A.R.S. tit. 5 ch. 5.1 — Arizona Revised Statutes Title 5 Chapter 5.1 — State Lottery

5-531. Definitions In this article, unless the context otherwise requires: 1. "Bond related expenses" means any expenses incurred by the director to issue and administer the bonds, including underwriting fees and costs, trustee fees, financial consultant fees, printing and advertising costs, paying agent fees, transfer agent fees, legal, accounting, feasibility consultant and other professional fees and expenses, bond insurance or other credit enhancements or liquidity facilities, attorney and accounting fees and expenses related to credit enhancement, bond insurance or liquidity enhancement, remarketing fees, rating agency fees and costs, travel and telecommunications expenses and all other fees considered necessary by the director in order to market and administer the bonds. 2. "Bond related obligations" means any agreement or contractual relationship between the director and any bank, trust company, insurance company, surety bonding company, pension fund or other financial institution providing increased credit on, or security for, the bonds or liquidity for secondary market transactions and any agreement to fund or replenish reserves for the bonds. 3. "Bonds" means any bonds issued pursuant to this article. 4. "Department" means the department of administration. 5. "Director" means the director of the department of administration. 5-532. Authorization of state lottery revenue bonds A. The director shall issue state lottery revenue bonds pursuant to this article in an amount sufficient to provide monies to: 1. Deposit in the state general fund by December 31, 2010 an amount of not more than four hundred fifty million dollars. 2. Pay bond related expenses. 3. Pay fees, charges and expenses incurred with respect to bond related obligations. 4. Fully or partially fund any reserves or sinking accounts for debt service on the bonds established by the bond documents. B. The director shall authorize the bonds by an appropriate document signed by the director. The bond authorizing document shall prescribe: 1. The fixed or variable rate or rates of interest, the date or dates on which interest is payable and the denominations of the bonds. 2. The date or dates of the bonds and maturity, within twenty years after the date of issuance. 3. The form of the bonds. 4. The manner of executing the bonds. 5. The medium and place of payment. 6. The terms of redemption, which may provide for a premium for early redemption. C. The bonds issued pursuant to this article shall be known as state lottery revenue bonds. D. The director shall notify the joint legislative budget committee of the bond's proposed terms and conditions at least ten days before an initial public offering document is released. 5-533. Issuance and sale of bonds; state lottery revenue bond proceeds fund; use of bond proceeds A. The state lottery revenue bonds shall be sold at public or private sale at the price and on the terms prescribed by the director at, above or below par. The first four hundred fifty million dollars of proceeds received from the issuance of state lottery revenue bonds shall be deposited in the state general fund. B. The state lottery revenue bond proceeds fund is established. Except as provided in subsection A, the fund shall consist of the net proceeds received from the sale of any state lottery revenue bonds issued by the director pursuant to this article. The department shall administer the fund. C. The director may use monies in the state lottery revenue bond proceeds fund only for the purposes provided in section 5-532, subsection A, paragraphs 2, 3 and 4. The monies in the fund are exempt from the provisions of section 35-190 relating to the lapsing of appropriations. 5-534. State lottery revenue bond debt service fund A. The state lottery revenue bond debt service fund is established. The fund shall consist of monies transferred pursuant to law. The department shall administer and account for the state lottery revenue bond debt service fund. B. If the director issues state lottery revenue bonds: 1. Amounts distributable to the state general fund from the state lottery fund pursuant to section 5-522 shall be transferred first to the state lottery bond debt service fund until the state lottery bond debt service fund contains monies sufficient to meet all requirements for the current period as required by the bond documents and, after the requirements for the current period as required by the bond documents have been satisfied, shall be transferred to the state general fund. 2. After payment of the state lottery operating expenses, amounts distributable from the state lottery fund pursuant to section 5-572 shall be transferred first to the state lottery bond debt service fund until the state lottery bond debt service fund contains monies sufficient to meet all requirements for the current period as required by the bond documents and, after the requirements for the current period as required by the bond documents have been satisfied, shall be transferred in accordance with section 5-572. C. Monies in the state lottery revenue bond debt service fund may be used only for the purposes authorized by this article. 5-535. Securing principal and interest; refunding bonds A. In connection with issuing state lottery revenue bonds authorized by this article and to secure the principal and interest on the bonds, the director may: 1. Segregate the state lottery revenue bond debt service fund into one or more accounts and subaccounts and provide that bonds issued under this article may be secured by a lien on all or part of the monies paid into the state lottery revenue bond debt service fund or into any account or subaccount in the fund. 2. Provide that the bonds issued under this article are secured by a first lien on the monies paid into the state lottery revenue bond debt service fund and paid into the state lottery fund to be placed in the state lottery bond debt service fund as provided in this article and pledge and assign to or in trust for the benefit of the holder or holders of the bonds all or part of the monies in the state lottery revenue bond debt service fund, in any account or subaccount in the state lottery revenue bond debt service fund or in the state lottery revenue bond proceeds fund as is necessary to secure and pay the principal, the interest and any premium on the bonds as they come due. 3. Establish priorities among bondholders based on criteria adopted by the director. 4. Set aside, regulate and dispose of reserves and sinking accounts. 5. Prescribe the procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of bonds the holders of which must consent to and the manner in which the consent may be given. 6. Provide for payment of bond related expenses from the proceeds of the sale of the bonds or other revenues authorized by this article and available to the director. 7. Provide for the services of trustees, cotrustees, agents and consultants and other specialized services with respect to the bonds. 8. Take any other action that in any way may affect the security and protection of the bonds or interest on the bonds. 9. Refund any bonds issued by the director by issuing new bonds, if these bonds are secured from the same source of revenues as the bonds authorized by this article. 