1 STATE OF OKLAHOMA
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2 2nd Session of the 59th Legislature (2024)
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3 SENATE BILL 1432 By: Howard
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6 AS INTRODUCED
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7 An Act relating to Oklahoma Education Lottery Act;
7 amending 3A O.S. 2021, Section 703, which relates to
8 definitions; modifying definitions; amending 3A O.S.
8 2021, Section 705, which relates to the board of
9 trustees; removing provisions for initial membership;
9 amending 3A O.S. 2021, Section 711, which relates to
10 the executive director; modifying reporting
10 frequency; amending 3A O.S. 2021, Section 712, as
11 amended by Section 1, Chapter 332, O.S.L. 2023 (3A
11 O.S. Supp. 2023, Section 712), which relates to
12 employees of the Oklahoma Lottery Commission;
12 removing prohibition of employee from certain
13 employment following termination; updating statutory
13 language; amending 3A O.S. 2021, Section 713, as
14 amended by Section 2, Chapter 332, O.S.L. 2023 (3A
14 O.S. Supp. 2023, Section 713), which relates to the
15 Oklahoma Education Lottery Trust Fund; removing
15 method of transfer of certain funds; modifying
16 portion of annual appropriation; directing certain
16 funds from the Oklahoma Education Lottery Trust Fund
17 to go into certain funds; providing for method of
17 apportionment to be transferred from fund into the
18 specified funds; directing remainder of funds to be
18 transferred into certain fund by certain date;
19 updating statutory reference; repealing 3A O.S. 2021,
19 Section 719, which relates to the Fidelity Revolving
20 Fund; repealing 3A O.S. 2021, Section 732, which
20 relates to negotiable bonds and promissory notes; and
21 providing an effective date.
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24 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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Req. No. 2692 Page 1
 1 SECTION 1. AMENDATORY 3A O.S. 2021, Section 703, is
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2 amended to read as follows:
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3 Section 703. As used in the Oklahoma Education Lottery Act:
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4 1. “Administrative expenses” means operating expenses,
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5 excluding amounts set aside for prizes, regardless of whether such
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6 prizes are claimed and excluding amounts deposited to the Fidelity
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7 Revolving Fund pursuant to Section 20 of this act;
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8 2. “Board” means the board of trustees of the Oklahoma Lottery
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9 Commission;
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10 3. “Capital outlay projects” means the acquisition,
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11 construction, installation, modification, renovation, repair,
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12 extension, renewal, replacement, or rehabilitation of land,
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13 interests in land, buildings, structures, facilities, or other
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14 improvements and the acquisition, installation, modification,
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15 renovation, repair, extension, renewal, replacement, rehabilitation,
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16 or furnishing of fixtures, machinery, equipment, computers,
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17 software, laboratories, furniture, textbooks, and reference material
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18 or other property of any nature whatsoever used on, in, or in
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19 connection with educational facilities;
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20 4. “Commission” means the Oklahoma Lottery Commission;
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21 5. “Educational facilities” means land, structures, and
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22 buildings owned or operated by and through the Oklahoma State
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23 Regents for Higher Education, the State Board of Education, the
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24 Oklahoma Department of Career and Technology Education, or by any
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 1 school district within this state. A public road or highway leading
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2 to an educational facility shall not be considered an educational
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3 facility;
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4 6. “Executive director” means the chief executive officer and
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5 administrator of the Oklahoma Lottery Commission;
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6 7. “Gross proceeds” means all revenue derived from the sale of
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7 lottery tickets or shares and all other monies derived from the
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8 lottery;
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9 8. “Instant ticket” means a lottery ticket that requires the
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10 player to remove a coating to determine if a prize has been won;
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11 9. “Lottery”, “lotteries”, “lottery game”, or “lottery games”
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12 means an activity conducted by the Commission under the Oklahoma
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13 Education Lottery Act through which prizes are awarded or
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14 distributed by chance among persons who have paid for a chance or
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15 other opportunity to receive a prize, including, but not limited to,
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16 instant tickets and on-line games, but excluding charity bingo and
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17 games conducted pursuant to the Oklahoma Charity Games Act, poker,
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18 blackjack, slot machines, pulltab machines, card games, dice,
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19 dominos, roulette wheels, or other similar forms of gambling, or
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20 electronic or video forms of these gambling activities, or games
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21 where winners are determined by the outcome of a sports contest, or
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22 pari-mutuel betting conducted pursuant to the Oklahoma Horse Racing
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23 Act;
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 1 10. “Major procurement contract” means any gaming product or
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2 service costing in excess of Twenty-five Thousand Dollars
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3 ($25,000.00), including, but not limited to, major advertising
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4 contracts, annuity contracts, prize payment agreements, consulting
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5 services, equipment, tickets, and other products and services unique
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6 to the Oklahoma lottery, but not including materials, supplies,
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7 equipment, and services common to the ordinary operations of the
