0001| SENATE BILL 79
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0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998
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0003| INTRODUCED BY
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0004| JOHN ARTHUR SMITH
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0005|
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0006|
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0007|
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0008| FOR THE LOTTERY OVERSIGHT COMMITTEE
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0009|
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0010| AN ACT
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0011| CREATING A GAMING OVERSIGHT COMMITTEE AND PROVIDING FOR ITS
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0012| AUTHORITY AND DUTIES; AMENDING SECTIONS 6-24-10, 6-24-27,
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0013| 6-24-28 AND 6-24-33 NMSA 1978 (BEING LAWS 1995, CHAPTER 155,
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0014| SECTIONS 10, 27, 28 AND 33); REPEALING SECTION 6-24-9 NMSA
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0015| 1978 (BEING LAWS 1995, CHAPTER 155, SECTION 9); DECLARING AN
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0016| EMERGENCY.
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0017|
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0018| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0019| Section 1. [NEW MATERIAL] LEGISLATIVE GAMING OVERSIGHT
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0020| COMMITTEE CREATED--MEMBERSHIP--ORGANIZATION--ADVISORY
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0021| MEMBERS--PAYMENT OF COMMITTEE MEMBERS--DISQUALIFYING
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0022| INTERESTS--PROHIBITED ACTS.--
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0023| A. The "gaming oversight committee" is created as
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0024| a joint interim legislative committee.
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0025| B. The committee consists of eight members, four
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0001| from the house of representatives and four from the senate.
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0002| The house members shall be appointed by the speaker of the
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0003| house of representatives. The senate members shall be
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0004| appointed by the committees' committee of the senate or, if
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0005| the senate appointments are made in the interim, by the
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0006| president pro tempore of the senate after consultation with
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0007| and agreement of a majority of the members of the committees'
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0008| committee. Members shall be appointed so that there are two
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0009| members of the committee from each of the major political
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0010| parties from each house. The power of appointment shall be
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0011| exercised by the appointing authority at the beginning of each
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0012| interim so that committee members may be reappointed or
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0013| replaced. Members shall serve a term beginning with the date
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0014| of appointment and ending on the first day of the regular
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0015| session of the legislature following the interim for which the
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0016| member is appointed. No representative or senator shall serve
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0017| as a committee member for more than four consecutive interims.
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0018| Vacancies on the committee shall be filled by the appointing
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0019| authority to serve until the end of the interim in which the
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0020| succeeding member is appointed.
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0021| C. The chairman of the first committee appointed
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0022| pursuant to this section shall be designated by the speaker of
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0023| the house of representatives and the vice chairman of the
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0024| first committee appointed shall be designated by the president
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0025| pro tempore of the senate. The positions of chairman and vice
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0001| chairman shall thereafter rotate at the beginning of each
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0002| interim so that a senate member is designated chairman for the
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0003| committee serving during the second interim and a house member
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0004| is designated a vice chairman.
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0005| D. The respective appointing authorities may
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0006| appoint members of the two bodies of the legislature as
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0007| advisory members of the committee. The conditions of
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0008| appointment of members shall also apply to the appointment of
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0009| advisory members. Advisory members shall not vote on actions
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0010| taken by the committee.
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0011| E. A quorum consists of five voting members of the
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0012| committee.
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0013| F. Members and advisory members shall be paid per
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0014| diem and mileage for attendance at a regularly called meeting
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0015| of the committee if a quorum of the membership is present or,
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0016| in the absence of a quorum, if a majority of the total
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0017| membership of the committee, including advisory members, is
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0018| present.
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0019| G. A legislator shall not be appointed to or serve
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0020| on the committee if he has a pecuniary interest in an entity
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0021| operating gaming activities within the state or supplying
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0022| services or personal property to an entity operating or
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0023| regulating gaming activities within the state. As used in
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0024| this subsection "pecuniary interest" means an ownership
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0025| interest that is of a quality or quantity to affect
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0001| significantly, directly or indirectly, the decisions or
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0002| activities of an entity operating gaming activities within the
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0003| state or supplying services or personal property to an entity
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0004| operating or regulating gaming activities within the state.
