SECTIONS 12, 15 and 23. Tax 61.04(1)(d), Tax 61.08(11)(c) and (21)(c) are amended, with language which clearly and consistently states the performance expectations which a retailer must achieve to contract with the Lottery to sell the Lottery's products.
SECTION 13 and 14. Tax 61.05(1) and (2) are amended, to provide the Lottery the authority to accept irrevocable letter of credit in addition to fidelity bond. An irrevocable letter of credit is generally less expensive and less cumbersome for a retailer to obtain, and can be claimed directly by the Lottery avoiding additional administrative costs currently associated with the collection of overdue retailer debt.
SECTION 18. Tax 61.08(13)(a) is amended, to improve customer service by providing the authority necessary to account for unsalable tickets returned for credit.
SECTION 19. Tax 61.08(13)(c) and (d) are created, to provide specific conditions for the return for credit of unsalable tickets, and for tickets returned consistent with a settlement date declared by the administrator, respectively.
SECTION 21. Tax 61.08(16)(a) is amended, to clarify language that allows for the industry practice of cross-redemption, which is the redeeming of lottery tickets at a location different from where the tickets were purchased. This language was inadvertently omitted from previous proposed rule orders regarding Chapter
Tax 61.
SECTION 22. Tax 61.08(17)(a) is repealed and recreated as Tax 61.08(17)(a) and (a)1., 2., and 3., to provide for reasonable circumstances under which the Lottery administrator may allow the return of break-open tickets sold to retailers. This language is similar to language under Chapter
Tax 63.06(11)(c), which provides for returns of break-open tickets by non-profit organizations.
SECTION 24. Tax 61.085(2)(a) is amended, to broaden the definition of the term "Appropriate sales history" consistent with changes in the RPP which will make both quarterly and annual payments.
SECTION 25. Tax 61.085(2)(b) is renumbered Tax 61.085(2)(c).
SECTION 26. Tax 61.085(2)(b) is created, to create the definition for comparable history fiscal year, consistent with the changes to the RPP.
SECTION 27, 28 and 29. Tax 61.085(2)(c), (d) and (e) are renumbered Tax 61.085(2)(d), (e) and (g).
SECTION 30. Tax 61.085(2)(f) is renumbered Tax 61.085(2)(h) and amended, to clarify language that improves the definition consistent with the intent of the program improvements.
SECTION 31. Tax 61.085(2)(f) is created, to define instant ticket for purposes of the retailer performance program.
SECTIONS 32, 33 and 34. Tax 61.085(2)(g), (h), and (i) are renumbered Tax 61.085(2)(i), (j) and (k), respectively.
SECTION 35. Tax 61.085(4)(a)1. is amended, to provide caps on funding for winning ticket payments, so that a single drawing of a winning number prize level will not cause payments in excess of those intended.
SECTION 36. Tax 61.085(4)(a)2. is amended, to clarify language for payment of winning tickets from TV show entries.
SECTION 37. Tax 61.085(4)(b) is amended, to clarify language that supports sales goal performance payments.
SECTION 38. Tax 61.085(4)(b)1. is renumbered Tax 61.085(4)(b)1.a. and is amended, to reduce the funding available for quarterly payments from 10% to up to 2% of sales increases of instant tickets, consistent with overall changes to the retailer performance program (RPP).
SECTION 39. Tax 61.085(4)(b)1. is created, to clarify quarterly payments of the RPP.
SECTION 40. Tax 61.085(4)(b)2. is renumbered Tax 61.085(4)(b)1.b., and is amended, to reduce the funding available for quarterly payments from 10% to up to 2% of sales increases of non-jackpot terminal-generated tickets, consistent with overall changes to the retailer performance program (RPP).
SECTION 41. Tax 61.085(4)(b)2. is created, to provide for authority to make fiscal year sales goal payments, consistent with overall changes to the RPP.
SECTION 42. Tax 61.085(4)(b)2.a. is created, to provide authority for fiscal year performance payments made for instant ticket sales goals.
SECTION 43. Tax 61.085(4)(b)2.b. is created, to provide authority for fiscal year performance payments made for non-jackpot terminal-generated ticket sales goals.