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8 Commission;
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9 11. “Member” or “members” means a trustee or trustees of the
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10 board of trustees of the Oklahoma Lottery Commission;
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11 12. “Member of a minority” means an individual who is a member
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12 of a race which comprises less than fifty percent (50%) of the total
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13 population of Oklahoma;
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14 13. “Minority business” means any business which is owned by:
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15 a. an individual who is a member of a minority who
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16 reports as the personal income of the individual for
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17 Oklahoma income tax purposes the income of the
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18 business,
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19 b. a partnership in which a majority of the ownership
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20 interest is owned by one or more members of a minority
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21 who report as their personal income for Oklahoma
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22 income tax purposes more than fifty percent (50%) of
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23 the income of the partnership, or
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 1 c. a corporation organized under the laws of this state
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2 in which a majority of the common stock is owned by
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3 one or more members of a minority who report as their
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4 personal income for Oklahoma income tax purposes more
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5 than fifty percent (50%) of the distributed earnings
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6 of the corporation;
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7 14. “Net proceeds” means all revenue derived from the sale of
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8 lottery tickets or shares and all other monies derived from the
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9 lottery less operating expenses;
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10 15. “On-line games” means a game where tickets or shares are
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11 purchased through a network of computer terminals located at retail
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12 outlets, and such terminals are linked to a central computer that
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13 records the purchases;
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14 16. “Operating expenses” means all costs of doing business,
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15 including but not limited to, prizes, commissions, and other
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16 compensation paid to retailers, advertising and marketing costs,
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17 personnel costs, capital costs, amounts held in or paid from the
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18 Fidelity Revolving Fund pursuant to Section 20 of this act, debt
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19 service payments for the payment of the initial expenses of start-
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20 up, administration, and operation of the Commission and the lottery,
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21 and other operating costs;
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22 17. “Pari-mutuel betting” means the pari-mutuel system of
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23 wagering as defined in Section 200.1 of Title 3A of the Oklahoma
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24 Statutes. Such term shall not include a lottery game which may be
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 1 predicated on a horse-racing scheme that does not involve actual
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2 track events or traditional lottery games which may involve the
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3 distribution of winnings by pools;
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4 18. “Person” means any individual, corporation, partnership,
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5 unincorporated association, limited liability company, or other
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6 legal entity;
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7 19. “Retailer” means a person who sells lottery tickets or
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8 shares on behalf of the Commission pursuant to a contract;
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9 20. “Share” means any intangible evidence of participation in a
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10 lottery game;
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11 21. “Ticket” means any tangible evidence issued by the lottery
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12 to provide participation in a lottery game; and
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13 22. “Vendor” means a person who provides or proposes to provide
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14 goods or services to the Commission pursuant to a major procurement
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15 contract, but does not include an employee of the Commission, a
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16 retailer, or a state agency or instrumentality thereof. Such term
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17 does not include any corporation whose shares are publicly traded
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18 and which is the parent company of the contracting party in a major
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19 procurement contract.
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20 SECTION 2. AMENDATORY 3A O.S. 2021, Section 705, is
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21 amended to read as follows:
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22 Section 705. A. The Oklahoma Lottery Commission shall be
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23 governed by a board of trustees composed of seven (7) members to be
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24 appointed by the Governor with the advice and consent of the Senate.
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 1 Not more than two members shall be appointed from any single
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2 congressional district.
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3 B. Members shall be residents of the State of Oklahoma, shall
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4 be prominent persons in their businesses or professions, and shall
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5 not have been convicted of any felony offense, and shall not be
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6 awaiting sentencing on a plea of guilt or nolo contendere to a
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7 felony offense. At least one member of the board shall be engaged
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8 in the practice of law, at least one member shall be engaged in the
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9 practice of accounting, and at least one member shall have expertise
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10 in marketing.