10. Issue bonds partly to refund outstanding bonds and partly for any other purpose consistent with this article. B. If state lottery revenue bonds are issued, the director shall provide to the state lottery commission a schedule of the amount needed to pay each fiscal year's debt service on outstanding state lottery revenue bonds, including sinking fund and reserve fund deposits pursuant to the terms of the bonds, bond related expenses and amounts payable with respect to bond related obligations. 5-536. Lien of pledge A. Any pledge made under this article in connection with state lottery revenue bonds is valid and binding from the time the pledge is made. B. The monies pledged and received by the state lottery revenue bond debt service fund and by the state lottery fund to be placed in the state lottery revenue bond debt service fund are immediately subject to the lien of the pledge without any future physical delivery or further act. Any lien of any pledge is valid and binding against all parties that have claims of any kind against the state, regardless of whether the parties have notice of the lien. The official resolution or trust indenture or any instrument by which this pledge is created when adopted by the director, is notice to all concerned of the creation of the pledge, and those instruments need not be recorded in any other place to perfect the pledge. 5-537. Bond purchase; cancellation The director may purchase bonds for cancellation out of any monies available for the purchase, at a price of not more than either of the following: 1. If the bonds are redeemable at the time of the purchase, the applicable redemption price plus accrued interest to the next interest payment date on the bonds. 2. If the bonds are not redeemable at the time of the purchase, the applicable redemption price on the first date after the purchase on which the bonds become subject to redemption plus accrued interest to that date. 5-538. Payment of bonds The state lottery revenue bonds shall be paid solely from monies from the state lottery revenue bond debt service fund established by section 5-534. 5-539. Investment of monies; funds A. The director may authorize the state treasurer or bond trustee to invest monies in the state lottery revenue bond proceeds fund and the state lottery revenue bond debt service fund. B. The order directing an investment may state a specified time when the monies invested will be used. The state treasurer or bond trustee shall make the investment in such a way as to mature at the specified date. C. All monies earned as interest or otherwise derived from the investment of the monies in the state lottery revenue bond proceeds fund and the state lottery revenue bond debt service fund shall be credited to the state lottery revenue bond debt service fund established by section 5-534. D. At the direction of the director, the state treasurer or bond trustee may invest or reinvest monies in the state lottery revenue bond proceeds fund and the state lottery revenue bond debt service fund in investments authorized by section 35-313. The purchase of the securities shall be made by the state treasurer or bond trustee on authority of the director. The treasurer or bond trustee shall act as custodian of all securities purchased. The securities may be sold on an order of the director. 5-540. Characteristics of bonds; negotiable; exemption from taxation; obligation; legal investments A. State lottery revenue bonds issued under this article are fully negotiable within the meaning and for all purposes of the uniform commercial code, subject only to any provisions for registration, regardless of whether the bonds actually constitute negotiable instruments under the uniform commercial code. B. The bonds, the transfer of the bonds and the income from the bonds are at all times free from taxation in this state. C. State lottery revenue bonds: 1. Are payable only according to their terms. 2. Are not general, special or other obligations of this state. 3. Do not constitute a debt of this state. 4. Are not enforceable against this state nor is the payment of the bonds enforceable out of any monies other than the revenue pledged and assigned to, or in trust for the benefit of, the holder or holders of the bonds. 5. Are securities in which public officers and bodies of this state and of municipalities and political subdivisions of this state, all companies, associations and other persons carrying on an insurance business, all financial institutions, investment companies and other persons carrying on a banking business, all fiduciaries and all other persons who are authorized to invest in government obligations may properly and legally invest. 6. Are securities that may be deposited with public officers or bodies of this state and municipalities and political subdivisions of this state for purposes that require the deposit of government bonds or obligations. 5-541. Effect of changing circumstances of bonds; agreement of state A. An amendment of any provision of this article does not diminish or impair the validity of bonds issued under this article or the remedies and rights of bondholders. B. This state pledges to and agrees with the holders of the bonds authorized by this article that this state will not limit, alter or impair the rights and remedies of the bondholders, until all bonds issued under this article, together with interest on the bonds, interest on any unpaid installments of principal or interest and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholders, are fully met and discharged. The director, as agent for this state, may include this pledge and undertaking in its resolutions and indentures authorizing and securing the bonds. 5-542. Validity of bonds A. This article constitutes full authority for authorizing and issuing state lottery revenue bonds without reference to any other law of this state. No other law with regard to authorizing or issuing obligations or that in any way impedes or restricts performing the acts authorized by this article may be construed to apply to any proceedings taken or acts done pursuant to this article. B. The validity of bonds issued under this article does not depend on and is not affected by the legality of any proceeding relating to any action relating to application of the proceeds of the bonds. C. The bonds shall recite that they are regularly issued pursuant to this article. That recital constitutes prima facie evidence of the legality and validity of the bonds. From and after the sale and delivery of the bonds, they are incontestable by the director or this state. 5-543. State officials to comply with agreements Notwithstanding any other law, all state officials shall comply with all agreements made by the director with or for the benefit of the owners of its state lottery revenue bonds. The executive director of the state lottery commission shall provide assistance and information as requested by the director of the department of administration to accomplish the purposes of this article and the issuance, sale and administration of the bonds. 5-551. Definitions In this chapter, unless the context otherwise requires: 1. "Commission" means the Arizona state lottery commission. 2. "Director" means the executive director of the Arizona state lottery commission. 3. "Lottery" or "state lottery" means the lottery created and operated pursuant to this chapter. 