LTR-42-11-00011-P Powerball Game Design and Quick Draw Game "Draw" Definition

10/19/11 N.Y. St. Reg. LTR-42-11-00011-P

NEW YORK STATE REGISTER

VOLUME XXXIII, ISSUE 42

October 19, 2011

RULE MAKING ACTIVITIES

DIVISION OF THE LOTTERY

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. LTR-42-11-00011-P

Powerball Game Design and Quick Draw Game "Draw" Definition

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Amendment of sections 2806.13 and 2835.1 of Title 21 NYCRR.

Statutory authority:

Tax Law, sections 1601, 1604, 1612 and 1617

Subject:

Powerball game design and Quick Draw game "draw" definition.

Purpose:

To conform to the changes required by the Powerball consortium and recent amendments to section 1612 of the Lottery for Education Law.

Text of proposed rule:

Paragraph (2) of subdivision (a) of section 2806.13 is amended to read as follows:

(a) Purpose.

(2) During each Powerball drawing, six (6) Powerball winning numbers will be selected from two (2) fields of numbers in the following manner: five (5) winning numbers from a field of one (1) through fifty-nine (59), and one (1) winning number from a field of one (1) through thirty-[nine (39)] five (35).

Paragraphs (1), (4), and (6) of subdivision (b) of section 2806.13 is amended to read as follows:

(b) Definitions.

The following definitions apply to Powerball:

(1)["Match 5 Bonus Prize" means the bonus money won when a Jackpot Prize has reached a new high level and bonus prize monies have been declared under this section. The Match 5 Bonus Prize does not include the original amount declared for the Match 5 Prize.] Intentionally omitted.

(4) "Powerball Play Area" means the area of the play slip, also known as a "panel" which contains two sets of numbered spaces to be marked by a player, the first set containing fifty-nine (59) spaces, numbered one (1) through fifty-nine (59) and the second set containing thirty-[nine (39)] five (35) spaces, numbered one (1) through thirty-[nine (39)] five (35).

(6) "Powerball Winning numbers" means the six (6) numbers, the first five (5) from a field of fifty-nine (59) numbers and the last one (1) from a field of thirty-[nine (39)] five (35) numbers, randomly selected at each drawing, which shall be used to determine winning plays shown on a game ticket.

Paragraph (1) of subdivision (c) of section 2806.13 is amended to read as follows:

(c) Game Description.

(1) Powerball is a five (5) out of fifty-nine (59) plus one (1) out of thirty-[nine (39)] five (35) computerized lottery game which pays the Jackpot Prize, at the election of the player made in accordance with this section or by a default election made in accordance with this section, either on an annuitized pari-mutuel basis or as a [cash] lump sum payment of the total cash held for this prize pool on a pari-mutuel basis. Except as provided in this section, all other prizes are paid on a [set cash] fixed basis. To play Powerball, a player may select five (5) different numbers, from one (1) through fifty-nine (59) and one (1) additional number from one (1) through thirty-[nine (39)] five (35). The additional number may be the same as one of the first five (5) numbers selected by a player. A player may select a set of five (5) numbers and one additional number by communicating the six (6) numbers to a Lottery Sales Agent, or by marking six (6) numbered spaces in any one panel on a Play Slip and submitting the Play Slip to an Agent or by requesting Quick Pick from an Agent. An Agent will then issue a ticket containing the selected set or sets of numbers, each of which constitutes a game play.

Paragraph (1) of subdivision (e) of section 2806.13 is amended to read as follows:

(e) Ticket Prices.

(1) A Powerball ticket may be purchased for $[1.00] 2.00 per play in accordance with the number of game panels and inclusive drawings. The purchaser receives one play for each $[1.00] 2.00 wagered in Powerball. Tickets may contain multiple plays. The Division may authorize the sale of Powerball tickets at a different purchase price. Such a change in the purchase price shall be announced publicly by the Division prior to the effective date of such change.

