DEPARTMENT OF TREASURY

                  COMMISSIONER OF THE BUREAU OF STATE LOTTERY

                                   LOTTERY

(By authority conferred on the commissioner of Bureau  of  State  Lottery  by 
section 11 of 1972 PA 239, MCL 432.11)


R 432.1   Definitions.
  Rule 1. (1) As used in these rules:
 (a) "Act" means 1972 PA 239, MCL 432.1 et seq.
 (b) "Retailer" means a person who has been licensed to sell lottery  tickets 
under the act and is referenced in the act as an agent.
 (c) "Terminal" means an on?line lottery game terminal.
 (d) "Ticket" means a lottery ticket, share, or interest issued by the bureau 
for sale to the general public.
 (2) The terms defined in the act have the same meanings when used  in  these 
rules.

  History: 1979 AC; 1986 AACS; 1998-2000 AACS; 2006 AACS.


R 432.2   Employees and contractors.
  Rule 2. An officer or  employee  of  the  bureau  and  any  spouse,  child, 
brother, sister, or parent residing as a member of the same household in  the 
principal place of abode of an officer or employee of the  bureau  shall  not 
have any interest, direct or indirect, in dealing in the lottery  or  in  the 
ownership or leasing of any property or premises used by or for the lottery.

  History: 1979 AC; 1998-2000 AACS; 2006 AACS.


R 432.3   License eligibility; application.
  Rule 3. (1) In addition to the requirements of section 23 of the  act,  the 
commissioner shall consider the following additional factors  in  determining 
the eligibility of any prospective licensee or renewal  of  a  license  as  a 
retailer:
 (a) The honesty and integrity of the applicant.
 (b) The veracity of the information supplied in the application for  lottery 
retailer's license.
 (c) The applicant's indebtedness to the state or any local government.
 (d) The business experience and general fitness of the applicant.
 (2) Licenses shall be issued only to the following:
 (a) Residents of this state.
 (b) Corporations incorporated in this state or authorized to do business  in 
this state.
 (c) Partnerships in which at least 1 of the partners resides in this state.
 (d) Unincorporated businesses or other entities which are authorized  to  do 
business in this state.
 (3) A person interested in obtaining a license as a retailer shall  file  an 
application for a lottery retailer's license with the bureau  on  application 
forms which may be obtained from the bureau.

  History: 1979 AC; 2006 AACS.


R 432.4   License revocation.
  Rule 4. (1) A license is evidence of an agency that is revocable at will by 
either the bureau or the retailer.  Revocation of the agency is effective  30 
days after notice of the revocation has been mailed by the revoking  party.
On or before the thirtieth day following notice  of  revocation,  a  retailer 
shall surrender the license to the bureau.
 (2) The bureau may immediately suspend, revoke, or not  renew  a  retailer's 
license for any of the following reasons:
 (a) The retailer's application for a license contains  false  or  misleading 
information.
 (b) The retailer violates any of the provisions of the act, these rules,  or 
instructions and directives of the commissioner or bureau.
 (c) The retailer's business location is changed.
 (d) The  retailer  commits  any  act  that  seriously  impairs  his  or  her 
reputation for honesty and integrity.
 (e) The retailer does not display lottery point of sale material in a manner 
that can be readily seen by the public or fails  to  make  handout  materials 
readily available to the public.
 (f) The retailer is delinquent in making required accounting or fails to pay 
promptly all moneys owed the state.
 (g) The retailer has been convicted of a crime other than a traffic offense.
 (h) The retailer has been arrested for bookmaking or other forms of  illegal 
gambling, whether or not convicted of bookmaking or  other  form  of  illegal 
gambling in a court of law.
 (i) The retailer has been found guilty of any fraud or misrepresentation.
 (j) There is reasonable cause to believe that the  retailer  is  engaged  in 
fraud, misrepresentation, or illegal gaming.
 (k) The retailer fails to take reasonable security precautions  with  regard 
to the handling of lottery tickets and other materials.
 (l) The commissioner finds that the retailer's  experience,  character,  and 
general fitness are such that his or  her  participation  as  a  retailer  is 
inconsistent with the public interest, convenience, and necessity.
 (m) Any other reason within the permissible discretion of the commissioner.
 (3) The retailer shall  surrender  immediately  to  the  appropriate  bureau 
official his or her retailer's license and other lottery  materials  supplied 
to him or her by the bureau.

