§ 10201. Definitions
As used in this chapter:
(1) "Break-open ticket" means a lottery utilizing a card or ticket of the so-called pickle card, jar ticket or break-open variety commonly bearing the name "Lucky 7," "Nevada Club," "Victory Bar," "Texas Poker," "Triple Bingo," or any other name.
(2) "Commissioner" means the commissioner of taxes.
(3) "Distributor" means a person who purchases break-open tickets from a manufacturer and sells or distributes break-open tickets at wholesale in Vermont. "Distributor" shall include any officer, employee or agent of a corporation or dissolved corporation who has a duty to act for the corporation in complying with the requirements of this chapter. "Distributor" shall not include a person who distributes only jar tickets which are used only for merchandise prizes.
(4) "Manufacturer" means a person who designs, assembles, fabricates, produces, constructs or who otherwise prepares a break-open ticket for sale to a distributor.
(5) "Nonprofit organization" means a nonprofit corporation which is qualified for tax exempt status under the provisions of Section 501(c) of the Internal Revenue Code, as amended and which has engaged, in good faith, in charitable, religious, educational or civic activities in this state on a regular basis during the preceding year. "Nonprofit organization" also includes churches, schools, fire departments, municipalities, fraternal organizations and organizations that operate agricultural fairs or field days and which has engaged, in good faith, in charitable, religious, educational or civic activities in this state on a regular basis during the preceding year. (Added 1991, No. 267 (Adj. Sess.), § 2, eff. Oct. 1, 1992; amended 1993, No. 183 (Adj. Sess.), § 7.)
§ 10202. License required
(a) Manufacture. Break-open tickets sold in Vermont shall be manufactured only by a person licensed by the commissioner. A licensed manufacturer shall sell break-open tickets only to distributors licensed under this chapter, and a distributor licensed under this chapter shall purchase break-open tickets only from a manufacturer licensed under this chapter.
(b) Distribution. A distributor who sells or distributes break-open tickets for resale in Vermont shall be licensed by the commissioner and also shall be:
(1) a natural person who is a resident of Vermont; or
(2) a partnership in which the majority of partners are residents of Vermont; or
(3) a corporation incorporated under the laws of Vermont provided that a majority of the ownership interest is held by Vermont residents; or
(4) a person, not a resident of Vermont, whose home state allows Vermont residents or corporations to distribute break-open tickets in that state under similar terms and conditions. (Added 1991, No. 267 (Adj. Sess.), § 2, eff. Oct. 1, 1992; amended 1993, No. 183 (Adj. Sess.), § 8.)
§ 10203. Distribution; retail purchase and sale
(a) Only nonprofit organizations may purchase break-open tickets from distributors licensed under this chapter.
(b) A nonprofit organization may purchase break-open tickets only from a distributor licensed under this chapter.
(c) No person, other than a licensed distributor, shall distribute a box of break-open tickets, and no person shall distribute a box of break-open tickets, unless the box bears indicia as required by the commissioner. No person shall distribute or sell a break-open ticket at retail unless the ticket bears a unique serial number.
(d) A distributor licensed under this chapter may sell break-open tickets only to nonprofit organizations as defined in subdivision 10201(5) of this title, except that a person other than a licensed distributor may sell such tickets to a licensed distributor upon written approval of the commissioner.
(e) Only nonprofit organizations may sell break-open tickets at retail.
(f) Break-open tickets shall not be sold at premises licensed to sell alcoholic beverages except at clubs as defined in subdivision 2(7) of Title 7. However, a nonprofit organization may sell break-open tickets at premises licensed to sell alcoholic beverages if, notwithstanding 13 V.S.A. § 2143(e), all proceeds from the sale of break-open tickets are used by the nonprofit organization exclusively for charitable, religious, educational and civic undertakings, with only the following costs deducted from the proceeds:
(1) actual cost of the break-open tickets;
(2) the prizes awarded;
(3) reasonable legal fees necessary to organize the nonprofit organization and to assure compliance with all legal requirements; and
(4) reasonable accounting fees necessary to account for the proceeds from the sale of break-open tickets.
