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1		AN ACT concerning gaming.
2		Be it enacted by the People of the State of Illinois,
3		represented in the General Assembly:
4		Section 5. The Illinois Lottery Law is amended by changing
5		Sections 2, 9.1, and 20 and by adding Section 21.10 as follows:
6		(20 ILCS 1605/2) (from Ch. 120, par. 1152)
7		Sec. 2. This Act is enacted to implement and establish
8		within the State a lottery to be conducted by the State through
9		the Department. The entire net proceeds of the Lottery are to
10		be used for the support of the State's Common School Fund,
11		except as provided in subsection (o) of Section 9.1 and
12		Sections 21.2, 21.5, 21.6, 21.7, 21.8, and 21.9, and 21.10. The
13		General Assembly finds that it is in the public interest for
14		the Department to conduct the functions of the Lottery with the
15		assistance of a private manager under a management agreement
16		overseen by the Department. The Department shall be accountable
17		to the General Assembly and the people of the State through a
18		comprehensive system of regulation, audits, reports, and
19		enduring operational oversight. The Department's ongoing
20		conduct of the Lottery through a management agreement with a
21		private manager shall act to promote and ensure the integrity,
22		security, honesty, and fairness of the Lottery's operation and
23		administration. It is the intent of the General Assembly that

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1		the Department shall conduct the Lottery with the assistance of
2		a private manager under a management agreement at all times in
3		a manner consistent with 18 U.S.C. 1307(a)(1), 1307(b)(1),
4		1953(b)(4).
5		(Source: P.A. 98-649, eff. 6-16-14.)
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
17		that the offeror intends to initially engage to assist the
18		offeror in performing its obligations under the management
19		agreement.
20		"Final offer" means the last proposal submitted by an
21		offeror in response to the request for qualifications,
22		including the identity of any prospective vendor or vendors
23		that the offeror intends to initially engage to assist the
24		offeror in performing its obligations under the management
25		agreement.

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1		"Final offeror" means the offeror ultimately selected by
2		the Governor to be the private manager for the Lottery under
3		subsection (h) of this Section.
4		(b) By September 15, 2010, the Governor shall select a
5		private manager for the total management of the Lottery with
6		integrated functions, such as lottery game design, supply of
7		goods and services, and advertising and as specified in this
8		Section.
9		(c) Pursuant to the terms of this subsection, the
10		Department shall endeavor to expeditiously terminate the
11		existing contracts in support of the Lottery in effect on the
12		effective date of this amendatory Act of the 96th General
13		Assembly in connection with the selection of the private
14		manager. As part of its obligation to terminate these contracts
15		and select the private manager, the Department shall establish
16		a mutually agreeable timetable to transfer the functions of
17		existing contractors to the private manager so that existing
18		Lottery operations are not materially diminished or impaired
19		during the transition. To that end, the Department shall do the
20		following:
21		(1) where such contracts contain a provision
22		authorizing termination upon notice, the Department shall
23		provide notice of termination to occur upon the mutually
24		agreed timetable for transfer of functions;
25		(2) upon the expiration of any initial term or renewal
26		term of the current Lottery contracts, the Department shall

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1		not renew such contract for a term extending beyond the
2		mutually agreed timetable for transfer of functions; or
3		(3) in the event any current contract provides for
4		termination of that contract upon the implementation of a
5		contract with the private manager, the Department shall
6		perform all necessary actions to terminate the contract on
7		the date that coincides with the mutually agreed timetable
8		for transfer of functions.
9		If the contracts to support the current operation of the
10		Lottery in effect on the effective date of this amendatory Act
11		of the 96th General Assembly are not subject to termination as
12		provided for in this subsection (c), then the Department may
13		include a provision in the contract with the private manager
14		specifying a mutually agreeable methodology for incorporation.
15		(c-5) The Department shall include provisions in the
16		management agreement whereby the private manager shall, for a
17		fee, and pursuant to a contract negotiated with the Department
18		(the "Employee Use Contract"), utilize the services of current
19		Department employees to assist in the administration and
20		operation of the Lottery. The Department shall be the employer
21		of all such bargaining unit employees assigned to perform such
22		work for the private manager, and such employees shall be State
23		employees, as defined by the Personnel Code. Department
24		employees shall operate under the same employment policies,
25		rules, regulations, and procedures, as other employees of the
26		Department. In addition, neither historical representation

