i) Cash; or (ii) Noncash, noncredit methods of payment, including without limitation debit cards or other electronic transfer of funds of the consumer to the retailer. (B) A retailer that chooses to accept noncash, noncredit methods of payment is responsible for any costs, fees, or charge-backs that may be incurred with the noncash, noncredit transaction. (3) As used in this subsection, “debit card” means any card issued by a financial institution to a consumer for use in initiating an electronic fund transfer from the account of the consumer at the financial institution for the purpose of transferring money between accounts or obtaining money, property, labor, or services.

Ark. Code Ann. § 23-115-403 Attachments, garnishments, or executions withheld from lottery prizes — Validity of tickets or shares — Lottery prize restrictions — Unclaimed lottery prizes.

(a) Proceeds of a lottery prize are subject to Arkansas state income tax. (b)(1) Except as otherwise provided in this chapter, attachments, garnishments, or executions served upon the Office of the Arkansas Lottery that are authorized and issued under Arkansas law shall be honored if timely served upon the office. (2) Subdivision (b)(1) of this section does not apply to a retailer. (c)(1)(A) The office shall adopt rules to establish a system of verifying the validity of tickets or shares claimed to win lottery prizes and to effect payment of lottery prizes. (B) A lottery prize, any portion of a lottery prize, or any right of any individual to a lottery prize is not assignable. (C)(i) A lottery prize or any portion of a lottery prize remaining unpaid at the death of a lottery prize winner shall be paid to the estate of the deceased lottery prize winner or to the trustee of a trust established by the deceased lottery prize winner as settlor if: (a) A copy of the trust document or instrument has been filed with the office along with a notarized letter of direction from the settlor; and (b) A written notice of revocation has not been received by the office before the settlor's death. (ii) Following a settlor's death and before any payment to a successor trustee, the office shall obtain from the trustee a written agreement to indemnify and hold the office harmless with respect to any claims that may be asserted against the office arising from payment to or through the trust. (D) Under an appropriate judicial order, an individual shall be paid the lottery prize to which a winner is entitled. (2) A lottery prize shall not be paid for a claim ticket that is: (A) Stolen, counterfeit, altered, fraudulent, unissued, produced or issued in error, unreadable, not received, or not recorded by the office within applicable deadlines; (B) Lacking in captions that conform and agree with the play symbols as appropriate to the particular lottery involved; or (C) Not in compliance with rules and public or confidential validation and security tests of the office appropriate to the particular lottery involved. (3)(A) A particular lottery prize in any lottery shall not be paid more than one (1) time. (B) If there is a determination that more than one (1) claimant is entitled to a particular lottery prize, the sole remedy of the claimants is the award to each of them of an equal share in the lottery prize. (4)(A) Within one hundred eighty (180) days after the drawing in which a cash lottery prize has been won, a holder of a winning cash ticket or share from an Arkansas lottery or from a multistate or multisovereign lottery shall claim the cash lottery prize. (B)(i) In an Arkansas lottery in which a player may determine instantly if he or she has won or lost, a player who has won shall claim a cash lottery prize within ninety (90) days after the playing of the instant game. (ii) In any multistate or multisovereign lottery in which a player may determine instantly if he or she has won or lost, a player who has won shall claim a cash lottery prize within one hundred eighty (180) days after the playing of the instant game. (C) If a valid claim is not made for a cash lottery prize within the applicable period, the cash lottery prize constitutes an unclaimed lottery prize for purposes of this section. (D) The office at any time may alter the time periods under subdivisions (c)(4)(A) and (B) of this section by rule. (5) If practicable, an auditor chosen by the office shall be present at a draw to determine the winners of a draw game to verify the accuracy of the results. (d)(1) A lottery prize shall not be paid upon a ticket or share purchased or sold in violation of this chapter. (2) A lottery prize described in subdivision (d)(1) of this section is an unclaimed lottery prize for purposes of this section. (e) The office is discharged of all liability upon payment of a lottery prize. (f)(1) The office shall not pay a lottery prize that exceeds the amount of five hundred dollars ($500) to any: (A) Employee of the office; or (B) Member of the immediate family of an employee of the office living in the same household as the employee. (2) If an officer, employee, agent, or subcontractor of a vendor has access to confidential information that may compromise the integrity of a lottery, a ticket or share shall not be purchased by and a lottery prize shall not be paid to: (A) The officer, employee, agent, or subcontractor of the vendor; or (B) A member of the immediate family of the officer, employee, agent, or subcontractor of the vendor. (g)(1) During a fiscal year, the office may expend up to two million five hundred thousand dollars ($2,500,000) of unclaimed lottery prize money for one (1) or more of the following: (A) Increasing the pool from which future lottery prizes are to be awarded; (B) Maintaining online game reserves at a fiscally sound level; or (C) Prize promotion. (2) On the last day of each fiscal year, the office shall deposit into the trust account for net lottery proceeds the amount of unclaimed lottery prize money existing at the end of the fiscal year less one million dollars ($1,000,000). (3) The office shall include in its monthly reports to the Legislative Council the following monthly and year-to-date amounts: (A) Unclaimed lottery prize money; (B) Expenditures from unclaimed lottery prize money; and (C) Deposits to net lottery proceeds from unclaimed lottery prize money.

Ark. Code Ann. § 23-115-404 Confidential information.

