SENATE BILL 364
48th legislature - STATE OF NEW MEXICO - first session, 2007
INTRODUCED BY
Michael S. Sanchez
AN ACT
RELATING TO THE NEW MEXICO LOTTERY; CHANGING THE COMPOSITION OF THE AUTHORITY BOARD; REQUIRING THAT A PERCENTAGE OF EACH MONTH'S GROSS REVENUE BE DEPOSITED IN THE LOTTERY TUITION FUND; ELIMINATING THE LOTTERY RESERVE FUND; REQUIRING THE AUTHORITY TO COMPLY WITH THE PROVISIONS OF THE PROCUREMENT CODE; PROVIDING DUTIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 6-24-1 NMSA 1978 (being Laws 1995, Chapter 155, Section 1) is amended to read:
"6-24-1. SHORT TITLE.--[Sections 1 through 34 of this
act] Chapter 6, Article 24 NMSA 1978 may be cited as the "New Mexico Lottery Act"."
Section 2. Section 6-24-4 NMSA 1978 (being Laws 1995, Chapter 155, Section 4) is amended to read:
"6-24-4. DEFINITIONS.--As used in the New Mexico Lottery Act:
A. "authority" means the New Mexico lottery authority;
B. "board" means the board of directors of the authority;
C. "chief executive officer" means the chief executive officer of the authority appointed by the board pursuant to the New Mexico Lottery Act;
D. "lottery" means the New Mexico state lottery established and operated by the authority pursuant to the New Mexico Lottery Act;
E. "lottery contractor" means a person with whom the authority has contracted for the purpose of providing goods or services for the lottery;
F. "lottery game" means any variation of the following types of games, but does not include any video lottery game:
(1) an instant-win game in which disposable tickets contain certain preprinted winners that are determined by rubbing or scraping an area or areas on the tickets to match numbers, letters, symbols or configurations, or any combination thereof, as provided by the rules of the game; provided, an instant-win game may also provide for preliminary and grand prize drawings conducted pursuant to the rules of the game; and
(2) an on-line lottery game in which a lottery game is hooked up to a central computer via a telecommunications system through which a player selects a specified group of numbers or symbols out of a predetermined range of numbers or symbols and purchases a ticket bearing the player-selected numbers or symbols for eligibility in a drawing regularly scheduled in accordance with game rules;
G. "lottery retailer" means a person with whom the authority has contracted for the purpose of selling tickets in lottery games to the public;
H. "lottery vendor" means any person who submits a bid, proposal or offer as part of a major procurement contract and any person who is awarded a major procurement contract; and
[I. "major procurement contract" means a contract for the procurement of any lottery game product or service costing in excess of seventy-five thousand dollars ($75,000), including but not limited to major advertising contracts, annuity contracts, prize payment agreements, consulting services, equipment, tickets and other products and services unique to the lottery, but not including materials, supplies, equipment and services common to the ordinary operations of a corporation;
J. "net revenues" means all lottery and nonlottery revenues received by the authority less payments for lottery prizes and operating expenses as provided in the New Mexico Lottery Act; and
K.] I. "person" means an individual or any other legal entity."
Section 3. Section 6-24-5 NMSA 1978 (being Laws 1995, Chapter 155, Section 5) is amended to read:
"6-24-5. NEW MEXICO LOTTERY AUTHORITY CREATED.--
A. There is created a public body, politic and corporate, separate and apart from the state, constituting a governmental instrumentality to be known as the "New Mexico lottery authority". The authority is created and organized for the purpose of establishing and conducting the [New Mexico state] lottery to provide revenues for the public purposes designated by the New Mexico Lottery Act.
B. The authority shall be governed by a board of directors composed of [seven] nine members who are residents of New Mexico appointed by the governor with the advice and consent of the senate. The members of the board of directors shall be prominent persons in their businesses or professions and shall be appointed so as to provide equitable geographical representation. No more than four members of the board shall be from any one political party. The governor shall [consider appointing] appoint at least one member who:
(1) has at least five [years] years' experience as a law enforcement officer [at least one member who];
(2) is an attorney admitted to practice in New Mexico [and at least one member who];
(3) is a certified public accountant certified in New Mexico;
(4) is a representative of a four-year public post-secondary educational institution; and
(5) is a representative of a two-year public post-secondary educational institution.