  History: 1979 AC; 1998-2000 AACS; 2006 AACS.


R 432.5   License fee.
  Rule 5. (1) The commissioner shall determine the fee for  a  license  as  a 
retailer.  The fee is payable at the time of license issuance.
 (2) A license renewal fee may be charged annually in an amount determined by 
the commissioner.
 (3) The fees in subrules (1) and (2) of  this  rule  shall  not  exceed  the 
actual cost to the bureau.

  History: 1979 AC; 1998-2000 AACS; 2001 AACS; 2006 AACS; 2009 MR 5, Eff. Mar.
13, 2009.


R 432.6    Conditions of licensing.
  Rule 6. Upon issuance of a license, the retailer  agrees  that  he  or  she 
shall do all of the following:
 (a) Be bound by and comply with the act, these rules,  or  instructions  and 
directives of the commissioner or bureau.
 (b) Make tickets available for sale to the  public  during  normal  business 
hours.
 (c ) Not purchase a winning ticket or tickets from an original purchaser  or 
from a subsequent purchaser.
 (d) Maintain authorized displays, notions, drop boxes,  and  other  material 
used in conjunction with sales in accordance with instructions issued by  the 
bureau.
 (e) Act in a fiduciary capacity with respect to all  tickets  accepted  from 
the bureau or its authorized distributors until payment has been made.
 (f) Maintain current and accurate records of all operations  in  conjunction 
with sales in conformity with rules,  instructions,  and  directives  of  the 
bureau.  The retailer shall make the records available to representatives  of 
the bureau upon request for inspection and audit.
 (g) Ensure that a person under 18 years of age does not sell tickets or  pay 
winning tickets.
 (h) Ensure that tickets will not be sold at any price greater than the price 
stated on the ticket.
 (i) Hold the bureau and the state harmless from  any  liability  arising  in 
connection with sales.
 (j) Remit funds due for lottery sales and other amounts owing to the  bureau 
at the time and in the manner specified by the bureau.
 (k) Validate all winning tickets through the bureau gaming  system  and  pay 
customers the full prize  value  of  validated  winning  tickets  up  to  the 
retailer's cashing limit as determined by the commissioner.

  History: 1979 AC; 1998-2000 AACS; 2001 AACS; 2006 AACS.


R 432.7   Nontransferability of license.
  Rule 7. A license is not assignable or transferable. The commissioner shall 
be notified, in writing,  not  less  than   20   days  before   any  proposed 
business change or substantial change   in   ownership  of  the  business.  A 
substantial change in ownership under this rule means a transfer  of  50%  or 
more of the equity of  any  business  licensed  under  these  rules.  If  the 
business to which a  license  is  issued   changes   its  business  location, 
then the owner shall submit an application for a  license.   An  owner  shall 
report  every   change  of  business  location,  in    writing,    to     the 
commissioner not less than 20 days before the change.

  History: 1979 AC; 1998-2000 AACS.


R 432.8   Bonding of retailer.
  Rule 8. The bureau may require a bond as specified by the commissioner from 
any retailer in an amount the bureau determines  will  prevent  any  monetary 
loss to the state because of a retailer's activities in the sale of tickets.
The bond is a condition of becoming or continuing as a retailer.  The  bureau 
may require a financial statement revealing the financial  condition  of  any 
person or organization seeking to become or continue as a retailer.

  History: 1979 AC; 1998-2000 AACS; 2006 AACS.


R 432.9   License expiration and renewal.
  Rule 9.  A retailer's license remains in full force and  effect  until  the 
termination date indicated upon the license, but in no case more than 1  year 
from the date of issuance of the license.   The  license  may  be  terminated 
before the expiration date by the commissioner in accordance with these rules.

  History: 1979 AC; 2006 AACS.


