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THE DISTRICT OF COLUMBIA
LOTTERY AND CHARITABLE GAMES CONTROL BOARD
NOTICE OF FINAL RULEMAKING
The Executive Director of the District of Columbia Lottery and Charitable Games Control Board, pursuant to the authority set forth in D.C. Official Code §§ 1-204.24a(c)(6) (2012 Supp.); §§ 3-1306 and 3-1321 (2007 Repl.); District of Columbia Financial Responsibility and Management Assistance Authority Order, issued September 21, 1996; and Office of the Chief Financial Officer Financial Management Control Order No. 96-22, issued November 18, 1996, hereby gives notice of its intent to amend Chapters 9 and 99 of Title 30 “Lottery and Charitable Games” of the District of Columbia Municipal Regulations (DCMR). The amendments are necessary to implement unilateral changes to a national Hot Lotto® game. These changes to the game start on May 12, 2013.
The Notice of Proposed Rulemaking was published in D.C. Register on April 5, 2013 at 60 DCR 5163. Final action to adopt these rules as final took place on May 06, 2013. No comments were received, and no substantive changes were made to the rulemaking. These final rules will become effective upon publication of this notice in the D.C. Register.
AMEND CHAPTER 9. “DESCRIPTION OF ON-LINE GAMES”
Amend Sections 940 through 944 to read as follows:
940 DESCRIPTION OF THE HOT LOTTO® GAME
940.1 The Agency may offer a game known as Hot Lotto® to the public.
940.2 The provisions of §§ 501.2, 503.4, 503.5, 607.2, 611.1, and 805.1 shall apply to ticket purchase, void and cancelled tickets, ticket validation, and prize payments in the Hot Lotto® game.
940.3 Hot Lotto® is a five (5) out of forty-seven (47) plus one (1) out of nineteen (19) on-line lottery game that pays Grand Prize payments as a cash lump sum payment on a pari-mutuel basis. All prizes are paid on a cash basis. To play Hot Lotto®, a player shall select five (5) different numbers, between one (1) and forty-seven (47) and one (1) additional number between one (1) and nineteen (19), for input into a terminal. The additional number may be the same as one of the first five numbers selected by the player.
940.4 Drawings shall be held at the times and places established by MUSL Product Group and the results shall be subsequently announced to the public.
940.5 If a single ticket contains more than one (1) winning play on separate game boards, the prize amounts shall be added together and shall be paid in accordance with the prize payment limits set forth in §§ 940.6 and 943.
940.6 The holder of a winning Hot Lotto® ticket may win in only one prize category per board in connection with the winning numbers drawn, and shall be entitled only to the prize for the highest prize category won by those numbers.
940.7 The price of a Hot Lotto® game ticket shall be one play for one dollar ($1) or any other price designated by the Executive Director from a price schedule adopted by the Agency.
940.8 A ticket subject to the validations requirements of this title shall be the only proof of a wager.
941 PRIZE POOL
941.1 The prize pool for all prize categories shall consist of fifty percent (50%) of each drawing period’s sales, including tax, after the prize reserve accounts are funded consistent with all agreements in place governing the conduct of Hot Lotto®.
941.2 The prize money allocated to the Grand Prize category shall be awarded equally to the number of game boards winning a Grand Prize.
941.3 Any amount remaining in the prize pool at the end of each game shall be carried forward to a replacement game or expended in a manner consistent with all agreements in place governing the conduct of Hot Lotto® and in accordance with District law.
941.4 An amount equal to up to one percent (1%) of a Lottery’s sales, including tax, shall be deducted from a Lottery’s Grand Prize Pool and placed in trust in one or more prize reserve accounts when the Grand Prize exceeds $2,000,000.00. An additional two percent (2%) of a Lottery’s sales, including tax, shall be deducted from a Lottery’s Grand Prize Pool and placed in trust in one (1) or more prize reserve accounts when the Grand Prize exceeds $5,000,000.00 until the Lottery’s share of the prize reserve account(s) reach(es) the amounts designated by MUSL Product Group.