5-552. Arizona state lottery commission; membership; appointment; term; chairman; removal; reimbursement of expenses A. There is established the Arizona state lottery commission consisting of five members who shall be citizens and residents of this state and appointed by the governor pursuant to section 38-211. No more than three members may be from the same political party. The term of members appointed to the commission is five years. The commission members shall annually elect one of the members to serve as chairman of the commission. B. At least one member of the commission shall have a minimum of five years' experience in law enforcement. C. At least one member of the commission shall have a minimum of five years' experience as a certified public accountant. D. At least one member of the commission shall have a minimum of five years' experience in marketing or advertising, or both. E. At least one member of the commission shall have a minimum of five years' experience in convenience store, minimart or grocery retailing. F. Any member of the commission may be removed from office by the governor for cause upon notice and opportunity to be heard at a public hearing. G. Members of the commission are eligible to receive compensation pursuant to section 38-611. H. The commission shall hold at least one meeting each quarter. I. No commission member may have a pecuniary interest in any contract or agreement to which the commission is a party. J. No action of the commission is binding unless taken at a meeting with at least three members present voting in favor of the action in question. 5-553. Executive director; appointment A. An executive director appointed by the governor pursuant to section 38-211 shall exercise immediate supervision over the lottery. The director shall be a person qualified by training and experience to administer the state lottery. The director shall be appointed by the governor and shall serve at the pleasure of the governor. B. The director shall devote his entire time and attention to the administration of the state lottery and shall not be engaged in any other profession or occupation. The director is eligible to receive compensation pursuant to section 38-611. 5-554. Commission; director; powers and duties; definitions A. The commission shall meet with the director not less than once each quarter to make recommendations and set policy, receive reports from the director and transact other business properly brought before the commission. B. The commission shall oversee a state lottery to produce the maximum amount of net revenue consonant with the dignity of the state. To achieve these ends, the commission shall authorize the director to adopt rules in accordance with title 41, chapter 6. Rules adopted by the director may include the following: 1. Subject to the approval of the commission, the types of lottery games and the types of game play-styles to be conducted. 2. The method of selecting the winning tickets or shares for noncomputerized online games, except that a method may not be used that, in whole or in part, depends on the results of a dog race, a horse race, any gaming activity conducted pursuant to the 2021 tribal-state gaming compact amendments or any sports event or other event. 3. The manner of payment of prizes to the holders of winning tickets or shares, including providing for payment by the purchase of annuities in the case of prizes payable in installments, except that the commission staff shall examine claims and may not pay any prize based on altered, stolen or counterfeit tickets or based on any tickets that fail to meet established validation requirements, including rules stated on the ticket or in the published game rules, and confidential validation tests applied consistently by the commission staff. No particular prize in a lottery game may be paid more than once, and in the event of a binding determination that more than one person is entitled to a particular prize, the sole remedy of the claimants is the award to each of them of an equal portion of the single prize. 4. The method to be used in selling tickets or shares, except that no elected official's name may be printed on the tickets or shares. The overall estimated odds of winning some prize or some cash prize, as appropriate, in a given game shall be printed on each ticket or share. 5. The licensing of agents to sell tickets or shares, except that a person who is under eighteen years of age shall not be licensed as an agent. 6. The manner and amount of compensation 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, including provision for variable compensation based on sales volume. 7. Matters necessary or desirable for the efficient and economical operation and administration of the lottery and for the convenience of the purchasers of tickets or shares and the holders of winning tickets or shares. 8. The licensing of authorized keno locations, including the persons that control the business or other activity conducted at an authorized keno location. C. The commission shall authorize the director to issue orders and shall approve orders issued by the director for the necessary operation of the lottery. Orders issued under this subsection may include the following: 1. The prices of tickets or shares in lottery games. 2. The themes, game play-styles, and names of lottery games and definitions of symbols and other characters used in lottery games, except that each ticket or share in a lottery game shall bear a unique distinguishable serial number. 3. The sale of tickets or shares at a discount for promotional purposes. 4. The prize structure of lottery games, including the number and size of prizes available. Available prizes may include free tickets in lottery games and merchandise prizes. 5. The frequency of drawings, if any, or other selections of winning tickets or shares, except that: (a) All drawings shall be open to the public. (b) The actual selection of winning tickets or shares may not be performed by an employee or member of the commission. (c) Noncomputerized online game drawings shall be witnessed by an independent observer. 6. Requirements for eligibility for participation in grand drawings or other runoff drawings, including requirements for the submission of evidence of eligibility within a shorter period than that provided for claims by section 5-568. 7. Incentive and bonus programs designed to increase sales of lottery tickets or shares and to produce the maximum amount of net revenue for this state. 