Second Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 12-0717.01 Sharon Eubanks x4336 HOUSE BILL 12-1280 HOUSE SPONSORSHIP Coram and Sonnenberg, Becker, Casso, Massey, McKinley, Scott SENATE SPONSORSHIP Tochtrop and Spence, Hodge House Committees Senate Committees Agriculture, Livestock, & Natural Resources Appropriations A BILL FOR AN ACT Concerning regulation of the state lottery by the state lottery division in the department of revenue, and, in connection therewith, authorizing the installation of video lottery terminals under the control of the division. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The Colorado lottery commission (commission) is given discretionary authority to license no more than 2 lottery retailers to install and operate video lottery terminals (VLTs). Qualifications to be a lottery retailer are established in the bill. A lottery retailer is prohibited from installing or operating a VLT unless certain conditions are satisfied. A single lottery retailer may install and operate VLTs at a limited number of sites within Colorado. The bill specifies that VLTs shall not be installed or operated at more than 3 sites within Colorado or in any city, town, city and county, or unincorporated portion of a county unless its governing body or a majority of its electors gives prior approval. To defray the costs of the related on- and off-site impacts and subject to certain limitations, video lottery impact fees may be imposed on a lottery retailer by the governing body of any city, town, city and county, or county in which premises are located on which video lottery terminals are to be located. The commission is given rule-making authority to implement the bill and to monitor and regulate the operation of VLTs. Each VLT is subject to approval by the commission in accordance with its rules and must meet certain requirements. Lottery retailers are required to be responsible for all expenses necessary to purchase or lease, install, maintain, and operate VLTs. Lottery retailers are entitled to receive a specified percentage of net machine income from VLTs. The remainder of the proceeds from the operation of VLTs, net of expenses and prizes, is required to be distributed in accordance with section 3 (1) (b) (III) of article XXVII of the state constitution (great outdoors Colorado program). All revenues that would otherwise be allocated to the general fund pursuant to section 3 (1) (b) (III) of the great outdoors Colorado program are to be credited to the Colorado college scholarship fund, which is created by the bill, except for a portion of the moneys to be credited to the public school capital construction assistance fund up to a specified amount and a portion of the moneys to be allocated to Colorado community colleges in certain circumstances. Revenues in the Colorado college scholarship fund will be used to fund a scholarship program, which the general assembly must enact by bill during the 2013 legislative session, to increase the access of Colorado residents to undergraduate postsecondary education. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, 24-35-201, add (1.3), (4.5), (5.5), (6.5), (7.5), and (9) as follows: 24-35-201. Definitions. As used in this part 2, unless the context otherwise requires: (1.3) "Cash value" means the value of all currency plus the value of all printed pay vouchers redeemable for currency. (4.5) "Licensed track" means a class B track, as defined in section 12-60-102 (4) (a) (I), C.R.S., at which a race meet of horses, consisting of thirty or more race days, was conducted during the previous calendar year and is scheduled to conduct a race meet of horses, consisting of thirty or more race days, in the current calendar year. (5.5) "Lottery retailer" means a lottery sales agent licensed pursuant to sections 24-35-206 and 24-35-208.5. (6.5) "Net machine income" means the cash value placed into a video lottery terminal minus the value of all free games awarded and all pay vouchers issued by such terminal. (7.5) "Pari-mutuel licensee" means a licensee, as defined in section 12-60-102 (17), C.R.S., that owns or controls a licensed track and that is in compliance with all statutes and rules regarding the conduct of a race meet of horses at, and the operation of, the licensed track. (9) (a) "Video lottery terminal" means an electronic computerized game machine that: (I) Is networked and can be monitored, controlled, and audited by a central technology system; (II) Upon insertion of cash value, is available to play a video game of chance authorized by the division; and (III) Uses microprocessors to award to a player, on the basis of chance, free games or credits evidenced by a printed pay voucher redeemable for currency. (b) "Video lottery terminal" does not include: (I) A machine or device that directly disburses coins, cash, tokens, or any item of value other than a printed pay voucher; or (II) A machine or device defined as a slot machine in section 9 (4) (c) of article XVIII of the state constitution. SECTION 2. In Colorado Revised Statutes, add 24-35-208.5 as follows: 24-35-208.5. Commission - video lottery terminals - authorization - requirements - rules. (1) The commission may authorize the installation and operation of video lottery terminals by no more than two lottery retailers who meet all qualifications set forth in this section and section 24-35-206. Such authorization shall be evidenced by an additional license issued by the commission. (2) (a) A lottery retailer shall not install or operate a video lottery terminal unless the lottery retailer is a pari-mutuel licensee and the video lottery terminal is to be located in an age-controlled