Bill Text: IL HB0414 | 2011-2012 | 97th General Assembly | Amended
Bill Title: Amends the Illinois Lottery Law. Makes a technical change in a Section concerning the short title.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2013-01-08 - Session Sine Die [HB0414 Detail]
Download: Illinois-2011-HB0414-Amended.html
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1 | AMENDMENT TO HOUSE BILL 414
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2 | AMENDMENT NO. ______. Amend House Bill 414 by replacing | ||||||
3 | everything after the enacting clause with the following:
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4 | "Section 5. The Illinois Lottery Law is amended by changing | ||||||
5 | Section 9.1 as follows:
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6 | (20 ILCS 1605/9.1) | ||||||
7 | Sec. 9.1. Private manager and management agreement. | ||||||
8 | (a) As used in this Section: | ||||||
9 | "Offeror" means a person or group of persons that responds | ||||||
10 | to a request for qualifications under this Section. | ||||||
11 | "Request for qualifications" means all materials and | ||||||
12 | documents prepared by the Department to solicit the following | ||||||
13 | from offerors: | ||||||
14 | (1) Statements of qualifications. | ||||||
15 | (2) Proposals to enter into a management agreement, | ||||||
16 | including the identity of any prospective vendor or vendors |
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1 | that the offeror intends to initially engage to assist the | ||||||
2 | offeror in performing its obligations under the management | ||||||
3 | agreement. | ||||||
4 | "Final offer" means the last proposal submitted by an | ||||||
5 | offeror in response to the request for qualifications, | ||||||
6 | including the identity of any prospective vendor or vendors | ||||||
7 | that the offeror intends to initially engage to assist the | ||||||
8 | offeror in performing its obligations under the management | ||||||
9 | agreement. | ||||||
10 | "Final offeror" means the offeror ultimately selected by | ||||||
11 | the Governor to be the private manager for the Lottery under | ||||||
12 | subsection (h) of this Section. | ||||||
13 | (b) By September 15, 2010, the Governor shall select a | ||||||
14 | private manager for the total management of the Lottery with | ||||||
15 | integrated functions, such as lottery game design, supply of | ||||||
16 | goods and services, and advertising and as specified in this | ||||||
17 | Section. | ||||||
18 | (c) Pursuant to the terms of this subsection, the | ||||||
19 | Department shall endeavor to expeditiously terminate the | ||||||
20 | existing contracts in support of the Lottery in effect on the | ||||||
21 | effective date of this amendatory Act of the 96th General | ||||||
22 | Assembly in connection with the selection of the private | ||||||
23 | manager. As part of its obligation to terminate these contracts | ||||||
24 | and select the private manager, the Department shall establish | ||||||
25 | a mutually agreeable timetable to transfer the functions of | ||||||
26 | existing contractors to the private manager so that existing |
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1 | Lottery operations are not materially diminished or impaired | ||||||
2 | during the transition. To that end, the Department shall do the | ||||||
3 | following: | ||||||
4 | (1) where such contracts contain a provision | ||||||
5 | authorizing termination upon notice, the Department shall | ||||||
6 | provide notice of termination to occur upon the mutually | ||||||
7 | agreed timetable for transfer of functions; | ||||||
8 | (2) upon the expiration of any initial term or renewal | ||||||
9 | term of the current Lottery contracts, the Department shall | ||||||
10 | not renew such contract for a term extending beyond the | ||||||
11 | mutually agreed timetable for transfer of functions; or | ||||||
12 | (3) in the event any current contract provides for | ||||||
13 | termination of that contract upon the implementation of a | ||||||
14 | contract with the private manager, the Department shall | ||||||
15 | perform all necessary actions to terminate the contract on | ||||||
16 | the date that coincides with the mutually agreed timetable | ||||||
17 | for transfer of functions. | ||||||
18 | If the contracts to support the current operation of the | ||||||
19 | Lottery in effect on the effective date of this amendatory Act | ||||||
20 | of the 96th General Assembly are not subject to termination as | ||||||
21 | provided for in this subsection (c), then the Department may | ||||||
22 | include a provision in the contract with the private manager | ||||||
23 | specifying a mutually agreeable methodology for incorporation. | ||||||
24 | (c-5) The Department shall include provisions in the | ||||||
25 | management agreement whereby the private manager shall, for a | ||||||
26 | fee, and pursuant to a contract negotiated with the Department |
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1 | (the "Employee Use Contract"), utilize the services of current | ||||||
2 | Department employees to assist in the administration and | ||||||