8. The method used for the validation of a ticket, which may be by physical or electronic presentation of a ticket. D. Notwithstanding title 41, chapter 6 and subsection B of this section, the director, subject to the approval of the commission, may establish a policy, procedure or practice that relates to an existing online game or a new online game that is the same type and has the same type of game play-style as an online game currently being conducted by the lottery or may modify an existing rule for an existing online game or a new online game that is the same type and has the same type of game play-style as an online game currently being conducted by the lottery, including establishing or modifying the matrix for an online game by giving notice of the establishment or modification at least thirty days before the effective date of the establishment or modification. E. The commission shall maintain and make the following information available for public inspection at its offices during regular business hours: 1. A detailed listing of the estimated number of prizes of each particular denomination expected to be awarded in any instant game currently on sale. 2. After the end of the claim period prescribed by section 5-568, a listing of the total number of tickets or shares sold and the number of prizes of each particular denomination awarded in each lottery game. 3. Definitions of all play symbols and other characters used in each lottery game and instructions on how to play and how to win each lottery game. F. Any information that is maintained by the commission and that would assist a person in locating or identifying a winning ticket or share or that would otherwise compromise the integrity of any lottery game is deemed confidential and is not subject to public inspection. G. The commission, in addition to other games authorized by this article, may establish multijurisdictional lottery games to be conducted concurrently with other lottery games authorized under subsection B of this section. The monies for prizes, for operating expenses and for payment to the state general fund shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system. The monies shall be derived from the revenues of multijurisdictional lottery games. H. The commission, in addition to other games authorized by this article, shall establish special instant ticket games with play areas protected by paper tabs designated for use by charitable organizations. The monies for prizes and for operating expenses shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system. Monies saved from the revenues of the special games, by reason of operating efficiencies, shall become other revenue of the lottery commission and revert to the state general fund, except that the commission shall transfer the proceeds from any games that are sold from a vending machine in an age-restricted area to the state treasurer for deposit in the following amounts: 1. Nine hundred thousand dollars each fiscal year in the internet crimes against children enforcement fund established by section 41-199. 2. One hundred thousand dollars each fiscal year in the victims' rights enforcement fund established by section 41-1727. 3. Any monies in excess of the amounts listed in paragraphs 1 and 2 of this subsection, in the state lottery fund established by section 5-571. I. The commission or director shall not establish or operate any online or electronic keno game or any game played on the internet, except for the electronic keno game and the mobile draw game authorized in subsection J of this section. J. From and after the date on which the conditions prescribed in sections 5-1213 and 5-1321 are met, the commission or director, in addition to any other game authorized in this section, may establish and operate a single electronic keno game and a single mobile draw game on a centralized computer system controlled by the lottery that allows a player to place wagers, view the outcome of a game and receive winnings over the internet, including on personal electronic devices. K. An electronic keno game conducted pursuant to subsection J of this section may be operated only within an authorized keno location. If the electronic keno game is authorized to be played on personal electronic devices, players shall be geographically restricted by means of geofencing to authorized keno locations. Electronic keno game draws may not be conducted more frequently than once every four minutes. The number of authorized keno locations may not exceed the number published annually by the director, which is equal to the total number of establishments licensed by the department of gaming to allow wagering on live horse races and simulcast wagering pursuant to section 5-107, plus the total number of class 14 liquor licenses that the department of liquor licenses and control issued to fraternal organizations or veterans' organizations as of January 1, 2021. The total number of authorized keno locations shall be automatically increased by two percent every two years. L. A mobile draw game conducted pursuant to subsection J of this section may offer players multiple game play styles and wagering options. Players of the mobile draw game may not play or win a prize more frequently than once per hour. M. An electronic keno game or mobile draw game conducted pursuant to this section may not present the player with a user interface depicting spinning reels or that replicates a slot machine, blackjack, poker, roulette, craps or any other casino-style game other than traditional keno or a traditional lottery draw game. N. Except as provided in subsections J, K, L and M of this section, the commission or director shall not establish or operate any lottery game or any type of game play-style, either individually or in combination, that uses gaming devices or video lottery terminals as those terms are used in section 5-601.02, including monitor games that produce or display outcomes or results more than once per hour. O. The director shall print, in a prominent location on each lottery ticket or share, a statement that help is available if a person has a problem with gambling and a toll-free telephone number where problem gambling assistance is available. The director shall require all licensed agents to post a sign with the statement that help is available if a person has a problem with gambling and the toll-free telephone number at the point of sale as prescribed and supplied by the director. P. For the purposes of this section: 1. "Additional wagering facility" has the same meaning prescribed in section 5-101. 2. "Authorized keno location" means a physical facility located at least five miles from an Indian gaming facility that is licensed by the director in the same manner as licenses issued pursuant to section 5-562 but only to a fraternal organization or veterans' organization or to a racetrack enclosure or additional wagering facility where pari-mutuel wagering on horse races is conducted. 3. "Charitable organization" means any nonprofit organization, including not more than one auxiliary of that organization, that has operated for charitable purposes in this state for at least two years before submitting a license application under this article. 4. "Electronic keno game" means a house banking game in which: (a) A player selects from one to twenty numbers on a card that contains the numbers one through eighty. (b) The lottery randomly draws twenty numbers. (c) Players win if the numbers they select correspond to the numbers drawn by the lottery. (d) The lottery pays all winners, if any, and collects from all losers. 5. "Fraternal organization" has the same meaning prescribed in section 5-401. 6. "Game play-style" means the process or procedure that a player must follow to determine if a lottery ticket or share is a winning ticket or share. 7. "Matrix" means the odds of winning a prize and the prize payout amounts in a given game. 8. "Mobile draw game" conducted pursuant to subsection J of this section, means a lottery draw game offered to players over the internet, including on mobile devices, in which: (a) A combination of numbers, symbols or characters is selected. (b) A computer system authorized by the lottery randomly selects a winning combination of numbers, symbols or characters. (c) A computer system validates any prize awarded to the players. 