Q & A

Will it do us any good to comment? YES, in fact, if you don't comment they will think everybody approves of spending millions of taxpayer money just so the retailers can have two lottery terminals in their stores. Since many schools are under-funded, don't have computers or necessary supplies and teachers remain underpaid and under-insured, is this "really" an expense the TLC should be making? For those of you who think commenting doesn't work, it does work. We have won a few battles in the past and we will win the battle regarding Lotto Texas in the end. That comment form is coming next.

Why do they want "self service terminals?" Isn't this going to cost the state alot of money? Yes, it will probably cost them more money to purchase and maintain these terminals than it would to simply pay the retailers a commission for each transaction they make. Retailers in Texas are paid less in commissions than those in many other lottery states - the TLC has actually done them as dirty as they've done us. They have never had a raise - 11 years - no raise. More work, less money. Do you think this is fair?

Do retailers deserve more money? YES. Because the new Mega Millions game, the increase of lottery drawings and excessive $2, $3 and $4 prizes is requiring hundreds of thousands of additional transactions DAILY for the retailers. Plus, roughly 50% of the players ask retailers to check their tickets for them but retailers don't get paid for providing these "extra" services. For retailers, the end result is loss of employee productivity without pay.

The retailers are demanding that the TLC increase their commissions or just pay them for each transaction. Rather than to pay the retailers for the work they do, the TLC is proposing "self service terminals" as THE solution.

The Texas Lottery could solve this problem for the retailers by insisting that Players bear the sole responsibility of checking their own tickets. But they don't want to do this because then the unclaimed prize fund may suffer. The state would save alot of money by not purchasing these terminals and implementing this rule instead ... "Players SHALL be responsible for checking his own tickets" ... the retailers would be thrilled, more players would collect their winnings and this would finally protect the players.

Will ALL retailers have self service terminals? NO. Retailers have to qualify and qualifying is dependent on "if they sell enough tickets to qualify." The little guys won't have any relief.

Will the TLC have comments in favor of this new rule? Absolutely YES. Since I've posted this page, rumor has it that the TLC/G-Tech is now asking their BIG lottery retailers to comment in favor so they'll have something for the record. And like we've seen before, the BIG guys will do anything for more money. (If you'd like to see how retailers testified in FAVOR of adding 4 balls so they'd make more money, just click here.)

Has the TLC already purchased new terminals like they purchased the new balls and machines for the 5/44 rule before it was adopted? Can't say for sure but it doesn't really matter. They can always return them. I do know that they are developing software for the terminals now though. I will make an open records request to find out if the terminals have already been purchased.

Is it true that stores have actually collected the players winnings but the player didn't receive his winnings? YES, this can and has happened though it's not done on purpose. When a clerk scans your ticket, and the terminal doesn't respond quickly, she may get impatient and scan it again. Well, the main terminal may still be processing the 1st scan, so when she gets a print out, it says, "NOT A WINNING TICKET." That's because the computer thinks the ticket has already been paid due to the first scan.

How can the terminals misread our tickets? Two quick answers. (1) How come not all groceries scan when your checking out at the grocery store? (2) The ticket may have something spilled or written on it, it may have been folded, the ink may be too light - any number of reasons. Terminals are just "machines" and machines malfunction.

Will you be posting your letter of comment? YES, I plan to write my letter by Jan 14, 2004 and it will be sent to the TLC and all members of the Texas Legislature. Since I have a great many comments already, I believe they will KNOW that I am speaking for their constituents and will act fast IF they indend to oppose the rule on behalf of their voters. The WILL of the People is who they are suppose to listen to, protect and act for. We've had very little notice of this proposed rule. I will post my letter as soon as its written.

Three Reasons Players Should Oppose The Rule

First: Do you think the state should spend the money so retailers can have 2 terminals in their stores? Don't you think the money is needed elsewhere? Don't you think it would be simpler to simply pay the retailer for the work he does?

Second: Terminals err in reading winning tickets (A Miami Herald Story). Faulty readings by the terminals is one reason I think the unclaimed prize fund is in excess of $500 million and as many of you read recently, prizes not claimed are kept by the state. (Referring to the $162 million Mega Million ticket that was originally reported as lost.) The TLC wants terminals checking players tickets and will go to this expense to keep it going.

Third - Cigarette companies, by law, cannot place their machines/products in areas that are "accessible to minors." Therefore, the Texas Lottery should have to place their "gambling devices" in similar locations. By law, you have to be 18 years of age to buy cigarettes and to buy a lottery ticket. The rule states, "Online self-service terminals may only be placed within the retailer's location in a site and manner approved by the commission." The rule should be very specific as to where the terminals MUST be placed but its vague instead.

We must comment on this rule and this time, they DO have to consider comment ... If you agree with me, please complete the form above. I will fax and/or hand deliver your comments to the TLC just like I've done in the past. (A copy of the acutal proposed rule as written is below. If you want to read it, scroll down or click here) If you disagree with me, and you want to comment too, then use the "other comments" area of the form to comment. I will submit your comments as well.