3 | operation of the Lottery. The Department shall be the employer | ||||||
4 | of all such bargaining unit employees assigned to perform such | ||||||
5 | work for the private manager, and such employees shall be State | ||||||
6 | employees, as defined by the Personnel Code. Department | ||||||
7 | employees shall operate under the same employment policies, | ||||||
8 | rules, regulations, and procedures, as other employees of the | ||||||
9 | Department. In addition, neither historical representation | ||||||
10 | rights under the Illinois Public Labor Relations Act, nor | ||||||
11 | existing collective bargaining agreements, shall be disturbed | ||||||
12 | by the management agreement with the private manager for the | ||||||
13 | management of the Lottery. | ||||||
14 | (d) The management agreement with the private manager shall | ||||||
15 | include all of the following: | ||||||
16 | (1) A term not to exceed 10 years, including any | ||||||
17 | renewals. | ||||||
18 | (2) A provision specifying that the Department: | ||||||
19 | (A) shall exercise actual control over all | ||||||
20 | significant business decisions; | ||||||
21 | (A-5) has the authority to direct or countermand | ||||||
22 | operating decisions by the private manager at any time; | ||||||
23 | (B) has ready access at any time to information | ||||||
24 | regarding Lottery operations; | ||||||
25 | (C) has the right to demand and receive information | ||||||
26 | from the private manager concerning any aspect of the |
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1 | Lottery operations at any time; and | ||||||
2 | (D) retains ownership of all trade names, | ||||||
3 | trademarks, and intellectual property associated with | ||||||
4 | the Lottery. | ||||||
5 | (3) A provision imposing an affirmative duty on the | ||||||
6 | private manager to provide the Department with material | ||||||
7 | information and with any information the private manager | ||||||
8 | reasonably believes the Department would want to know to | ||||||
9 | enable the Department to conduct the Lottery. | ||||||
10 | (4) A provision requiring the private manager to | ||||||
11 | provide the Department with advance notice of any operating | ||||||
12 | decision that bears significantly on the public interest, | ||||||
13 | including, but not limited to, decisions on the kinds of | ||||||
14 | games to be offered to the public and decisions affecting | ||||||
15 | the relative risk and reward of the games being offered, so | ||||||
16 | the Department has a reasonable opportunity to evaluate and | ||||||
17 | countermand that decision. | ||||||
18 | (5) A provision providing for compensation of the | ||||||
19 | private manager that may consist of, among other things, a | ||||||
20 | fee for services and a performance based bonus as | ||||||
21 | consideration for managing the Lottery, including terms | ||||||
22 | that may provide the private manager with an increase in | ||||||
23 | compensation if Lottery revenues grow by a specified | ||||||
24 | percentage in a given year. | ||||||
25 | (6) (Blank). | ||||||
26 | (7) A provision requiring the deposit of all Lottery |
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1 | proceeds to be deposited into the State Lottery Fund. | ||||||
2 | (8) A provision requiring the private manager to locate | ||||||
3 | its principal office within the State. | ||||||
4 | (8-5) A provision encouraging that at least 20% of the | ||||||
5 | cost of contracts entered into for goods and services by | ||||||
6 | the private manager in connection with its management of | ||||||
7 | the Lottery, other than contracts with sales agents or | ||||||
8 | technical advisors, be awarded to businesses that are a | ||||||
9 | minority owned business, a female owned business, or a | ||||||
10 | business owned by a person with disability, as those terms | ||||||
11 | are defined in the Business Enterprise for Minorities, | ||||||
12 | Females, and Persons with Disabilities Act. | ||||||
13 | (9) A requirement that so long as the private manager | ||||||
14 | complies with all the conditions of the agreement under the | ||||||
15 | oversight of the Department, the private manager shall have | ||||||
16 | the following duties and obligations with respect to the | ||||||
17 | management of the Lottery: | ||||||
18 | (A) The right to use equipment and other assets | ||||||
19 | used in the operation of the Lottery. | ||||||
20 | (B) The rights and obligations under contracts | ||||||
21 | with retailers and vendors. | ||||||
22 | (C) The implementation of a comprehensive security | ||||||
23 | program by the private manager. | ||||||
24 | (D) The implementation of a comprehensive system | ||||||
25 | of internal audits. | ||||||
26 | (E) The implementation of a program by the private |
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1 | manager to curb compulsive gambling by persons playing | ||||||
2 | the Lottery. | ||||||
3 | (F) A system for determining (i) the type of | ||||||
4 | Lottery games, (ii) the method of selecting winning | ||||||
5 | tickets, (iii) the manner of payment of prizes to | ||||||