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1		rights under the Illinois Public Labor Relations Act, nor
2		existing collective bargaining agreements, shall be disturbed
3		by the management agreement with the private manager for the
4		management of the Lottery.
5		(d) The management agreement with the private manager shall
6		include all of the following:
7		(1) A term not to exceed 10 years, including any
8		renewals.
9		(2) A provision specifying that the Department:
10		(A) shall exercise actual control over all
11		significant business decisions;
12		(A-5) has the authority to direct or countermand
13		operating decisions by the private manager at any time;
14		(B) has ready access at any time to information
15		regarding Lottery operations;
16		(C) has the right to demand and receive information
17		from the private manager concerning any aspect of the
18		Lottery operations at any time; and
19		(D) retains ownership of all trade names,
20		trademarks, and intellectual property associated with
21		the Lottery.
22		(3) A provision imposing an affirmative duty on the
23		private manager to provide the Department with material
24		information and with any information the private manager
25		reasonably believes the Department would want to know to
26		enable the Department to conduct the Lottery.

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1		(4) A provision requiring the private manager to
2		provide the Department with advance notice of any operating
3		decision that bears significantly on the public interest,
4		including, but not limited to, decisions on the kinds of
5		games to be offered to the public and decisions affecting
6		the relative risk and reward of the games being offered, so
7		the Department has a reasonable opportunity to evaluate and
8		countermand that decision.
9		(5) A provision providing for compensation of the
10		private manager that may consist of, among other things, a
11		fee for services and a performance based bonus as
12		consideration for managing the Lottery, including terms
13		that may provide the private manager with an increase in
14		compensation if Lottery revenues grow by a specified
15		percentage in a given year.
16		(6) (Blank).
17		(7) A provision requiring the deposit of all Lottery
18		proceeds to be deposited into the State Lottery Fund except
19		as otherwise provided in Section 20 of this Act.
20		(8) A provision requiring the private manager to locate
21		its principal office within the State.
22		(8-5) A provision encouraging that at least 20% of the
23		cost of contracts entered into for goods and services by
24		the private manager in connection with its management of
25		the Lottery, other than contracts with sales agents or
26		technical advisors, be awarded to businesses that are a

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1		minority owned business, a female owned business, or a
2		business owned by a person with disability, as those terms
3		are defined in the Business Enterprise for Minorities,
4		Females, and Persons with Disabilities Act.
5		(9) A requirement that so long as the private manager
6		complies with all the conditions of the agreement under the
7		oversight of the Department, the private manager shall have
8		the following duties and obligations with respect to the
9		management of the Lottery:
10		(A) The right to use equipment and other assets
11		used in the operation of the Lottery.
12		(B) The rights and obligations under contracts
13		with retailers and vendors.
14		(C) The implementation of a comprehensive security
15		program by the private manager.
16		(D) The implementation of a comprehensive system
17		of internal audits.
18		(E) The implementation of a program by the private
19		manager to curb compulsive gambling by persons playing
20		the Lottery.
21		(F) A system for determining (i) the type of
22		Lottery games, (ii) the method of selecting winning
23		tickets, (iii) the manner of payment of prizes to
24		holders of winning tickets, (iv) the frequency of
25		drawings of winning tickets, (v) the method to be used
26		in selling tickets, (vi) a system for verifying the

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1		validity of tickets claimed to be winning tickets,
2		(vii) the basis upon which retailer commissions are
3		established by the manager, and (viii) minimum
4		payouts.
5		(10) A requirement that advertising and promotion must
6		be consistent with Section 7.8a of this Act.
7		(11) A requirement that the private manager market the
8		Lottery to those residents who are new, infrequent, or
9		lapsed players of the Lottery, especially those who are
10		most likely to make regular purchases on the Internet as
11		permitted by law.
12		(12) A code of ethics for the private manager's
13		officers and employees.
14		(13) A requirement that the Department monitor and
15		oversee the private manager's practices and take action
16		that the Department considers appropriate to ensure that
17		the private manager is in compliance with the terms of the
18		management agreement, while allowing the manager, unless
19		specifically prohibited by law or the management
20		agreement, to negotiate and sign its own contracts with
21		vendors.
22		(14) A provision requiring the private manager to
23		periodically file, at least on an annual basis, appropriate
24		financial statements in a form and manner acceptable to the
25		Department.
26		(15) Cash reserves requirements.