Paragraphs (3), (5), (6) and (7) of subdivision (h) of section 2806.13 are amended to read as follows:

(h) Prize Pool, Prize Structure and Probability of Winning.

(3) Expected Prize Payout Percentages. The Jackpot Prize shall be determined on a pari-mutuel basis. Except as provided in this section, all other prizes shall be paid as [set cash] fixed lump sum prizes with the following expected prize payout percentages:

Number of Matches Per Play	Prize Payment	Prize Pool Percentage Allocated to Prize
All five (5) of first set plus one (1) of second set.	Jackpot Prize	[65.0577] 63.9511%[*]
All five (5) of first set and none of second set.	$[2]1,000,000	[7.7849] 19.4038%
Any four (4) of first set plus one (1) of second set.	$10,000	[2.7657] 1.5409%
Any four (4) of first set and none of second set.	$100	[1.0510] 0.5239%
Any three (3) of first set plus one (1) of second set.	$100	[1.4658] 0.8167%
Any three (3) of first set and none of second set.	$7	[3.8991] 1.9437%
Any two (2) of first set plus one (1) of second set.	$7	[1.7785] 0.9909%
Any one (1) of first set plus one (1) of second set.	$4	[6.4789] 3.6097%
None of first set plus one (1) of second set.	$[3] 4	[9.7184] 7.2194%

[When the Jackpot Prize reaches a new high level, the Prize Pool Percentage allocated to the Jackpot Prize shall be reduced to that percentage needed to fund a maximum Jackpot Prize increase, with the remainder funding the Match 5 Bonus Prize category.]

(5) The prize pool percentage allocated to the [set] fixed prizes [(the cash prizes of $200,000 or less)] shall be carried forward to subsequent drawings if all or a portion of it is not needed to pay the [set] fixed prizes awarded in the current drawing. The Division, in consultation with other state lotteries selling Powerball tickets, may decide that it is necessary to pay a [set] fixed prize as a pari-mutuel prize.

(6) [The prize money allocated to the Match 5 Bonus Prize shall be divided equally by the number of game panels eligible for the Match 5 prize when a game panel is eligible for the new high Jackpot amount.

(7)] Probability of Winning. The following table sets forth the probability of winning and the probable distribution of winners in and among each prize category based upon the total number of possible combinations in Powerball.

Number of Matches Per Ticket	Probability Distribution Winners Probability	Probable/Set Prize Amount
All five (5) of first set plus one (1) of second set	1 1: [195,249,054]175,223,510.0000	Jackpot Prize
All five (5) of first set and none of second set	38 1: 5,[138,133.0000]153,632.6471	$[2]1,000,000
Any four (4) of first set plus one (1) of second set	270 1: [723,144.6444]648,975.9630	$10,000
Any four (4) of first set and none of second set	9,180[10,260] 1: 19,[030.1222]087.5283	$100
Any three (3) of first set plus one (1) of second set	14,310 1: [13,644.2386]12,244.8295	$100
Any three (3) of first set and none of second set	486,540[543,780] 1: [359.0589]360.1420	$7
Any two (2) of first set plus one (1) of second set	248,040 1: [787.1676]706.4325	$7
Any one (1) of first set plus one (1) of second set	1,581,255 1: [123.4773]110.8129	$4
None of first set plus one (1) of second set	3,162,510 1: [61.7386]55.4065	$3
Overall	5,502,140[5,560,464] 1: [35.1138]31.8464

Paragraphs (4) and (7) of subdivision (i) of section 2806.13 are amended to read as follows:

(i) Prize Payment.

(4) Rollover. If the Jackpot Prize is not won in a drawing, the prize money allocated for the Jackpot Prize shall roll over and be added to the Jackpot Prize pool for the following drawing. [If a new high Jackpot Prize is not won in a drawing, the prize money allocated for the Match 5 Bonus Prizes shall roll over and be added to the Match 5 Bonus Prize pool for the following drawing.]