(g) The provisions of this chapter regarding sales and purchases of break-open tickets also apply to transfers of break-open tickets for no charge. (Added 1991, No. 267 (Adj. Sess.), § 2, eff. Oct. 1, 1992; amended 1993, No. 183 (Adj. Sess.), § 9; 2003, No. 70 (Adj. Sess.), § 61, eff. March 1, 2004.)
§ 10204. License requirements; fees
(a) Upon application and payment of the fee, the commissioner may issue the following licenses to qualified applicants:
(1) Manufacturer annual license $3,000.00
(2) Distributor annual license 2,000.00
(b) A license shall not be granted to an individual who has been convicted of a felony within five years of the license application nor to an entity in which any partner, officer or director has been convicted of a felony within five years of the application.
(c) Licenses issued under this section may be renewed annually on October 1, upon reapplication and payment of the licensing fee.
(d) All fees collected pursuant to this section shall be deposited into the general fund. (Added 1991, No. 267 (Adj. Sess.), § 2, eff. Oct. 1, 1992.)
§ 10205. Records; report
(a) Each distributor and manufacturer licensed under this chapter shall maintain records and books relating to the distribution and sale of break-open tickets and to any other expenditure required by the commissioner. A licensee shall make its records and books available to the commissioner for auditing.
(b) Each licensed distributor shall file with the commissioner on the same schedule as the distributor files sales tax returns the following information for the preceding reporting period:
(1) The names of organizations to which boxes of break-open tickets were sold.
(2) The number of boxes of break-open tickets sold to each organization.
(3) The ticket denomination and serial numbers of tickets for each box.
(c) Records and reports filed under this section shall be subject to the provisions of 32 V.S.A. § 3102.
(d) The commissioner of taxes shall provide the records and reports filed under this section to the attorney general, upon request, notwithstanding the provisions of section 3102 of this title. (Added 1991, No. 267 (Adj. Sess.), § 2, eff. Oct. 1, 1992; amended 1993, No. 183 (Adj. Sess.), § 10.)
§ 10206. Rules
The department of taxes shall regulate the licensing and reporting requirements of manufacturers and distributors of break-open tickets under this chapter. The commissioner shall adopt rules for licensure and indicia for boxes of break-open tickets. (Added 1991, No. 267 (Adj. Sess.), § 2, eff. Oct. 1, 1992.)
§ 10207. Enforcement
(a) Any person who intentionally violates section 10203 of this title shall be fined not more than $500.00.
(b) Any person who intentionally violates sections 10202, 10204, or 10205 of this title shall be fined not more than $10,000.00 for the first offense and fined not more than $20,000.00 or imprisoned not more than one year, or both, for each subsequent offense.
(c) In addition to the criminal penalties provided under subsections (a) and (b) of this section, any person who violates a provision of this chapter shall be subject to one or more of the following penalties:
(1) Revocation or suspension by the commissioner of a license granted pursuant to this chapter.
(2) Confiscation of break-open tickets or confiscation of the revenues derived from the sale of those tickets, or both. (Added 1991, No. 267 (Adj. Sess.), § 2, eff. Oct. 1, 1992.)
§ 10208. Appeals
Any licensee aggrieved by an action taken under subsection 10207(c) of this chapter and any person aggrieved by the commissioner's refusal to issue or renew a license under this chapter may appeal in writing to the commissioner for review of such action. The commissioner shall thereafter grant a hearing subject to the provisions of chapter 25 of Title 3 upon the matter and notify the aggrieved person in writing of his or her determination. The commissioner's determination may be appealed within 30 days to the Washington superior court or the superior court of the county in which the taxpayer resides or has a place of business. (Added 1997, No. 156 (Adj. Sess.), § 27, eff. April 29, 1998.)