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1		(16) Procedural requirements for obtaining the prior
2		approval of the Department when a management agreement or
3		an interest in a management agreement is sold, assigned,
4		transferred, or pledged as collateral to secure financing.
5		(17) Grounds for the termination of the management
6		agreement by the Department or the private manager.
7		(18) Procedures for amendment of the agreement.
8		(19) A provision requiring the private manager to
9		engage in an open and competitive bidding process for any
10		procurement having a cost in excess of $50,000 that is not
11		a part of the private manager's final offer. The process
12		shall favor the selection of a vendor deemed to have
13		submitted a proposal that provides the Lottery with the
14		best overall value. The process shall not be subject to the
15		provisions of the Illinois Procurement Code, unless
16		specifically required by the management agreement.
17		(20) The transition of rights and obligations,
18		including any associated equipment or other assets used in
19		the operation of the Lottery, from the manager to any
20		successor manager of the lottery, including the
21		Department, following the termination of or foreclosure
22		upon the management agreement.
23		(21) Right of use of copyrights, trademarks, and
24		service marks held by the Department in the name of the
25		State. The agreement must provide that any use of them by
26		the manager shall only be for the purpose of fulfilling its

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1		obligations under the management agreement during the term
2		of the agreement.
3		(22) The disclosure of any information requested by the
4		Department to enable it to comply with the reporting
5		requirements and information requests provided for under
6		subsection (p) of this Section.
7		(e) Notwithstanding any other law to the contrary, the
8		Department shall select a private manager through a competitive
9		request for qualifications process consistent with Section
10		20-35 of the Illinois Procurement Code, which shall take into
11		account:
12		(1) the offeror's ability to market the Lottery to
13		those residents who are new, infrequent, or lapsed players
14		of the Lottery, especially those who are most likely to
15		make regular purchases on the Internet;
16		(2) the offeror's ability to address the State's
17		concern with the social effects of gambling on those who
18		can least afford to do so;
19		(3) the offeror's ability to provide the most
20		successful management of the Lottery for the benefit of the
21		people of the State based on current and past business
22		practices or plans of the offeror; and
23		(4) the offeror's poor or inadequate past performance
24		in servicing, equipping, operating or managing a lottery on
25		behalf of Illinois, another State or foreign government and
26		attracting persons who are not currently regular players of

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1		a lottery.
2		(f) The Department may retain the services of an advisor or
3		advisors with significant experience in financial services or
4		the management, operation, and procurement of goods, services,
5		and equipment for a government-run lottery to assist in the
6		preparation of the terms of the request for qualifications and
7		selection of the private manager. Any prospective advisor
8		seeking to provide services under this subsection (f) shall
9		disclose any material business or financial relationship
10		during the past 3 years with any potential offeror, or with a
11		contractor or subcontractor presently providing goods,
12		services, or equipment to the Department to support the
13		Lottery. The Department shall evaluate the material business or
14		financial relationship of each prospective advisor. The
15		Department shall not select any prospective advisor with a
16		substantial business or financial relationship that the
17		Department deems to impair the objectivity of the services to
18		be provided by the prospective advisor. During the course of
19		the advisor's engagement by the Department, and for a period of
20		one year thereafter, the advisor shall not enter into any
21		business or financial relationship with any offeror or any
22		vendor identified to assist an offeror in performing its
23		obligations under the management agreement. Any advisor
24		retained by the Department shall be disqualified from being an
25		offeror. The Department shall not include terms in the request
26		for qualifications that provide a material advantage whether

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1		directly or indirectly to any potential offeror, or any
2		contractor or subcontractor presently providing goods,
3		services, or equipment to the Department to support the
4		Lottery, including terms contained in previous responses to
5		requests for proposals or qualifications submitted to
6		Illinois, another State or foreign government when those terms
7		are uniquely associated with a particular potential offeror,
8		contractor, or subcontractor. The request for proposals
9		offered by the Department on December 22, 2008 as
10		"LOT08GAMESYS" and reference number "22016176" is declared
11		void.
12		(g) The Department shall select at least 2 offerors as
13		finalists to potentially serve as the private manager no later
14		than August 9, 2010. Upon making preliminary selections, the
15		Department shall schedule a public hearing on the finalists'
16		proposals and provide public notice of the hearing at least 7
17		calendar days before the hearing. The notice must include all
18		of the following:
19		(1) The date, time, and place of the hearing.
20		(2) The subject matter of the hearing.
21		(3) A brief description of the management agreement to
22		be awarded.
23		(4) The identity of the offerors that have been
24		selected as finalists to serve as the private manager.
25		(5) The address and telephone number of the Department.
26		(h) At the public hearing, the Department shall (i) provide