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0005| Section 2. [NEW MATERIAL] GAMING OVERSIGHT COMMITTEE--
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0006| DUTIES AND AUTHORITY--STAFFING.--
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0007| A. The gaming oversight committee shall exercise
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0008| its responsibility for oversight by:
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0009| (1) continuously reviewing the operations of
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0010| all state agencies and instrumentalities involved in the
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0011| operation of or regulation of gaming activities within the
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0012| state;
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0013| (2) during an interim, making advisory
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0014| recommendations to the executive branch for appropriate
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0015| actions by it to improve the operations and regulation of
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0016| gaming activities within the state;
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0017| (3) at the close of an interim, making
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0018| recommendations to the legislature for legislation or other
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0019| actions in the next following regular legislative session to
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0020| improve the operations and regulation of gaming activities
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0021| within the state; and
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0022| (4) making and publishing an annual report of
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0023| its activities prior to the end of each interim, copies of
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0024| which shall be furnished to the governor, the speaker of the
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0025| house of representatives and the chairman of the committees'
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0001| committee of the senate with further distribution of the
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0002| report as determined by the committee.
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0003| B. In exercising its responsibilities for
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0004| oversight, the gaming oversight committee:
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0005| (1) may investigate the operations and
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0006| regulation of gaming activities within the state;
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0007| (2) may require persons to appear and testify
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0008| before it and to produce information in any form for review by
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0009| the committee if the subject matter of the testimony or
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0010| information sought is relevant to the committee's
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0011| responsibilities specified in Subsection A of this section;
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0012| (3) may issue appropriate subpoenas to compel
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0013| persons to appear and testify and to produce information as
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0014| specified in Paragraph (2) of this subsection and, in the
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0015| event of noncompliance with an issued subpoena, may seek
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0016| enforcement of the subpoena in the district court of the first
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0017| judicial district; and
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0018| (4) may take action reasonably necessary to
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0019| fulfill its responsibilities delineated in this section even
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0020| though specific authority for a particular action is not
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0021| expressed in this section.
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0022| C. Staff services for the gaming oversight
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0023| committee shall be furnished by the legislative council
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0024| service and funds for its expenses shall be budgeted by the
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0025| legislative council service. Staff services that are not
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0001| readily available from the legislative council service may be
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0002| provided to the committee if requested from and approved by
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0003| the legislative council.
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0004| Section 3. Section 6-24-10 NMSA 1978 (being Laws 1995,
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0005| Chapter 155, Section 10) is amended to read:
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0006| "6-24-10. CHIEF EXECUTIVE OFFICER--COMPENSATION--
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0007| APPOINTMENT--DUTIES.--
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0008| A. The board shall appoint and set the
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0009| compensation of a "chief executive officer", who shall serve
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0010| at the pleasure of the board.
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0011| B. The chief executive officer, who shall be an
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0012| employee of the authority, shall:
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0013| (1) manage and direct the operation of the
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0014| lottery and all administrative and technical activities of the
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0015| authority in accordance with the provisions of the New Mexico
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0016| Lottery Act and pursuant to rules, policies and procedures
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0017| adopted by the board pursuant to that act;
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0018| (2) employ and supervise such personnel as
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0019| deemed necessary;
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0020| (3) with the approval of the board and
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0021| pursuant to rules, policies and procedures adopted by the
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0022| board, enter into contracts for materials, equipment and
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0023| supplies to be used in the operation of the lottery, for the
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0024| design and installation of lottery games, for consultant
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0025| services and for promotion of the lottery;
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0001| (4) contract with lottery retailers pursuant
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0002| to the New Mexico Lottery Act and board rules;
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0003| (5) promote or provide for promotion of the
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0004| lottery and any functions related to the authority;
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0005| (6) hire an executive vice president for
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0006| security and an internal auditor and take all necessary
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0007| measures to provide for the security and integrity of the
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0008| lottery;
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0009| (7) prepare an annual budget for the approval
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0010| of the board;
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0011| (8) provide quarterly to the board, the
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0012| governor, the [lottery] gaming oversight committee and the
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0013| legislative finance committee a full and complete report of
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0014| lottery revenues and expenses for the preceding quarter; and
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0015| (9) perform such other duties as are
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0016| necessary to implement and administer the lottery.