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11 C. Members shall serve terms of five (5) years, except that of
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12 the initial members appointed, one shall be appointed for an initial
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13 term of one (1) year, one shall be appointed for an initial term of
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14 two (2) years, one shall be appointed for an initial term of three
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15 (3) years, two shall be appointed for initial terms of four (4)
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16 years, and two shall be appointed for initial terms of five (5)
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17 years. Any vacancy occurring on the board shall be filled by the
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18 Governor by appointment with the advice and consent of the Senate
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19 for the remainder of the unexpired term.
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20 D. Members of the board shall not have any direct or indirect
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21 interest in an undertaking that puts their personal interest in
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22 conflict with that of the Commission, including, but not limited to,
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23 an interest in a major procurement contract or a participating
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24 retailer.
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 1 E. Members of the board shall be reimbursed for travel expenses
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2 pursuant to the State Travel Reimbursement Act.
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3 F. The members shall elect from their membership a chair, vice-
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4 chair, secretary, and treasurer. Such officers shall serve for such
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5 terms as shall be prescribed by the rules of the Commission or until
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6 their respective successors are elected and qualified. No member of
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7 the board shall hold more than any one office of the Commission at
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8 the same time, except that the same person may serve as secretary
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9 and treasurer.
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10 G. The board of trustees shall employ an executive director of
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11 the Commission.
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12 H. A majority of members in office shall constitute a quorum
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13 for the transaction of any business and for the exercise of any
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14 power or function of the Commission.
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15 I. All meetings of the board shall be subject to the Oklahoma
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16 Open Meeting Act. Action may be taken and motions and resolutions
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17 adopted by the board at any meeting thereof by the affirmative vote
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18 of a majority of present and voting board members.
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19 J. No vacancy in the membership of the board shall impair the
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20 right of the members to exercise all the powers and perform all the
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21 duties of the board.
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22 SECTION 3. AMENDATORY 3A O.S. 2021, Section 711, is
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23 amended to read as follows:
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 1 Section 711. A. The executive director of the Oklahoma Lottery
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2 Commission shall direct and supervise all administrative and
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3 technical activities in accordance with the provisions of the
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4 Oklahoma Education Lottery Act and with the rules promulgated by the
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5 board of trustees of the Oklahoma Lottery Commission. It shall be
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6 the duty of the executive director to:
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7 1. Facilitate the initiation of and supervise and administer
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8 the operation of the lottery games;
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9 2. Employ by contract and compensate such persons and firms as
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10 deemed necessary;
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11 3. Promote or provide for promotion of the lottery and any
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12 functions related to the Commission;
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13 4. Prepare a budget for the approval of the board;
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14 5. Require bond from such retailers and vendors in such amounts
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15 as required by the board;
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16 6. Report quarterly annually to the State Auditor and Inspector
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17 and the board a full and complete statement of lottery revenues and
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18 expenses for the preceding quarter; and
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19 7. Perform other duties generally associated with an executive
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20 director or a chief executive officer of a state lottery.
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21 B. In accordance with the provisions of the Oklahoma Education
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22 Lottery Act or the rules of the board, the executive director may
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23 for good cause suspend, revoke, or refuse to renew any contract
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24 entered into.
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 1 C. The executive director or designee may conduct hearings and
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2 administer oaths to persons for the purpose of assuring the security
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3 or integrity of lottery operations or to determine the
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4 qualifications of or compliance by vendors and retailers.
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5 SECTION 4. AMENDATORY 3A O.S. 2021, Section 712, as
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6 amended by Section 1, Chapter 332, O.S.L. 2023 (3A O.S. Supp. 2023,
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7 Section 712), is amended to read as follows:
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8 Section 712. A. The executive director of the Oklahoma Lottery
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9 Commission, with the approval of the board of trustees, shall employ
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10 such personnel as may be necessary to carry out the provisions of
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11 this act the Oklahoma Education Lottery Act and shall set the
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12 compensation and terms of compensation of such employees. All
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13 offices, positions, and personnel of the Oklahoma Lottery Commission
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14 shall be in the unclassified service.
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15 B. No employee of the Commission shall have a financial
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16 interest in any vendor doing business or proposing to do business
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17 with the Commission.
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18 C. No employee of the Commission shall participate in any
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19 decision involving a retailer with whom the employee has a financial
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20 interest.
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21 D. No employee of the Commission who leaves the employment of
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22 the Commission may represent any vendor or lottery retailer before
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23 the Commission for a period of two (2) years following termination
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24 of employment with the Commission.
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 1 E. A background investigation shall be conducted on each
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2 applicant who has reached the final selectio