6 | holders of winning tickets, (iv) the frequency of | ||||||
7 | drawings of winning tickets, (v) the method to be used | ||||||
8 | in selling tickets, (vi) a system for verifying the | ||||||
9 | validity of tickets claimed to be winning tickets, | ||||||
10 | (vii) the basis upon which retailer commissions are | ||||||
11 | established by the manager, and (viii) minimum | ||||||
12 | payouts. | ||||||
13 | (10) A requirement that advertising and promotion must | ||||||
14 | be consistent with Section 7.8a of this Act. | ||||||
15 | (11) A requirement that the private manager market the | ||||||
16 | Lottery to those residents who are new, infrequent, or | ||||||
17 | lapsed players of the Lottery, especially those who are | ||||||
18 | most likely to make regular purchases on the Internet as | ||||||
19 | permitted by law. | ||||||
20 | (12) A code of ethics for the private manager's | ||||||
21 | officers and employees. | ||||||
22 | (13) A requirement that the Department monitor and | ||||||
23 | oversee the private manager's practices and take action | ||||||
24 | that the Department considers appropriate to ensure that | ||||||
25 | the private manager is in compliance with the terms of the | ||||||
26 | management agreement, while allowing the manager, unless |
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1 | specifically prohibited by law or the management | ||||||
2 | agreement, to negotiate and sign its own contracts with | ||||||
3 | vendors. | ||||||
4 | (14) A provision requiring the private manager to | ||||||
5 | periodically file, at least on an annual basis, appropriate | ||||||
6 | financial statements in a form and manner acceptable to the | ||||||
7 | Department. | ||||||
8 | (15) Cash reserves requirements. | ||||||
9 | (16) Procedural requirements for obtaining the prior | ||||||
10 | approval of the Department when a management agreement or | ||||||
11 | an interest in a management agreement is sold, assigned, | ||||||
12 | transferred, or pledged as collateral to secure financing. | ||||||
13 | (17) Grounds for the termination of the management | ||||||
14 | agreement by the Department or the private manager. | ||||||
15 | (18) Procedures for amendment of the agreement. | ||||||
16 | (19) A provision requiring the private manager to | ||||||
17 | engage in an open and competitive bidding process for any | ||||||
18 | procurement having a cost in excess of $50,000 that is not | ||||||
19 | a part of the private manager's final offer. The process | ||||||
20 | shall favor the selection of a vendor deemed to have | ||||||
21 | submitted a proposal that provides the Lottery with the | ||||||
22 | best overall value. The process shall not be subject to the | ||||||
23 | provisions of the Illinois Procurement Code, unless | ||||||
24 | specifically required by the management agreement. | ||||||
25 | (20) The transition of rights and obligations, | ||||||
26 | including any associated equipment or other assets used in |
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1 | the operation of the Lottery, from the manager to any | ||||||
2 | successor manager of the lottery, including the | ||||||
3 | Department, following the termination of or foreclosure | ||||||
4 | upon the management agreement. | ||||||
5 | (21) Right of use of copyrights, trademarks, and | ||||||
6 | service marks held by the Department in the name of the | ||||||
7 | State. The agreement must provide that any use of them by | ||||||
8 | the manager shall only be for the purpose of fulfilling its | ||||||
9 | obligations under the management agreement during the term | ||||||
10 | of the agreement. | ||||||
11 | (22) Beginning on January 1, 2012, a requirement that | ||||||
12 | each retail location must have a device that allows the | ||||||
13 | purchaser of a lottery ticket to determine if that ticket | ||||||
14 | can be redeemed for a prize. | ||||||
15 | (e) Notwithstanding any other law to the contrary, the | ||||||
16 | Department shall select a private manager through a competitive | ||||||
17 | request for qualifications process consistent with Section | ||||||
18 | 20-35 of the Illinois Procurement Code, which shall take into | ||||||
19 | account: | ||||||
20 | (1) the offeror's ability to market the Lottery to | ||||||
21 | those residents who are new, infrequent, or lapsed players | ||||||
22 | of the Lottery, especially those who are most likely to | ||||||
23 | make regular purchases on the Internet; | ||||||
24 | (2) the offeror's ability to address the State's | ||||||
25 | concern with the social effects of gambling on those who | ||||||
26 | can least afford to do so; |
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1 | (3) the offeror's ability to provide the most | ||||||
2 | successful management of the Lottery for the benefit of the | ||||||
3 | people of the State based on current and past business | ||||||
4 | practices or plans of the offeror; and | ||||||
5 | (4) the offeror's poor or inadequate past performance | ||||||
6 | in servicing, equipping, operating or managing a lottery on | ||||||
7 | behalf of Illinois, another State or foreign government and | ||||||