C. Board members shall be appointed for five-year terms. To provide for staggered terms, four of the initially appointed members shall be appointed for terms of five years and three members for terms of three years. Thereafter, all members shall be appointed for five-year terms. A vacancy shall be filled by appointment by the governor for the remainder of the unexpired term. A member shall serve until [his] a replacement is confirmed by the senate. Board members shall be eligible for reappointment.
D. The board shall select [one of its members as chairman] a chair annually. A [chairman] chair may be selected for successive years. Members of the board may be removed by the governor for malfeasance, misfeasance or willful neglect of duty after reasonable notice and a public hearing unless the notice and hearing are expressly waived in writing by the member.
E. The board shall hold regular meetings at the call of the [chairman] chair, but not less often than once each calendar quarter. A board meeting may also be called upon the request in writing of three or more board members. A majority of members then in office constitutes a quorum for the transaction of any business and for the exercise of any power or function of the authority.
F. Board members shall receive no compensation for their services, but shall be paid expenses incurred in the conduct of authority business as allowed and approved by the authority in accordance with policies adopted by the board.
G. A board member shall be subject to a background check and investigation to determine [his] fitness for office. The results of that background check shall be made available to the governor and the senate."
Section 4. Section 6-24-7 NMSA 1978 (being Laws 1995, Chapter 155, Section 7) is amended to read:
"6-24-7. BOARD OF DIRECTORS--DUTIES.--The board shall provide the authority with the private-sector perspective of a large marketing enterprise and shall make every effort to exercise sound and prudent business judgment in its management and promotion of the lottery. It is the duty of the board to:
A. adopt all rules, policies and procedures necessary for the establishment and operation of the lottery;
B. maximize the [net] revenue for the public purposes of the New Mexico Lottery Act and to that end assure that all rules, policies and procedures adopted further revenue maximization;
C. appoint a chief executive officer, prescribe [his] the chief executive officer's qualifications, duties and salary and set the salaries of the other officers and employees of the authority;
D. approve, disapprove, amend or modify the annual budget recommended by the chief executive officer for the operation of the authority;
E. approve or disapprove all [major] procurements [and approve, disapprove, amend or modify the terms of such procurements recommended by the chief executive officer] over seventy-five thousand dollars ($75,000);
F. supervise the chief executive officer and the other officers and employees of the authority and meet with the chief executive officer at least once every three months to make and consider recommendations, set policies, determine types and forms of lottery games to be operated by the lottery and transact other necessary business;
G. conduct, with the chief executive officer, a continuing study of the lottery and other state lotteries to improve the efficiency, profitability and security of the authority and the lottery;
H. prepare quarterly and annual reports and maintain records as required under the New Mexico Lottery Act; and
I. pursue [any and all] other matters necessary, desirable or convenient for the efficient and effective operation of lottery games, the continued entertainment and convenience of the public and the integrity of the lottery."
Section 5. Section 6-24-19 NMSA 1978 (being Laws 1995, Chapter 155, Section 19) is amended to read:
"6-24-19. [MAJOR] PROCUREMENT--COMPETITIVE PROPOSALS.--[A.] The authority shall enter into a contract for a [major] procurement after evaluating competitive proposals and shall not design requests for proposals to provide only for sole source contracts. [The authority shall design requests for proposals in such a manner as to encourage competitive proposals. The board shall adopt procedures and standards designed to allow the selection of proposals that provide the greatest long-term benefit to the state, the greatest integrity for the authority and the best service and products for the public.
B. In any request for proposal process] The authority shall conduct its own procurement, but the authority shall conduct all [major] procurement in [keeping with the general principles of] accordance with the Procurement Code.
[C. The authority may make procurements that integrate functions such as lottery game design and production, lottery ticket distribution to retailers, marketing support, supply of goods and services and advertising.] In all procurement decisions, the authority shall take into account the particularly sensitive nature of the lottery and shall act to promote and ensure security, honesty, fairness and integrity in the operation and administration of the lottery and the objectives of raising [net revenues] revenue for the public purposes of the New Mexico Lottery Act. [D.] Procurements shall not be artificially divided to reduce the cost of the procurement below the [major] procurement [threshold] thresholds provided in the Procurement Code."
