Reference is to Printer's Date 2/6/13--S.
Amend the bill, as and if amended, page 3, by adding a penultimate new SECTION appropriately numbered to read:
/ SECTION __. A. Title 33 of the 1976 Code is amended by adding:
Section 33-57-100. (A)
A lottery or raffle of any type whatsoever
is unlawful unless it is authorized by the following:
(1)
Chapter 150, Title 59, the Education Lottery;
(2)
Article 24, Chapter 21, Title 12, Charitable Bingo; or
(3)
Chapter 57, Title 33, Nonprofit Raffles for Charitable
Purposes.
(B) It is the intent of
the General Assembly that only qualified tax-exempt entities,
which are organized and operated for charitable purposes and
which dedicate raffle proceeds to charitable purposes, shall
operate and conduct raffles as authorized by this chapter.
(C)(1) Nothing in this
chapter may be construed to allow electronic gambling devices or
machines of any types, slot machines, video poker or similar
electronic play devices, or to change or alter in any manner the
prohibitions regarding video poker or similar electronic play
devices in Chapter 21, Title 12 and Chapter 19, Title 16.
(2)
No person shall conduct a fundraising event commonly known
and operated as a 'casino night', 'Las Vegas night', or 'Monte
Carlo night' involving live individuals playing roulette,
blackjack, poker, baccarat, or other card games, or dice games,
unless the event is conducted only for entertainment purposes
and no prizes, financial rewards, or incentives are received by
players.
(3)
No events with an electronic device or machine, slot
machines, electronic video gaming devices, wagering on live
sporting events, or simulcast broadcasts of horse races are
authorized.
(D) Except for raffles
conducted by the South Carolina Lottery Commission pursuant to
Chapter 150, Title 59 or Charitable Bingo authorized by Article
24, Chapter 21, the provisions of this chapter provide the sole
means by which activities associated with conducting raffles are
authorized. The provisions of this chapter must be narrowly
construed to ensure that tax-exempt entities conducting a
nonprofit raffle pursuant to this chapter are in strict
compliance with the requirements of this chapter.
Section 33-57-110.
For purposes of this chapter:
(1)
'Charitable purpose' means religious, charitable,
scientific, literary, or educational purposes, or to foster
national or international amateur sports competition (but only
if no part of its activities involve the provision of athletic
facilities or equipment), or for the prevention of cruelty to
children or animals within the meaning of Internal Revenue Code
Section 170(c)(2)(B). Any interpretation of this statute with
respect to charitable purpose shall be guided by the applicable
Internal Revenue Code provisions and regulations of the Internal
Revenue Service as interpreted by the courts.
(2)
'Adjusted gross receipts' means gross receipts less all
cash prizes and the amount paid for merchandise prizes
purchased.
(3)
'Member' shall have the same meaning as defined in Chapter
31, Title 33.
(4)
'Nonprofit organization' means an organization recognized
by the South Carolina Department of Revenue and the United
States Internal Revenue Service as exempt from federal and state
income taxation pursuant to Internal Revenue Code Section
501(c)(3), 501(c)(4), 501(c)(6), 501(c)(7), 501(c)(8),
501(c)(10), 501(c)(19), or 501(d), or is a class, department, or
organization of an educational institution, as defined in
Chapter 56, Title 33 of the South Carolina Code of Laws.
(5)
'Nonprofit gaming supplies and equipment' means any
material, device, apparatus, or paraphernalia customarily used
in the conduct of raffles, including raffle tickets, and other
apparatus or paraphernalia used in conducting raffles subject to
regulation under this chapter. The term shall not include any
material, device, apparatus, or paraphernalia incidental to the
raffle, such as pencils, playing cards, or other supplies that
may be purchased or leased from normal sources of supply.
(6)
'Fifty-fifty raffle' means a raffle conducted by a
nonprofit organization qualified to operate raffles pursuant to
Section 33-57-120 and the proceeds collected by the sale of the
raffle tickets are split evenly between the prize winner and the
nonprofit organization after the raffle drawing.