8 | attracting persons who are not currently regular players of | ||||||
9 | a lottery. | ||||||
10 | (f) The Department may retain the services of an advisor or | ||||||
11 | advisors with significant experience in financial services or | ||||||
12 | the management, operation, and procurement of goods, services, | ||||||
13 | and equipment for a government-run lottery to assist in the | ||||||
14 | preparation of the terms of the request for qualifications and | ||||||
15 | selection of the private manager. Any prospective advisor | ||||||
16 | seeking to provide services under this subsection (f) shall | ||||||
17 | disclose any material business or financial relationship | ||||||
18 | during the past 3 years with any potential offeror, or with a | ||||||
19 | contractor or subcontractor presently providing goods, | ||||||
20 | services, or equipment to the Department to support the | ||||||
21 | Lottery. The Department shall evaluate the material business or | ||||||
22 | financial relationship of each prospective advisor. The | ||||||
23 | Department shall not select any prospective advisor with a | ||||||
24 | substantial business or financial relationship that the | ||||||
25 | Department deems to impair the objectivity of the services to | ||||||
26 | be provided by the prospective advisor. During the course of |
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1 | the advisor's engagement by the Department, and for a period of | ||||||
2 | one year thereafter, the advisor shall not enter into any | ||||||
3 | business or financial relationship with any offeror or any | ||||||
4 | vendor identified to assist an offeror in performing its | ||||||
5 | obligations under the management agreement. Any advisor | ||||||
6 | retained by the Department shall be disqualified from being an | ||||||
7 | offeror.
The Department shall not include terms in the request | ||||||
8 | for qualifications that provide a material advantage whether | ||||||
9 | directly or indirectly to any potential offeror, or any | ||||||
10 | contractor or subcontractor presently providing goods, | ||||||
11 | services, or equipment to the Department to support the | ||||||
12 | Lottery, including terms contained in previous responses to | ||||||
13 | requests for proposals or qualifications submitted to | ||||||
14 | Illinois, another State or foreign government when those terms | ||||||
15 | are uniquely associated with a particular potential offeror, | ||||||
16 | contractor, or subcontractor. The request for proposals | ||||||
17 | offered by the Department on December 22, 2008 as | ||||||
18 | "LOT08GAMESYS" and reference number "22016176" is declared | ||||||
19 | void. | ||||||
20 | (g) The Department shall select at least 2 offerors as | ||||||
21 | finalists to potentially serve as the private manager no later | ||||||
22 | than August 9, 2010. Upon making preliminary selections, the | ||||||
23 | Department shall schedule a public hearing on the finalists' | ||||||
24 | proposals and provide public notice of the hearing at least 7 | ||||||
25 | calendar days before the hearing. The notice must include all | ||||||
26 | of the following: |
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1 | (1) The date, time, and place of the hearing. | ||||||
2 | (2) The subject matter of the hearing. | ||||||
3 | (3) A brief description of the management agreement to | ||||||
4 | be awarded. | ||||||
5 | (4) The identity of the offerors that have been | ||||||
6 | selected as finalists to serve as the private manager. | ||||||
7 | (5) The address and telephone number of the Department. | ||||||
8 | (h) At the public hearing, the Department shall (i) provide | ||||||
9 | sufficient time for each finalist to present and explain its | ||||||
10 | proposal to the Department and the Governor or the Governor's | ||||||
11 | designee, including an opportunity to respond to questions | ||||||
12 | posed by the Department, Governor, or designee and (ii) allow | ||||||
13 | the public and non-selected offerors to comment on the | ||||||
14 | presentations. The Governor or a designee shall attend the | ||||||
15 | public hearing. After the public hearing, the Department shall | ||||||
16 | have 14 calendar days to recommend to the Governor whether a | ||||||
17 | management agreement should be entered into with a particular | ||||||
18 | finalist. After reviewing the Department's recommendation, the | ||||||
19 | Governor may accept or reject the Department's recommendation, | ||||||
20 | and shall select a final offeror as the private manager by | ||||||
21 | publication of a notice in the Illinois Procurement Bulletin on | ||||||
22 | or before September 15, 2010. The Governor shall include in the | ||||||
23 | notice a detailed explanation and the reasons why the final | ||||||
24 | offeror is superior to other offerors and will provide | ||||||
25 | management services in a manner that best achieves the | ||||||
26 | objectives of this Section. The Governor shall also sign the |
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1 | management agreement with the private manager. | ||||||
