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<p><b>APPORTIONMENT OF LOTTERY</b></p>

<p><b>REVENUE FOR PAYMENT OF PRIZES</b></p>



<p><b>House Bill 5147 (Substitute H-1)</b></p>

<p><b>Sponsor:  Rep. Earl Poleski</b></p>

<p><b>Committee:  Regulatory Reform                                         <i>(Enacted
as Public Act 279 of 2011)</i></b></p>



<p><b>Complete to 12-7-11</b></p>



<p style='text-align:justify'><b>A SUMMARY OF HOUSE BILL 5147
(H-1) AS REPORTED FROM COMMITTEE 12-7-11</b></p>



<p style='margin-left:.5in;text-align:justify'><a name="StartText"></a>The bill would amend Section 12 of the State Lottery Act
(1972 PA 239) to eliminate a sunset that was scheduled to take effect on
January 1, 2012, regarding the distribution of lottery revenue for prize money. 
Under current law, the Bureau of State Lottery can pay out more than 45% of the
total annual revenue from ticket sales until January 1, 2012.  At that time the
Lottery would be required to pay out exactly 45% of revenue.  The bill would
eliminate the sunset and allow the Lottery to continue to pay out more than 45%
with no expiration date.</p>



<p style='margin-left:.5in;text-align:justify'>[Specifically,
the act, at MCL 432.12, requires that not less than 45% of the total annual
revenue be apportioned for payment of prizes.]</p>



<p style='text-align:justify'><b>FISCAL IMPACT:</b> </p>



<p style='margin-left:.5in;text-align:justify'>Under current
law, the Bureau of State Lottery can pay out more than 45% of the total annual
revenue accruing from the sale of lottery tickets in prizes until January 1,
2012.&nbsp; After January 1, 2012, the Bureau of State Lottery would be
required to pay exactly 45% of the total revenue in prizes.&nbsp; According to
the Bureau of State Lottery annual reports, approximately 55-60% of total
ticket revenue is currently paid out in prizes.&nbsp; If the sunset extension
proposed under HB 5147 were not implemented, the prize payout would be reduced
to 45% from the current 55-60% range.&nbsp; </p>



<p style='margin-left:.5in;text-align:justify'>While potential
ticket holders would realize a drop in prize payouts, the corresponding
increase in profits realized by the Bureau of State Lottery would be disbursed
to the School Aid Fund (SAF), all else remaining equal.&nbsp; However, with a
reduction in the prize payout to 45%, fewer lottery ticket sales may be
presumed.&nbsp; Even with the former prize payout dollars being transferred to
the SAF, it is possible that ticket sales would drop enough to reduce transfers
to the SAF below current levels.&nbsp; </p>



<p style='margin-left:.5in;text-align:justify'>The provisions
of the bill would eliminate the sunset on prize payouts exceeding 45%.&nbsp;
This would allow the Bureau of State Lottery to continue with their current
level of prize payout percentages on all ticket sales.&nbsp; There would be no
adverse fiscal impact under the provisions of the bill.</p>





<p style='text-align:justify'><b>BACKGROUND INFORMATION:</b></p>



<p style='margin-left:.5in;text-align:justify'>As originally enacted,
Section 12 of the State Lottery Act (1972 PA 239) required 45% of the total
annual revenue accruing from the sale of lottery tickets or shares to be apportioned
for the payment of prizes to winners.  Public Act 53 of 1995 amended this
section to require <i>not less than</i> 45% of the total revenue from the sale
of lottery tickets to be used to pay winning tickets and established a sunset
of January 1, 1999, at which time the distribution would return to 45% of sales
used for prize payouts.  1996 PA 167 added a provision excluding games
involving joint enterprise agreements (Big Game, etc.) from the calculations of
ticket sales.  The date of the sunset was subsequently pushed back to January
1, 2003 (1998 PA 393), January 1, 2007 (2002 PA 471), and most recently,
January 1, 2012 (2006 PA 625).  This bill would eliminate the sunset.</p>



<p style='margin-left:.5in;text-align:justify;text-indent:-.5in'><b>POSITIONS:</b></p>



<p style='margin-left:.5in;text-align:justify'>The Department
of Treasury supports the bill. (12-7-11)</p>



















































<p style='text-align:justify'>                                                                                        Legislative
Analyst:   <a name="Analyst"></a>Jeff Stoutenburg</p>

<p style='text-align:justify'>                                                                                                Fiscal
Analyst:   Ben Gielczyk</p>

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<p style='text-align:justify'><span style='font-size:10.0pt;
font-family:"Arial","sans-serif"'>&#9632;</span><span style='font-size:10.0pt'>
This analysis was prepared by nonpartisan House staff for use by House members
in their deliberations, and does not constitute an official statement of
legislative intent.</span></p>

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