941.5 The MUSL Product Group has established the following prize reserve accounts for the Hot Lotto® game: the Prize Reserve Account (“PRA”), which is used to guarantee the payment of valid, but unanticipated, Grand Prize claims that may result from a system error or other reason, and to fund deficiencies in low-tier prize payments (subject to the limitations of these rules); the Set-Aside Account, which is used to guarantee payment of the minimum or starting Grand Prize; the Hot Lotto® Sizzler Rollover Account, which is described in Part III of these rules; and the Lower Tier Prize Pool, which holds the temporary balances that may result from having fewer than expected winners in the low-tier set prize categories. The source of the Lower Tier Prize Pool funds is the Party Lottery’s weekly prize contributions less actual set prize liability.
942 GRAND PRIZE PAYMENT
942.1 Grand Prize Payments are made as a cash lump sum payment on a pari-mutuel basis.
942.2 A Grand Prize Winner shall receive a “Withholding Taxes Paid Prize.”
942.3 “Withholding Taxes Paid Prizes” is a prize where the Lottery pays the prize winner a net prize amount, that consists of the Lottery reducing the “gross prize value” by the required federal and jurisdictional withholding taxes (if any), and withholding and depositing on behalf of the prize winner the required federal and jurisdictional withholding taxes (if any) on the “gross prize value” and the Lottery pays the prizewinner the residual amount (subject to any setoff requirements). Grand Prize winners will receive a Withholding Taxes Paid prize determined after deducting all applicable withholding taxes regardless of the “Advertised Grand Prize Amount”, and which may be higher or lower than the “Advertised Grand Prize amount. Federal and jurisdictional withholding tax rates are subject to change and will be determined at the time the prize is awarded.
942.4 The “Withholding Taxes Paid” prize amount reported to the federal and jurisdictional revenue authorities by the Lottery as subject to income taxation shall reflect the amount paid to the prize winner and also the amount remitted as withholding taxes to the federal and jurisdictional authorities (if any) on behalf of the prize winner. The Lottery and MUSL Product Group are not responsible for additional income or other taxes applicable in excess of the amount withheld and remitted by the Lottery that may be due when the prizewinner files all tax returns for the year the prize is claimed; Prizewinners should verify personal tax liability with a financial adviser.
For example, if a single Grand Prize winner wins the “Advertised Grand Prize” of $2,000,000.00 that has a gross prize value of $3,050,000.00, and the federal withholding tax rate is 25% and the jurisdictional withholding tax rate is 6%, the Lottery will withhold and remit $762,500.00 in federal tax withholding, $183,000.00 in jurisdictional tax withholding and pay the prize winner $2,104,500.00 in a single cash prize payment (subject to any setoff requirements); at the end of the tax year the Lottery will communicate to the prizewinner a W-2G Form showing prize won of $3,050,000.00.
942.5 Grand Prize winners will receive a “Withholding Taxes Paid Prize” determined after deducting all applicable withholding taxes regardless of the “Advertised Grand Prize Amount”, and which may be higher or lower than the “Advertised Grand Prize amount.”
943.6 Advertised Grand Prize Amount shall be the minimum cash amount that would be paid as a “Withholding Taxes Paid” prize to the Grand Prizewinner(s), on a pari-mutuel basis, after calculating the potential federal and jurisdictional withholding taxes, if any, to the Gross Grand Prize Amount. Minimum guaranteed prizes or increases may be waived if the alternate funding mechanism set out in §941.5.
942.7 Entitlement to the Hot Lotto® Grand Prize, or a per winner portion thereof, shall occur upon the:
(a) Presentation of a winning Hot Lotto® lottery ticket for validation;
(b) Presentation of a completed and signed claim form at a Claim Center; and
(c) Satisfaction of all lottery ticket and claim validation requirements set forth in this title including, without limitation, all final determinations that may be required by the Executive Director.
942.8 A payment election made after entitlement to the prize occurs is final and cannot be revoked, withdrawn, or changed.
942.9 The Executive Director may adopt procedures, requirements, and documentation to complete a Hot Lotto® Grand Prize payment election. The Executive Director's acceptance of an election is conditional upon his or her determination that the election request is valid.
