Section 12-568a-17 - Requirements of the CLC(a)New lottery games, department approval. The CLC shall obtain the department's approval of all new lottery game designs, and official procedures and working papers, in order to ensure the integrity of the lottery games prior to publicizing the lottery games or offering such games to the public. To the extent board approval is required or sought by the CLC for a lottery game design, official procedure or working paper, such approval shall occur before the item is presented to the department for approval.(b)Provision of all CLC records. The CLC shall provide to the department all business records, reports, documents, policies and procedures required by the department in its sole discretion.(c)Provision of all payroll listings and organizational charts of the CLC. The CLC shall provide to the department a complete payroll listing of all employees of the CLC on a monthly basis. Upon request of the department, and in addition to the requirements of 12-568a-18 of the Regulations of Connecticut State Agencies, the CLC shall provide to the department a complete organizational chart, including officers and directors, and advise the department immediately concerning changes in key personnel who are employed by the CLC, including, but not limited to, absences greater than one work week.(d)Annuity providers, department approval.(1) All annuities, from which payments shall be made to winners of lottery prizes, shall be invested in instruments issued by agencies of the United States government and backed by the full faith and credit of the United States, or shall be issued by insurance companies licensed to do business in the state.(2) The department shall approve, prior to utilization by the CLC, the financial stability and acceptable minimum investment rating of all annuity providers.(e)Cost of regulatory oversight paid for by the CLC. The CLC shall reimburse the department for all reasonable costs associated with the regulatory oversight of the corporation, as determined by the department in its sole discretion.(f)Offices for the department. The CLC shall provide suitable office space for the use of department personnel at the CLC corporate offices and the primary site. Final determination as to the suitability of said office space is in the sole discretion of the department. Department personnel shall have unfettered access to all areas of the CLC offices and the primary site.(g)Records retention. The CLC and any vendor shall retain all business records for a period of not less than five (5) years or such other time as approved in writing by the department.(h)Access. The CLC shall cooperate and provide such written information in a timely manner as may be requested by the department. Any department authorized representative may enter any facility of the CLC for the purpose of: (1) Inspecting, examining or testing any and all files, books and records; and(2) Monitoring and testing the internal control system of all phases of the cash flow, revenue and expenditures of the CLC.(i)Changes in agent status. The CLC shall, on a monthly basis, notify the department of changes in the status of issued lottery sales agent licenses and the reasons for such change.(j)Delinquency assessment accounting. The CLC shall account to the department on a monthly basis, those amounts that remain outstanding for all delinquent agents. Such reporting shall delineate delinquencies by individual agent.(k)Acceptance testing.(1) Prior to the installation of any lottery gaming system or the implementation of any software or hardware modifications to such system, the CLC shall certify to the department that the system has been tested and is operating correctly. The CLC shall make available the acceptance test plans, test script and test results for review by the department prior to implementation.(2) In the sole discretion of the department, the CLC shall require a vendor to produce a test system accessible and available for department testing prior to implementation of the lottery gaming system or any software or hardware modifications to such system.(3) The department shall have final approval over the implementation of any lottery gaming system modification.(l)Unclaimed prize funds, accounting.(1) The CLC shall maintain a separate accounting of unclaimed prize funds. Such information shall include, but not be limited to, accurate reports of tickets purged from all lottery games. Information on unclaimed prize contributions for lottery games shall be made available through the lottery gaming system's management information system, as approved by the department.(2) A written description of unclaimed prize disbursals shall be submitted quarterly to the department by the CLC, in a format approved by the department, and shall include the following information: (A) Unclaimed prize funds used as additional revenue to the state;(B) Unclaimed prize funds used to increase sales by returning such funds to patrons;(C) Unclaimed prize funds used to increase sales by means other than returning such funds to patrons; and(D) A narrative describing the use of any unclaimed prize funds to increase sales.(m)Tax withholding and reporting.(1) The CLC shall be responsible for all applicable federal and state withholding and reporting responsibilities arising under the provisions of chapters 226 and 229a of the Connecticut General Statutes pertaining to lottery prize winners, agents and any other applicable person or entity. The department shall be held harmless from any federal or state tax penalties or interest that may arise as a result of the CLC's activities in performing these responsibilities.(2) The department shall have the right to inspect withholding and miscellaneous income records and related tax filings as prepared by the CLC at all times.(3) The CLC shall provide W2-G information to the department as requested and on an annual basis, by June 30th of each year, in a format acceptable to the department.(n)Federal gaming occupation tax. If, at any time, the operation or the management of the CLC becomes subject to the federal gaming occupation tax, the CLC shall be responsible for meeting all applicable requirements and shall hold agents, any other applicable person or entity and the department, harmless from any penalties or interest that may arise as a result of the CLC's activities in performing these responsibilities.(o)Contact personnel.(1) The CLC shall designate individuals knowledgeable in, and responsible for, the CLC's accounting and reporting systems as contact persons who shall respond to and cooperate with the department regarding accounting and other financially related questions or problems.(2) The CLC shall provide the department with the names of contact persons from each financial consultant and certified public accountant firm utilized for financial advice, accounting and auditing functions, as applicable, and shall provide the names of contact persons from any law firm utilized for legal counsel and advice. The CLC shall advise the department within five (5) business days after a change in any such contact persons.(3) The CLC shall provide the department with the names of vendor contact personnel and shall advise the department within five (5) business days after a change in any such contact personnel.(p)Disclosure of odds of winning.(1) The CLC shall include a prominent and clear statement of the average chances of winning per ticket in each advertisement intended to promote the purchase of tickets for a specific game.(2) The CLC shall include a prominent and clear statement of the odds of winning each individual prize level on all lottery game brochures and in game descriptions on its website.(q)Automated wagering system balancing and reconciliation. The CLC shall have procedures to internally balance and reconcile the lottery gaming system on a daily, weekly, and monthly basis and shall provide reports of same to the department.(r)Contracts, intent to contract. Upon request, the CLC shall provide to the commissioner any document or executed contract that may be intended for incorporation into any agreement for the provision of goods, services and professional advisors necessary or useful in connection with the operation and management of the lottery.Conn. Agencies Regs. § 12-568a-17
Adopted effective October 6, 1999; amended 4/13/2021