(7)
'Gross receipts' means all funds collected or received
from the conduct of raffles.
(8)
'Net receipts' means adjusted gross receipts less all
expenses, charges, fees, and deductions that are authorized
under this chapter. Payment of unauthorized expenses, charges,
fees, and deductions from the gross receipts is a violation of
this chapter.
(9)
'Operate', 'operated', or 'operating' means the conduct,
direction, supervision, management, operation, control, or
guidance of activity.
(10)
'Person' means an individual, an organization, a trust, a
foundation, a group, an association, a partnership, a
corporation, a society, any other private entity, or a
combination of them, or a manager, agent, servant, officer, or
employee thereof.
(11)
'Raffle' means a game of chance in which a participant is
required to pay something of value for a ticket for a chance to
win a prize, with the winner to be determined by a random
drawing or similar process whereby all entries have an equal
chance of winning.
(12)
'Secretary' means the Office of the Secretary of
State.
(13)
'Ticket' means tangible evidence issued by the nonprofit
organization to provide participation in a raffle.
(14)
'Year' means a twelve-month period that is the same as a
nonprofit organization's fiscal year.
Section 33-57-120. (A)
A nonprofit organization is qualified to
conduct raffles in accordance with the provisions of this
chapter if the nonprofit organization:
(1)
is recognized by the South Carolina Department of Revenue
and the United States Internal Revenue Service as exempt from
federal and state income taxation pursuant to Internal Revenue
Code Section 501(c)(3), 501(c)(4), 501(c)(6), 501(c)(7),
501(c)(8), 501(c)(10), 501(c)(19), or 501(d), or is a class,
department, or organization of an educational institution, as
defined in Chapter 56, Title 33; and
(2)
is organized and operated for religious, charitable,
scientific, literary, or educational purposes, or to foster
national or international amateur sports competition (but only
if no part of its activities involve the provision of athletic
facilities or equipment), or for the prevention of cruelty to
children or animals; and
(3)
is registered with the secretary pursuant to the
requirements of Chapter 56, Title 33, unless it is exempt from
or not required to follow the registration requirements of
Chapter 56, Title 33, or is a governmental unit or educational
institution of this State.
(B)(1) The requirement
to register with the secretary for the purpose of operating
raffles for charitable purposes shall apply to any and all
nonprofit organizations that intend to operate a raffle in this
State, including those organizations that are exempt from or not
required to follow the requirements for solicitation of
charitable funds pursuant to Chapter 56, Title 33.
(2)
An exemption from registration for the purpose of
operating raffles is authorized for:
(a)
raffles operated by a nonprofit organization for
charitable purposes, where a non-cash prize is donated for the
nonprofit raffle and the total value of the prize or prizes
offered for a raffle event is not more than five hundred
dollars; and
(b)
fifty-fifty raffles where the tickets are sold to members
or guests of a nonprofit organization, and not to the general
public, and the total value of proceeds collected is not more
than nine hundred fifty dollars.
(3)
An organization operating a raffle that is within an
exemption authorized by the provisions of (B)(2) shall not
operate more than one raffle every seven calendar days.
(C) Nonprofit
organizations that comply with the requirements of Section
33-57-120(A) and intend to operate a raffle must submit an
annual raffle form with a fee of fifty dollars to the secretary.
Proceeds from the fees shall be retained by the secretary for
enforcement of these provisions. This registration form shall
cover all authorized raffles for that nonprofit organization's
fiscal year. Registrations for raffles shall expire on
the fifteenth day of the fifth month after the end of a
nonprofit organization's fiscal year.
(D) The secretary may
revoke a registration issued pursuant to this chapter if an
organization is not in compliance with the exemption
requirements of the Internal Revenue Code. A registration
revoked under this chapter must not be reissued until a new
application for registration has been made and the secretary
determines that the organization is in compliance with the
applicable provisions of the Internal Revenue Code.
