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S.F. No. 2984 - Lottery Retailers Compensation and Commissions Provisions Modification
 
Author: Senator Mark W. Koran
 
Prepared By: Stephanie James, Senate Counsel (651/296-0103)
 
Date: March 9, 2018



 

Section 1 [Rules] constrains the lottery director’s rulemaking authority, so that rules that the lottery may promulgate for compensation to lottery retailers must be consistent with the new rates for commissions set in statute in section 2. This will allow the lottery director to set commissions higher than the commissions set in the new statute, but will not permit the director to set commissions lower than those set in statute.  

Section 2 [Lottery Retailer Commissions] sets new minimum rates for commissions paid to lottery retailers in statute. Currently, under rule promulgated by the State Lottery, a retailer is paid a commission of 5.5 percent on the price of each ticket sold by the retailer, and a commission of one percent on the amount of a winning ticket sold by the retailer.

The proposed change sets the retailers’ commission in statute.  The rate for “lotto” games (where the winner is determined by a drawing) is unchanged at 5.5 percent; the rate for non-lotto games (where the winner is determined by something other than a drawing, such as scratch-off games) is increased to 6.25 percent.  In addition, the retailers’ commission on the amount of a winning ticket is increased to two percent.

 

 

 

 

The following table compares the commission rates paid to lottery retailers under current law to the rates proposed in SF2984:

 

Currently

Change proposed in SF2984

On the price of a ticket for a lottery game for which the winner is determined by a drawing

5.5% (under Rule 7856.4030)

At least 5.5% (under new statute 349A.17, subd. 2, clause (1))

On the price of a ticket for a lottery game in which the winner is determined without a drawing (i.e. scratch-offs, and other instant win)

5.5% (under Rule 7856.4030)

At least 6.25% (under new statute 349A.17, subd. 2, clause (2))

On the amount of a winning ticket

1% (under Rule 7856.4030)

At least 2% (under new statute 349A.17, subd. 2, clause (3))


This change applies to tickets sold on or after August 1, 2018.

Section 3 [Rule Change; Transition] directs the lottery director to amend the rule setting retailers’ commissions to be consistent with the new statute.  As noted above, this will permit the lottery director to set commissions higher than the statutorily set rate, but will not permit the director to set the commissions lower than the statutory rate. 

This section also specifies that commissions on tickets sold prior to the effective date of this act will be what the rate was at the time the ticket was sold.

Section 4 [Repealer] repeals a statute that was enacted in 1998 to increase the rate a half percentage above what was set in rule at the time and to set a commission of one percent of winning ticket amounts.  This statute is no longer needed in light of the new statute section in section 2 of this bill.

 
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