(a)(1) Except as otherwise provided in this subsection, the Office of the Arkansas Lottery shall comply with the Freedom of Information Act of 1967, § 25-19-101 et seq. (2) The following records or information shall be treated as confidential and are exempt from public disclosure under the Freedom of Information Act of 1967, § 25-19-101 et seq.: (A) Information pertaining to the security of lottery games and lottery operations, including without limitation: (i) Security measures, systems, or procedures; and (ii) Security reports; and (B) Any records exempt from disclosure under the Freedom of Information Act of 1967, § 25-19-101 et seq. (3)(A) Except as provided under subdivision (a)(3)(B) of this section, if a lottery winner who wins more than five hundred thousand dollars ($500,000) requests that his or her records or information filed with the Office of the Arkansas Lottery remain confidential, the records or information filed with the Office of the Arkansas Lottery shall be treated as confidential and are exempt from public disclosure under the Freedom of Information Act of 1967, § 25-19-101 et seq. (B)(i) However, the records or information of a lottery winner shall remain confidential under subdivision (a)(3)(A) of this section for only six (6) months if the lottery winner is an elected official or an individual who is related in the second degree of consanguinity to an elected official. (ii) As used in subdivision (a)(3)(B)(i) of this section, "elected official" means a person who holds an elected office of a governmental body, whether elected or appointed to the office. (C) Records or information filed with the Office of the Arkansas Lottery and treated as confidential under subdivision (a)(3)(A) of this section shall become public after three (3) years. (b) Arkansas Legislative Audit shall have full access to the records of the office.

Ark. Code Ann. § 23-115-405 Intelligence sharing, reciprocal use, or restricted use agreements.

(a) The Office of the Arkansas Lottery may enter into an intelligence sharing, reciprocal use, or restricted use agreement with the United States Government, law enforcement agencies, lottery regulation agencies, and gaming enforcement agencies of other jurisdictions that provide for and regulate the use of information provided and received under the agreement. (b) Records, documents, and information in the possession of the office received under subsection (a) of this section are exempt from the Freedom of Information Act of 1967, § 25-19-101 et seq., and shall not be released without the permission of the person or agency providing the records, documents, and information.

Ark. Code Ann. § 23-115-406 Authority of local government.

(a)(1) The authority of local government concerning all matters relating to the operation of lotteries is preempted by this chapter. (2) Local government shall not take any action, including without limitation the adoption of an ordinance, relating to the operation of lotteries. (b) This section does not prohibit local government from requiring a retailer to obtain an occupational license for any business unrelated to the sale of tickets or shares.

Ark. Code Ann. § 23-115-407 Video lotteries prohibited.

A video lottery shall not be used as part of a lottery under this chapter.

Ark. Code Ann. § 23-115-408 Video lotteries by institution or facility governed by other wagering laws prohibited.

This chapter does not permit the use of a video lottery for any purposes by any institution or facility governed by the: (1) Arkansas Horse Racing Law, § 23-110-101 et seq.; (2) Arkansas Greyhound Racing Law, § 23-111-101 et seq.; or (3) Local Option Horse Racing and Greyhound Racing Electronic Games of Skill Act, § 23-113-101 et seq.

Ark. Code Ann. § 23-115-409 Laws under other wagering chapters not affected.

This chapter does not alter wagering that may be conducted under the Arkansas Horse Racing Law, § 23-110-101 et seq., the Arkansas Greyhound Racing Law, § 23-111-101 et seq., or the Local Option Horse Racing and Greyhound Racing Electronic Games of Skill Act, § 23-113-101 et seq.

Ark. Code Ann. § 23-115-411 Multidraw screen-based lottery game prohibited.

(a)(1) A multidraw screen-based lottery game shall not be used as part of a lottery under this chapter except as provided under subdivision (a)(2) of this section. (2) All lottery games operated by the Office of the Arkansas Lottery on or before June 29, 2014, are permitted and may continue as a part of the Arkansas Scholarship Lottery. (b) The prohibition of multidraw screen-based lottery games shall expire on March 13, 2015.

Ark. Code Ann. § 23-115-501 Vendors — Requirements when submitting bid, proposal, or offer — Major procurement contract.

(a) The Office of the Arkansas Lottery shall investigate the financial responsibility, security, and integrity of a vendor who is a finalist in submitting a bid, proposal, or offer to perform a major procurement contract. (b) At the time of submitting a bid, proposal, or offer to the office, a vendor shall include: (1) A disclosure of the vendor's name and address and, as applicable, the names and addresses of the following: (A)(i) If the vendor is a corporation, the officers, directors, and each stockholder holding more than a ten percent (10%) interest in the corporation. (ii) However, in the case of owners of equity securities of a publicly traded corporation, only the names and addresses of those known to the corporation to own beneficially five percent (5%) or more of the securities need be disclosed; (B) If the vendor is a trust, the trustee and all persons entitled to receive income or benefits from the trust; (C) If the vendor is an association, the members, officers, and directors; and (D) If the vendor is a partnership or joint venture, all of the general partners, limited partners, or joint venturers; (2) A disclosure of all the states and jurisdictions in which the vendor does business and the nature of the business for each state or jurisdiction; (3) A disclosure of all the states and jurisdictions in which the vendor has contracts to supply gaming goods or services, including without limitation lottery goods and services, and the nature of the goods or services involved for each state or jurisdiction; (4)(A) A disclosure of all the states and jurisdictions in which the vendor has applied for, has sought renewal of, has received, has been denied, has pending, or has had revoked a lottery or gaming license of any kind or had fines or penalties assessed to the vendor's license, contract, or operation and the disposition of each instance in each state or jurisdiction. (B) If a lottery or gaming license or contract has been revoked or has not been renewed or any lottery or gaming license or application has been either denied or is pending and has remained pending for more than six (6) months, all of the facts and circumstances underlying the failure to receive a license shall be disclosed; (5)(A) A disclosure of the details of a finding or plea, conviction, or adjudication of guilt in a state, federal, foreign, or international court or tribunal for a criminal offense other than a traffic violation committed by the vendor or a person identified under subdivision (b)(1) of this section. (B)(i) The office may request that any or all of the persons identified under subdivision (b)(1) of this section undergo a state and federal criminal background check. (ii) If requested, a state and federal criminal background check shall be conducted under § 23-115-601(e); (6) A disclosure of the details of a vendor's: (A) Bankruptcy, insolvency, or reorganization; (B) Corporate or individual purchase or takeover of another corporation, including without limitation the assumption of bonded indebtedness or other debts or liabilities; and (C) Pending litigation; (7) The vendor's most recent financial statement, the most recent audit report of the vendor's operations, and a disclosure of the vendor's internal financial controls and procedures for financial reporting; and (8) Additional disclosures and information that the office determines is appropriate for the major procurement contract involved. (c) If any portion of a vendor's contract is subcontracted, the vendor shall disclose all of the information required by this section for the subcontractor as if the subcontractor were itself a vendor. (d)(1) The office shall not enter into a major procurement contract with a vendor that: (A) Has not complied with the disclosure requirements of this section; (B) Has been found guilty of a felony related to the security or integrity of a lottery in this or any other jurisdiction; or (C) Has an ownership interest in an entity that has supplied lottery goods or services under contract to the office regarding the request for proposals pertaining to those particular goods or services. (2) The office may terminate a major procurement contract with a vendor that does not comply with requirements for periodically updating disclosures during the term of a major procurement contract as specified in the major procurement contract. (3) This section shall be construed broadly and liberally to achieve full disclosure of all information necessary to allow for a full and complete evaluation by the office of the competence, integrity, background, and character of a vendor for a major procurement contract. (e)(1) A vendor who provides or proposes to provide goods or services under a major procurement contract shall not provide a gift or compensation to: (A) The Director of the Office of the Arkansas Lottery, an employee of the office, the Secretary of the Department of Finance and Administration, the Deputy Director of the Department of Finance and Administration, or a member of the Legislative Council; or (B) A member of the immediate family of the Director of the Office of the Arkansas Lottery, an employee of the office, the secretary, the Deputy Director of the Department of Finance and Administration, or a member of the Legislative Council. (2)(A) A person who knowingly violates subdivision (e)(1) of this section shall be guilty of a Class A misdemeanor. (B) The Arkansas Ethics Commission may investigate and enforce alleged violations of subdivision (e)(1) of this section under the authority granted by §§ 7-6-217 and 7-6-218. (f)(1) A public official, the secretary, and the Deputy Director of the Department of Finance and Administration shall not knowingly own a financial interest in a vendor. (2)(A) If a public official, the secretary, or the Deputy Director of the Department of Finance and Administration becomes aware that he or she owns a financial interest in a vendor, the public official, the secretary, or the Deputy Director of the Department of Finance and Administration shall divest the financial interest as soon as possible. (B) A public official, the secretary, or the Deputy Director of the Department of Finance and Administration shall not divest the financial interest to a member of his or her immediate family.