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0017| C. The chief executive officer may refuse to renew
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0018| [any] a lottery contract in accordance with the provisions
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0019| of the New Mexico Lottery Act or the rules, policies and
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0020| procedures of the board.
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0021| D. The chief executive officer or his designee may
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0022| conduct hearings and administer oaths to persons for the
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0023| purpose of assuring the security or integrity of lottery
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0024| operations or to determine the qualifications of or compliance
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0025| by lottery vendors and lottery retailers."
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0001| Section 4. Section 6-24-27 NMSA 1978 (being Laws 1995,
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0002| Chapter 155, Section 27) is amended to read:
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0003| "6-24-27. REVENUE AND BUDGET REPORTS--RECORDS--
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0004| INDEPENDENT AUDITS.--
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0005| A. The board shall:
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0006| (1) submit quarterly and annual reports to
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0007| the governor, legislative finance committee and lottery
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0008| oversight committee disclosing the total lottery revenue,
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0009| prizes, commissions, ticket costs, operating expenses and net
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0010| revenues of the authority during the reporting period and, in
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0011| the annual report, describe the organizational structure of
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0012| the authority and summarize the functions performed by each
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0013| organizational division within the authority;
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0014| (2) maintain weekly or more frequent records
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0015| of lottery transactions, including the distribution of lottery
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0016| tickets to retailers, revenue received, claims for prizes,
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0017| prizes paid, prizes forfeited and other financial transactions
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0018| of the authority; and
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0019| (3) use the state government fiscal year.
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0020| B. The board shall provide, for informational
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0021| purposes, to the department of finance and administration and
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0022| the legislative finance committee, by December 1 of each year,
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0023| a copy of the annual proposed operating budget for the
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0024| authority for the succeeding fiscal year. This budget
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0025| proposal shall also be accompanied by an estimate of the net
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0001| revenues to be deposited in the public school capital outlay
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0002| fund and the lottery tuition fund for the current and
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0003| succeeding fiscal years.
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0004| C. The board shall contract with an independent
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0005| certified public accountant or firm for an annual financial
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0006| audit of the authority. The certified public accountant or
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0007| firm shall have no financial interest in any lottery
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0008| contractor. The certified public accountant or firm shall
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0009| present an audit report no later than March 1 for the prior
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0010| fiscal year. The certified public accountant or firm shall
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0011| evaluate the internal auditing controls in effect during the
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0012| audit period. The cost of this financial audit shall be an
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0013| operating expense of the authority. The legislative finance
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0014| committee may, at any time, order an audit of any phase of the
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0015| operations of the authority, at the expense of the authority,
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0016| and shall receive a copy of the annual independent financial
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0017| audit. A copy of any audit performed by the certified public
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0018| accountant or ordered by the legislative finance committee
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0019| shall be transmitted to the governor, the speaker of the house
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0020| of representatives, the president pro tempore of the senate,
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0021| the legislative finance committee and the [lottery] gaming
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0022| oversight committee."
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0023| Section 5. Section 6-24-28 NMSA 1978 (being Laws 1995,
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0024| Chapter 155, Section 28) is amended to read:
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0025| "6-24-28. INTERNAL AUDITOR--APPOINTMENT--DUTIES.--
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0001| A. The board, with the recommendation and
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0002| assistance of the chief executive officer, shall employ an
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0003| internal auditor. The internal auditor, who shall be an
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0004| employee of the authority, shall be qualified by training and
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0005| experience as an auditor and management analyst and have at
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0006| least five years of auditing experience. The internal auditor
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0007| shall take direction as needed from the chief executive
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0008| officer and be accountable to the board.
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0009| B. The internal auditor shall conduct and
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0010| coordinate comprehensive audits for all aspects of the
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0011| lottery, provide management analysis expertise and carry out
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0012| any other duties specified by the board and by law. The
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0013| internal auditor shall specifically:
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0014| (1) conduct, or provide for through a
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0015| competitive bid process, an annual financial audit and
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0016| observation audits of drawings;
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0017| (2) create an annual audit plan to be
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0018| approved by the board;
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0019| (3) search for means of better efficiency and
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0020| cost savings and waste prevention;
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0021| (4) examine the policy and procedure needs of
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0022| the lottery and determine compliance;
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0023| (5) ensure that proper internal controls
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0024| exist;
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0025| (6) perform audits that meet or exceed
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0001| governmental audit standards; and
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0002| (7) submit audit reports on a quarterly basis
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0003| to the board, the chief executive officer, the state auditor,
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0004| the [lottery] gaming oversight committee and the
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0005| legislative finance committee.