(E) Nonprofit
organizations, other organizations, and persons operating
raffles for charitable purposes are subject to investigation and
other actions by the secretary and subject to all penalties
contained in Chapters 56 and 57, Title 33.
(F) Nonprofit
organizations, other organizations, or persons operating raffles
or lotteries that violate the provisions of Chapter 19, Title
16, are subject to investigation and other actions by law
enforcement.
Section 33-57-130. (A)
A nonprofit organization is allowed to
operate up to four raffles per year. If a nonprofit
organization has affiliates or subsidiaries that share a federal
Employer's Identification Number (EIN) with a parent nonprofit
organization, meet the requirements of this chapter, and are
registered pursuant to Section 33-57-120(C), then each qualified
affiliate or subsidiary, in addition to the raffles conducted by
a parent nonprofit organization, may operate and conduct up to
four raffles per year. Each nonprofit raffle shall continue for
not more than nine months from the date the first raffle ticket
is sold. No raffle drawing shall be conducted between the hours
of midnight and 10 a.m. Local law enforcement officials are
authorized to enforce the hours of operation.
(B) The restriction on
numbers of raffles shall not apply to raffles held by nonprofit
organizations that are exempt pursuant to Section
33-57-120(B)(2).
Section 33-57-140. (A)
Except for fifty-fifty raffles, no less than
ninety percent of the net receipts of a raffle authorized
pursuant to this chapter must be used for the charitable purpose
of the nonprofit organization.
(B) No receipts of a
raffle shall be used for any expenditure or activity which would
subject an organization exempt from taxation under Internal
Revenue Code Section 501(c)(3) or its managers to revocation of
its tax-exempt status or excise taxes under the Internal Revenue
Code, including directly or indirectly participating in, or
intervening in, any political campaign on behalf of (or in
opposition to) any candidate for elective public office or
engaging in an excess benefit transaction with a person who
would be a disqualified person if the nonprofit organization
were exempt from taxation under Internal Revenue Code Section
501(c)(3).
(C) A nonprofit
organization shall not enter into a contract with any person to
have that person operate raffles on behalf of the nonprofit
organization.
(D)(1) A nonprofit
organization shall not lend its name nor allow its identity to
be used by any person in the operating or advertising of a
raffle in which the nonprofit organization is not directly and
solely operating the raffle.
(2)
No person shall purchase or lease the name of a nonprofit
organization for the purpose of conducting a raffle.
(3)
Nothing in this section, however, shall prohibit two or
more qualified nonprofit organizations from participating
together to conduct a raffle.
(E) A nonprofit
organization conducting a raffle may advertise the event. An
advertisement, in whatever form, for a raffle must name, within
the advertisement, the nonprofit organization sponsoring the
event, the charitable purposes for which the net receipts shall
be used, and a statement of the proportion of the gross receipts
of all raffles conducted by the nonprofit organization in the
most recent two years in which the nonprofit organization
conducted raffles which were not applied to charitable
purposes.
(F)(1) A raffle shall
be conducted only by a qualified and authorized nonprofit
organization through its directors, bona fide employees, and
unpaid volunteers none of whom shall receive compensation for
their services in conducting the raffle, except that bona fide
employees of a nonprofit organization may receive their regular
and ordinary compensation.
(2)
Except as otherwise provided in this chapter, no member,
director, officer, employee, or agent of a nonprofit
organization, a member of the family of any of those persons, or
an entity in which a person described in the previous two
categories holds a thirty-five percent ownership interest is
allowed to receive any direct or indirect economic benefit from
the operation of the raffle other than being able to participate
in the raffle on a basis equal to all other participants, except
that bona fide employees may receive reasonable compensation for
services rendered in furthering the charitable purposes of the
nonprofit organization from raffle proceeds.
(3)
Food and beverages served to and consumed by volunteers or
staff of the sponsoring organization during a raffle are not
compensation.
