Sec. 1770.190 - Prize Payment, Claiming or Redeeming of Prizes and Transfers to Common School Fund

ยง 1770.190. Prize Payment, Claiming or Redeeming of Prizes and Transfers to Common School Fund

a) The prize structure may vary with each game and will be established at the beginning of the game by the Private Manager, subject to the approval of the Department. The prize structure, odds of winning, the manner in which winners are determined, the claim period for the game and various procedural matters will be set forth in game rules and play instructions.

b) A winning Lottery ticket with a face value of $600 or less may be redeemed by submitting the winning ticket to a licensed Lottery agent location that sells the type of game won, and may be paid by the licensed Lottery agent directly from Lottery ticket sales funds on hand after the licensed agent follows verification procedures that establish that the ticket is a winning ticket, examines the ticket for alteration, verifies that the prize claim period has not expired, and requests proof of age from the claimant if appropriate. However, when a winning ticket is presented for payment at a licensed sales agent location after the expiration of any licensed sales agent claim period established in game rules, the winning ticket has a face value in excess of $600, or the Department's verification procedures require, the licensed sales agent shall follow the claim procedures set forth in subsection (c).

c) Winning tickets with a face value of up to $25,000 may be redeemed at Lottery prize centers, provided that the claimant is an individual or is a partnership or other legal entity receiving payment under a Federal Employer Identification Number and is not subject to offset of the prize due to amounts owed the State of Illinois. Payment of prizes at prize centers is subject to established claim periods, procedures and validation tests.

d) All claims for prizes of more than $25,000, as well as claims for lesser prizes not paid by the Department at a prize center or by a licensed sales agent pursuant to subsection (b), must be paid centrally by the Department. Claimants may obtain claim forms from any Lottery office, by mail or from the Lottery's website. When initiating a claim in person, a claimant shall complete the name and address area on the reverse of the ticket and present proof of identification and the winning ticket. The Department employee will assist the claimant in filling out the claim form, which will be signed by the employee and by the claimant or his or her authorized representative. The claimant or authorized representative will receive a copy of the claim form as a receipt. The winning ticket and a copy of the claim form will be sent to the Department's offices in Springfield, Illinois, for verification. When the ticket is verified as a winning ticket, the prize will be mailed to the claimant.

e) Prizes in the amount of $1,000,000 or more may be claimed only at the Department's prize centers or administrative offices in Springfield and Chicago, or an alternate site mutually agreed to by the Department and the claimant, and absent extenuating circumstances, only by appointment so that appropriate Department personnel are available to assist in the claim process. The Superintendent may require claimants of $1,000,000 or more, or at the Department's discretion (e.g., physically unable, fear for safety of the winner), the claimants' authorized representative, to participate in a press conference as part of the claim process, in order to assure the public that prizes are being awarded and maintain public trust in the Lottery. For purposes of press conference requirements, the claimants are the ultimate recipients of the prize, such as the beneficiaries of a trust, the partners in a partnership, or the members of a club or group.

f) Prizes with a face value of $600 or less, not redeemed at a licensed sales agent's location but instead claimed by multiple winners playing as partners or as a group, with common ownership of a winning ticket at the time of the prize drawing, shall be claimed in the individual name of one of the partners or members of the group. Payment of any claim filed on behalf of an individual group member shall be in the same manner as if filed on behalf of a single claimant.

g) Prizes of over $600 but less than $1,000,000 claimed by multiple winners playing as partners or as a group, with common ownership of a winning ticket at the time of the prize drawing, may be claimed in the individual name of one of the partners or members of the group, but must be accompanied by a form 5754 setting forth the names, addresses, social security numbers (SSNs) and prize shares of all other persons entitled to a share of the prize. The Department will process a voucher payable to each individual listed on the form 5754, dividing the winnings as designated on the form 5754. The Department will then process payment vouchers to the Office of the Comptroller for preparation of warrants and end of year income tax withholding documents. Claim and payment may be made in a partnership name only if the partnership furnishes a Federal Employer's Identification Number (FEIN).

h) Prizes in the amount of $1,000,000 or more claimed by multiple winners with common ownership of a winning ticket at the time of the prize drawing must be claimed in the name of a partnership, group or other entity, subject to the limitations set forth in this subsection (h).

1) If the prize claim is made in the name of a partnership, the claim must be supported by a copy of the partnership agreement signed by all partners, confirming that the partners had agreed to share any prize prior to purchasing the winning ticket and specifying each partner's share of the prize. Payment will be made out to the partnership as a single payee under the partnership's FEIN, or to each of the individual partners under their SSNs, as requested in writing by the partnership's authorized representative.. The ticket and claim form must be signed by one of the general partners on behalf of the partnership, and the claim form must be accompanied by a form 5754 setting forth the names, addresses, and SSNs of each partner. The partnership agreement shall be subject to review by the Department's legal staff and may not contain provisions contrary to law. When separate checks have been requested, the partnership must additionally furnish payment instructions for each partner.

2) If the prize claim is made in the name of a group, the claim must be supported by a written document signed by all group members confirming that the members had agreed to share any prize prior to purchasing the winning ticket. Group claims shall include a group name and the address and SSN of the representative signing the ticket and claim form and shall be accompanied by a form 5754 setting forth the names, addresses, SSNs and prize shares of all group members.