R 432.10   Special licenses.
  Rule 10. (1) A special license  may  be  issued  subject  to  such  special 
conditions or limitations as the commissioner deems prudent and determines to 
be consonant with the dignity of the state, the general welfare of the people 
and the dignity and integrity of the bureau.  These limitations or conditions 
include, but are not limited to, the following:
 (a) License period.
 (b) Hours or days of sale.
 (c) Location of sale.
 (d) Specific business or organization which may sell tickets.
 (e) Specific sporting, charitable, social, or  other  special  events  where 
lottery tickets may be sold.
 (f) Special selling or dispensing methods.
 (2) Retailers holding special licenses are subject to all rules  promulgated 
by the bureau.

  History: 1979 AC; 2006 AACS.


R 432.11   Sales by bureau directly.
  Rule 11. The bureau may sell tickets at any central or  branch  office   or 
selling point it establishes in the state.

  History: 1979 AC.


R 432.12   Stolen tickets.
  Rule 12. A retailer is responsible for all tickets consigned to him or her.
 If tickets are stolen, then the retailer  shall  report  the  theft  to  the 
bureau and to local or state police authorities. The retailer shall  pay  for 
the stolen tickets on the settlement date. The  retailer  shall  subsequently 
file a statement swearing to or affirming, under the penalty of perjury,  the 
facts of the case.  The retailer shall furnish to the bureau a  copy  of  the 
police report covering the theft.  Following an investigation by  the  bureau 
and police authorities, the bureau may issue  a  refund  to  the  retailer.
Refunds may only be issued if losses to the bureau  have  been  mitigated  by 
retailer's actions  in  reporting  the  tickets  stolen  and  the  retailer's 
appropriate accounting of the tickets stolen.

  History: 1979 AC; 1998-2000 AACS; 2006 AACS.


R 432.13   Sale;  inspection;  commission;  bonus   programs;   depositories; 
tickets held in trust for benefit of the bureau; disqualification of retailer 
representative; direct ticket distribution to retailers.
  Rule 13. (1) A retailer shall sell tickets only  on  the  premises  at  the 
specific location named in the license or attachments to the license.
 (2) A retailer shall allow inspections of his or her premises  at  any  time 
upon the reasonable request of authorized inspectors of the bureau.  A bureau 
inspector may make an inspection without prior notice to the retailer.
 (3) A retailer is entitled to a commission for tickets sold by him or her in 
an amount to be determined  by  the  commissioner.   The  commissioner  shall 
announce changes in the commission amount not less than 60  days  before  the 
effective date and shall include  the  changes  in  a  written  communication 
issued to all retailers.
 (4) The  commissioner  shall  provide  details  of  any  bonus  program  for 
retailers in a written communication issued to all retailers.
 (5) A retailer shall deposit, in a manner specified by the commissioner  for 
collection by the state, all moneys received by the retailer from the sale of 
tickets, less the amount retained as compensation.  The retailer  shall  file 
with the bureau, or its designated agents, reports of  ticket  sale  receipts 
and transactions.  The bureau shall specify the form of the reports  and  the 
information required.  In preparing a  report,  a  retailer  shall  refer  to 
directives and instructions to authorized retailers  made  available  by  the 
bureau.
 (6) Until such time as payment has been received by the bureau, all  lottery 
tickets made available to a retailer and any net  ticket  proceeds  shall  be 
deemed to be held in trust for the benefit of the bureau.
 (7) The bureau may disqualify any person authorized by the licensed retailer 
as the  retailer's representative.
 (8) The bureau may distribute tickets  directly  to  retailers  if,  in  the 
commissioner's opinion, it is necessary to maintain continued sales activity.

  History: 1979 AC; 1998-2000 AACS; 2001 AACS; 2006 AACS.


R 432.14   Rescinded.

  History: 1979 AC; 1998-2000 AACS.