942.10 If the documentation required by the Executive Director to complete a prize election is to be completed and signed in the name of a legal entity, the entity must designate in writing one (1) duly authorized natural person to execute the documentation.
942.11 If a Hot Lotto® Grand Prize claimant is unable to complete the documentation required by the Executive Director for a prize payment election due to a legal, physical, or other disability, a duly authorized representative, guardian, conservator, custodian, or other fiduciary may complete and execute all required documentation on the claimant's behalf.
942.12 If a natural person completing the documentation required by the Executive Director to complete prize election is the personal representative of the estate of a deceased winner, or the authorized representative of a legal person or other entity entitled to claim the prize, he or she shall submit his or her letter of administration, trust, other authorizing documents, or their legal equivalent, showing an appointment from the court having jurisdiction over the estate, or other evidence of legally binding authorization.
942.13 A person who executes documentation required by the Executive Director to complete a prize election shall be considered to have represented that the information contained therein is accurate and complete. Any person who willfully submits false or fraudulent documentation may be prosecuted for the offense of making a false statement in accordance with D.C. Official Code § 22-2405 (2001 ed.).
942.14 All provisions of this title relating to the election of a Hot Lotto® Grand Prize payment shall be interpreted in a manner that is consistent with the purposes, requirements, and restrictions of 26 U.S.C. § 451.
942.15 If the Hot Lotto® Grand Prize is not won in a drawing, the prize money allocated for the Hot Lotto® Grand Prize shall roll over.
942.16 Prior to a drawing the Product Group shall determine and publicly announce the “Advertised Grand Prize” amount for that drawing. The Gross Grand Prize Value amount, that is used to determine the Advertised Grand Prize amount, shall be a guaranteed amount, and the Product Group may offer guaranteed minimum Gross Grand Prize Value amounts or minimum increases in the Gross Grand Prize Value amount between drawings or make other changes in the allocation of prize money where the Product Group finds that it would be in the best interest of the game. Guaranteed Gross Grand Prize Value amounts shall be funded as determined by the Product Group.
942.17 Grand Prizewinner shares shall be determined as follows: if there are multiple Grand Prize winners during a single drawing, then a winner's share of the Grand Prize shall be determined by dividing the Gross Grand Prize Value by the number of winners.
942.18 A share of the Hot Lotto® Grand Prize may be rounded to facilitate the purchase of an appropriate funding mechanism. Funds remaining after the prize has been rounded down on a Hot Lotto® Grand Prize win, ("breakage"), shall be added to the first cash payment to the winner or winners. Prizes which, under this chapter, may become single-payment, pari-mutuel prizes, may be rounded down so that prizes can be paid in multiples of whole dollars. Breakage resulting from rounding these prizes shall be carried forward to the prize pool for the next draw.
943 HOT LOTTO® PRIZE STRUCTURE
943.1 The Hot Lotto® Grand Prize shall be determined on a pari-mutuel basis. Except as provided in these rules, all other prizes awarded shall be paid as set cash prizes with the following expected prize payout percentages.
943.2 Provided the prize pools are fully funded, the fixed prize payments for Hot Lotto® based on a one dollar ($1) bet are as follows:
Number of Matches Per Play
Prize Payment
Prize Pool % Allocated to Prize
All five (5) of first set plus one (1) of the second set
Gross Grand Prize Value*
52.1188%
All five (5) of first set and none of the second set
$30,000
3.7056%
Any four (4) of first set plus one (1) of the second set
$3,000
4.3232%
Any four (4) of first set and none of the second set
$100
2.5940%
Any three (3) of first set plus one (1) of the second set
$50
2.9542%
Any three (3) of first set and none of the second set
$6
6.3811%
Any two (2) of first set plus one (1) of the second set
$6
4.7268%
Any one (1) of first set plus one (1) of the second set.