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1		sufficient time for each finalist to present and explain its
2		proposal to the Department and the Governor or the Governor's
3		designee, including an opportunity to respond to questions
4		posed by the Department, Governor, or designee and (ii) allow
5		the public and non-selected offerors to comment on the
6		presentations. The Governor or a designee shall attend the
7		public hearing. After the public hearing, the Department shall
8		have 14 calendar days to recommend to the Governor whether a
9		management agreement should be entered into with a particular
10		finalist. After reviewing the Department's recommendation, the
11		Governor may accept or reject the Department's recommendation,
12		and shall select a final offeror as the private manager by
13		publication of a notice in the Illinois Procurement Bulletin on
14		or before September 15, 2010. The Governor shall include in the
15		notice a detailed explanation and the reasons why the final
16		offeror is superior to other offerors and will provide
17		management services in a manner that best achieves the
18		objectives of this Section. The Governor shall also sign the
19		management agreement with the private manager.
20		(i) Any action to contest the private manager selected by
21		the Governor under this Section must be brought within 7
22		calendar days after the publication of the notice of the
23		designation of the private manager as provided in subsection
24		(h) of this Section.
25		(j) The Lottery shall remain, for so long as a private
26		manager manages the Lottery in accordance with provisions of

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1		this Act, a Lottery conducted by the State, and the State shall
2		not be authorized to sell or transfer the Lottery to a third
3		party.
4		(k) Any tangible personal property used exclusively in
5		connection with the lottery that is owned by the Department and
6		leased to the private manager shall be owned by the Department
7		in the name of the State and shall be considered to be public
8		property devoted to an essential public and governmental
9		function.
10		(l) The Department may exercise any of its powers under
11		this Section or any other law as necessary or desirable for the
12		execution of the Department's powers under this Section.
13		(m) Neither this Section nor any management agreement
14		entered into under this Section prohibits the General Assembly
15		from authorizing forms of gambling that are not in direct
16		competition with the Lottery.
17		(n) The private manager shall be subject to a complete
18		investigation in the third, seventh, and tenth years of the
19		agreement (if the agreement is for a 10-year term) by the
20		Department in cooperation with the Auditor General to determine
21		whether the private manager has complied with this Section and
22		the management agreement. The private manager shall bear the
23		cost of an investigation or reinvestigation of the private
24		manager under this subsection.
25		(o) The powers conferred by this Section are in addition
26		and supplemental to the powers conferred by any other law. If

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1		any other law or rule is inconsistent with this Section,
2		including, but not limited to, provisions of the Illinois
3		Procurement Code, then this Section controls as to any
4		management agreement entered into under this Section. This
5		Section and any rules adopted under this Section contain full
6		and complete authority for a management agreement between the
7		Department and a private manager. No law, procedure,
8		proceeding, publication, notice, consent, approval, order, or
9		act by the Department or any other officer, Department, agency,
10		or instrumentality of the State or any political subdivision is
11		required for the Department to enter into a management
12		agreement under this Section. This Section contains full and
13		complete authority for the Department to approve any contracts
14		entered into by a private manager with a vendor providing
15		goods, services, or both goods and services to the private
16		manager under the terms of the management agreement, including
17		subcontractors of such vendors.
18		Upon receipt of a written request from the Chief
19		Procurement Officer, the Department shall provide to the Chief
20		Procurement Officer a complete and un-redacted copy of the
21		management agreement or any contract that is subject to the
22		Department's approval authority under this subsection (o). The
23		Department shall provide a copy of the agreement or contract to
24		the Chief Procurement Officer in the time specified by the
25		Chief Procurement Officer in his or her written request, but no
26		later than 5 business days after the request is received by the

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1		Department. The Chief Procurement Officer must retain any
2		portions of the management agreement or of any contract
3		designated by the Department as confidential, proprietary, or
4		trade secret information in complete confidence pursuant to
5		subsection (g) of Section 7 of the Freedom of Information Act.
6		The Department shall also provide the Chief Procurement Officer
7		with reasonable advance written notice of any contract that is
8		pending Department approval.
9		Notwithstanding any other provision of this Section to the
10		contrary, the Chief Procurement Officer shall adopt
11		administrative rules, including emergency rules, to establish
12		a procurement process to select a successor private manager if
13		a private management agreement has been terminated. The
14		selection process shall at a minimum take into account the
15		criteria set forth in items (1) through (4) of subsection (e)
16		of this Section and may include provisions consistent with
17		subsections (f), (g), (h), and (i) of this Section. The Chief
18		Procurement Officer shall also implement and administer the
19		adopted selection process upon the termination of a private
20		management agreement. The Department, after the Chief
21		Procurement Officer certifies that the procurement process has
22		been followed in accordance with the rules adopted under this
23		subsection (o), shall select a final offeror as the private
24		manager and sign the management agreement with the private
25		manager.
26		Except as provided in Sections 21.2, 21.5, 21.6, 21.7,

