ASSEMBLY, No. 4119

STATE OF NEW JERSEY

218th LEGISLATURE

 

INTRODUCED JUNE 7, 2018

 


 

Sponsored by:

Assemblywoman  ELIANA PINTOR MARIN

District 29 (Essex)

Assemblyman  JOHN J. BURZICHELLI

District 3 (Cumberland, Gloucester and Salem)

 

 

 

 

SYNOPSIS

     Adjusts from 30 percent to 27 percent rate at which proceeds accruing from sale of lottery tickets are dedicated for public pensions.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act adjusting the rate at which proceeds accruing from the sale of lottery tickets are dedicated for public pensions and amending P.L.1970, c.13.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    Section 7 of P.L.1970, c.13 (C.5:9-7) is amended to read as follows:

     7.    The commission shall have the power, and it shall be its duty:

     a.     After full and thorough study of the report and recommendations of the State Lottery Planning Commission established pursuant to Joint Resolution Number 11, approved November 20, 1969, and such other pertinent information as may be available, to promulgate such rules and regulations governing the establishment and operation of a State lottery as it deems necessary and desirable in order that the mandate of the people expressed in their approval of the amendment to Article IV, Section VII, paragraph 2, of the Constitution in the general election of November, 1969, may be fully implemented, in order that such a lottery shall be initiated at the earliest feasible and practicable time, and in order that such lottery shall produce the maximum amount of net proceeds for State institutions and State aid for education consonant with the dignity of the State and the general welfare of the people.  Such rules and regulations may include, but shall not be limited to, the following:

     (1)   The type of lottery to be conducted.

     (2)   The price, or prices, of tickets or shares in the lottery.

     (3)   The number and sizes of the prizes on the winning tickets or shares.

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

     (5)   The manner of payment of prizes to the holders of winning tickets or shares, including, subject to the approval of the State Treasurer, provision for payment of prizes not to exceed $599.00 by agents licensed hereunder out of moneys received from sales of tickets or shares.

     (6)   The frequency of the drawings or selections of winning tickets or shares, without limitation.

     (7)   Without limit as to number, the type or types of locations at which tickets or shares may be sold.

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

     (9)   The licensing of agents to sell tickets or shares, provided that no person under the age of 21 shall be licensed as an agent.     (10) The manner and amount of compensation, if any, to be paid licensed sales agents necessary to provide for the adequate availability of tickets or shares to prospective buyers and for the convenience of the public.

     (11)    The apportionment of the total proceeds accruing from the sale of lottery tickets or shares and from all other sources among (a) the payment of prizes to the holders of winning tickets or shares, (b) the payment of costs incurred in the operation and administration of the lottery, including the expenses of the division and the costs resulting from any contract or contracts entered into for promotional, advertising or operational services or for the purchase or lease of lottery equipment and materials, (c) for the repayment of the money appropriated to the State Lottery Fund pursuant to section 23 of this act, and (d) for transfer to the general fund for State institutions and State aid for education; provided, however, that no less than 30% of the total proceeds accruing from the sale of lottery tickets or shares shall be dedicated to (d) above.

     During the term of the lottery contribution made pursuant to section 4 of P.L.2017, c.98 (C.5:9-22.8), the apportionment of the total proceeds accruing from the sale of lottery tickets or shares and from all other sources among (a) the payment of prizes to the holders of winning tickets or shares, (b) the payment of costs incurred in the operation and administration of the Lottery Enterprise, as defined in section 3 of P.L.2017, c.98 (C.5:9-22.7), including the expenses of the division and the costs resulting from any contract or contracts entered into for promotional, advertising, or operational services for the purchase or lease of lottery equipment and materials, and (c) for transfer to the investment account of Common Pension Fund L, for the benefit of retirement systems, as provided in the "Lottery Enterprise Contribution Act," P.L.2017, c.98 (C.5:9-22.5 et al.); provided, however, that no less than 30 percent of the proceeds accruing from the sale of lottery tickets or shares shall be dedicated to the investment account under (c) above.  (d) Notwithstanding subparagraph (c) above, the State Lottery Commission, in order to maximize and increase total contributions to the investment account of Common Pension Fund L under that subparagraph (c) and consistent with lottery industry best practices shall allocate up to an additional 3 percent to the payment of prizes to the holders of winning tickets or shares pursuant to subparagraph (a) above, in which case no less than 27 percent of the proceeds accruing from the sale of lottery tickets or shares shall be dedicated to the investment account under that subparagraph (c).  In the event that total revenues accruing from the sale of lottery tickets or shares in the first full fiscal year after the effective date of P.L.    , c.    (C.      ) (pending before the Legislature as this bill) fall below the total reserves of the last full fiscal year prior to that effective date, this subparagraph (d) shall automatically be null and void.  In the event that total revenues accruing from the sale of lottery tickets or shares in that first full fiscal year rise above the total revenues of the last full fiscal year prior to enactment, this subparagraph (d) shall remain in effect during and past the term of the lottery contribution made pursuant to section 4 of P.L.2017, c.98 (C.5:9-22.8).