9. "Other event" has the same meaning prescribed in section 5-1301. 10. "Sports event" has the same meaning prescribed in section 5-1301. 11. "Veterans' organization" has the same meaning prescribed in section 5-401. 5-555. Apportionment of revenue A. Not more than eighteen and one-half per cent of the total annual revenues accruing from the sale of lottery tickets or shares and from all other sources and not more than thirty-five per cent of the total annual revenues from the sale of special instant games authorized under section 5-554, subsection H shall be deposited in the state lottery fund established by section 5-571 to be expended for the following: 1. The payment of costs incurred in the operation and administration of the lottery, including the expenses of the commission and the costs resulting from any contract or contracts entered into for consulting or operational services. 2. Independent audits, which shall be performed annually in addition to the audits required by section 5-574. 3. Incentive programs for lottery sales agents and lottery employees. 4. Payment of compensation to licensed sales agents necessary to provide for the adequate availability of tickets or services to prospective buyers and for the convenience of the public. Except as otherwise provided in this subsection, compensation of licensed sales agents shall be at least five and one-half per cent but not more than eight per cent of the price of each ticket or share that a retail sales agent sells in instant games and online games, less the price of any tickets or shares that are voided. 5. The payment of reasonable fees to redemption agents as authorized by section 5-569. 6. The purchase or lease of lottery equipment, tickets and materials. 7. Compensation of a licensed sales agent who is designated as a charitable organization as defined in section 5-554. Compensation shall be twenty per cent of the price of each ticket from a special instant game authorized under section 5-554, subsection H and shall be an offset against the sale of the ticket. B. Not less than fifty per cent of the total annual revenues accruing from the sale of lottery tickets or shares shall be deposited in the state lottery prize fund established by section 5-573 for payment of prizes to the holders of winning tickets or shares or for other purposes provided for in section 5-568. C. All other revenues accruing from the sale of lottery tickets or shares in online games or instant games shall be deposited in the state lottery fund established by section 5-571 to be used as prescribed by section 5-572. D. Monies expended under subsection A of this section shall be subject to legislative appropriation. 5-556. Powers and duties of director In addition to other powers and duties prescribed in this chapter, the director shall: 1. Supervise and administer the operation of the lottery in accordance with this chapter and the rules adopted under this chapter, subject to the continuous duty to take into account the particularly sensitive and responsible nature of the commission's functions. 2. Enforce this chapter and the rules adopted under this chapter. The director shall accept allegations of any violations of the laws of this state or rules pertaining to the conduct of the lottery. 3. Pursuant to this chapter and the rules adopted by the commission, license as agents to sell lottery tickets such persons as will best serve the public convenience and promote the sale of tickets or shares. 4. Subject to title 41, chapter 4, article 4, hire such professional, clerical, technical and administrative personnel as may be necessary to carry out this chapter. The director shall conduct background checks of prospective employees, and, in all employment decisions, shall take into account the particularly sensitive and responsible nature of the operation of the state lottery. 5. Act as secretary and executive officer of the commission. 6. Confer regularly as necessary or desirable and not less than once every quarter with the commission on the operation and administration of the lottery. 7. Make available for inspection by the commission, upon request, all books, records, files and other information and documents of the commission. 8. Advise the commission and recommend matters as are necessary and advisable to improve the operation and administration of the lottery. 9. Suspend or revoke any license issued pursuant to this chapter or the rules adopted pursuant to this chapter, subject to appeal to the commission. 10. Within thirty days after receiving an allegation of a violation of the laws of this state or rules pertaining to the conduct of the lottery by a licensed agent and evidence substantiating the allegation, determine whether the agent has violated the rules or if a criminal investigation is warranted. 5-557. Monthly reports; annual reports A. The director shall make a monthly report to the commission, the governor, the speaker of the house of representatives and the president of the senate. The monthly report shall include the total lottery revenue, prize disbursements and other expenses for the preceding month. B. The commission shall make an annual report to the governor, the speaker of the house of representatives and the president of the senate. The annual report shall include a full and complete statement of lottery revenues, prize disbursements and other expenses for the preceding years, and recommendations for amendments to this chapter as the commission deems necessary or desirable. 5-558. Studies and investigations A. The director shall conduct an ongoing study and investigation of the lottery for the following purposes: 1. To ascertain any defects in this chapter or in the rules through which any abuses in the administration and operation of the lottery or any evasion of this chapter or the rules may arise or be practiced. 2. To formulate recommendations for changes in this chapter. 3. To guard against the use of this chapter and the rules as a cloak for organized gambling and crime. 4. To insure that this chapter and the rules are in a form and are administered to serve the true purposes of this chapter. B. The director shall conduct an ongoing study and investigation of the operation and the administration of lottery laws in effect in other states or countries, any literature on the subject that may be published or available, any federal laws that may affect the operation of the lottery and the reaction of citizens to existing and potential features of the lottery with a view to recommending or effecting changes that will tend to serve the purposes of this chapter. 5-559. Contracts; limitation; restrictions A. Notwithstanding any other statute, the director may: 1. Directly solicit bids and contract for the design and operation of the lottery or the purchase of lottery equipment, tickets and related materials. 2. Contract to effectuate the purposes of this chapter and the rules adopted pursuant to this chapter. 