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0006| C. The internal auditor shall conduct audits as
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0007| needed in the areas of:
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0008| (1) personnel security;
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0009| (2) lottery retailer security;
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0010| (3) lottery contractor security;
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0011| (4) security of manufacturing operations of
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0012| lottery contractors;
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0013| (5) security against lottery ticket
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0014| counterfeiting and alteration and other means of fraudulently
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0015| winning;
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0016| (6) security of drawings among entries or
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0017| finalists;
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0018| (7) computer security;
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0019| (8) data communications security;
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0020| (9) database security;
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0021| (10) systems security;
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0022| (11) lottery premises and warehouse security;
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0023| (12) security in distribution;
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0024| (13) security involving validation and
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0025| payment procedures;
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0001| (14) security involving unclaimed prizes;
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0002| (15) security aspects applicable to each
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0003| particular lottery game;
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0004| (16) security of drawings in games whenever
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0005| winners are determined by drawings;
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0006| (17) the completeness of security against
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0007| locating winners in lottery games with preprinted winners by
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0008| persons involved in their production, storage, distribution,
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0009| administration or sales; and
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0010| (18) any other aspects of security applicable
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0011| to any particular lottery game and to the lottery and its
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0012| operations.
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0013| D. Specific audit findings related to security
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0014| invasion techniques are confidential and may be reported only
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0015| to the chief executive officer or his designee, the board, the
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0016| governor and the attorney general."
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0017| Section 6. Section 6-24-33 NMSA 1978 (being Laws 1995,
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0018| Chapter 155, Section 33) is amended to read:
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0019| "6-24-33. UNLAWFUL PURCHASE OF LOTTERY TICKET--
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0020| PENALTY.--
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0021| A. It is unlawful for the following persons to
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0022| purchase a lottery ticket or to share knowingly in the lottery
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0023| winnings of another person:
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0024| (1) the chief executive officer, a board
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0025| member [a member of the lottery oversight committee] or an
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0001| employee of the authority; or
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0002| (2) an owner, officer or employee of a
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0003| lottery vendor or, in the case of a corporation, an owner of
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0004| five percent or more of the corporate stock of a lottery
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0005| vendor.
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0006| B. Notwithstanding the provisions of Subsection A
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0007| of this section, the chief executive officer may authorize in
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0008| writing any employee of the authority and any employee of a
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0009| lottery contractor to purchase a lottery ticket for the
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0010| purposes of verifying the proper operation of the lottery with
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0011| respect to security, systems operation and lottery retailer
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0012| contract compliance. Any prize awarded as a result of such
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0013| ticket purchase shall become the property of the authority and
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0014| shall be added to the prize pools of subsequent lottery games.
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0015| C. Nothing in this section shall prohibit lottery
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0016| retailers or their employees from purchasing lottery tickets
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0017| or from being paid a prize for a winning ticket.
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0018| D. Certain classes of persons who, because of the
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0019| unique nature of the supplies or services they provide for use
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0020| directly in the operation of the lottery, may be prohibited,
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0021| in accordance with rules adopted by the board, from
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0022| participating in any lottery in which such supplies or
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0023| services are used.
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0024| E. Any person who violates any provision of this
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0025| section for the first time is guilty of a misdemeanor and
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0001| shall be sentenced pursuant to the provisions of Section
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0002| 31-19-1 NMSA 1978.
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0003| F. Any person who violates any provision of this
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0004| section for a second or subsequent time is guilty of a fourth
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0005| degree felony and shall be sentenced pursuant to the
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0006| provisions of Section 31-18-15 NMSA 1978."
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0007| Section 7. REPEAL.--Section 6-24-9 NMSA 1978 (being Laws
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0008| 1995, Chapter 155, Section 9) is repealed.
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0009| Section 8. EMERGENCY.--It is necessary for the public
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0010| peace, health and safety that this act take effect
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0011| immediately.
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0012|
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