$3
11.5214%
None of the first set plus one (1) of the second set
$2
11.6750%
* The above reflects the Gross Grand Prize Value; the “Advertised Grand Prize” is described elsewhere in these Rules. The Gross Grand Prize Value amount will be reduced by federal and jurisdictional withholding taxes (if any) that will be remitted by the Lottery on behalf of the prizewinner with the prizewinner receiving the residual amount as their Grand Prize payment (subject to offsets). The prize amount reported to the federal and jurisdictional revenue authorities by the Lottery as subject to income taxation shall reflect the amount paid to the prize winner (including any offsets) and also the amount remitted as withholding taxes to the federal and jurisdictional authorities (if any) on behalf of the prize winner.
943.3 The prize money allocated to the Gross Grand Prize Value category shall be divided equally by the number plays winning the Grand Prize.
943.4 If the prize pools are not fully funded and there are not sufficient funds in the prize pool to pay fixed prizes, the prizes shall be paid pursuant to § 943.5, including payment on a pari-mutuel basis if required.
943.5 The prize pool percentage allocated to the fixed prizes (the cash prize of $30,000.00 thousand dollars or less) shall be carried forward to subsequent draws if all or a portion of it is not needed to pay the fixed prizes awarded in the current draw. If the total of the fixed prizes awarded in a drawing exceeds the percentage of the prize pool allocated to the fixed prizes, then the amount needed to fund the fixed prizes awarded shall be drawn from the following sources in the following order:
(a) The amount allocated to the fixed prizes and carried forward from previous draws, if any.
(b) An amount from the Prize Reserve Account, if available, not to exceed the balance of that account.
(c) An amount from the set-aside account, if available not to exceed the balance of the account.
943.6 If, after these sources are depleted, there are not sufficient funds to pay the fixed prizes awarded, the highest fixed prize shall become a pari-mutuel prize. If the amount of the highest fixed prize when paid on a pari-mutuel basis, drops to or below the next highest fixed prize and there are still not sufficient funds to pay the remaining fixed prizes awarded, the next highest fixed prize shall become a pari-mutuel prize. This procedure shall continue down through all fixed prize levels, if necessary, until all fixed prize levels become pari-mutuel prize levels. In that instance, the money available from the funding sources listed in this chapter shall be divided among the winning plays in proportion to their respective prize percentages.
943.7 Minimum guaranteed prizes or increases offered by the Executive Director pursuant to § 942.14 may be waived if the alternate funding mechanism set out in Subsections §§ 943.5 and 943.6 becomes necessary.
944 PROBABILITY OF WINNING
944.1 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 Hot Lotto®.
Number of Matches Per Ticket
Probability Distribution
Probable/Set Prize Amount
All five (5) of first set plus one (1) of the
second set
1: 29,144,841
$7,594,954.50* **
All five (5) of first set and none of the second set
1: 1,619,157.833333
$30,000.00
Any four (4) of first set plus one (1) of the second set
1: 138,784.957143
$3,000.00
Any four (4) of first set and none of
the second set
1: 7,710.275397
$100.00
Any three (3) of first set plus one (1) of
the second set
1: 3,384.998955
$50.00
Any three (3) of first set and none of the
second set
1: 188.055497
$6.00
Any two (2) of first set plus one (1) of the second set
1: 253.874922
$6.00
Any one (1) of first set plus one (1) of
the second set.
1: 52.076907
$3.00
None of the first set plus one (1) of
the second set
1: 34.261123
$2.00
Overall
1: 17.217787
* The Grand Prize amount does not include the Prize Reserve Account (“PRA”) deduction or any other deductions, if any.
** The Gross Grand Prize Value amount reflects the “Gross Prize Value”; the “Advertised Grand Prize” and “Withholding Taxes Paid Prize” amounts are discussed elsewhere in these Rules.
AMEND CHAPTER 9. “DESCRIPTION OF ON-LINE GAMES”
Amend Section § 946 to read as follows:
946 SIZZLER PRIZE POOL, PRIZE CHART AND PROBABILITY
946.1 The Sizzler Prize Pool for all prize categories shall consist of approximately forty-seven and eight thousand eight hundred thirteen ten thousandths percent (47.8813%) of each drawing period's sales, including any specific statutorily mandated tax of a Selling Lottery to be included in the price of a lottery ticket. Any amount remaining in the prize pool at the end of this game shall be carried forward to a replacement game or expended in a manner as directed by the MUSL Product Group in accordance with state law.