Section 6. Section 6-24-24 NMSA 1978 (being Laws 1995, Chapter 155, Section 24, as amended) is amended to read:
"6-24-24. DISPOSITION OF REVENUE.--
A. As nearly as practical, an amount equal to at least fifty percent of the gross annual [revenues] revenue from the sale of lottery tickets shall be returned to the public in the form of lottery prizes.
B. No later than fifteen days after the end of each month, the authority shall transmit [all net revenues] at least thirty percent of the gross revenue for that month to the state treasurer, who shall deposit [them] it in the lottery tuition fund. [Estimated net revenues shall be transmitted monthly to the state treasurer for deposit in the fund; provided that the total amount of annual net revenues for the fiscal year shall be transmitted no later than August 1 each year.]
C. [In determining net revenues] Operating expenses of the lottery include all costs incurred in the operation and administration of the lottery and all costs resulting from any contracts entered into for the purchase or lease of goods or services required by the lottery, including the costs of supplies, materials, tickets, independent audit services, independent studies, data transmission, advertising, promotion, incentives, public relations, communications, commissions paid to lottery retailers, printing, distribution of tickets, purchases of annuities or investments to be used to pay future installments of winning lottery tickets, debt service and payment of any revenue bonds issued, contingency reserves, transfers to the reserve fund and any other necessary costs incurred in carrying out the provisions of the New Mexico Lottery Act.
[D. An amount up to two percent of the gross annual revenues shall be set aside as a reserve fund to cover bonuses and incentive plans for lottery retailers, special promotions for retailers, purchasing special promotional giveaways, sponsoring special promotional events, compulsive gambling rehabilitation and such other purposes as the board deems necessary to maintain the integrity and meet the revenue goals of the lottery. The board shall report annually to the governor and each regular session of the legislature on the use of the money in the reserve fund. Any balance in excess of fifty thousand dollars ($50,000) at the end of any fiscal year shall be transferred to the lottery tuition fund.]"
Section 7. Section 6-24-27 NMSA 1978 (being Laws 1995, Chapter 155, Section 27, as amended) is amended to read:
"6-24-27. REVENUE AND BUDGET REPORTS--RECORDS--INDEPENDENT AUDITS.--
A. The board shall:
(1) submit quarterly and annual reports to the governor and the legislative finance committee disclosing the total lottery revenue, prizes, commissions, ticket costs, operating expenses and [net revenues] other revenue of the authority during the reporting period and, in the annual report, describe the organizational structure of the authority and summarize the functions performed by each organizational division within the authority;
(2) maintain weekly or more frequent records of lottery transactions, including the distribution of lottery tickets to retailers, revenue received, claims for prizes, prizes paid, prizes forfeited and other financial transactions of the authority; and
(3) use the state government fiscal year.
B. The board shall provide, for informational purposes, to the department of finance and administration and the legislative finance committee, by December 1 of each year, a copy of the annual proposed operating budget for the authority for the succeeding fiscal year. This budget proposal shall also be accompanied by an estimate of the [net revenues] revenue to be deposited in the [public school capital outlay fund and the] lottery tuition fund for the current and succeeding fiscal years.
C. The board shall contract with an independent certified public accountant or firm for an annual financial audit of the authority. The certified public accountant or firm shall have no financial interest in any lottery contractor. The certified public accountant or firm shall present an audit report no later than March 1 for the prior fiscal year. The certified public accountant or firm shall evaluate the internal auditing controls in effect during the audit period. The cost of this financial audit shall be an operating expense of the authority. The legislative finance committee may, at any time, order an audit of any phase of the operations of the authority, at the expense of the authority, and shall receive a copy of the annual independent financial audit. A copy of any audit performed by the certified public accountant or ordered by the legislative finance committee shall be transmitted to the governor, the speaker of the house of representatives, the president pro tempore of the senate, [and] the legislative finance committee and the legislative council service library."
Section 8. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2007.
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