(4)
Bona fide employees, for purposes of this section, do not
include an employee whose compensation is based, in whole or in
part, on the amount raised in gross or net receipts from a
raffle operated by the nonprofit organization or whose job
duties are significantly related to the conduct of raffles.
(G) A nonprofit
organization shall not conduct raffles through any agent or
third party, and shall not pay anything of value to any person
for any services performed in relation to operating or
conducting a nonprofit raffle except the usual and regular
compensation of bona fide employees. Rental of raffle equipment
from a third party and the hiring of a person to operate
equipment, so long as the expense is reasonable, are not
considered conducting a raffle by a third party.
(H) Non-cash prizes
shall not be redeemed for money from the nonprofit organization
or from any other entity that redeems non-cash prizes awarded by
raffles for money in the ordinary course of business.
(I) No raffle drawing
event shall be held on Christmas Day.
(J) Raffle drawings
must be conducted in accordance with local building and fire
code regulations.
(K) The provisions of
this chapter are not intended and shall not be construed to
allow the operation or play of raffles through electronic
gambling devices, or machines, slot machines, video poker or
similar electronic play devices and do not amend or alter in any
manner the prohibitions on video poker or similar electronic
play devices in Chapter 21, Title 12 or Chapter 19, Title
16.
(L) An individual prize
awarded to each winner in a raffle shall not exceed a maximum
fair market value of forty thousand dollars. No real property
shall be offered as a prize in a raffle. For each raffle event,
the total fair market value of all prizes offered by any
nonprofit organization shall not exceed two hundred fifty
thousand dollars.
(M) The purchase price
for a raffle ticket may not exceed one hundred dollars.
Section 33-57-150. (A)
Expenses that are reasonable and necessary
to operate and conduct raffles, as authorized by this chapter,
are allowable.
(B) Allowable expenses
include only reasonable and necessary expenses incurred for:
(1)
advertising, including the cost of printing raffle tickets
and gift certificates, provided that costs of advertising are
reasonable and the services are not provided, directly or
indirectly, in connection with any other service related to
operating or conducting a nonprofit raffle regardless of whether
those services are compensated;
(2)
office supplies, copying, and minor office equipment costs
incurred in conducting or operating a nonprofit raffle;
(3)
reasonable postage, parking, and shipping costs;
(4)
costs of food and beverages, including corkage and
gratuity fees, provided to the attendees and volunteers of the
event;
(5)
costs of materials and supplies for decorating a facility
used for a nonprofit raffle drawing;
(6)
entertainment related costs, such as disc jockeys, music
bands, auctioneers, waiters, bartenders, and wait staff,
incurred during the conducting or operating of a nonprofit
raffle drawing;
(7)
repairs to premises and equipment related to conducting or
operating a nonprofit raffle;
(8)
door prizes or raffle prizes;
(9)
stated premises' rental or insurance expenses;
(10)
security expenses incurred in conducting or operating a
nonprofit raffle;
(11)
bookkeeping, accounting, or legal services utilized in
connection with a nonprofit raffle including, but not limited
to, the registration fees and the required financial reports;
(12)
permit costs, fees, or taxes required by local or state
government to conduct and operate a nonprofit raffle; and
(13)
janitorial services and supplies incurred in conducting or
operating a nonprofit raffle.
(C) A report shall be
submitted annually to the secretary no later than the fifteenth
day of the fifth month after the end of the nonprofit
organization's fiscal year. The report must be signed under
penalty of perjury and must contain the following information
for each raffle conducted within the preceding year:
(1)
the amount of the gross receipts;
(2)
an itemized list of expenses incurred or paid, including
the name of each person, company, or governmental entity to whom
an expense was paid;
(3)
each item of an expenditure made or to be made, with a
detailed description of the merchandise purchased or the
services rendered, and the name of each person, company, or
governmental entity to whom the expenditure is to be made;
(4)
the amount of the net receipts;
(5)
the use to which the net receipts have been or are to be
applied;
(6)
a list of prizes offered and given, with an estimate of
their respective values; and
(7)
the number of tickets sold.