R 432.15   Lottery tickets.
  Rule 15. (1) The bureau shall prepare tickets for sale to the  public.  The 
commissioner shall determine the price of a ticket  and  shall  announce  the 
price  by  directives,  advertising,  and  other  means  calculated  to  give 
reasonable notice to the public.
 (2) The  commissioner  may  limit  wagering  on  any  particular  number  or 
combination of numbers when he or she determines it is in the  best  interest 
of the bureau and the state of Michigan.
 (3) When a lottery ticket is purchased, the purchaser accepts the  terms  of 
the lottery ticket contract. Each lottery ticket  provides  that  all  ticket 
transactions and claims are subject to the laws of the state of Michigan, the 
rules,  regulations,  all  directives  of  the  Michigan  lottery,  and   any 
subsequent  changes.  In   questions   involving   ticket   validation,   the 
commissioner's determination is final. In cases of dispute  for  any  reason, 
the commissioner may at his or her  sole  discretion,  replace  the  disputed 
ticket with an unplayed ticket of equal value  or  refund  the  retail  sales 
price. The commissioner's decision to replace or refund  the  ticket  is  the 
purchaser's exclusive remedy. The rules governing a particular  lottery  game 
are set forth in bureau of state lottery directives.  The  directives  govern 
the terms and conditions of play.
 (4) The sale of a valid lottery ticket is final and  a  retailer  shall  not 
accept ticket returns.
 (5) The retailer will be responsible for  remitting  the  balance  owed  for 
tickets that are not accounted for by a retailer in a manner as  directed  by 
the commissioner.
 (6) The commissioner shall establish a  procedure  for  the  disposition  of 
unsold tickets.
 (7) A retailer shall return tickets printed in error or damaged in  any  way 
by the bureau to the bureau for credit.

  History: 1979 AC; 1998-2000 AACS; 2006 AACS.


R 432.16   Claiming of prizes.
  Rule 16. (1) The commissioner shall designate claim centers for the lottery 
program and advertise their locations.
 (2) The processing of winning tickets shall be in accordance with directives 
and instructions issued by the commissioner. If a special drawoff is required 
to determine the exact amount won, then the bureau shall notify the  claimant 
when and where to appear for the drawoff and where  to  present  his  or  her 
winning ticket for validation.
 (3) Mutilated tickets shall be validated only if adequate  portions  of  the 
ticket remain reasonably intact to ensure the authenticity of the ticket.
 (4) A claimant shall fill out a  claim  form,  present  the  form  with  the 
winning ticket, and receive a copy of the claim form as his or her receipt.
 (5) Upon validation of a winning ticket, payment of the amount due shall  be 
forwarded to the claimant in accordance with bureau procedures. If a claim is 
not validated as proper, then the bureau shall deny the  claim  and  promptly 
notify the claimant.

  History: 1979 AC; 1998-2000 AACS; 2006 AACS; 2009 MR 5, Eff. Mar. 13, 2009.


R 432.17   Ownership of lottery tickets.
  Rule 17. (1) A valid lottery ticket  that  has  been  sold  by  a  licensed 
retailer is presumed to be owned by  the  person  or  entity  whose  name  is 
entered on the claim form, notwithstanding that the name of another person or 
entity may appear on the ticket face or reverse side. Except as  provided  in 
subrule (2) of this rule, the bureau shall pay a prize to  the  person  whose 
name is entered on the claim form or present the prize to a third  party  who 
is authorized, in writing, as the claimant's representative.   All  liability 
of the bureau, the state, their employees and agents terminates upon payment.
 (2) Upon receipt of information supported by proper  evidence  that  another 
person is entitled to payment, or upon assertion  that  the  ticket  was  not 
legally issued initially, the commissioner may withhold  payment  pending  an 
investigation.  If the ownership of a winning lottery ticket is disputed  and 
the results of the commissioner's investigation are  inconclusive,  then  the 
commissioner may initiate an appropriate  judicial  proceeding  to  determine 
ownership.
 (3) The claimant of a lottery prize shall not assign  or  sell  his  or  her 
right to any prize except as provided for by  law.   The  commissioner  shall 
develop policies, procedures, and fee schedules  for  the  disposition  of  a 
claimant's rights to future payments.
 (4) The prize for a winning ticket must be claimed by  the  expiration  date 
printed, or as defined, on the ticket.

  History: 1979 AC; 1998-2000 AACS; 2006 AACS.