[(7) Jackpot Prize Maximum Increase. Creation of Match 5 Bonus Prizes. When the Jackpot Prize reaches a new high annuitized amount, the maximum amount to be allocated to the Jackpot Prize pool from the Jackpot Prize percentage shall be the previous high amount plus $25 million (annuitized) or as otherwise set by MUSL. Any amount of the Jackpot Prize percentage which exceeds the $25 million (annuitized) increase shall be added to the Match 5 Bonus Prize Pool. The Match 5 Bonus prize pool shall accumulate until the Jackpot Prize is won, at which time the Match 5 Bonus prize pool shall be divided equally by the number of game panels eligible for the Match 5 prize. If there are no Match 5 winning tickets for the drawing when the new high Jackpot Prize is won, then the Match 5 Bonus prize pool shall be divided equally by the number of game panels eligible for the Match 4+1 prize.]

Paragraph (8) of subdivision (j) of section 2806.13 is amended to read as follows:

(j) Ticket Responsibility.

(8) Child support arrears [and], public assistance repayments and past due State tax liabilities shall be withheld from Powerball prizes in such amounts as may be required by law.

Subdivision (h) of section 2835.1 is amended to read as follows:

(h) Draw means the time at which the winning numbers are drawn for the Quick Draw game. Draw will be held daily at [five minute] intervals during the hours designated by the Director. [Draws will not be held during more than 13 hours in any 24-hour period or during more than eight consecutive hours. In the discretion of the Lottery, there may be minor variations in the five-minute intervals between draws.] If for any reason a drawing cannot be held, the next draw will take place at the next scheduled draw time.

Text of proposed rule and any required statements and analyses may be obtained from:

Julie B. Silverstein Barker, Associate Attorney, New York Lottery, One Broadway Center, Schenectady, NY 12301-7500, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. Statutory authority: The amendments to 21 NYCRR Part 2806.13 is proposed pursuant to Lottery for Education Law, Sections 1601, 1604, 1612 and 1617.

Tax Law § 1601 describes the purpose of the New York State Lottery for Education Law (Tax Law Article 34) as being to establish a lottery operated by the State, the net proceeds of which are applied exclusively for aid to education. Tax Law § 1604 authorizes the Division of the Lottery (the Lottery) "to promulgate rules and regulations governing the establishment and operation thereof." Tax Law § 1612 (a) describes the distribution of revenues for the Quick Draw game and any joint, multi-jurisdiction, and out-of-state lottery game. Tax Law Section 1617 authorizes the Lottery Director to "enter into an agreement with a government-authorized group of one or more other jurisdictions providing for the operation and administration of a joint, multi-jurisdiction, and out-of-state lottery."

2. Legislative objectives: The purpose of operating Lottery games is to generate earnings for the support of education in the State. Amendment of this regulation is expected to advance the Lottery's ability to generate earnings for education.

3. Needs and benefits: This rulemaking is necessary to continue participation in the Powerball game. The consortium of State lotteries that participate in the Powerball game and the Multi-State Lottery Association ("MUSL"), the organization that has administered the Powerball game since the inception of the game, has approved and adopted amendments to the Powerball game effective as of January 18, 2012. Each participating state lottery within the Powerball consortium is required to comply with the official Powerball game rules, as amended. Therefore, the proposed amendments to the New York Lottery's regulations are necessary to continue participation in the Powerball game. Furthermore, the new Powerball game design is expected to generate more revenue for education at a time when such revenue is urgently needed.

This rulemaking is also necessary to conform the Quick Draw game regulations to recent amendments to Section 1612 of the Lottery for Education Law made by Chapter 147 of the Laws of 2010.