area, as defined by rule of the commission, on premises that are owned or controlled by the lottery retailer and: (I) At a single location that is within the area east of the continental divide and either: (A) A licensed track; or (B) Within a city other than the city of Pueblo, a town, a city and county, or an unincorporated portion of a county other than the county of Pueblo; (II) At a single location within the city or county of Pueblo; or (III) At a single location within the area west of the continental divide. (b) A lottery retailer may install or operate video lottery terminals on premises located at no more than three different sites within Colorado. (3) The commission shall determine the number of video lottery terminals that may be placed on the premises of a lottery retailer at one site; except that the commission shall not approve more than two thousand five hundred video lottery terminals on the premises of a lottery retailer at one site. (4) Video lottery terminals shall not be installed or operated on premises: (a) Located at more than three different sites within Colorado; or (b) Located in any city, town, city and county, or unincorporated portion of a county unless first approved by: (I) An affirmative vote of a majority of the governing body of such city, town, city and county, or county in which such premises are wholly or partially located; or (II) An affirmative vote of a majority of the electors of such city, town, city and county, or county in which such premises are wholly or partially located upon the question being submitted to the electors by the governing body of such city, town, city and county, or county at a general, regular, or special election conducted pursuant to applicable state or local government election laws. (5) (a) Subject to the provisions of this subsection (5) and in addition to any other impact fees or development charges that may be imposed by law, the governing body of any city, town, city and county, or county in which premises are wholly or partially located on which video lottery terminals are to be installed or operated may impose video lottery impact fees on a lottery retailer to defray the costs of the on- and off-site impacts directly related to the operation of video lottery terminals on such premises. (b) Any video lottery impact fees authorized under paragraph (a) of this subsection (5) shall be: (I) Reasonably related in time to the incurrence of the on- and off-site impacts directly related to the operation of video lottery terminals on such premises, or the costs thereof; and (II) No greater than necessary to defray the costs of the on- and off-site impacts directly related to the operation of video lottery terminals on such premises; except that the amount of video lottery impact fees annually imposed by a local government on a lottery retailer pursuant to this subsection (5) shall not exceed five million dollars, adjusted annually for inflation. (c) For purposes of this subsection (5), "inflation" means the percentage change in the United States department of labor, bureau of labor statistics, consumer price index for Denver-Boulder-Greeley, all items, all urban consumers, or its successor index. (6) The commission may promulgate rules as necessary to implement this section and to monitor and regulate the operation of video lottery terminals. The commission may fine, admonish, or suspend or revoke the license of any lottery retailer that the commission finds has allowed an underage person to enter the age-controlled area, as defined by rule of the commission, of any premises for the purpose of using a video lottery terminal. (7) The director and the commission shall manage and regulate the operation of video lottery terminals in accordance with this section and their powers and duties as set forth in sections 24-35-204 and 24-35-208, respectively. (8) Each video lottery terminal is subject to approval by the commission in accordance with rules promulgated by the commission. (9) In addition to any other requirements set forth in this section, each video lottery terminal approved under this section shall: (a) Offer only games licensed and authorized by the commission; and (b) Not have any means of manipulation by a player or other unauthorized person that would affect the probability of winning a game. (10) Lottery retailers shall bear all expenses necessary to purchase or lease, install, maintain, and operate video lottery terminals. Marketing and advertising related to video lottery terminals are subject to approval by the commission. Nothing in this subsection (10) precludes the commission from advertising or marketing video lottery terminals. (11) Compensation to be paid to lottery retailers shall be seventy percent of net machine income. (12) Of the proceeds received from the operation of video lottery terminals, the division shall first remit to lottery retailers the compensation set forth in subsection (11) of this section. The division shall distribute the balance of such proceeds, net of prizes and expenses, in accordance with section 3 (1) (b) of article XXVII of the state constitution. (13) Nothing in this section shall be construed to alter, limit, impair, prevent, or diminish any land use, building, or zoning plans, codes, resolutions, or regulations of any city, town, city and county, or county within which premises are wholly or partially located on which video lottery terminals are to be installed or operated pursuant to this section. SECTION 3. In Colorado Revised Statutes, add 23-5-142 as follows: 23-5-142. Colorado college scholarship fund - creation. (1) There is hereby created in the state treasury the Colorado college scholarship