(D) Records required by
this chapter shall be preserved for three years, and
organizations shall make available their records relating to
operations of raffles at any time at the request of a member of
the organization, or investigators from the secretary or from
law enforcement.
(E) No new registration
shall be issued to an organization that fails to file its report
as required by this section until all reports are filed, and the
secretary has confirmed that the information in the reports is
in compliance with the provisions of this chapter. An
organization that fails to file a timely annual report required
by this section may be assessed by the secretary administrative
fines of ten dollars for each day of noncompliance for each
delinquent report not to exceed two thousand dollars for each
separate violation. In addition to the assessed fines, the
secretary may revoke an organization's registration for failure
to file an annual report and bring an action before an
administrative law judge to enjoin the organization from
conducting raffles until the required reports are filed with the
secretary.
Section 33-57-160. (A)
The secretary shall perform all functions
incident to the administration, collection, enforcement, and
operation of the provisions imposed pursuant to this chapter.
Upon his own motion or upon complaint of any person, the
secretary may investigate an organization to determine if it has
violated the provisions of this chapter or has filed an
application, or other information required by this chapter,
which contains false or misleading statements. The secretary
may subpoena or audit persons and organizations and require
production of books, papers, and other documents to aid in the
investigation of alleged violations of this chapter. By
registering with the secretary pursuant to this chapter, each
nonprofit organization consents to the secretary, as well as his
agents, including local law enforcement or a circuit solicitor
or his agents, entering onto the premises where a nonprofit
raffle drawing is being held, for the purpose of enforcing the
provisions of this chapter.
(B)(1) In addition to
other actions authorized by this chapter and by law, the
secretary, if he has reason to believe that one or more of the
following acts or violations listed below has occurred or may
occur, may assess a fine of not more than five hundred dollars
for each violation that has occurred and bring an action before
an administrative law judge to enjoin a person or an
organization from continuing the act or violation, or committing
other acts in furtherance of it, and for other relief as the
court considers appropriate:
(a)
a person or organization operated in violation of the
provisions of this chapter;
(b)
a person or organization made a false statement in any
information required to be filed by this chapter;
(c)
a person or organization used a device, scheme, or
artifice to defraud or to obtain money or property by means of
false pretences, representation, or promise during a nonprofit
raffle for charitable purposes;
(d)
the officers, directors, representatives, or agents of a
nonprofit organization refused or failed, after notice, to
produce records of the organization; or
(e)
the funds raised by the nonprofit raffles were not devoted
to or distributed to the charitable purposes of the nonprofit
raffle for charitable purposes.
(2)
Each violation and each day in violation of a provision of
this chapter constitutes a separate offense for which an
administrative fine may be assessed.
(C) A person or
organization that is assessed an administrative fine, has its
registration suspended or revoked, or that has its registration
denied, has thirty days from receipt of certified notice from
the secretary to pay the fine or request an evidentiary hearing
before an administrative law judge. If a person or organization
fails to remit fines or request a hearing after the required
notice is given and after thirty days from the date of receipt
of certified notice has elapsed, the secretary may suspend its
registration pending final resolution and may bring an action
before the administrative law judge to enjoin the person or
organization from engaging in further nonprofit raffles. The
decision of the administrative law judge may be appealed
according to the procedures in the Administrative Procedures
Act.
Section 33-57-170. (A)
A person or organization that knowingly and
willfully conducts a nonprofit raffle without obtaining the
necessary registration or qualifying for an exemption is guilty
of conducting an illegal lottery and, upon conviction of a first
offense, must be fined not more than one thousand dollars or
imprisoned not more than one year, or both. For a second or
subsequent offense, a person or organization is guilty of a
felony and, upon conviction, must be fined not more than ten
thousand dollars or imprisoned not more than five years, or
both.