4. Costs:

a. Costs to regulated parties for the implementation and continuing compliance with the rule: None. There are no costs to Lottery sales agents for the implementation and continuing compliance with the rule. The Lottery provides the necessary equipment to its sales agents to sell Lottery games and will make any necessary hardware and software changes to such equipment to accommodate the new Powerball game design at no cost to the sales agents. Information about the new game design and other materials to promote the Powerball game are also provided to Lottery sales agents at no cost to the sales agents.

b. Costs to the agency, the State, and local governments for the implementation and continuation of the rule: No additional operating costs are anticipated, because the cost associated with the Powerball game changes, such as printing new play cards and tickets, and advertising the new game design are expected to be minimal and more than compensated for by the increase in revenue. Any minimal operating costs that may have been incurred as a result of the recently enacted amendments to the Quick Draw game made to section 1612(a) of the Lottery for Education Law by Chapter 147 of the Laws of 2010 were more than compensated for by the increase in revenue for such game.

c. Sources of cost evaluations: Estimated annual sales of the Powerball game are expected to increase by approximately $70 million with an expected annual revenue increase of approximately $24 million. When the new game design is launched in January of 2012, the revenue impact for fiscal year 2011-20112 is expected to be approximately $6 million. The foregoing cost evaluations are based on the Lottery's experience in operating State Lottery games for more than 40 years.

5. Local government mandates: None. No local government is authorized or required to do any act, apply any effort, expend any funds, or use any other resources in connection with the amendment of the Powerball and Quick Draw game rules. All necessary actions will be carried out by the Lottery or licensed Lottery retailers who will be completely responsible for all aspects of game operations at the local retail level. The Lottery has no authority and no need to impose any mandate on any local government. Consequently, no provision of the rule imposes any burden on any local government in the State.

6. Paperwork: There are no changes in paperwork requirements. Game information will be issued by the New York Lottery for public convenience on the Lottery's website and through point of sale advertising materials at retailer locations.

7. Duplication: None.

8. Alternatives: The Powerball game regulations must be amended to conform to the rules implemented by MUSL and the Powerball consortium. The alternative to amending the Powerball game regulations is to forego participation in the Powerball game and loss of substantial revenue to education within the State of New York.

The proposed amendments to the Powerball game will ensure that the Lottery will be able to offer the best possible game which will result in maximum sales and revenue for aid to education in New York State.

The Quick Draw game rules must be amended to conform to recent amendments made to section 1612 (a) of the Lottery for Education Law by Chapter 147 of the Laws of 2010.

9. Federal standards: None.

10. Compliance schedule: None.

Regulatory Flexibility Analysis and Rural Area Flexibility Analysis

The proposed rulemaking does not require a Regulatory Flexibility Analysis or a Rural Area Flexibility Analysis. There will be no adverse impact on rural areas, small business or local governments.

The proposed amendments to the New York Lottery's Powerball and Quick Draw game regulations will not impose any adverse economic or reporting, recordkeeping or other compliance requirements on small businesses or local governments. The proposed amendment to the Quick Draw game is being made to conform the Quick Draw game regulations to recent amendments to the Lottery for Education Law. Small businesses will not have any additional recordkeeping requirements as a result of the proposed amendments.

Additionally, the proposed amendments to the Powerball game are anticipated to have a positive affect on the revenue of small businesses that sell lottery tickets because such amendments are being made for the convenience and benefit of Lottery players. Revenue from the Powerball game may increase which will increase sales commissions paid to retailers as players find the amendments being made to be more beneficial.

Local governments are not regulated by the New York Lottery or its regulations nor are any economic or recordkeeping requirements imposed on local governments as a result of the proposed amendments to such regulations.

Job Impact Statement

The proposed amendment of 21 NYCRR Part 2806 and section 2835.1 does not require a Job Impact Statement because there will be no adverse impact on jobs and employment opportunities in New York State.

The amendments are being made to change certain technical aspects of the Powerball game and to conform the Quick Draw game regulations to recent amendments to the Lottery for Education Law. The changes will not adversely impact jobs and employments opportunities within New York State.