3. Acquire administrative office facilities and related facilities and equipment for the use of the commission by lease, purchase or lease-purchase. B. Procurement pursuant to this section shall be performed as prescribed in section 41-2501, subsection H. Bids received under this section may be deemed confidential in whole or in part by the director if required on account of the sensitive and responsible nature of the commission's functions and the paramount considerations of security and integrity. C. Any award made by the director pursuant to this section becomes effective and binding on the commission unless it is rejected by the commission at a meeting held within fourteen calendar days after the award is communicated to the members of the commission. D. A contract awarded or entered into by the director pursuant to this section shall not be assigned by the holder except by specific approval of the director. In all awards of contracts pursuant to this section, the director shall take particular account of the sensitive and responsible nature of the commission's functions and the paramount considerations of security and integrity. 5-560. Security operations; powers; peace officer status A. The state lottery commission shall maintain operations responsible for security. The director shall appoint a security officer to supervise the security operations of the commission. B. The security operations of the state lottery commission shall be a law enforcement agency and the supervising security officer is designated a peace officer. Such law enforcement agency and peace officer status shall be for the limited purpose of receiving investigative information from law enforcement agencies pertaining to investigations of lottery activities. C. No employee of the lottery commission is eligible for participation in the public safety personnel retirement system. 5-561. Department of public safety; investigation; authority; payment The director of the department of public safety shall order an investigation into any violation of a statute of this state which pertains to the conduct of the state lottery. The director shall include in the commission's overhead expenses and pay, upon certified invoice submitted by the director of the department of public safety, any charges for actual expenses as a result of investigations and related law enforcement activities, or for any activity directly or indirectly related to the lottery operation. The charges may include costs for personnel, supplies, materials, equipment and travel within or without the state. 5-562. Licenses to sell tickets or shares; fee; conditions; definitions A. A license as an agent to sell lottery tickets or shares shall not be issued to any person to engage in business exclusively as a lottery sales agent. Before issuing a license as a lottery sales agent to any person, the director shall consider factors such as the financial responsibility and security of the person and the nature of the person's business activity, the person's background, the accessibility of the person's place of business or activity to the public, the accessibility of existing licensees to serve the public convenience and the volume of expected sales. B. A person that is lawfully engaged in nongovernmental business on state property may be licensed as a lottery sales agent. C. The director may establish by rule and collect a fee for a license issued pursuant to this section. D. A license is not assignable or transferrable. E. A licensed agent or licensed agent's employee may sell lottery tickets or shares only on the premises stated in the license of the agent. F. The director may purchase a blanket bond covering the activities of licensed agents. G. A licensed agent shall display the licensed agent's license or a copy of the license conspicuously in accordance with the rules prescribed by the director. H. If a licensed agent sells lottery tickets or shares on leased premises and all or part of the agent's rental payments are based on the total volume of sales made at the premises, the compensation paid by the state lottery commission to the agent for the sale of tickets and shares is the amount of the sale for the purposes of determining the agent's rental payments. This subsection does not apply if the lease agreement expressly provides that the total volume of sales made at the premises includes sales of lottery tickets or shares. I. The commission shall adopt rules to establish penalties for a licensed agent who violates section 5-565 or 5-565.01. The penalty for a subsequent violation within any twelve-month period shall be more severe than the penalty for a prior violation. J. The director shall not require a licensed agent, as a condition of securing or continuing to hold a license to sell lottery tickets or shares to the public, to sell such tickets or shares through or by the use of a self-service vending machine at the licensed agent's premises. K. For the purposes of this section, acts or omissions of an employee at the premises of a licensed agent or sales of tickets or shares by a self-service vending machine in violation of section 5-565 or 5-565.01 shall be deemed acts or omissions of the licensed agent only at the premises where the acts, omissions or sales occurred. L. For the purposes of this section: 1. "Person": (a) Means an individual, association, corporation, club, trust, estate, society, company, joint stock company, receiver, trustee or referee, any other person acting in a fiduciary or representative capacity who is appointed by a court, or any combination of individuals. (b) Includes any department, commission, agency or instrumentality of this state, including any county, city or town and any agency or instrumentality of this state or of a county, city or town. 2. "Premises" means the physical location and address listed on the license of the licensed agent where lottery tickets or shares may be sold. 5-562.01. Prosecution; payment of costs A. The attorney general and county attorneys have concurrent prosecution authority for any offense arising out of or in connection with the formation, management, operation or conduct of the state lottery. B. The director shall include, as an expense of the commission, all costs incurred by the attorney general or a county attorney as a result of prosecution of a person for a violation of the provisions of this article or for any violation directly or indirectly related to the state lottery operation. The director shall authorize reimbursement of prosecution costs on presentation of a certified invoice signed by the attorney general or a county attorney. C. As used in this section prosecution costs may include but are not limited to costs for personnel, expenses, fees and other costs necessary in the preparation and prosecution of a person charged with a violation of the provisions of this article. 5-563. Right to prize not assignable; exceptions A. The right of any person to a prize is not assignable, except that: 1. Payment of any prize drawn or the remainder of any annuity purchased may be paid to any of the following: (a) The estate of a deceased prize winner. (b) The beneficiary of a deceased prize winner. (c) A person pursuant to an appropriate judicial order. 2. Payments to winners in an amount of six hundred dollars or more are subject to setoff pursuant to section 5-575. 