3) Claims by other entities such as corporations or trusts must be in the name of the entity as established prior to ticket purchase, provide the taxpayer identification number of the entity and be signed by an authorized representative. Payment will be in the name and under the taxpayer identification number of the claiming entity.

i) Lottery clubs, charitable organizations, corporations, partnerships and other "artificial" persons shall be eligible to purchase Lottery tickets. However, with respect to awards of prizes for life, those artificial persons shall be entitled to the minimum guaranteed prize.

j) Prizes claimed but unpaid at the time of a prize winner's death shall be treated as follows:

1) Any prize, or portion of a prize, remaining unpaid at the death of a winner, may be paid to the estate of the deceased prize winner, or to the designated trustee under a revocable living trust established by the deceased prize winner, as settlor, provided that a copy of the trust has been filed with the Department, along with a notarized letter of direction from the settlor, and no written notice of revocation has been received by the Department prior to the settlor's death. Following a settlor's death and prior to any payment to a successor trustee, the Superintendent shall obtain from the trustee and each trust beneficiary a written agreement to indemnify and hold the Department harmless with respect to any claims that may be asserted against the Department arising from payment to, or through, the trust.

2) At the election of the estate or successor trustee of an individual prize claimant, the estate or trustee may have the option to request, within six months from the date of death, that the annuity or equivalent investment securities procured by the Department for purposes of generating annual installment prize payments be liquidated at current market value. In the case of a prize claimed by a partnership or group, the right to request liquidation of the decedent's remaining prize may be available to the decedent's personal representative or successor trustee, but only if the decedent is entitled to receive one-third or more of the claimed prize. Upon receipt of a written request to liquidate the remaining prize, if the prize payment has been structured through purchase of an annuity and the annuity contract permits early liquidation, the Department shall promptly notify the annuity company and request that the annuity be liquidated and the commuted (check) value be paid to the personal representative or successor trustee. If the Department has procured investment securities to generate income for satisfaction of future prize installments, the Department, as soon as practical after receiving a request for prize liquidation, and without jeopardy to the common investment position of other winners of grand prizes from the same drawing date as the decedent, shall offer the decedent's share of the securities for market sale and shall pay the personal representative or successor trustee the proceeds of sales attributable to the decedent's prize. Prior to payment, the Department shall deduct from the proceeds of sales any amount that may be required to restore the investment position of securities purchased for other same-date winners to the position held prior to liquidation. The balance of the proceeds of sale attributable to the decedent's prize shall be distributed to the personal representative of the estate or the successor trustee. Prior to authorizing liquidation of any prize, the Department shall obtain, from each personal representative or successor trustee requesting liquidation, a complete release of liability of the Department for further payment with respect to the decedent's prize, beyond the amount actually realized through liquidation. Any election pursuant to this subsection (j)(2) must be in writing and shall be irrevocable.

3) If a prize for life winner passes away prior to receiving the guaranteed minimum payment for the game and prize won, the personal representative of the winner's estate or the successor trustee under a properly filed revocable living trust shall have the option to request liquidation of the investment securities funding the remaining guaranteed prize, following the process outlined in subsection (j)(2).

k) Unclaimed prize money shall be retained by the Superintendent for the person entitled to that prize money, for the duration of the claim period for the game won, as established by game rule. Thereafter, the unclaimed prize funds will be managed as provided in statute.

l) Winning tickets that provide entry into a preliminary grand prize drawing for any game must be received by the Department by the deadline established in the game rules. Entry tickets received after the preliminary grand prize drawing deadline for the game with respect to which the tickets were sold will be disqualified unless the game rules specifically provide that the entries will be carried over to a future drawing.

m) For prizes in excess of $10,000, a winner must identify his or her place of employment, if any, to ensure the winner is not prohibited from Lottery play by the Act or this Part. For partnership claims, each partner must furnish employment information.

n) The net revenues accruing from the sale of Lottery tickets shall be transferred to the Capital Projects Fund at the end of each fiscal year. Net revenues shall be determined by deducting from total revenues the payments of prizes to holders of winning tickets, payments of bonuses to Lottery retailers and payment of costs incurred in the operation and administration of the Department. Net revenue shall specifically:

1) Exclude sales proceeds, prize payments and expenses associated with the games conducted pursuant to Sections 21.2, 21.5, 21.6, 21.7 and 21.8 of the Act;

2) Include expense reimbursement or bonus payments paid to the Lottery's Private Manager, as well as any penalty payments that may be received from the Private Manager;

3) Exclude funds required to be transferred to the Common School Fund by Section 9.1 of the Act.

o) The Department may transfer income in excess of current operating needs to the Common School Fund, provided that the monthly amount transferred to the Common School Fund shall be an amount that is equal to the proceeds transferred in the corresponding month of fiscal year 2009, as adjusted for inflation.[20 ILCS 1605/9.1(o)(3)]

p) The rate of inflation to be utilized in calculating transfers to the Common School Fund shall be determined prior to the start of each fiscal year and utilized throughout the fiscal year by comparing the seasonally adjusted average Consumer Price Index for all urban consumers (CPI-U) for the first calendar quarter of 2009 to the average CPI-U for the first calendar quarter of the current year, after deducting energy costs from both indices (the Adjusted CPI-U). The formula to be used in calculating the inflation rate shall be:

(Current average Q1 Adjusted CPI-U - Calendar 2009 average Q1 Adjusted CPI-U)

Calendar 2009 average Q1 Adjusted CPI-U

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Amended at 36 Ill. Reg. 14356, effective September 14, 2012

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