R 432.18   Payment of prizes.
  Rule 18. (1) The bureau shall make payment of prizes as soon as  reasonably 
possible  after  the  claim  has  been  filed,  verified,  and  the  claimant 
identified to the satisfaction of the commissioner.
  (2) The commissioner shall establish a  schedule  for  payment  of  certain 
major prizes in installments rather than a lump sum.
  (3) The bureau shall make payment of prizes by mail,  when  applicable,  to 
the claimant at the address that the claimant entered on the claim form.
  (4) When a drawing or  ceremony  is  conducted,  winners  shall   receive   
payment in full,  or  if  applicable,  the  first  installment  of  a  prize, 
 at  an appointment scheduled with the  bureau  as  soon   as   practicable   
after  the drawing. The  bureau  shall  make  payment  by  state  treasurer's 
warrant,   special  check,  or  in  any  other  manner  determined   by   the 
commissioner  in  advance  of the drawing.
  (5) The agents, officers, and employees of the  state  and   the   bureau   
are discharged of all liability upon payment of a prize to a claimant.
  (6) Upon the death of a prize winner who has  not   yet   collected   the   
full amount of his or her minimum guaranteed  prize,   the   bureau   shall   
continue payment in the manner specified by law. Unless specifically provided 
 for  by law, the bureau shall not accelerate payment of prize  money  before 
its normal date of payment because of the death of the prize  winner.   The   
amount  paid will not exceed  the  minimum  prize  guarantee  as  indicated   
in  the  game directive.

  History: 1979 AC; 1998-2000 AACS; 2006 AACS; 2009 MR 5, Eff. Mar. 13, 2009.


R 432.19   Disposition of funds from sale of tickets.
  Rule 19.  The commissioner shall specify the frequency of the  transfer  of 
net revenue to the beneficiaries specified by law.

  History: 1979 AC; 1998-2000 AACS.


R 432.20   Drawings.
  Rule 20. (1) The commissioner  shall  detail  the  types  of  drawings  and 
drawing procedures in a directive.  All drawings  shall  be  conducted  in  a 
public place and the selection of winners shall  be  based  on  chance.   The 
commissioner shall include any new drawings or changes in drawing  procedures 
in the directives or directive amendments.  The commissioner shall make every 
attempt to keep the public informed of drawing procedures and changes in  the 
procedures.
 (2) The bureau shall provide that all drawings to determine the awarding  of 
prizes are open to the public. The bureau shall make the time  and  place  of 
drawings known to the public in advance to the extent practicable.
 (3) The bureau shall disseminate information regarding the time and place of 
future  drawings,  the  winning  numbers  in  previous  drawings,  and  other 
information of public interest, including descriptive  information  regarding 
current games, to retailers,  interested  parties,  and  the  public  through 
brochures, pamphlets, newsletters, reports, and other  means  to  the  extent 
practicable.
 (4) If the number  of  contestants  in  a  drawing  is  variable,  then  the 
commissioner may limit the number of contestants in  any  particular  drawing 
for administrative or practical reasons.

  History: 1979 AC; 1998-2000 AACS; 2006 AACS.


R 432.21   Prize structure.
  Rule 21. (1) The prize structure shall be determined  by  the  commissioner 
from time to time and shall be consistent with the act.  Every attempt  shall 
be made to inform the  public,  retailers,  and  interested  parties  of  the 
existing prize structure of any lottery game, and reasonable notice shall  be 
given before any changes in the prize structure.  When possible, the  current 
prize structure shall be listed on the  ticket  itself  or  in  informational 
materials available at sales locations.
 (2) Periodic bonus promotions offering special prizes shall be  detailed  in 
special directives. Information regarding bonuses shall  be  disseminated  to 
the extent possible through  the  news  media,  advertising,  point  of  sale 
materials  and  other  practicable  means.   The  time  of  announcement   of 
promotions shall be determined by the commissioner.
 (3) The commissioner may award prizes of cash or merchandise as door  prizes 
at drawings or special events. Numbers shall be drawn at random to  determine 
door prize winners according to procedures  determined  by  the  commissioner 
from time to time and announced in appropriate directives.

