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