3. In the event of a voluntary assignment, the remainder of any annuity, or a portion of the remainder of the annuity, may be assigned by a prize winner pursuant to an appropriate judicial order if all of the following conditions are met: (a) The prize winner provides an affidavit to the court to the effect that the affiant is of sound mind, is not acting under duress and has received independent financial and tax advice concerning the assignment. (b) The assignee pays the prize winner a lump sum for all amounts that are due to the prize winner under the assignment agreement on or before the date that the assignment takes effect. (c) The parties to the assignment pay a fee to the commission to defray the expenses incurred by the commission in processing the assignment. The commission shall determine the amount of the fee. Monies collected by the commission pursuant to this subdivision shall be deposited in the state lottery fund established by section 5-571. B. On receipt of a court order that meets the requirements of subsection A, paragraph 3 of this section, the director shall make the voluntary assignment. C. The commission and director shall be discharged of all further liability upon payment of a prize pursuant to this section. 5-564. Sale at unauthorized price or by unauthorized persons; violation; classification A. A person shall not sell a ticket or share at a price greater than that fixed by rule. A person other than a licensed lottery sales agent or any employee of an agent acting within the scope of his employment shall not sell lottery tickets or shares. This section does not prohibit a person from giving lottery tickets or shares to another person as a gift. B. A person who violates this section is guilty of a class 1 misdemeanor. 5-565. Sale of tickets or shares to underage persons; violation; classification A. It is unlawful for a person to sell or offer to sell a lottery ticket or share to any person who is under the age of twenty-one years. B. A person who violates this section is guilty of a class 3 misdemeanor. 5-565.01. Sale to persons using state issued electronic benefits transfer cards; violation; classification A. It is unlawful for a licensed agent to sell a lottery ticket or share to a person who uses either a public assistance voucher issued by any public entity or an electronic benefits transfer card issued by the department of economic security to purchase the ticket or share. B. It is unlawful for a licensed agent to sell a lottery ticket or share during the same transaction in which a person uses either a public assistance voucher issued by any public entity or an electronic benefits transfer card issued by the department of economic security. C. A person who violates this section is guilty of a class 3 misdemeanor. 5-565.02. Purchase of lottery tickets or shares by minors It is unlawful for a person under twenty-one years of age to purchase a lottery ticket or share. 5-566. Alteration of lottery tickets; violation; classification Any person who, with intent to defraud, falsely makes, alters, forges, utters, passes or counterfeits a state lottery ticket or share is guilty of a class 3 felony. 5-567. Purchase of tickets and receipt of prizes by certain persons prohibited A. A lottery ticket or share may not be purchased by and a prize may not be paid to an officer or employee of the commission or to any spouse, child, brother, sister or parent residing as a member of the same household in the principal place of residence of such officer or employee. B. A lottery ticket or share may not be purchased by and a prize may not be paid to any of the following persons: 1. An officer or employee of any person contracting with the commission to supply gaming equipment or lottery tickets, advertising or consulting services or to draw or otherwise select winning tickets or shares if the officer or employee is involved in the direct provision of goods or services to the commission or has access to information made confidential by the commission. 2. A spouse, child, brother, sister or parent residing as a member of the same household in the principal place of residence of a person described in paragraph 1. 3. The immediate supervisor of a person described in paragraph 1. 5-568. Disposition of unclaimed prize money Unclaimed prize money for the prize on a winning ticket or share shall be retained for the person entitled to the prize for one hundred eighty days after the drawing in which the prize was won in the case of a drawing prize and for one hundred eighty days after the announced end of the game in question in the case of a prize determined in any manner other than by means of a drawing. If a claim is not made for the money within the applicable period, the money shall be transferred in the following amounts: 1. Fifty-five percent of the prize money shall be held in the state lottery prize fund for use as additional prizes in future games, except that if the amount of monies transferred by the commission pursuant to section 5-554, subsection H, paragraph 1 is less than $900,000 each fiscal year, the difference shall be transferred to the internet crimes against children enforcement fund established by section 41-199 and if the amount of monies transferred by the commission pursuant to section 5-554, subsection H, paragraph 2 is less than $100,000 each fiscal year, the difference shall be transferred to the victims' rights enforcement fund established by section 41-1727. 2. Thirty percent shall be transferred quarterly to the court appointed special advocate and vulnerable persons fund established by section 8-524. 3. Fifteen percent shall be transferred monthly to the tribal college dual enrollment program fund established by section 15-244.01. The amount transferred may not exceed $325,000 in any fiscal year. 5-569. Lottery redemption agents The director may make arrangements for redemption agents to perform functions, activities or services in connection with the operation of the lottery, including direct payment of prizes not exceeding five thousand dollars, as he deems advisable pursuant to this chapter and the rules promulgated under this chapter. The director may make arrangements for payment of reasonable fees for such services. Notwithstanding any other statute, such functions, activities or services constitute lawful functions, activities and services of banks, savings and loan associations and credit unions. 5-570. Award of prize to certain persons prohibited No prize may be paid on any winning ticket or share to any person who is under twenty-one years of age. 5-571. State lottery fund The state lottery fund is established consisting of all revenues received from the sale of lottery tickets or shares, including revenues from games authorized pursuant to section 5-554, subsection G, the fees, if any, charged pursuant to section 5-554 and all other monies credited or transferred from any other fund or source pursuant to statute, with the exception of those monies apportioned for payment of prizes and deposited as provided in section 5-573. 5-572. Use of monies in state lottery fund; report A. If there are any bonds or bond related obligations payable from the state lottery revenue bond debt service fund, the state lottery revenue bond debt service fund shall be secured by a first lien on the monies in the state lottery fund after the payment of operating costs of the lottery, as prescribed in section 5-555, subsection A, paragraph 1, until the state lottery bond debt service fund contains sufficient monies to meet all the requirements for the current period as required by the bond documents. Debt service for revenue bonds issued pursuant to this chapter shall be paid first from monies that would have otherwise been deposited pursuant to this section in the state general fund. After the requirements for the current period have been satisfied as required by the bond documents, the monies in the state lottery fund shall be expended for the expenses of the commission incurred in carrying out its powers and duties and in the operation of the lottery. B. Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsection A of this section, $10,000,000 shall be deposited in the Arizona game and fish commission heritage fund established by section 17-297. C. Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A and B of this section, $5,000,000 shall be allocated to the department of child safety for the healthy families program established by section 8-481, $4,000,000 shall be allocated to the Arizona board of regents for the Arizona area health education system established by section 15-1643, $3,000,000 shall be allocated to the department of health services to fund the teenage pregnancy prevention programs established in Laws 1995, chapter 190, sections 2 and 3, $2,000,000 shall be allocated to the department of health services for the health start program established by section 36-697, $2,000,000 shall be deposited in the disease control research fund established by section 36-274 and $1,000,000 shall be allocated to the department of health services for the federal women, infants and children food program. The allocations in this subsection shall be adjusted annually according to changes in the GDP price deflator as defined in section 41-563, and the allocations are exempt from the provisions of section 35-190 relating to lapsing of appropriations. If there are not sufficient monies available pursuant to this subsection, the allocation of monies for each program shall be reduced on a pro rata basis. D. If the state lottery director determines that monies available to the state general fund may not equal $84,150,000 in a fiscal year, the director shall not authorize deposits to the Arizona game and fish commission heritage fund pursuant to subsection B of this section until the deposits to the state general fund equal $84,150,000 in a fiscal year. E. Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A through D of this section, $1,000,000 or the remaining balance in the fund, whichever is less, is appropriated to the department of economic security for grants to nonprofit organizations, including faith-based organizations, for homeless emergency and transitional shelters and related support services. The department of economic security shall submit a report on the amounts, recipients, purposes and results of each grant to the governor, the speaker of the house of representatives and the president of the senate on or before December 31 of each year for the prior fiscal year and shall provide a copy of this report to the secretary of state. F. Of the monies remaining in the state lottery fund each fiscal year after appropriations and deposits authorized in subsections A through E of this section, and after a total of at least $99,640,000 has been deposited in the state general fund, $1,750,000 shall be deposited in the Arizona competes fund established by section 41-1545.01 through fiscal year 2028-2029 and $3,500,000 thereafter. The balance in the state lottery fund remaining after deposits into the Arizona competes fund shall be deposited in the university capital improvement lease-to-own and bond fund established by section 15-1682.03, up to a maximum of eighty percent of the total annual payments of lease-to-own and bond agreements entered into by the Arizona board of regents. G. All monies remaining in the state lottery fund after the appropriations and deposits authorized in this section shall be deposited in the state general fund. H. Except for monies expended for debt service of revenue bonds as provided in subsection A of this section, monies expended under subsection A of this section are subject to legislative appropriation. I. The commission shall transfer monies prescribed in this section on a quarterly basis. 5-573. State lottery prize fund; setoff for state debts; notification to department of economic security; prizewinner confidentiality A. The state lottery prize fund is established. That portion of the gross proceeds that is apportioned pursuant to section 5-555, subsection B shall be deposited, pursuant to sections 35-146 and 35-147, directly in the state lottery prize fund as the commission receives such proceeds and are available for payment of prizes to the holders of winning tickets or shares or for the other purposes provided for in section 5-568. Procedures for payments to winners from this fund shall be established by rule or order of the commission. Notwithstanding any other statute, transfers or payments to or from the state lottery prize fund are not appropriations by the legislature, and deposits in the state lottery prize fund are not subject to appropriation by the legislature. B. Payments to winners that are payable by the commission or lottery redemption agents pursuant to this section in an amount of $600 or more are subject to setoff under section 5-575. C. The commission shall furnish the department of economic security with the names and the social security numbers of persons who are paid lottery prizes or winnings in an amount of $600 or more pursuant to this section for the purposes prescribed by section 41-1965. The department of economic security shall pay the commission for the costs of furnishing the information. D. Except as provided in subsections B and C of this section, the name of a person or legally formed entity that is paid a lottery prize or winnings of $100,000 or more is confidential on request of the prizewinner and, if confidentiality is requested, is not a public record under title 39, chapter 1, article 2. If a prizewinner does not make a request, the name of the person or legally formed entity is confidential for ninety days from the date the prize is awarded and is not a public record under title 39, chapter 1, article 2 during this ninety-day period. Information regarding the prizewinner's city and county of residence is not confidential. A prizewinner may waive the confidentiality provisions of this subsection by voluntarily consenting to the disclosure of the prizewinner's name. 5-574. Audit of accounts The certified public accountant hired to perform the annual audit under section 5-555, subsection A, paragraph 2 shall conduct postaudits of all accounts and transactions of the commission for each lottery game. The certified public accountant conducting an audit under this chapter shall have access and authority to examine any and all records of the commission, its redemption agents and its licensees. 5-575. Prizes; setoff for debts to state agencies; definitions A. The commission shall establish a liability setoff program by which state lottery prize payments pursuant to section 5-573 may be used to satisfy debts which a person owes this state. The program shall comply with the standards and requirements prescribed by this section. B. If a person owes an agency a debt, an agency may notify the commission, furnishing at least the state agency or program identifier, the first name, last name, middl