Ark. Code Ann. § 23-115-502 Vendor — Performance bond or letter of credit.

(a)(1) At the time of execution of a major procurement contract between the Office of the Arkansas Lottery and a vendor, the vendor shall post a performance bond or letter of credit from a bank or credit provider acceptable to the office in an amount deemed necessary by the office to assure the performance of the major procurement contract. (2) In lieu of the bond, the vendor may deposit and maintain with the office securities acceptable to the office that are: (A) Interest bearing or accruing; and (B) Rated in one (1) of the three (3) highest classifications by an established, nationally recognized investment rating service. (3) Securities eligible under this section are limited to: (A) Certificates of deposit in an amount fully insured by the Federal Deposit Insurance Corporation issued by solvent banks or savings associations, if the solvent banks or savings associations are: (i) Approved by the office; and (ii) Organized and existing under the laws of this state or under the laws of the United States; (B) United States Government bonds, notes, and bills for which the full faith and credit of the United States Government is pledged for the payment of principal and interest; (C) Federal agency securities by an agency or instrumentality of the United States Government; and (D)(i) Corporate bonds approved by the office. (ii) The entity that issued the bonds shall not be an affiliate or subsidiary of the depositor. (4) The securities shall be held in trust and shall at all times be in an amount as deemed necessary by the office for the major procurement contract. (b)(1) Each vendor shall be qualified to do business in this state and shall file appropriate tax returns as provided by the laws of this state. (2) A major procurement contract under this section shall be governed by the laws of this state except as provided in this chapter.

Ark. Code Ann. § 23-115-503 Cancellation, suspension, revocation, or termination of major procurement contract.

(a) A major procurement contract executed by the Office of the Arkansas Lottery under this chapter shall specify the reasons for which the major procurement contract may be canceled, suspended, revoked, or terminated by the office. The reasons shall include without limitation: (1) Commission of a violation of this chapter or a rule of the office; (2) Commission of any fraud, deceit, or misrepresentation; (3) Conduct prejudicial to public confidence in a lottery; (4) The vendor's filing for or being placed in bankruptcy or receivership; or (5) Any material change as determined in the sole discretion of the office in any matter considered by the office in entering into the major procurement contract with the vendor. (b)(1) If the Director of the Office of the Arkansas Lottery or his or her designee determines that cancellation, denial, revocation, suspension, or the failure to renew a major procurement contract is in the best interest of the Arkansas Scholarship Lottery, the public welfare, or the State of Arkansas, the director or his or her designee may: (A) Subject to notice and a right to a hearing, cancel, suspend, revoke, or terminate a major procurement contract issued under this chapter; or (B) Fail to renew a major procurement contract issued under this chapter. (2) The major procurement contract may be temporarily suspended by the director or his or her designee without prior notice pending a hearing. (3) A major procurement contract may be suspended, revoked, or terminated by the director or his or her designee for any one (1) or more of the reasons enumerated in this section. (c) Hearings under this section shall be held in accordance with the Arkansas Administrative Procedure Act, § 25-15-201 et seq.

Ark. Code Ann. § 23-115-504 Political contributions by vendors — Legislative findings.

(a) The General Assembly finds: (1) That the integrity of the Office of the Arkansas Lottery and the Arkansas Scholarship Lottery is of utmost importance; and (2) That the people of the State of Arkansas should have confidence and be assured that public officials are free of any improper political influence by vendors. (b) A vendor awarded a major procurement contract for lottery equipment or tickets or an officer, employee, or agent of a vendor awarded a major procurement contract for lottery equipment or tickets shall not make a political contribution to a public official or a candidate for election as a public official. (c) A vendor proposing to provide goods or services under a major procurement contract or an officer, employee, or agent of a vendor proposing to provide goods or services under a major procurement contract shall not make or promise to make a political contribution or future political contribution to a public official or a candidate for election as a public official while the award of the major procurement contract is pending.