     (12)    Such other matters necessary or desirable for the efficient and economical operation and administration of the lottery and the Lottery Enterprise and for the convenience of the purchasers of tickets or shares and the holders of winning tickets or shares.

     Notwithstanding the provisions of any other law to the contrary, no rule or regulation establishing a lottery game shall be considered an "administrative rule" or "rule" pursuant to P.L.1968, c. 410 (C. 52:14B-1 et seq.).

     b.    To amend, repeal, or supplement any such rules and regulations from time to time as it deems necessary or desirable.  Notwithstanding any provision of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to the contrary, the commission may adopt, immediately upon filing with the Office of Administrative Law, such regulations as are necessary to implement the provisions of the "Lottery Enterprise Contribution Act," P.L.2017, c.98 (C.5:9-22.5 et al.), which shall be effective for a period not to exceed 12 months following adoption, and may thereafter be amended, adopted, or readopted by the commission in accordance with the requirements of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

     c.     To advise and make recommendations to the director regarding the operation and administration of the lottery and the Lottery Enterprise.

     d.    To report monthly to the Governor and the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), and during the lottery contribution, to the Director of the Division of Investment, the total lottery proceeds, prize disbursements and other expenses for the preceding month, and to make an annual report, which shall include a full and complete statement of lottery proceeds, prize disbursements and other expenses, to the Governor, the Legislature, and during the lottery contribution, the Director of the Division of Investment, including such recommendations for changes in this act as it deems necessary or desirable.

     e.     To report immediately to the Governor and the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), and during the lottery contribution, to the Director of the Division of Investment, any matters which shall require immediate changes in the laws of this State in order to prevent abuses and evasions of this act or rules and regulations promulgated thereunder or to rectify undesirable conditions in connection with the administration or operation of the lottery and the Lottery Enterprise.

     f.     To carry on a continuous study and investigation of the lottery and the Lottery Enterprise throughout the State, which may include requiring a financial or operational audit of the Lottery Enterprise, (1) for the purpose of ascertaining any defects in this act or in the rules and regulations issued thereunder by reason whereof any abuses in the administration and operation of the lottery and the Lottery Enterprise or any evasion of this act or the rules and regulations may arise or be practiced, (2) for the purpose of formulating recommendations for changes in this act and the rules and regulations promulgated thereunder to prevent such abuses and evasions, (3) to guard against the use of this act and the rules and regulations issued thereunder as a cloak for the carrying on of organized gambling and crime, and (4) to insure that said law and rules and regulations shall be in such form and be so administered as to serve the true purposes of this act and the "Lottery Enterprise Contribution Act," P.L.2017, c.98 (C.5:9-22.5 et al.).

     g.    To make a continuous study and investigation of (1) the operation and the administration of similar laws which may be in effect in other states or countries, (2) any literature on the subject which from time to time may be published or available, (3) any Federal laws which may affect the operation of the lottery and the Lottery Enterprise, and (4) the reaction of New Jersey residents to existing and potential features of the lottery and the Lottery Enterprise, with a view to recommending or effecting changes that will tend to serve the purposes of this act.

(cf: P.L.2017, c.98, s.11)

 

     2.    This act shall take immediately.

 

 

STATEMENT

 

     This bill modernizes the New Jersey State Lottery by allowing for flexible prize payouts and ensuring the Lottery is able to take advantage of the best practices used by modern lotteries throughout the United States. The change will implement a guaranteed method to grow and maximize the profit potential of the New Jersey Lottery in order to sustain and enhance future funding of the good causes the Lottery supports. The 1970 New Jersey Lottery Law severely limits the profit potential of the Lottery by preventing the introduction of the most successful instant games. Changing the lottery law does not diminish or change the lottery assignment to the New Jersey Public Pension Fund.  It makes it more valuable and profitable.

     The current lottery statute enacted 48 years ago provides that no less than 30% of the total revenues accruing from the sale of lottery tickets or shares shall be dedicated to the State. This bill proposes to change that language to read as follows: “no less than 27 percent of the proceeds accruing from the sale of lottery tickets or shares shall be dedicated” to the State. Furthermore, in the event total funds transferred to the State accruing from the sale of lottery tickets or shares in the first full fiscal year after enactment of this language fall below the total funds transferred to the state in the last full fiscal year prior to enactment, this provision will be automatically null and void.

     A modest reduction from 30% to 27% in the mandatory return provision of the law will result in increased Lottery profit in real dollars. This change will not reduce lottery profit. Every other top-performing lottery, without exception, has successfully implemented this change, including New York (69 percent payout) and Pennsylvania (70 percent payout). The percentage of the prize payout is significant because the higher this percentage, the more players win. Greater frequency of winning increases the entertainment value of the games.  The more people win, the longer they stay in the game, which results in higher sales and profit. This fundamental principle in prize payouts is true across every lottery in the United States.  All 45 U.S. lotteries, except New Jersey, New Mexico, and Louisiana, have implemented higher prize payouts in their instant games.