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1		21.8, and 21.9, and 21.10, the Department shall distribute all
2		proceeds of lottery tickets and shares sold in the following
3		priority and manner:
4		(1) The payment of prizes and retailer bonuses.
5		(2) The payment of costs incurred in the operation and
6		administration of the Lottery, including the payment of
7		sums due to the private manager under the management
8		agreement with the Department.
9		(3) On the last day of each month or as soon thereafter
10		as possible, the State Comptroller shall direct and the
11		State Treasurer shall transfer from the State Lottery Fund
12		to the Common School Fund an amount that is equal to the
13		proceeds transferred in the corresponding month of fiscal
14		year 2009, as adjusted for inflation, to the Common School
15		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		(p) The Department shall be subject to the following
21		reporting and information request requirements:
22		(1) the Department shall submit written quarterly
23		reports to the Governor and the General Assembly on the
24		activities and actions of the private manager selected
25		under this Section;
26		(2) upon request of the Chief Procurement Officer, the

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1		Department shall promptly produce information related to
2		the procurement activities of the Department and the
3		private manager requested by the Chief Procurement
4		Officer; the Chief Procurement Officer must retain
5		confidential, proprietary, or trade secret information
6		designated by the Department in complete confidence
7		pursuant to subsection (g) of Section 7 of the Freedom of
8		Information Act; and
9		(3) at least 30 days prior to the beginning of the
10		Department's fiscal year, the Department shall prepare an
11		annual written report on the activities of the private
12		manager selected under this Section and deliver that report
13		to the Governor and General Assembly.
14		(Source: P.A. 97-464, eff. 8-19-11; 98-463, eff. 8-16-13;
15		98-649, eff. 6-16-14.)
16		(20 ILCS 1605/20) (from Ch. 120, par. 1170)
17		Sec. 20. State Lottery Fund.
18		(a) There is created in the State Treasury a special fund
19		to be known as the "State Lottery Fund". Such fund shall
20		consist of all revenues received from (1) the sale of lottery
21		tickets or shares, (net of commissions, fees representing those
22		expenses that are directly proportionate to the sale of tickets
23		or shares at the agent location, and prizes of less than $600
24		which have been validly paid at the agent level), (2)
25		application fees, and (3) all other sources including moneys

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1		credited or transferred thereto from any other fund or source
2		pursuant to law. Interest earnings of the State Lottery Fund
3		shall be credited to the Common School Fund.
4		(b) The receipt and distribution of moneys under Section
5		21.5 of this Act shall be in accordance with Section 21.5.
6		(c) The receipt and distribution of moneys under Section
7		21.6 of this Act shall be in accordance with Section 21.6.
8		(d) The receipt and distribution of moneys under Section
9		21.7 of this Act shall be in accordance with Section 21.7.
10		(e) The receipt and distribution of moneys under Section
11		21.8 of this Act shall be in accordance with Section 21.8.
12		(f) The receipt and distribution of moneys under Section
13		21.9 of this Act shall be in accordance with Section 21.9.
14		(g) The receipt and distribution of moneys under Section
15		21.10 of this Act shall be in accordance with Section 21.10.
16		(Source: P.A. 98-649, eff. 6-16-14.)
17		(20 ILCS 1605/21.10 new)
18		Sec. 21.10. The End of Alzheimer's Begins With Me
19		scratch-off game.
20		(a) The Department shall offer a special instant
21		scratch-off game with the title of "The End of Alzheimer's
22		Begins With Me". The game shall commence on January 1, 2017 or
23		as soon thereafter, at the discretion of the Director, as is
24		reasonably practical. The operation of the game shall be
25		governed by this Act and any rules adopted by the Department.

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1		If any provision of this Section is inconsistent with any other
2		provision of this Act, then this Section governs.
3		(b) The net revenue from the "The End of Alzheimer's Begins
4		With Me" scratch-off game shall be deposited into the
5		Alzheimer's Awareness Fund.
6		Moneys received for the purposes of this Section,
7		including, without limitation, net revenue from the special
8		instant scratch-off game and from gifts, grants, and awards
9		from any public or private entity, must be deposited into the
10		Fund. Any interest earned on moneys in the Fund must be
11		deposited into the Fund.
12		For the purposes of this subsection, "net revenue" means
13		the total amount for which tickets have been sold less the sum
14		of the amount paid out in the prizes and the actual
15		administrative expenses of the Department solely related to the
16		scratch-off game under this Section.
17		(c) During the time that tickets are sold for the "The End
18		of Alzheimer's Begins With Me" scratch-off game, the Department
19		shall not unreasonably diminish the efforts devoted to
20		marketing any other instant scratch-off lottery game.
21		(d) The Department may adopt any rules necessary to
22		implement and administer the provisions of this Section.
23		Section 99. Effective date. This Act takes effect upon
24		becoming law.