Ark. Code Ann. § 23-115-601 Retailers.

(a) The General Assembly recognizes that to conduct a successful lottery, the Office of the Arkansas Lottery must develop and maintain a statewide network of retailers that will serve the public convenience and promote the sale of tickets or shares and the playing of lotteries while ensuring the integrity of lottery operations, games, and activities. (b) The office shall make every effort to provide small retailers a chance to participate in the sales of tickets or shares. (c) The office shall provide for compensation to retailers in the form of commissions in an amount of not less than five percent (5%) of gross sales of tickets and shares and may provide for other forms of compensation for services rendered in the sale or cashing of tickets or shares. (d)(1) For purposes of display, the office shall issue a license to each person that it licenses as a retailer. (2)(A) A retailer shall post its license and keep the license conspicuously displayed in a location on the premises accessible to the public. (B) A license is not assignable or transferable. (e)(1) A person seeking to be a retailer shall apply to the Identification Bureau of the Division of Arkansas State Police for a state and federal criminal background check, to be conducted by the bureau and the Federal Bureau of Investigation. (2) The state and federal criminal background check shall conform to applicable federal standards and shall include the taking of fingerprints. (3) The applicant shall sign a consent to the release of information for the state and federal criminal background check. (4) The office shall be responsible for the payment of any fee associated with the state and federal criminal background check. (5) Upon completion of the state and federal criminal background check, the bureau shall forward to the office all releasable information obtained concerning the applicant. (f)(1) The office shall develop a list of objective criteria upon which the qualification of retailers shall be based. (2) The office shall develop separate criteria to govern the selection of retailers of instant tickets. (3) In developing the criteria, the office shall consider certain factors, including without limitation: (A) The applicant's financial responsibility; (B) Security of the applicant's place of business or activity; (C) Accessibility to the public; (D) The applicant's integrity; and (E) The applicant's reputation. (g) The office shall not consider political affiliation, activities, or monetary contributions to political organizations or candidates for any public office. (h) The office shall not select a person to be a retailer that: (1)(A) Is not current in filing all applicable tax returns to the State of Arkansas and in payment of all taxes, interest, and penalties owed to the State of Arkansas, excluding items under formal appeal under applicable statutes. (B) The Department of Finance and Administration shall provide to the office the information required to verify compliance with subdivision (h)(1)(A) of this section; (2) Has been convicted of a criminal offense related to the security or integrity of a lottery in this or any other jurisdiction; (3)(A) Has been convicted of any illegal gambling activity, false statements, false swearing, or perjury in this or any other jurisdiction or convicted of any crime punishable by more than one (1) year of imprisonment or a fine of more than one thousand dollars ($1,000), or both. (B) Subdivision (h)(3)(A) of this section shall not apply if the person's civil rights have been restored and at least five (5) years have elapsed from the date of the completion of the sentence without a subsequent conviction of a crime described in subdivision (h)(3)(A) of this section; (4) Has been found to have violated this chapter or any rule, policy, or procedure of the office unless: (A) Ten (10) years have passed since the violation; or (B) The office finds the violation both minor and unintentional in nature; (5) Is a vendor or an employee or agent of a vendor doing business with the office; (6) Is an employee of the office or a member of the immediate family of an employee of the office; (7) Has made a statement of material fact to the office knowing the statement to be false; or (8)(A) Is engaged exclusively in the business of selling tickets or shares. (B) Subdivision (h)(8)(A) of this section does not preclude the office from selling or giving away tickets or shares for promotional purposes. (i)(1) A person applying to become a retailer shall be charged a uniform application fee determined by rule for each lottery outlet. (2) A retailer license may be renewable annually in the discretion of the office unless canceled or terminated by the office. (3) The office may establish by rule a reasonable fee for the issuance, reissuance, fine, or penalty associated with the process, procedures, or enforcement necessary to issue or maintain a retailer license, including without limitation to cover the cost of: (A) An initial and any subsequent state and federal criminal background check under this subchapter; and (B) The reporting, communications technology, and banking processes necessary to implement and enforce this subchapter. (j)(1) A retailer or an applicant to be a retailer shall not provide a gift or compensation to: (A) The Director of the Office of the Arkansas Lottery, an employee of the office, the Secretary of the Department of Finance and Administration, or the Deputy Director of the Department of Finance and Administration; or (B) A member of the immediate family of the Director of the Office of the Arkansas Lottery, an employee of the office, the secretary, or the Deputy Director of the Department of Finance and Administration. (2)(A) A person who knowingly violates subdivision (j)(1) of this section shall be guilty of a Class A misdemeanor. (B) The Arkansas Ethics Commission shall have the authority to investigate and enforce alleged violations of subdivision (j)(1) of this section granted by §§ 7-6-217 and 7-6-218.

Ark. Code Ann. § 23-115-602 Retailer license.

(a) A retailer license is not transferable or assignable. (b) A retailer shall not contract with any person for lottery goods or services except with the approval of the Office of the Arkansas Lottery. (c) Tickets and shares shall be sold only by the retailer stated on the retailer's license issued by the office under this chapter.

Ark. Code Ann. § 23-115-603 Bond account for deposit of bond fees — Reserve account to cover losses — Retailer bond.

(a)(1) The Office of the Arkansas Lottery shall require a retailer to post a bond in a sufficient amount as determined by the office. (2) The amount of the bond under subdivision (a)(1) of this section shall not exceed two hundred dollars ($200). (3) The office shall establish a separate account into which bond fees shall be deposited. (4) Moneys deposited into the bond account may be: (A) Invested or deposited into one (1) or more interest-bearing accounts; (B) Used to cover losses the office experiences due to nonfeasance, misfeasance, or malfeasance of a retailer; and (C) Used to purchase blanket bonds covering the office against losses from all retailers. (5) At the end of each fiscal year, the office shall pay to the trust account managed and maintained by the Division of Higher Education any amount in the bond account established under subdivision (a)(3) of this section that exceeds five hundred thousand dollars ($500,000), and the funds shall be considered net proceeds from a lottery. (b)(1) A reserve account may be established as a general operating expense to cover amounts deemed uncollectible. (2) The office shall establish procedures for minimizing any losses that may be deemed uncollectible and shall exercise and exhaust all available options in those procedures before writing off amounts to the reserve account that may be established under subdivision (b)(1) of this section.