fund, referred to in this section as the "fund". The fund consists of moneys credited to the fund pursuant to subsection (2) of this section. The moneys in the fund are subject to annual appropriation by the general assembly for the direct and indirect costs of implementing and administering a scholarship program created by bill enacted by the general assembly during the first regular session of the sixty-ninth general assembly in 2013 for the purpose of increasing the access of Colorado residents to undergraduate postsecondary education. (2) All revenues that would otherwise be allocated to the general fund pursuant to section 3 (1) (b) (III) of article XXVII of the state constitution, except for the portion of such revenues required to be distributed pursuant to section 12-47.1-701.5 (3.5), C.R.S., and required to be transferred to the public school capital construction assistance fund pursuant to section 22-43.7-104 (2) (b) (III), C.R.S., are credited to the fund. (3) Any moneys in the fund not expended or otherwise encumbered may be invested by the state treasurer as provided by law. All interest and income derived from the investment and deposit of moneys in the fund are credited to the fund. Any unexpended and unencumbered moneys remaining in the fund at the end of a fiscal year remain in the fund and are not to be credited or transferred to the general fund or another fund. SECTION 4. In Colorado Revised Statutes, 12-47.1-701.5, add (3.5) as follows: 12-47.1-701.5. Revenues attributable to local revisions to gaming limits - extended limited gaming fund - identification - separate administration - distribution - definitions. (3.5) (a) (I) In the fiscal year that commences on July 1 of a given year after the end of the first fiscal year during which video lottery terminals are operated during only a portion of that fiscal year in accordance with section 24-35-208.5, C.R.S., if the aggregate amount of revenue in the extended limited gaming fund to be distributed in that fiscal year in accordance with subparagraph (I) of paragraph (c) of subsection (3) of this section to colleges that were operating on and after January 1, 2008, is less than twenty-nine million dollars, the state treasurer shall distribute moneys that would otherwise be allocated to the general fund pursuant to section 3 (1) (b) (III) of article XXVII of the state constitution in the same manner as moneys in the fund are distributed in accordance with subparagraph (I) of paragraph (c) of subsection (3) of this section so that the aggregate amount to be distributed in that fiscal year to colleges that were operating on and after January 1, 2008, in accordance with this subparagraph (I) and subparagraph (I) of paragraph (c) of subsection (3) of this section equals twenty-nine million dollars; except that, if the amount of moneys that would otherwise be allocated to the general fund pursuant to section 3 (1) (b) of article XXVII of the state constitution in that fiscal year is less than thirty-four million five hundred thousand dollars, the state treasurer shall distribute an amount equal to eighty-four percent of the moneys that would otherwise be allocated to the general fund pursuant to section 3 (1) (b) (III) of said article XXVII in the same manner as moneys in the fund are distributed in accordance with subparagraph (I) of paragraph (c) of subsection (3) of this section to colleges that were operating on and after January 1, 2008. (II) In the fiscal year that commences on July 1 of a given year after the end of the first fiscal year during which video lottery terminals are operated during the entire fiscal year in accordance with section 24-35-208.5, C.R.S., if the aggregate amount of revenue in the extended limited gaming fund to be distributed in that fiscal year in accordance with subparagraph (I) of paragraph (c) of subsection (3) of this section to colleges that were operating on and after January 1, 2008, is less than twenty-nine million dollars, adjusted for inflation in the most recently completed calendar year, the state treasurer shall distribute moneys that would otherwise be allocated to the general fund pursuant to section 3 (1) (b) (III) of article XXVII of the state constitution in the same manner as moneys in the fund are distributed in accordance with subparagraph (I) of paragraph (c) of subsection (3) of this section so that the aggregate amount to be distributed in that fiscal year to colleges that were operating on and after January 1, 2008, in accordance with this subparagraph (II) and subparagraph (I) of paragraph (c) of subsection (3) of this section equals twenty-nine million dollars, adjusted for inflation in the most recently completed calendar year. (III) In each fiscal year that commences on July 1 of a given year after the end of the second fiscal year during which video lottery terminals are operated during the entire fiscal year in accordance with section 24-35-208.5, C.R.S., if the aggregate amount of revenue in the extended limited gaming fund to be distributed in that fiscal year in accordance with subparagraph (I) of paragraph (c) of subsection (3) of this section to colleges that were operating on and after January 1, 2008, is less than twenty-nine million dollars, adjusted annually by the greater of inflation in the most recently completed calendar year or the percentage change in the balance of proceeds received from the operation of video lottery terminals, net of prizes, expenses, and compensation paid to lottery retailers, and distributed in accordance with section 3 (1) (b) of article XXVII of the state constitution in the prior fiscal year, the state treasurer shall distribute moneys