Chapter 565

565.10(3)(c)3. 3. Except as provided in subd. 4., if the retailer is a corporation, pars. (a) and (b) apply to the corporation, each officer or director of the corporation and each owner, directly or indirectly, of any equity security or other ownership interest in the corporation. In the case of owners of publicly held securities of a publicly traded corporation, pars. (a) and (b) apply only to those persons who are beneficial owners of 5 percent or more of the publicly held securities.

565.10(3)(c)4. 4. The restrictions under par. (a) do not apply to the partnership, limited liability company, association or corporation if the department determines that the partnership, limited liability company, association or corporation has terminated its relationship with the partner, member, officer, director or owner who was convicted or entered the plea or with the partner, member, officer, director, owner or other individual whose actions directly contributed to the partnership’s, limited liability company’s, association’s or corporation’s conviction or entry of plea.

565.10(3m) (3m) False statement or material omission. No retailer or person seeking a contract under this section may intentionally make a false statement or material omission in any disclosure statement required to obtain, retain or renew a retailer contract.

565.10(4) (4) Exclusive business restriction. No lottery retailer contract may be entered into with any person who is engaged in business exclusively as a lottery ticket or lottery share retailer unless one of the following is true:

565.10(4)(a) (a) The retailer contract is a temporary retailer contract.

565.10(4)(b) (b) Subject to approval of each such retailer contract by the department, the retailer contract is with one of the following:

565.10(4)(b)1. 1. An individual who has a physical or mental disability which constitutes or results in a substantial handicap to his or her employment.

565.10(4)(b)2. 2. A group of individuals who have physical or mental disabilities which constitute or result in substantial handicaps to their employment.

565.10(4)(b)3. 3. A nonprofit organization, as defined in s. 108.02 (19), whose primary purpose is to provide service to or for individuals who have physical or mental disabilities which constitute or result in substantial handicaps to their employment.

565.10(5) (5) State agencies; government property.

565.10(5)(a) (a) In entering into a lottery retailer contract with state agencies, other than the department, and agencies of local units of government, the administrator shall attempt to minimize the competitive effect of sales by the state or local agencies on other retailers. An application for a retailer contract by a local unit of government shall be approved by the governing body of the local unit of government.

565.10(5)(b) (b) A lottery retailer contract may be entered into with a private person operating activities on state or local government property. The department shall give preference to an individual, group of individuals or nonprofit organization, as specified under sub. (4) (b), in entering into contracts under this paragraph.

565.10(7) (7) Length and sales authorization of contract.

565.10(7)(a) (a) Except as provided in par. (b), a lottery retailer contract shall be for a period of 3 years and shall specify whether the retailer is authorized to conduct lottery ticket sales on a year-round, seasonal or temporary basis.

565.10(7)(b) (b) The administrator may, under rules promulgated by the department, contract for a period that is shorter than 3 years in order to stagger lottery retailer contract expiration dates throughout a 3-year period.

565.10(8) (8) Contract fees. A contract entered into under this section may require payment of a nonrefundable initial application fee or a nonrefundable annual fee for continuation, or both, in an amount promulgated by the department by rule under s. 565.02 (4) (b). A separate nonrefundable fee, in an amount specified in rules promulgated under s. 565.02 (4) (b), may be required for each certificate of authority issued under sub. (11).

565.10(8m) (8m) Payment to department or contractor. Payment by a retailer to the department or to any contractor for lottery tickets or lottery shares shall be by check, bank draft, electronic fund transfer or other recorded means, as determined by the administrator. No payment under this subsection may be in cash.

565.10(9) (9) Contract not assignable or transferable. A lottery retailer contract may not be assigned or transferred from one person or location to another.

565.10(10) (10) Location of sales. A retailer may sell lottery tickets or lottery shares only at locations specified in the contract entered into under this section.

565.10(11) (11) Certificate of authority; required display. The department shall issue to each retailer a separate certificate of authority for each location from which the retailer may sell lottery tickets or lottery shares. Each retailer shall conspicuously display the certificate of authority on the premises where retail sales of lottery tickets or lottery shares are authorized under the certificate in a location which is accessible for public inspection.

565.10(12) (12) Certificate of authority not assignable or transferable. A certificate of authority may not be assigned or transferred from one person or location to another.