Ark. Code Ann. § 23-115-604 Cancellation, suspension, revocation, or termination of retailer license.

(a) A retailer license executed by the Office of the Arkansas Lottery under this chapter shall specify the reasons for which the retailer license may be canceled, suspended, revoked, or terminated by the office. The reasons shall include without limitation: (1) Commission of a violation of this chapter or a rule of the office; (2) Failure to accurately or timely account for tickets, lottery games, revenues, or prizes as required by the office; (3) Commission of any fraud, deceit, or misrepresentation; (4) Insufficient sales; (5) Conduct prejudicial to public confidence in a lottery; (6) The retailer's filing for or being placed in bankruptcy or receivership; (7) Any material change as determined in the sole discretion of the office in any matter considered by the office in granting the license of the retailer; or (8) Failure to meet any of the objective criteria established by the office under this chapter. (b)(1) If the Director of the Office of the Arkansas Lottery or his or her designee determines that cancellation, denial, revocation, suspension, or the failure to renew a retailer license is in the best interest of the Arkansas Scholarship Lottery, the public welfare, or the State of Arkansas, the director or his or her designee may: (A) Subject to notice and a right to a hearing, cancel, suspend, revoke, or terminate a retailer license issued under this chapter; or (B) Fail to renew a retailer license issued under this chapter. (2) The retailer license may be temporarily suspended by the director or his or her designee without prior notice pending a hearing. (3) A retailer license may be suspended, revoked, or terminated by the director or his or her designee for any one (1) or more of the reasons enumerated in subsection (a) of this section. (4) Hearings under this subsection shall be held in accordance with the Arkansas Administrative Procedure Act, § 25-15-201 et seq.

Ark. Code Ann. § 23-115-605 Retailers — Fiduciary duty — Protection against loss.

(a)(1) Proceeds from the sale of tickets or shares shall be held in trust until paid to the Office of the Arkansas Lottery either directly or through the office's authorized collection representative. (2) A retailer and officers of a retailer's business have a fiduciary duty to preserve and account for retail lottery proceeds, and retailers are personally liable for all lottery proceeds. (3) For the purpose of this section, lottery proceeds include without limitation: (A) Unsold instant tickets received by a retailer; (B) Cash proceeds of the sale of lottery products; (C) Net of allowable sales commissions; and (D) Credit for lottery prizes paid to winners by retailers. (4) Sales proceeds and unused instant tickets shall be delivered to the office or its authorized collection representative upon demand. (b)(1) The office shall require retailers to place all lottery proceeds due the office in accounts in institutions insured by the Federal Deposit Insurance Corporation not later than the close of the next banking day after the date of their collection by the retailer until the date they are paid to the office. (2) At the time of the deposit, lottery proceeds shall be deemed to be the property of the office. (3) The office may require a retailer to establish a single separate electronic funds transfer account when available for the purpose of: (A) Receiving moneys from ticket or share sales; (B) Making payments to the office; and (C) Receiving payments for the office. (4) Unless authorized in writing by the office, each retailer shall establish a separate bank account for lottery proceeds that shall be kept separate and apart from all other funds and assets and shall not be commingled with any other funds or assets. (c) When an individual who receives proceeds from the sale of tickets or shares in the capacity of a retailer becomes insolvent or dies insolvent, the proceeds due the office from the individual or his or her estate have preference over all debts or demands. (d) If the office determines that a retailer failed to comply with subsection (b) of this section three (3) times within any consecutive twenty-four-month period, the office may pursue business closure against the retailer under this subchapter.

Ark. Code Ann. § 23-115-606 Retailer — Rental payments based on percentage of retail sales.

If a retailer's rental payments for the business premises are contractually computed, in whole or in part, on the basis of a percentage of retail sales and the computation of retail sales is not explicitly defined to include sales of tickets or shares, only the compensation received by the retailer from the Office of the Arkansas Lottery may be considered the amount of the lottery retail sale for purposes of computing the rental payment.

Ark. Code Ann. § 23-115-607 Business closure authority — Notice.

(a) In addition to all other remedies provided by law for failure to remit lottery proceeds due the Office of the Arkansas Lottery, the Director of the Office of the Arkansas Lottery may close the business of a retailer if the retailer fails to comply with § 23-115-605(b) three (3) times within any consecutive twenty-four-month period. (b)(1) The director shall give notice to the retailer that the third delinquency in complying with § 23-115-605(b) in any consecutive twenty-four-month period may result in the closure of the business. (2) The notice shall be in writing and delivered to the retailer by: (A) The United States Postal Service; or (B) Hand delivery. (c)(1) If the retailer has a third delinquency in complying with § 23-115-605(b) in any consecutive twenty-four-month period after the issuance of the notice provided in subsection (b) of this section and the director chooses to close the business, the director shall notify the retailer by certified mail or by hand delivery that the business will be closed within five (5) business days from the date of receipt of the notice unless the retailer avoids closure of the business under subsection (d) of this section. (2) If the fifth day falls on a Saturday, Sunday, or legal holiday, the performance of an act to avoid closure of the business under subsection (d) of this section is timely when performed on the next succeeding business day that is not a Saturday, Sunday, or legal holiday. (d) A retailer may avoid closure of the business by: (1) Remitting the delinquent lottery proceeds; or (2) Entering into a written payment agreement approved by the director to satisfy the lottery proceeds delinquency.

Ark. Code Ann. § 23-115-608 Administrative hearing.