946.2 Provided the prize pools are fully funded, pursuant to §§ 943.5 and 943.6 of this chapter, the fixed prize payments for Sizzler based on a one dollar ($1) bet are as follows:
Match
Regular Prize Amount
Sizzler 3X
All five (5) of first set and none of the second set
$30,000.00
$90,000.00
Any four (4) of first set plus one (1) of the second set
$3,000.00
$9,000.00
Any four (4) of first set and none of
the second set
$100.00
$300.00
Any three (3) of first set plus one (1) of
the second set
$50.00
$150.00
Any three (3) of first set and none of the
second set
$6.00
$18.00
Any two (2) of first set plus one (1) of the second set
$6.00
$18.00
Any one (1) of first set plus one (1) of
the second set.
$3.00
$9.00
None of the first set plus one (1) of
the second set
$2.00
$6.00
946.3 The Hot Lotto® Grand Prize is not subject to the Sizzler multiplier.
946.4 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 the Hot Lotto® Sizzler game.
Match
Probability
Sizzler 3X
All five (5) of first set and none of the second set
1: 1,619,157.833333
$90,000.00
Any four (4) of first set plus one (1) of the second set
1: 138,784.957143
$9,000.00
Any four (4) of first set and none of
the second set
1: 7,710.275397
$300.00
Any three (3) of first set plus one (1) of
the second set
1: 3,384.998955
$150.00
Any three (3) of first set and none of the
second set
1: 188.055497
$18.00
Any two (2) of first set plus one (1) of the second set
1: 253.874922
$18.00
Any one (1) of first set plus one (1) of
the second set.
1: 52.076907
$9.00
None of the first set plus one (1) of
the second set
1: 34.261123
$6.00
Overall odds of winning: 1:17
946.5 Prize Reserve Funding. Two and one thousand one hundred eighty-seven ten thousandths percent (2.1187%) of sales, including any specific statutorily mandated tax of a Selling Lottery to be included in the price of a lottery ticket, may be collected and placed in trust in the Sizzler Prize Pool or in one or more prize reserve accounts until the prize reserve accounts reach the amounts designated by the MUSL Product Group.
946.6 In certain rare instances, the Hot Lotto® set prize amount may be less than the amount shown. In such case, the Sizzler prizes will be a multiple of the new Hot Lotto® prize amount. For example, if the Match 5 of the first set and none of the second set Hot Lotto® set prize amount of $30,000.00 becomes $27,000.00 under the rules of the Hot Lotto® game, then a Sizzler player winning that prize would win $81,000.00 ($27,000.00 x 3).
AMEND CHAPTER 99, “DEFINITIONS”
Amend Subsection 9900.1 by substituting the following:
Advertised Grand Prize - a term used in the Hot Lotto® game that means the amount determined and publicly announced by the MUSL Product Group to be the Grand Prize for the drawing. The “Advertised Grand Prize” amount is not the Gross Grand Prize Value. The Advertised Grand Prize amount shall be the minimum cash amount that would be paid as a “Withholding Taxes Paid” prize to the Grand Prizewinner(s), on a pari-mutuel basis, after calculating the potential federal and jurisdictional withholding taxes, if any, applicable to resident United States citizens with a valid Social Security Number, to the Gross Grand Prize Amount. If a Member Lottery advertises an “Estimated Grand Prize” that shall have the same meaning as an “Advertised Grand Prize”
Gross Grand Prize Value - a term used in the Hot Lotto® game that means the prize value prior to deductions for any applicable withholding taxes due the federal or jurisdictional governments.
Withholding Taxes Paid Prize – a term used in the Hot Lotto® game that means the prizes where the Lottery pays the prize winner a net prize amount, that consists of the Lottery withholding and depositing on behalf of the prize winner the required federal and jurisdictional withholding taxes (if any) on the “Gross Grand Prize Value” and the residual amount paid to the prize winner.