SECTION 44. Tax 61.085(4)(b)3. is renumbered Tax 61.085(4)(b)2.c. and amended, to provide authority for fiscal year performance payments made for jackpot terminal-generated ticket sales goals.
SECTION 45. Tax 61.085(4)(c) is amended, to remove or improve restrictions on the offering of short-term performance incentive payments, consistent with overall changes to the RPP.
SECTIONS 46, 47 and 48. Tax 61.085(4)(c)3., 4. and 6. are amended, to clarify the length of time, the amount of funding and the use of industry merchandise as payment, for short-term incentives.
SECTIONS 49, 50, 51 and 52. Tax 61.085(4)(d), and (d)1., 2. and 3. are created, to provide authority and control for the proper procurement and accounting of industry merchandise as payment for short-term incentives.
SECTION 53. Tax 61.085(5)(a) is amended, to clarify how a retailer will qualify for annual sales goals payments.
SECTION 54. Tax 61.085(5)(a)1. is created, to provide for secondary qualification for annual sales goal payments.
SECTION 55. Tax 61.085(5)(b) is amended, to clarify how a retailer will qualify for quarterly sales goals payments.
SECTIONS 56, 57 and 58. Tax 61.085(5)(b)1., 2. and 3. are amended, to provide for secondary qualification for quarterly sales goal payments.
SECTION 59. Tax 61.085(6) is amended, to list the proper sequence of incentive payments for the retailer performance program.
SECTION 60. Tax 61.085(6)(a) is renumbered Tax 61.085(6)(e)1.
SECTION 61. Tax 61.085(6)(a) is created, to list winning ticket incentives.
SECTION 62. Tax 61.085(6)(b) is renumbered Tax 61.085 (6)(e)3., and is amended, to focus the language around quarterly payment activity.
SECTION 63. Tax 61.085(6)(b) is created, to list short-term incentives.
SECTION 64. Tax 61085(6)(c) is repealed and recreated, to remove language which becomes redundant, and to list quarterly sales incentive payments.
SECTIONS 65, 66, 67 and 68. Tax 61.085(6)(d), (e), (e)2. and (e)4. are created, to list quarterly sales goals and annual sales goals, and to identify the appropriate manner of payments for the retailer performance program, respectively.
SECTION 69. Tax 61.085(7) is amended, to remove language that unintentionally limits the authority of the administrator in situations where an adjustment of RPP payments is fiscally necessary.
Initial Regulatory Flexibility Analysis
This order does not have a significant economic impact on a substantial number of small businesses, and does not generate new costs for any small businesses. This order does simplify and clarify a number of small business processes between the state and lottery retailers, and also improves the retailer performance program in ways which make the expected performance clearer and more consistent with state policy and lottery retailer activities.
Fiscal Estimate
Under current law, the Lottery pays retailers basic compensation of 5.5% of the sales price of scratch-off tickets and 6.25% of the sales price of on-line tickets. The law also allows the Wisconsin Lottery to pay additional compensation incentives to retailers that exceed performance goals. The amount of additional compensation incentives and the performance goals are set by administrative rule, ch.
Tax 61, which provides for the Retailer Performance Program.
In general, the proposed rule updates definitions and procedures for new lottery products and these rule changes do not have a fiscal effect.
A fiscal effect may result from the proposed changes to the Retailer Performance Program. According to the Lottery, payments of additional compensation incentives to underperforming retailers would decrease by a total of about $400,00 under the proposed rule. However, the decrease in incentive payment would be offset in part by payments of new incentives allowed under the proposed rule. To the extent the proposed rule changes to the Retailer Performance Program result in a net decrease in Lottery administrative costs, Lottery-funded property tax relief would increase, up to about $400,00.
Administrative costs would be absorbed by the Department, except for Retailer Performance Program costs as discussed above.
Comments on the Rule
Interested persons are invited to appear at the hearing and may make an oral presentation. It is requested that written comments reflecting the oral presentation be given to the department at the hearing. Written comments may also be submitted to the contact person shown below no later than Friday, September 3rd, 2004, which is no less consideration as testimony presented at the hearing.
Contact Person
James Amberson
Department of Revenue
2135 Rimrock Road
P.O. Box 8941
Madison, WI 53708-8941
608 267-4840