Technical Legal Stuff - The rule was approved by the Commissioners to post in the Texas Register on Dec 18, 2003. The transcript of the Dec 18th commissioners meeting was posted on the TLC web site on Jan 6, 2004. The rule was published in the Jan 2, 2004 edition of the Texas Register and the TLC finally posted, on their web site, the proposed rule on Jan 9, 2004. The deadline for comment is 30 days from the date it appeared in the Texas Register. The TLC has NOT used PlayerConnect to notify players of the proposed rule. Should the TLC suddenly decide to notify players of the proposed rule through PlayerConnect, they will play it up as a good thing - like "now you can check your tickets via the self service lottery terminals!" Yet the terminals are known to err.

The Proposed Rule Itself

Chapter 401. ADMINISTRATION OF STATE LOTTERY ACT

Subchapter E. RETAILER RULES

16 TAC §401.369

The Texas Lottery Commission proposes new rule 16 TAC §401.369 relating to online self-service terminals. The new rule sets out the requirements imposed on a retailer for placement of a self-service terminal at the retailer's location. Specifically, the rule defines the term self-service terminal, indicates that a retailer must comply with the criteria established by the Executive Director for placement and retention of a self-service terminal, requires the retailer to certify whether the location is greater than 1,000 feet from a pre-school, elementary or secondary school, provides for the use of a remote shut off device for locations within 1,000 feet of a pre-school, elementary or secondary school, requires the retailer to keep the self-service terminal stocked with printer supplies and online roll stock, requires the retailer to undergoing training relating to use and maintenance of the terminal, and requires the retailer to allow service technicians access to the terminal during normal business hours.

Lee Deviney, Financial Administration Director, has determined for each year of the first five years the section is in effect there will be the following fiscal implications, net revenue gain to the state, for state or local government as a result of enforcing or administering the rule: FY 2004, $4.3 million; FY 2005, $5.9 million; FY 2006, $5.9 million; FY 2007, $5.9 million; and FY 2008, $5.9 million. There will be no fiscal implications for local government as a result of enforcing or administering the rule. There will be a positive fiscal impact on small businesses, micro businesses or local or state employment as a result of implementing the section as follows: FY 2004, $0.6 million; FY 2005, $0.8 million; FY 2006, $0.8 million; FY 2007, $0.8 million; and FY 2008, $0.8 million.

Toni Erickson, Acting Marketing Director, has determined that each of the first five years the section as proposed is in effect, the public benefit anticipated as a result of the proposed amendments is the potential for additional revenue to the State as well as to the retailer. Additionally, another benefit to the retailer is potential lower operating costs since the self-service aspect of the terminal reduces the need for labor time for the retailer.

Written comments on the proposed new rule may be submitted to Kimberly L. Kiplin, General Counsel, Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78761-6630. Comments must be received by the Commission within 30 days after the proposed new rule is published in the Texas Register to be considered.

The new rule is proposed under Government Code, §466.015 which authorizes the Commission to adopt all rules necessary to administer the State Lottery Act and to adopt rules governing the establishment and operation of the lottery, and under Government Code, §467.102 which authorizes the Commission to adopt rules for the enforcement and administration of the laws under the Commission's jurisdiction.

§401.369.Online Self-Service Terminals.

(a) No retailer may sell commission online game tickets from an online self-service terminal, except those online self-service terminals supplied and placed by the commission. For purposes of this section an online self-service terminal is defined as a terminal that dispenses online lottery game tickets without the assistance of a retailer's personnel.

(b) Online self-service terminals may be placed by the commission or the commission's designated representative in a retailer’s business location based upon criteria established by the executive director. The criteria may include, but is not limited to, consideration of the location of the retailer, the type of the business to which a license is assigned, the size of the retailer’s location and a minimum sales criteria which shall be provided to the retailers prior to implementation of such criteria.

(c) A retailer must maintain the minimum sales criteria established by the executive director to retain an online self-service terminal. A retailer who does not maintain minimum sales in accordance with such sales criteria may be placed in a sales review period unless good cause exists as determined by the executive director. After the retailer's sales review period has expired, the retailer's sale of online lottery game tickets shall be reviewed. If the retailer has not maintained the minimum sales level in accordance with the minimum lottery ticket sales criteria during such sales review period, the commission or commission's designated representative may remove the online self-service terminal.

(d) The minimum sales criteria established by the executive director shall be provided to retailers at least 30 days prior to implementation of such minimum sales criteria.

(e) Online self-service terminals may only be placed within the retailer's location in a site and manner approved by the commission.

(f) A retailer shall certify whether or not the location is greater than 1,000 feet from any preschool, elementary school, middle school or high school.

(g) A retailer's location within 1,000 feet from any preschool, elementary school, middle school or high school shall be equipped only with an online self-service terminal(s) containing a remote shut off device.

(h) A retailer shall keep the online self-service terminal stocked with printer supplies and online roll stock that is authorized by the commission for use with the online self-service terminal.

(i) A retailer shall maintain the key to the self-service terminal. If the retailer loses the key, the retailer shall pay $100 per terminal for the service call to install new locks and key.

(j) A retailer and certain retailer employees shall undergo required training and comply with requirements identified in the training relating to the use and maintenance of online self-service terminals.

(k) A retailer shall allow service technicians access to the online self-service terminal during normal business hours to service and repair the online self-service terminal.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 19, 2003.

TRD-200308702

Kimberly L. Kiplin
General Counsel
Texas Lottery Commission

Earliest possible date of adoption: February 1, 2004

For further information, please call: (512) 344-5113