Revenue Ruling 35-10-1
County/City Lottery (Keno)

ELIMINATION OF PRINTED PAY TICKETS

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Issue:

Is it permissible for a county, city, village, lottery operator, or sales outlet location to eliminate the printing of pay tickets in a keno lottery?

Conclusion:

The Nebraska Department of Revenue (Department) may authorize a county, city, village, lottery operator, or sales outlet location to discontinue the printing of pay tickets. Prior to a county, city, village, lottery operator, or sales outlet location discontinuing the printing of pay tickets, a written request for authorization must be submitted to the Department. The request must include a description of an alternative method for the documentation of the payment of winnings authorized by the keno system, and the verification of the winning ticket and its subsequent authorization by keno management, if required. The original outside ticket issued to the player must still be presented for payment. A request to discontinue the printing of pay tickets submitted by a lottery operator or sales outlet location must have the written concurrence of the sponsoring county, city, or village.

Definitions:

Inside Ticket. The ticket completed by the player and given to the keno writer in order to make a wager.

Keno Runner. A licensed lottery worker, other than a keno writer on duty, who accepts an inside ticket and payment of wager from a player, transports this ticket and wager to a keno writer station to place the wager, and returns to the player the resulting outside ticket.

Keno Writer. A licensed lottery worker who accepts inside tickets or verbal requests for wagers and payments of wagers from players or from keno runners, issues outside tickets, voids tickets, and redeems winning tickets.

Outside Ticket. The computer-generated ticket which contains the game number, date, dollar amount of wager, the numbers chosen by the player, ticket sequence number, writer station number, etc.

Transaction Log. A record of all transactions entered on the keno system. The transaction log includes, but is not limited to, all outside ticket information, ticket processing, voided tickets, game closing time, game results, payout, and all other information required by Department regulations to be entered on the transaction log.

Analysis:

Current Statutory and Regulatory Requirements

Neb. Rev. Stat. § 9-607(1) of the Nebraska County and City Lottery Act defines lottery and the types of lotteries which are authorized under the Act. Subsection (1)(c)(ii) defines keno as follows:

(ii) by use of a game known as keno in which a player selects up to twenty numbers from a total of eighty numbers on a paper ticket and a computer, other electronic selection device, or electrically operated blower machine which is not player-activated randomly selects up to twenty numbers from the same pool of eighty numbers and the winning players are determined by the correct matching of the numbers on the paper ticket selected by the players with the numbers randomly selected by the computer, other electronic selection device, or electrically operated blower machine, except that no keno game shall permit or require player access or activation of lottery equipment and the random selection of numbers by the computer, other electronic selection device, or electrically operated blower machine shall not occur within five minutes of the completion of the previous selection of random numbers; and (d) the holders of the winning paper tickets are to receive cash or prizes redeemable for cash. Selection of a winner or winners shall be predicated solely on chance. [emphasis added]

There is no statutory requirement regarding the printing of pay tickets. The statutory requirement for a paper ticket in § 9-607(1) would not be compromised if the Department authorized a county, city, village, lottery operator, or sales outlet location to discontinue the printing of a paper pay ticket as evidence of the payment of a winning ticket. The paper ticket requirement in § 9-607(1)(c)(ii) relates to the computer-generated ticket which represents the player’s wager (outside ticket) and it would continue to be printed. Currently, a pay ticket is printed by the keno system when a player presents his or her winning outside ticket for payment. The printed pay ticket is attached to the player’s outside ticket and is retained by the sponsoring county, city, or village in accordance with Records Retention Schedule 59:

59-11 OUTSIDE COPIES OF NET WINNING TICKETS OF $1,500.00 OR MORE WITH PAY TICKETS AND INSIDE TICKETS

An outside ticket is the computer-generated ticket which contains the game number, date, dollar amount of wager, the numbers chosen by the player, ticket sequence number, writer station number, etc. An inside ticket is the ticket completed by the player and given to the keno writer in order to make a wager.

INSIDE TICKETS: May be disposed of at discretion of sponsoring County, City or Village.

OUTSIDE COPIES OF NET WINNING TICKETS OF $1,500.00 OR MORE WITH PAY TICKETS: Dispose of after 3 years, provided audit has been completed.

The Nebraska County and City Lottery Regulations contain several references to pay tickets:

Regulation 35-613.07D(3) states:

All ticket processing, game results, pay information, and any other information required by these regulations to be entered on the transaction log may be kept on paper or on digital, electronic, magnetic, optical or any other recording medium approved by the county, city, or village and the Department, so long as the transaction log remains capable of being reviewed and printed. The default method of recording the transaction log shall be to print the log on paper concurrently with each transaction. If the county, city, or village approves a method of recording the transaction log other than concurrent printing, such approval with the specifications of the proposed record keeping system shall be provided to the Department for approval prior to discontinuing concurrent printing of the transaction log. Those specifications shall include a plan for making the transaction log available for keno compliance procedures. The transaction log shall be retained for a minimum of three years and be secured in an area other than the location where the keno game is conducted.

The purpose for which pay tickets are printed, namely, documenting that the payment of winnings was proper, is satisfied by other keno system functions, including recording of all keno tickets, wins, and payment of winnings on the transaction log.

APPROVED:
Douglas A. Ewald
Tax Commissioner

March 1, 2010