(a) A retailer may request an administrative hearing concerning the decision of the Director of the Office of the Arkansas Lottery to close the retailer's business. (b) Within five (5) business days after the delivery or attempted delivery of the notice required by § 23-115-607(c), the retailer may file a written protest, signed by the retailer or his or her authorized agent, with the director stating the reasons for opposing the closure of the business and requesting an administrative hearing. (c)(1) A retailer may request that an administrative hearing be held: (A) In person; (B) By telephone; (C) Upon written documents furnished by the retailer; or (D) Upon written documents and any evidence to be produced by the retailer at an administrative hearing. (2) The director may determine whether an administrative hearing at which testimony is to be presented will be conducted in person or by telephone. (3) A retailer who requests an administrative hearing based upon written documents is not entitled to any other administrative hearing before the rendering of the administrative decision. (d) The administrative hearing shall be conducted by a hearing officer appointed by the director. (e)(1) The hearing officer shall: (A) Set the time and place for a hearing; and (B) Give the retailer notice of the hearing. (2) At the administrative hearing, the retailer may: (A) Be represented by an authorized representative; and (B) Present evidence in support of his or her position. (f) The administrative hearing shall be held within fourteen (14) calendar days of receipt by the director of the request for hearing. (g) The administrative hearing and determinations made by the hearing officer under this subchapter are subject to the Arkansas Administrative Procedure Act, § 25-15-201 et seq. (h) The defense or defenses to the closure of a business under this subchapter are: (1) Written proof that the retailer remitted the delinquent lottery proceeds due; or (2) That the retailer has entered into a written payment agreement, approved by the director, to satisfy the lottery proceeds delinquency. (i) The decision of the hearing officer shall be in writing with copies delivered to the retailer and the director by the United States Postal Service or by hand delivery.

Ark. Code Ann. § 23-115-609 Judicial relief.

(a)(1) If the decision of the hearing officer under § 23-115-608 is to affirm the closure of the business, the decision shall be submitted in writing and delivered by the United States Postal Service or by hand to the retailer. (2) The retailer may seek judicial relief from the decision by filing suit within twenty (20) calendar days of the date of the decision. (b)(1) Jurisdiction for a suit under this section to contest a determination of the Director of the Office of the Arkansas Lottery shall be in Pulaski County Circuit Court, where the matter shall be tried de novo. (2)(A) If the circuit court finds that the business closure order was appropriately issued by the director, the circuit court shall issue an injunction against the retailer prohibiting the further operation of the business. (B) If a business subject to an injunction issued by the circuit court as provided in this subchapter continues in operation, upon conviction, any person responsible for the decision to operate the business after the issuance of the injunction shall be guilty of a Class A misdemeanor. (3) An appeal may be made from the circuit court to the appropriate appellate court, as provided by law. (c) The procedures established by § 23-115-608 and this section are the sole methods for seeking relief from a written decision to close the business of a retailer for failure to comply with § 23-115-605(b). (d) The decision to close the business of a retailer shall be final: (1) If the retailer fails to: (A) Request an administrative hearing under § 23-115-608; or (B) Seek judicial relief under this section; or (2) Upon the final decision of the circuit court or an appellate court. (e)(1) It is unlawful for a business to continue in operation after a business closure order is issued that is: (A) Upheld on appeal under this subchapter; or (B) Not appealed by the retailer under this subchapter. (2) Upon conviction, any person responsible for the decision to operate the business in violation of this subchapter shall be guilty of a Class A misdemeanor.

Ark. Code Ann. § 23-115-610 Business closure procedure.

(a) If a retailer fails to timely seek administrative or judicial review of a business closure decision or if the business closure decision is affirmed after administrative or judicial review, the Director of the Office of the Arkansas Lottery shall direct the Department of Finance and Administration to affix a written notice to all entrances of the business that: (1) Identifies the business as being subject to a business closure order; and (2) States that the business is prohibited from further operation. (b) The director may also direct that the business be locked or otherwise secured so that it may not be operated. (c) The Secretary of the Department of Finance and Administration may request the assistance of the Division of Arkansas State Police or any state or local law enforcement official to post the notice or to secure the business as authorized in this section. (d) The Office of the Arkansas Lottery may reimburse the department for the costs of administering this section after review of the amount by the Legislative Council.

Ark. Code Ann. § 23-115-611 Revocation and suspension of business license.

(a) The closure of a business under this subchapter shall be grounds for cancellation, suspension, revocation, or termination of a retailer license under § 23-115-604. (b) The closure of a business under this subchapter shall be grounds for the suspension or revocation of any business license granted under the laws of the State of Arkansas, excluding professional licenses. (c) After the decision to close the retailer's business becomes final, the Director of the Office of the Arkansas Lottery shall contact the appropriate administrative body responsible for granting licenses to operate the business and report the closure of the business.

Ark. Code Ann. § 23-115-612 Authority to promulgate rules.

The Office of the Arkansas Lottery may promulgate rules necessary for the implementation and enforcement of this subchapter.

Ark. Code Ann. § 23-115-701 Procurements — Major procurement contracts — Competitive bidding.

(a)(1) The Office of the Arkansas Lottery may purchase, lease, or lease-purchase goods or services as necessary for effectuating the purposes of this chapter. (2) The office may make procurements that integrate functions, including without limitation: (A) Lottery design; (B) Ticket distribution to retailers; (C) Supply of goods and services; and (D) Advertising. (3) In all procurement decisions, the office shall: (A) Take into account the particularly sensitive nature of lotteries; and (B) Act to promote and ensure: (i) Security, honesty, fairness, and integrity in the operation and administration of lotteries; and (ii) The objectives of raising net proceeds for the benefit of scholarships and grants. (b) Except as provided in subsections (c) and (d) of this section, the office shall comply with the Arkansas Procurement Law, § 19-61-101 et seq. (c)(1) The office shall adopt rules concerning the procurement process for major procurement contracts. (2) The office shall arrange for the solicitation and receipt of competitive bids for major procurement contracts. (3) Except for printing, stationery, and supplies under Arkansas Constitution, Amendment 54, the office is not required to accept the lowest responsible bid for major procurement contracts but shall select a bid that provides the greatest long-term benefit to the state, the greatest integrity for the office, and the best service and products for the public. (d) In any bidding process, the office may administer its own bidding and procurement or may utilize the services of the Department of Finance and Administration. (e)(1) Each proposed major procurement contract and each amendment or modification to a proposed or executed major procurement contract shall be filed with the Legislative Council for review at least thirty (30) days before the execution date of the major procurement contract or the amendment or modification to a proposed or executed major procurement contract. (2) The Legislative Council, or if the General Assembly is in session, the Joint Budget Committee, shall provide the office with its review as to the propriety of the major procurement contract and each amendment or modification to a proposed or executed major procurement contract within thirty (30) days after receipt of the proposed major procurement contract or the amendment or modification to a proposed or executed major procurement contract.