(B) A person or
organization that knowingly and willfully violates a provision
of this chapter with the intent to deceive or defraud an
individual or nonprofit organization is guilty of a misdemeanor
and, upon conviction of a first offense, must be fined not more
than five thousand dollars or imprisoned not more than one year,
or both. For a second or subsequent offense, a person or
organization is guilty of a felony and, upon conviction, must be
fined not more than ten thousand dollars or imprisoned not more
than five years, or both.
(C) A person or
organization that knowingly and willfully gives false or
misleading information to the secretary in a registration or
report required by this chapter is guilty of a misdemeanor and,
upon conviction of a first offense, must be fined not more than
two thousand dollars or imprisoned not more than one year, or
both. For a second or subsequent offense, a person or
organization is guilty of a felony and, upon conviction, must be
fined not more than five thousand dollars or imprisoned not more
than five years, or both.
(D) Upon the conviction
of a member of a nonprofit organization or the conviction of a
nonprofit organization for a violation pursuant to this section,
all proceeds of the raffle from which the offense arose shall be
disgorged to the secretary. Proceeds disgorged pursuant to this
chapter shall be retained by the secretary for purposes of
enforcement of this chapter.
(E) An organization
whose officer or director is convicted of a violation pursuant
to this section shall be prohibited from registering to conduct
a raffle for a period of no less than five calendar years after
the date of the conviction.
Section 33-57-180. All administrative fines collected pursuant to this chapter must be transmitted to the State Treasurer and deposited in the state general fund.
Section 33-57-190. The
Secretary of State may promulgate regulations to administer and
enforce the provisions of this chapter.
Section 33-57-200. (A)
The provisions of this chapter are repealed
as of July 1, 2020, unless and until the General Assembly
reauthorizes the provisions by joint resolution by a two-thirds
vote of each body. The vote on the reauthorization may occur
within two years preceding the date of repeal.
(B) The provisions of
this chapter are repealed every ten years thereafter, unless
reauthorized in accordance with subsection (A)."
B. Nothing in the provisions of this
section, including the allowance of persons to operate casino
nights for entertainment purposes when no prizes, financial
rewards, or incentives are received by players, shall alter or
amend the terms of "The Catawba Indian Claims Settlement
Agreement" or "The Catawba Indian Claims Settlement
Act", as referenced in S.C. Code Ann. Sections 27-16-10
through 27-16-140 (2010) and in 25 U.S.C. Sections 941 through
941n (2010), or the holding of the South Carolina Supreme Court
in Catawba Indian Tribe of South Carolina v. State of South
Carolina, 372 S.C. 519, 642 S.E.2d 751 (2007).
C. This section shall apply prospectively. The repeal or amendment by the provisions of this section or any law, whether temporary or permanent or civil or criminal, does not affect pending actions, rights, duties, or liabilities founded thereon, or alter, discharge, release, or extinguish any penalty, forfeiture, or liability incurred under the repealed or amended law, unless the repealed or amended provision shall so expressly provide. After the effective date of this section, all laws repealed or amended by this section must be taken and treated as remaining in full force and effect for the purpose of sustaining any pending or vested right, civil action, special proceeding, criminal prosecution, or appeal existing as of the effective date of this section, and for the enforcement of rights, duties, penalties, forfeitures, and liabilities as they stood under the repealed or amended laws.
D. If any subsection, item, subitem, paragraph, subparagraph, sentence, clause, phrase, or word of this section is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this section, the General Assembly hereby declaring that it would have passed this section, and each and every subsection, item, subitem, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the section that any one or more other subsections, items, subitems, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective, unless the provision prohibiting the altering or amending of the terms of "The Catawba Indian Claims Settlement Act" is held invalid or unconstitutional, so as to allow casino games in South Carolina by an Indian Tribe or any other group of individuals. The invalidity of that provision shall affect all other provisions or applications of this section, and to that end, the provisions of this section are non-severable from that provision.
E. The provisions of this section become effective thirty days after ratification of an amendment to Section 7, Article XVII of the Constitution of this State allowing its terms as proposed to the qualified electors of this State at the 2014 General Election. /
Renumber sections to conform.
Amend title to conform.