565.10(13) (13) Bond. The department may by rule under s. 565.02 (4) (d) require fidelity bonds from retailers. In lieu of a bond, the department may purchase blanket bonds covering all or selected retailers or may allow a retailer to deposit and maintain with the department interest-bearing or interest-accruing securities approved by the department. Such securities shall be held in trust by the department and shall have at all times a market value at least equal to the amount required by the department.

565.10(14) (14) Compensation.

565.10(14)(a) (a) In this subsection, “nonprofit organization” means a religious, charitable, service, fraternal or veterans organization or any organization, other than the state or a political subdivision of the state, to which contributions are deductible for federal income tax purposes or state income or franchise tax purposes, which meets all of the following criteria:

565.10(14)(a)1. 1. Is incorporated in this state as a nonprofit corporation or organized in this state as a religious or nonprofit organization.

565.10(14)(a)2. 2. Has been in existence for at least 3 years immediately preceding its application for a contract under this subsection.

565.10(14)(a)3. 3. Has at least 15 members in good standing.

565.10(14)(a)4. 4. Operates without profit to its members and no part of the net earnings of the organization inure to the benefit of any private shareholder or individual.

565.10(14)(a)5. 5. Conducts activities within this state in addition to selling lottery tickets or lottery shares.

565.10(14)(b) (b)

565.10(14)(b)1. 1. The basic compensation to be paid to a retailer for the sale of a lottery ticket or lottery share described under s. 565.01 (6m) (a) 2. is 5.5 percent of the retail price of lottery tickets or lottery shares sold by the retailer.

565.10(14)(b)2. 2. The basic compensation to be paid to a retailer for the sale of a lottery ticket or lottery share described under s. 565.01 (6m) (a) 1. is 6.25 percent of the retail price of lottery tickets or lottery shares sold by the retailer.

565.10 Note NOTE: 1997 Wis. Act 27, section 4759 created s. 560.10 (14) (b) 2. to read as shown above. The “2” in “6.25” was erroneously marked as partially vetoed in section 4759. Section 4759 was not listed as partially vetoed in the Governor’s Veto Message and the veto message made no mention of the subject matter of section 4759. See also, 70 Atty Gen. 189 and State ex rel. Klezcka v. Conta, 82 Wis. 2d 679, 264 N.W.2d 539 (1978).

565.10(14)(b)3m. 3m. The department may, in rules promulgated under s. 565.02 (4) (g), provide for additional compensation, above the compensation provided under subd. 1. or 2., to be paid to retailers who meet certain performance goals identified by the department.

565.10(14)(b)4. 4. The department may, in the rules promulgated under s. 565.02 (4) (f), provide for the payment of a higher rate of compensation to nonprofit organizations making sales under a contract issued on a temporary basis than the rate of compensation paid to other retailers.

565.10(15) (15) Remitting proceeds. A retailer shall daily, unless another frequency that is at least once every 60 days is provided by the department by rule, remit to the department the lottery proceeds from the sale of lottery tickets or lottery shares. The amount of compensation deducted by the retailer, if any, shall be indicated as a deduction from the total remitted.

565.10(16) (16) Displaying notification that prizes claimed. Each lottery retailer contract shall require the retailer to display a sign as provided by rule under s. 565.02 (3) (j) when the department notifies the retailer that the top prizes in a scratch-off game have been claimed.

565.10 History History: 1987 a. 119, 399; 1989 a. 172; 1991 a. 39, 269; 1993 a. 112; 1995 a. 27; 1997 a. 27; 1999 a. 9; 2005 a. 22, 25.

565.10 Cross-reference Cross-reference: See also chs. Tax 61 and 63, Wis. adm. code.

565.12 565.12 Retailer contract termination or suspension.

565.12(1) (1) A lottery retailer contract entered into under s. 565.10 may be terminated or suspended for a specified period if the department finds that the retailer has done any of the following:

565.12(1)(a) (a) Violated this chapter or any rule promulgated under this chapter.

565.12(1)(b) (b) Failed to meet any of the qualifications for being a retailer under s. 565.10 or rules promulgated under s. 565.02 (3) (b) or as specified by contract.

565.12(1)(c) (c) Endangered the security of the lottery.

565.12(1)(d) (d) Engaged in fraud, deceit, misrepresentation or other conduct prejudicial to public confidence in the lottery.

565.12(1)(e) (e) Failed to account accurately for lottery tickets, revenues or prizes or lottery shares, as required by the department, or is delinquent in remitting lottery ticket or lottery share revenues.