2 | (i) Any action to contest the private manager selected by | ||||||
3 | the Governor under this Section must be brought within 7 | ||||||
4 | calendar days after the publication of the notice of the | ||||||
5 | designation of the private manager as provided in subsection | ||||||
6 | (h) of this Section. | ||||||
7 | (j) The Lottery shall remain, for so long as a private | ||||||
8 | manager manages the Lottery in accordance with provisions of | ||||||
9 | this Act, a Lottery conducted by the State, and the State shall | ||||||
10 | not be authorized to sell or transfer the Lottery to a third | ||||||
11 | party. | ||||||
12 | (k) Any tangible personal property used exclusively in | ||||||
13 | connection with the lottery that is owned by the Department and | ||||||
14 | leased to the private manager shall be owned by the Department | ||||||
15 | in the name of the State and shall be considered to be public | ||||||
16 | property devoted to an essential public and governmental | ||||||
17 | function. | ||||||
18 | (l) The Department may exercise any of its powers under | ||||||
19 | this Section or any other law as necessary or desirable for the | ||||||
20 | execution of the Department's powers under this Section. | ||||||
21 | (m) Neither this Section nor any management agreement | ||||||
22 | entered into under this Section prohibits the General Assembly | ||||||
23 | from authorizing forms of gambling that are not in direct | ||||||
24 | competition with the Lottery. | ||||||
25 | (n) The private manager shall be subject to a complete | ||||||
26 | investigation in the third, seventh, and tenth years of the |
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1 | agreement (if the agreement is for a 10-year term) by the | ||||||
2 | Department in cooperation with the Auditor General to determine | ||||||
3 | whether the private manager has complied with this Section and | ||||||
4 | the management agreement. The private manager shall bear the | ||||||
5 | cost of an investigation or reinvestigation of the private | ||||||
6 | manager under this subsection. | ||||||
7 | (o) The powers conferred by this Section are in addition | ||||||
8 | and supplemental to the powers conferred by any other law. If | ||||||
9 | any other law or rule is inconsistent with this Section, | ||||||
10 | including, but not limited to, provisions of the Illinois | ||||||
11 | Procurement Code, then this Section controls as to any | ||||||
12 | management agreement entered into under this Section. This | ||||||
13 | Section and any rules adopted under this Section contain full | ||||||
14 | and complete authority for a management agreement between the | ||||||
15 | Department and a private manager. No law, procedure, | ||||||
16 | proceeding, publication, notice, consent, approval, order, or | ||||||
17 | act by the Department or any other officer, Department, agency, | ||||||
18 | or instrumentality of the State or any political subdivision is | ||||||
19 | required for the Department to enter into a management | ||||||
20 | agreement under this Section. This Section contains full and | ||||||
21 | complete authority for the Department to approve any contracts | ||||||
22 | entered into by a private manager with a vendor providing | ||||||
23 | goods, services, or both goods and services to the private | ||||||
24 | manager under the terms of the management agreement. | ||||||
25 | Except as provided in Sections 21.2, 21.5, 21.6, 21.7, and | ||||||
26 | 21.8, the Department shall distribute all proceeds of lottery |
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1 | tickets and shares sold in the following priority and manner: | ||||||
2 | (1) The payment of prizes and retailer bonuses. | ||||||
3 | (2) The payment of costs incurred in the operation and | ||||||
4 | administration of the Lottery, including the payment of | ||||||
5 | sums due to the private manager under the management | ||||||
6 | agreement with the Department and payment of sums due to | ||||||
7 | the private vendor for lottery tickets and shares sold on | ||||||
8 | the Internet via the pilot program as compensation under | ||||||
9 | its contract with the Department. | ||||||
10 | (3) On the last day of each month or as soon thereafter | ||||||
11 | as possible, the State Comptroller shall direct and the | ||||||
12 | State Treasurer shall transfer from the Lottery Fund to the | ||||||
13 | Common School Fund an amount that is equal to the proceeds | ||||||
14 | transferred in the corresponding month of fiscal year 2009, | ||||||
15 | as adjusted for inflation, to the Common School Fund. | ||||||
16 | (4) On or before the last day of each fiscal year, | ||||||
17 | deposit any remaining proceeds, subject to payments under | ||||||
18 | items (1), (2), and (3) into the Capital Projects Fund each | ||||||
19 | fiscal year. | ||||||
20 | (Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09; 96-840, | ||||||
21 | eff. 12-23-09.)
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22 | Section 99. Effective date. This Act takes effect upon | ||||||
23 | becoming law.".
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