  History: 1979 AC; 2006 AACS.


R 432.22   Rescinded.

  History: 1979 AC; 1998-2000 AACS.


R 432.31   Rescinded.

  History:  1986 AACS; 1998-2000 AACS.


R 432.32   Rescinded.

  History:  1986 AACS; 1998-2000 AACS.


R 432.33   Rescinded.

  History:  1986 AACS; 1998-2000 AACS.


R 432.34   Rescinded.

  History:  1986 AACS; 1998-2000 AACS.


R 432.35   Rescinded.

  History:  1986 AACS; 1998-2000 AACS.


R 432.36   Retailer  performance  requirements  and  terms  and   conditions; 
disciplinary action; conference.
  Rule 36. (1) A licensee does not have a property interest  in  the  license 
granted or the on?line lottery terminal.
 (2) The commissioner shall establish and provide advance written  notice  of 
retailer performance requirements and specific terms and conditions to assure 
the efficient and effective functioning of the bureau, maintain the  bureau's 
security and integrity, and assure compliance  with  the  act,  these  rules, 
contracts with retailers, directives, and other written  communications  with 
retailers.  The performance requirements and terms and conditions include all 
of the following:
 (a) The weekly minimum sales performance requirement for  total  game  sales 
shall not be more than a $4,000.00 weekly average.
 (b) Reporting changes in ownership and location.
 (c) Continued terminal operation.
 (d) In-store location, installation, and operation of a terminal.
 (e) Promotion and marketing requirements, including the use  of  promotional 
materials.
 (f) Requirements for the prompt settlement  of  funds  due  the  bureau  for 
lottery sales or other fees.
 (g) Hours of operation, customer service  requirements,  claims  processing, 
and redemption of winning tickets.
 (h) Attendance at training sessions.
 (i) Compliance with federal, state, and local laws, rules, and regulations.
 (j) Prohibiting participation as a retailer for other lotteries.
 (k) Requirements necessary to assure compliance with the act and these rules 
and to assure the security, integrity, and efficient and effective  operation 
of the bureau.
 (3) Violation of the performance requirements or terms and conditions  shall 
result in disciplinary action depending on the nature  and  severity  of  the 
violation. Disciplinary action may include any, or a combination of  any,  of 
the following:
 (a) Counseling.
 (b) Suspension of selling privileges.
 (c) Probation.
 (d) On-line terminal deactivation.
 (e) License revocation.
 (4) If the severity of a violation warrants  license  revocation,  then  the 
retailer may request a  conference  with  the  commissioner  or  his  or  her 
designee.  At the informal conference,  the  commissioner  shall  review  the 
alleged violation with the retailer.  The retailer shall have the opportunity 
to refute the alleged violation or to explain the reasons for the violation.
After the conference, the commissioner may decide to do any of the following:
 (a) Continue the disciplinary action.
 (b) Modify or suspend the disciplinary action.
 (c) Revoke the retailer's license without benefit of further consideration.

  History:  1986 AACS; 1998-2000 AACS; 2006 AACS.


R 432.37   Fees.
  Rule 37 (1) The commissioner shall establish fees for all of the following:
 (a) The processing and investigative costs of licensing retailers.
 (b) Communications system installation, or relocation, or operation.
 (c) Failure of a retailer to promptly settle for any  game  as  required  by 
bureau rules, contracts, directives, or written communications.
 (d) Inactive license status.
 (2) The fees in subrule (1) of this rule shall not exceed the actual cost to 
the bureau for the action.
 (3) Retailers whose weekly sales fall below the  minimum  sales  performance 
requirements established under R 432.36 may be assessed a  weekly  low  sales 
performance fee.  The commissioner shall determine  the  amount  of  the  fee 
assessed for failure to meet minimum sales performance requirements  under  R 
432.36.

  History: 1986 AACS; 1998-2000 AACS; 2001 AACS; 2006 AACS.


R 432.38    Result of invalid rule.
  Rule 38. If any rule or part of a rule is found to be  invalid,  only  that 
rule or part thereof shall be considered to be invalid.

  History:  1986 AACS.