565.12(1)(f) (f) Performed any action constituting a reason for termination or suspension as specified in the contract, which shall include the following:

565.12(1)(f)1. 1. The intentional sale of lottery tickets or lottery shares to any person under the age of 18.

565.12(1)(f)2. 2. A violation of this chapter or any rule promulgated under this chapter.

565.12(2) (2) If the administrator determines that the immediate suspension or termination of a lottery retailer contract entered into under s. 565.10 is necessary to protect the public interest or the security, integrity or fiscal responsibility of the lottery, the administrator may, without prior notice or hearing, suspend for a specified period or terminate the lottery retailer contract by mailing to the retailer a notice of suspension or termination that includes a statement of the facts or conduct that warrant the suspension or termination and a notice that the retailer may, within 30 days after the date on which the notice of suspension or termination is mailed, have the suspension or termination reconsidered by the administrator. If, upon reconsideration, the administrator affirms the determination to suspend or terminate the lottery retailer contract, the retailer shall be afforded an opportunity for a hearing before the department to review the determination of the administrator.

565.12(3) (3) The department shall render the final decisions under s. 227.47 for all terminations and suspensions under subs. (1) and (2).

565.12 History History: 1987 a. 119; 1991 a. 39, 269; 1995 a. 27; 1997 a. 27.

565.15 565.15 Department retail outlet. The department may establish and operate a lottery ticket or lottery share retail sales outlet or sell lottery tickets or lottery shares to the public at a special event. In considering whether to engage in direct retail sales, the department shall attempt to minimize the competitive effects of its sales on sales by other retailers.

565.15 History History: 1987 a. 119, 403; 1991 a. 269; 1995 a. 27.

565.17 565.17 Limitations on ticket and share sales and purchases.

565.17(1) (1) Who may sell. Lottery tickets or lottery shares may not be sold by any person other than a retailer or the department.

565.17(1m) (1m) Ticket couriers prohibited. No person may operate a ticket courier service in this state.

565.17(2) (2) Price. No person may sell lottery tickets or lottery shares at a price other than the retail sales price established by the administrator under s. 565.27 (1) (b), except to the extent of any discount authorized by the administrator or the department.

565.17(3) (3) Cash sales. Lottery tickets or lottery shares may be sold only for cash.

565.17(4) (4) Age.

565.17(4)(a) (a) A person under 18 years of age may not purchase a lottery ticket or lottery share. This paragraph does not prohibit a person 18 years of age or older from giving a lottery ticket or lottery share to a person under 18 years of age.

565.17(4)(b) (b) No person may sell a lottery ticket or lottery share to a person under 18 years of age or to any other person knowing that the lottery ticket or lottery share is being purchased for a person under 18 years of age other than as a gift.

565.17(4)(c) (c) No person may pay a prize for a winning lottery ticket or lottery share to any person knowing that the purchaser was under 18 years of age or knowing that the lottery ticket or lottery share was purchased for a person under 18 years of age other than as a gift.

565.17(5) (5) Certain department employees.

565.17(5)(a) (a) Except as provided under par. (d), no employee in the lottery division of the department or the secretary, deputy secretary, or assistant deputy secretary of revenue and no member of such a person’s immediate family, as defined in s. 19.42 (7), may purchase a lottery ticket or lottery share.

565.17(5)(b) (b) No person may sell a lottery ticket or lottery share to a person knowing that the purchaser is prohibited from purchasing a lottery ticket or lottery share under par. (a).

565.17(5)(c) (c) No person may pay a prize for a winning lottery ticket or lottery share to any person knowing that the purchaser was prohibited from purchasing a lottery ticket or lottery share under par. (a).

565.17(5)(d) (d) An employee in the lottery division of the department may purchase a lottery ticket or lottery share if the purchase is on behalf of the lottery division of the department and is a part of an official lottery investigation. No person may share or assign a lottery ticket or lottery share purchased under this paragraph and no person may claim any prize or winnings from a lottery ticket or lottery share purchased under this paragraph.

565.17 History History: 1987 a. 119; 1991 a. 269; 1995 a. 27; 1997 a. 27, 237; 2013 a. 20; 2017 a. 17; 2023 a. 73.

565.17 Annotation A plan whereby a soft drink company would include a coupon for a Wisconsin lottery ticket with specified purchases and customers could redeem coupons for lottery tickets at retail lottery outlets would violate s. 100.16. 77 Atty. Gen. 303.

