Chapter 565

565.02(4)(f) (f) Providing for payment of a rate of compensation that is higher than the basic compensation under s. 565.10 (14) (b) for retailers that are nonprofit organizations.

565.02(4)(g) (g) Establishing a program to provide for additional compensation, above the compensation provided under s. 565.10 (14) (b) 1. or 2., to be paid to retailers who meet certain performance goals identified by the department. Under this program, the total compensation provided to retailers may not exceed 1.0 percent of the gross revenues from the sale of lottery tickets and lottery shares.

565.02(6) (6) The department shall deposit all gross lottery revenues, as defined in s. 25.75 (1) (b), in the lottery fund.

565.02(7) (7) Not later than March 1 of each year, the department shall submit to the joint committee on finance a report that includes an estimate for that fiscal year and for the subsequent fiscal year of the gross revenues from the sale of lottery tickets and lottery shares, the total amount paid as prizes and the prize payout ratio for each type of lottery game offered, and an evaluation of the effect of prize payout ratios of lottery games on lottery sales, lottery operating costs and on maximizing the revenue available for the lottery and gaming property tax credit. If, within 14 working days after the date on which the committee receives the report, the cochairpersons of the committee notify the department that the committee has scheduled a meeting for the purpose of reviewing the department’s proposed prize payouts, the department may proceed with its plans for the prize payouts for the subsequent fiscal year only upon approval of the plans by the committee. If the cochairpersons of the committee do not notify the department within 14 working days after the date on which the committee receives the report that the committee has scheduled a meeting for the purpose of reviewing the department’s proposed prize payouts, the department’s plans for the prize payouts for the subsequent fiscal year are considered approved by the committee.

565.02(8) (8) The department shall do all of the following:

565.02(8)(a) (a) Subject to s. 565.25, provide all of the security services for the gaming operations under this chapter.

565.02(8)(b) (b) Monitor the regulatory compliance of gaming operations under this chapter.

565.02(8)(c) (c) Audit the gaming operations under this chapter.

565.02(8)(d) (d) Investigate suspected violations of this chapter.

565.02(9) (9) The department may do all of the following:

565.02(9)(a) (a) Report suspected gaming-related criminal activity to the division of criminal investigation in the department of justice for investigation by that division.

565.02(9)(b) (b) Coordinate an investigation of suspected gaming-related criminal activity with local law enforcement officials and district attorneys.

565.02 History History: 1987 a. 119, 399; 1989 a. 31; 1991 a. 39, 269, 323; 1993 a. 16; 1995 a. 27; 1997 a. 27; 1999 a. 5, 9; 2005 a. 25; 2017 a. 17; 2023 a. 73.

565.05 565.05 Conflicts of interest.

565.05(1) (1) No employee in the lottery division of the department or the secretary, deputy secretary, or assistant deputy secretary of revenue may do any of the following:

565.05(1)(a) (a) Except as provided in sub. (1m), have a direct or indirect interest in, or be employed by, any vendor while serving as an employee in the lottery division of the department or as secretary, deputy secretary, or assistant deputy secretary of revenue for 2 years following the person’s termination of service.

565.05(1)(b) (b) Have a direct or indirect interest in or be employed by a business which has entered into a retailer contract under s. 565.10.

565.05(1)(d) (d) Accept or agree to accept money or any other thing of value from any vendor, retailer or person who has submitted a bid, proposal or application to be a vendor or retailer.

565.05(1m) (1m) A former employee of the lottery division of the department may be employed by a vendor at any time following the termination of the employee’s employment with the lottery division of the department if the department has entered into a contract with the vendor to perform services that were previously performed by employees of the lottery division of the department. An employee of the lottery division of the department may discuss future employment with a vendor while the vendor is attempting to enter into a major procurement contract with the department relating to the lottery only if the employee has the prior written consent of the administrator. This subsection does not apply to the administrator, deputy administrator, or any bureau director in the lottery division of the department.

565.05(2) (2) A vendor selected to provide management consultation services described under s. 565.01 (4c) (a) or (b) may not do any of the following:

565.05(2)(a) (a) Submit a bid or competitive sealed proposal with respect to those goods or services.

565.05(2)(b) (b) Have any ownership interest in or any partners, members or shareholders who have any ownership interest in any vendor that is under contract to supply or that submits a bid or competitive sealed proposal to supply those goods or services.

565.05 History History: 1987 a. 119; 1989 a. 99; 1991 a. 269; 1993 a. 112; 1995 a. 27; 1997 a. 27, 237; 2013 a. 20; 2015 a. 55.

565.10 565.10 Retailer contract.

565.10(1) (1) Selection of retailers; retailer contract. Under rules promulgated by the department under s. 565.02 (3) (b) and (4) (a), the administrator may contract with a person for the retail sale of lottery tickets or lottery shares. Retailers shall be selected for contract so as to provide adequate and convenient availability of lottery tickets and lottery shares to prospective buyers.

565.10(2) (2) Age restriction. No lottery retailer contract may be entered into with any person under 18 years of age. If the retailer is a partnership, this subsection applies to each partner of the partnership. If the retailer is a limited liability company, this subsection applies to each member of the limited liability company. If the retailer is an association or a corporation, this subsection applies to each officer and director of the association or corporation.

565.10(3) (3) Felony and other violations restriction; delinquent taxes and contributions restriction.

565.10(3)(a) (a) Notwithstanding s. 111.321, no lottery retailer contract may be entered into with a person if, during the immediately preceding 10 years, the person has been convicted of, or entered a plea of guilty or no contest to, any of the following, unless the person has been pardoned:

565.10(3)(a)1. 1. A felony.

565.10(3)(a)2. 2. Any gambling-related offense.

565.10(3)(a)3. 3. Fraud or misrepresentation in any connection.

565.10(3)(a)4. 4. A violation of this chapter or any rule promulgated under this chapter.

565.10(3)(b) (b) No lottery retailer contract may be entered into with a person who has been finally adjudged to be delinquent in the payment of taxes under ch. 71, 72, 76, 77, 78, or 139, who has been found delinquent in the payment of contributions to the unemployment reserve fund under s. 108.16 in a proceeding under s. 108.10, or who owes a payment to the uninsured employers fund under s. 102.82 or 102.85 (4) or to the work injury supplemental benefit fund under s. 102.49 (5) (a), 102.59 (2), or 102.60 (5) (b) if the person remains liable for those taxes, contributions, or payments at the time the person seeks to enter into the lottery retailer contract.

565.10(3)(c) (c)

565.10(3)(c)1. 1. Except as provided in subd. 4., if the retailer is a partnership, pars. (a) and (b) apply to the partnership and each partner of the partnership.

565.10(3)(c)1L. 1L. Except as provided in subd. 4., if the retailer is a limited liability company, pars. (a) and (b) apply to the limited liability company and to each of its members.

565.10(3)(c)2. 2. Except as provided in subd. 4., if the retailer is an association, pars. (a) and (b) apply to the association and each officer and director of the association.

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.