Ark. Code Ann. § 23-115-803 Disposition of funds — Definition.

(a)(1) To effectuate the purposes of the Office of the Arkansas Lottery, the office may borrow moneys from the State of Arkansas or accept and expend moneys from the State of Arkansas and shall repay any sums borrowed from the state as soon as practicable. (2) As used in this section, “purposes” includes without limitation the payment of the initial expenses of initiation, administration, and operation of the office and lotteries. (3) The office shall not issue bonds for any purpose. (b)(1) The office shall be self-sustaining and self-funded. (2)(A) Except as provided in subsection (a) of this section, moneys in the General Revenue Fund Account of the State Apportionment Fund shall not be used or obligated to pay the expenses of the office or prizes of a lottery. (B) A claim for the payment of an expense of a lottery or prizes of a lottery shall not be made against any moneys other than moneys credited to the office's operating account.

Ark. Code Ann. § 23-115-901 Sale of ticket or share to person under 18 years of age prohibited — Penalty.

(a) A retailer who knowingly sells a ticket or share to a person under eighteen (18) years of age or permits a person under eighteen (18) years of age to play a lottery is guilty of a violation and subject to the following penalties: (1) A fine not to exceed two hundred fifty dollars ($250) for a first violation; (2) For a second violation within a forty-eight-month period: (A) A fine not to exceed five hundred dollars ($500); and (B) Suspension of the retailer license issued under § 23-115-601 et seq. for a period not to exceed two (2) days; (3) For a third violation within a forty-eight-month period: (A) A fine not to exceed one thousand dollars ($1,000); and (B) Suspension of the retailer license issued under § 23-115-601 et seq. for a period not to exceed seven (7) days; (4) For a fourth or subsequent violation within a forty-eight-month period: (A) A fine not to exceed two thousand dollars ($2,000); and (B) Suspension of the retailer license issued under § 23-115-601 et seq. for a period not to exceed fourteen (14) days; and (5) For a fifth or subsequent violation within a forty-eight-month period, the retailer license issued under § 23-115-601 et seq. may be revoked. (b) An employee of a retailer who violates this section is subject to a fine not to exceed one hundred dollars ($100) per violation. (c) It is an affirmative defense to a prosecution under this section that the retailer reasonably and in good faith relied upon representation of proof of age in making the sale. (d) A person convicted of violating any provision of this section whose retailer license is suspended or revoked upon conviction shall surrender to the court his or her retailer license, and the court shall transmit the retailer license to the Office of the Arkansas Lottery and instruct the office: (1) To suspend or revoke the person's retailer license or to not renew the license; and (2) Not to issue any new retailer license to that person for the period of time determined by the court in accordance with this section.

Ark. Code Ann. § 23-115-902 Fraud — Penalty.

The offense of lottery fraud and penalties for a conviction of lottery fraud are provided under § 5-55-501 .

Ark. Code Ann. § 23-115-903 False statement on license application — Penalty.

(a) A person shall not knowingly make: (1) A material false statement in an application for a license or proposal to conduct a lottery; or (2) A material false entry in any book or record that is compiled, maintained, or submitted to or for the benefit of the Office of the Arkansas Lottery. (b)(1) A person who violates this section is guilty of a Class D felony. (2) A person convicted for violating subsection (a) of this section is subject to an additional fine of not more than twenty-five thousand dollars ($25,000) or the dollar amount of the material false entry or material false statement, whichever is greater.

Ark. Code Ann. § 23-115-904 Inconsistent statutes inapplicable.

(a) Section 5-66-101 et seq. and all other laws and parts of laws inconsistent with this chapter are expressly declared not to apply to any person engaged in, conducting, or otherwise participating in lotteries. (b) A person is not guilty of any criminal offense set forth in § 5-66-101 et seq. or any other law relating to illegal gambling to the extent the person relied on any rule, order, finding, or other determination by the Arkansas Lottery Commission [abolished] or the Office of the Arkansas Lottery that the activity was authorized by this chapter during the time that the rule, order, finding, or other determination was in effect.

Ark. Code Ann. § 23-115-1001 Legislative intent.

(a) The purposes of this subchapter are to establish: (1) A policy and to provide a system whereby all claimant agencies of this state in conjunction with the Office of the Arkansas Lottery shall cooperate in identifying debtors who owe money to the state through its various claimant agencies or to persons on whose behalf the state and its claimant agencies act and who qualify for lottery prizes under this chapter from the office; and (2) Procedures for setting off against any prize the sum of any debt owed to the state or to persons on whose behalf the state and its claimant agencies act. (b) This subchapter shall be liberally construed to effectuate the purposes stated in subsection (a) of this section.

Ark. Code Ann. § 23-115-1002 Definitions.

As used in this subchapter: (1) “Claimant agency” means a state agency, department, board, bureau, commission, or authority: (A) To which a person owes a debt; or (B) That acts on behalf of a person to collect a debt; (2) “Debt” means a: (A) Liquidated sum due and owing any claimant agency when the sum has accrued through contract, subrogation, tort, or operation of law regardless of whether there is an outstanding judgment for the sum; or (B) Sum that is due and owing any person and is enforceable by the state; (3) “Debtor” means an individual owing money to or having a delinquent account with a claimant agency when the obligation has not been: (A) Adjudicated as satisfied by court order; (B) Set aside by court order; or (C) Discharged in bankruptcy; and (4) “Prize” means the proceeds of any lottery prize awarded under this chapter.