565.20 565.20 Retailer rental payments. If a retailer’s rental payment for the premises described in a contract entered into under s. 565.10 is contractually computed, in whole or in part, on the basis of a percentage of retail sales and the computation of retail sales is not expressly defined, under the rental contract, to include sales of lottery tickets or lottery shares in the lottery under this chapter, any compensation received by the retailer under s. 565.10 (14) shall be considered the amount of the retail sales from the lottery tickets or lottery shares for the purposes of computing the rental payment.

565.20 History History: 1987 a. 119.

565.25 565.25 Contracting authority and purchasing procedures.

565.25(1) (1) Definition. In this section, “department” means the department of administration.

565.25(1m) (1m) Scope of authority. Subject to approval by the secretary of revenue, the administrator may determine whether lottery functions shall be performed by department of revenue employees or by one or more persons under contract with the department of administration, except that no contract may provide for the entire management of the lottery or for the entire operation of the lottery by any private person. The department of administration may contract for management consultation services to assist in the management or operation of the lottery. The department of administration may not contract for financial auditing or security monitoring services, except that, if the department of administration delegates under s. 16.71 (1) to the department of revenue the authority to make a major procurement, the department of revenue may contract with the department of administration for warehouse and building protection services relating to the state lottery. If the department of administration delegates under s. 16.71 (1) to the department of revenue the authority to make a major procurement, the department of revenue shall assume the powers and duties of the department of administration and the administrator shall assume the powers and duties of the secretary of administration under this section and ss. 16.70 to 16.77, except under ss. 16.72 (4) (a), 16.76 (1) and 16.77 (1).

565.25(2) (2) Purchasing procedures.

565.25(2)(a) (a)

565.25(2)(a)1. 1. Except as provided under s. 16.71 (1), the department shall make major procurements.

565.25(2)(a)2. 2. Notwithstanding the provisions of s. 16.75 (1) (a) relating to the lowest responsible bidder and s. 16.75 (2m) (g) relating to the most advantageous proposal, all contracts or orders under s. 16.75 (1) and (2m) shall be awarded on the basis of a formula specified by the department that weighs all of the following factors, to the extent applicable:

565.25(2)(a)2.a. a. The cost of the bid or proposal.

565.25(2)(a)2.b. b. The technical capability and expertise of the proposed vendor.

565.25(2)(a)2.c. c. The integrity, reliability and expertise of the proposed vendor in providing the items covered by the bid or proposal.

565.25(2)(a)2.d. d. The security for lottery operations provided under the bid or proposal.

565.25(2)(a)2.e. e. The financial stability of the proposed vendor.

565.25(2)(a)3. 3. In addition to the provisions of ss. 16.75 (3m) and 16.765 that apply to purchasing or contracting state agencies, in awarding orders or contracts, the department shall give preference to a bidder if at least 5 percent of the individuals employed by the bidder and any subcontractors to produce, distribute, supply or sell the materials, supplies, equipment or services under the order or contract are minority group members and are employed in the state.

565.25(2)(a)4. 4. The administrator shall develop specifications for major procurements. If security is a factor in the materials, supplies, equipment, property, or services to be purchased in any major procurement, then invitations for bids or competitive sealed proposals shall include specifications related to security. The administrator shall submit specifications for major procurement to the secretary of revenue for review and approval before the department of administration releases the specifications in invitations for bids or competitive sealed proposals. The department of administration shall require separate bids or separate competitive sealed proposals for management consultation services if the services are provided under contract as provided in sub. (1m).

565.25(2)(a)5. 5. The vendor shall disclose such information as is required by the department, by rule, with the vendor’s submission of a bid or proposal for a major procurement.

565.25(2)(a)6. 6. If the department of administration delegates under s. 16.71 (1) to the department of revenue the authority to make a major procurement, the award of the major procurement contract is subject to the requirements in ss. 16.72 (4) (a) and 16.76 (1). Copies of requisitions and contracts for major procurements shall be maintained by the administrator and shall be subject to inspection and copying under subch. II of ch. 19.

565.25(2)(a)7. 7. No bill or statement for any purchase or engagement for the department of revenue relating to the state lottery may be paid until the bill or statement is approved by the administrator.