that would otherwise be allocated to the general fund pursuant to section 3 (1) (b) (III) of article XXVII of the state constitution in the same manner as moneys in the fund are distributed in accordance with subparagraph (I) of paragraph (c) of subsection (3) of this section so that the aggregate amount to be distributed in that fiscal year to colleges that were operating on and after January 1, 2008, in accordance with this subparagraph (III) and subparagraph (I) of paragraph (c) of subsection (3) of this section equals twenty-nine million dollars, adjusted annually by the greater of inflation in the most recently completed calendar year or the percentage change in the balance of proceeds received from the operation of video lottery terminals, net of prizes, expenses, and compensation paid to lottery retailers, and distributed in accordance with section 3 (1) (b) of said article XXVII in the prior fiscal year. (IV) For purposes of this paragraph (a), "inflation" means the percentage change in the United States department of labor, bureau of labor statistics, consumer price index for Denver-Boulder-Greeley, all items, all urban consumers, or its successor index. (b) (I) Moneys that would otherwise be allocated to the general fund pursuant to section 3 (1) (b) (III) of article XXVII of the state constitution that are distributed pursuant to paragraph (a) of this subsection (3.5), and any interest or income earned on a college's deposit of such moneys, shall supplement and shall not supplant any other state moneys appropriated or otherwise allocated for similar programs or purposes. As used in this paragraph (b), "state moneys" means general fund operating funding, including college opportunity fund stipends and fee-for-service funds, adjusted for inflation to the same degree as the inflation adjustment received by other institutions of higher education. (II) Any higher education funding formula that allocates state-appropriated moneys shall not use moneys distributed pursuant to paragraph (a) of this subsection (3.5) to supplant state moneys otherwise allocated by such formula. SECTION 5. In Colorado Revised Statutes, 22-43.7-104, amend (2) (b) introductory portion and (2) (b) (III); and add (2) (b) (III.5) as follows: 22-43.7-104. Public school capital construction assistance fund - creation - crediting of moneys to fund - use of fund - emergency reserve - creation. (2) (b) For each fiscal year commencing on or after July 1, 2008, the following moneys shall be are credited to the assistance fund: (III) All moneys that would otherwise be transferred to the general fund pursuant to section 3 (1) (b) (III) of article XXVII of the state constitution, except as otherwise provided in subparagraph (III.5) of this paragraph (b). The moneys credited to the assistance fund pursuant to this subparagraph (III) and any income and interest derived from the deposit and investment of such moneys shall be are exempt from any restriction on spending, revenue, or appropriations, including, without limitation, the restrictions of section 20 of article X of the state constitution. (III.5) (A) In the fiscal year that commences on July 1 of a given year after the end of the first fiscal year during which video lottery terminals are operated during only a portion of that fiscal year in accordance with section 24-35-208.5, C.R.S., the aggregate amount transferred to the assistance fund in that fiscal year pursuant to subparagraph (III) of this paragraph (a) shall not exceed five million five hundred thousand dollars; except that, if the amount of moneys that would otherwise be allocated to the general fund pursuant to section 3 (1) (b) (III) of said article XXVII of the state constitution in that fiscal year is less than thirty-four million five hundred thousand dollars, the aggregate amount transferred to the assistance fund in that fiscal year pursuant to subparagraph (III) of this paragraph (a) shall equal sixteen percent of the amount of moneys that would otherwise be allocated to the general fund pursuant to section 3 (1) (b) (III) of said article XXVII in that fiscal year. (B) In the fiscal year that commences on July 1 of a given year after the end of the first fiscal year during which video lottery terminals were operated during the entire fiscal year in accordance with section 24-35-208.5, C.R.S., the aggregate amount transferred to the assistance fund in that fiscal year pursuant to subparagraph (III) of this paragraph (a) shall not exceed five million five hundred thousand dollars, adjusted for inflation in the most recently completed calendar year. (C) In each fiscal year that commences on July 1 of a given year after the end of the second fiscal year during which video lottery terminals were operated during the entire fiscal year in accordance with section 24-35-208.5, C.R.S., the aggregate amount transferred to the assistance fund in that fiscal year shall not exceed five million five hundred thousand dollars, adjusted annually by the greater of inflation in the most recently completed calendar year or the percentage change in the balance of proceeds received from the operation of video lottery terminals, net of prizes, expenses, and compensation paid to lottery retailers, and distributed in accordance with section 3 (1) (b) of article XXVII of the state constitution in the prior fiscal year. (D) For purposes of this subparagraph (III.5), "inflation" means the percentage change in the United States department of labor, bureau of labor statistics, consumer price index for Denver-Boulder-Greeley, all items, all urban consumers, or its successor index. SECTION 6. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.