Ark. Code Ann. § 23-115-1003 Collection remedy not exclusive.

The collection remedy authorized by this subchapter is in addition to and not in substitution for any other remedy available by law.

Ark. Code Ann. § 23-115-1004 List of debtors — Withholding winnings — Ranking of liens.

(a)(1) A claimant agency may submit to the Office of the Arkansas Lottery a list of the names of all debtors owing in excess of one hundred dollars ($100) to the claimant agency or to persons on whose behalf the claimant agency is acting. (2) The full amount of the debt is collectible from any prize without regard to limitations on the amounts that may be collectible in increments through garnishment or other proceedings. (3) The list shall constitute a valid lien upon and claim of lien against the prize of any debtor named in the list. (4) The list shall contain: (A) The name of each debtor; (B) The Social Security number of each debtor if available; and (C) Any other information that would assist the office in identifying each debtor named in the list. (b)(1) The office shall withhold any prizes subject to the lien created by this section and send notice to the winner by certified mail, return receipt requested, of the action and the reason the prizes were withheld. (2)(A) However, if the winner appears and claims prizes in person, the office shall notify the winner at that time by hand delivery of the action. (B) If the debtor does not protest the withholding of the prizes in writing within thirty (30) days of receipt of the notice, the office shall pay the prizes subject to the lien to the claimant agency. (C) If the debtor protests the withholding of the prizes subject to the lien within thirty (30) days of receipt of the notice, the office shall: (i) File an action in interpleader in the circuit court of the county where the debtor resides; (ii) Pay the disputed sum into the registry of the circuit court; and (iii) Give notice to the claimant agency and debtor of the initiation of the action. (c) The liens created by this section are ranked by priority as follows: (1) Taxes due the state; (2) Delinquent child support; (3) Overpayment of unemployment insurance benefits; and (4) All other judgments and liens in order of the date entered or perfected. (d) The office is not required to deduct claimed debts from prizes paid out by retailers or entities other than the office. (e) Any list of debt provided under this section shall be provided periodically as the office shall provide by rule, and the office is not obligated to retain the lists or deduct debts appearing on the lists beyond the period determined by the rules. (f) The office may prescribe forms and promulgate rules it deems necessary to implement this section. (g) The office and any claimant agency shall incur no civil or criminal liability for good faith adherence to this section. (h) The claimant agency shall pay the office for all costs incurred by the office in setting off debts in the manner provided in this subchapter.

Ark. Code Ann. § 23-115-1005 Confidential information.

(a)(1) Notwithstanding any other confidentiality statute, the Office of the Arkansas Lottery may provide to a claimant agency all information necessary to accomplish and effectuate the intent of this subchapter. (2) Information shall be used by a claimant agency only in the pursuit of its debt collection duties and practices. (b) Confidential information obtained by a claimant agency from the office under this section shall retain its confidentiality. (c) An employee or prior employee of a claimant agency who unlawfully discloses any information for any other purpose, except as otherwise specifically authorized by law, is guilty of a Class A misdemeanor.

Ark. Code Ann. § 23-115-1006 Applicability.

This subchapter only applies to prizes of more than five hundred dollars ($500).

Ark. Code Ann. § 23-115-1101 Duties of Legislative Council.

(a) The Legislative Council shall: (1) Review whether expenditures of lottery proceeds have been in accordance with this chapter; (2) Review and approve proposed rules of the Office of the Arkansas Lottery under § 10-3-309; (3)(A) Review proposed contracts of twenty-five thousand dollars ($25,000) or more before the execution of the contracts. (B) The office shall provide a list of all contracts less than twenty-five thousand dollars ($25,000) to the Legislative Council on a monthly basis; (4) Review reports filed with the Legislative Council by the Division of Higher Education, including without limitation reports filed under §§ 6-85-205 and 6-85-220; (5) Perform its duties under § 6-85-220; and (6) Study other lottery matters as the Legislative Council considers necessary to fulfill its mandate. (b)(1) Annually by December 15, the Legislative Council shall provide to the General Assembly: (A) Any analysis or findings resulting from its activities under this section that the Legislative Council deems relevant; and (B) Its recommendations for any changes to the: (i) Scholarship award amounts; (ii) Number or type of scholarships; and (iii) Scholarship eligibility requirements. (2) The Legislative Council may make interim reports to the General Assembly regarding the expenditure of net lottery revenues. (c)(1) During a regular, fiscal, or extraordinary session of the General Assembly, the Joint Budget Committee shall perform the functions assigned to the Legislative Council under: (A) This chapter; (B) Section 6-60-902; (C) Section 6-60-903; (D) Section 6-85-205; (E) Section 6-85-212; (F) Section 6-85-216; (G) Section 6-85-219; (H) Section 6-85-220; and (I) Section 25-44-212. (2) This subsection does not limit the authority of the Legislative Council to meet during a recess as authorized by § 10-2-223 or § 10-3-211. (d) The Legislative Council and the Joint Budget Committee may: (1) Establish or utilize one (1) or more subcommittees to assist in their duties under this chapter; (2) Assign information filed with the Legislative Council under this subchapter to one (1) or more subcommittees of the Legislative Council, including without limitation a subcommittee created under subdivision (d)(1) of this section; and (3) Delegate their duties under this chapter to one (1) or more subcommittees of the Legislative Council, subject to the final approval of the Legislative Council or the Joint Budget Committee.

Source: Public.Resource.Org / UniCourt, Official Code of Arkansas Annotated, Release 78 (2020) (unicourt.github.io/cic-code-ar)URL: https://unicourt.github.io/cic-code-ar/transforms/ar/ocar/r78/gov.ar.code.title.23.htmlFetched: 11/8/2026