California State Lottery.

The California State Lottery Act of 1984 authorizes a California State Lottery and provides for its operation and administration by the California State Lottery Commission and the Director of the California State Lottery. Existing law requires that not less than 87% of the total annual revenues of the state lottery be returned to the public in the form of prizes and net revenues to benefit public education, as specified, and requires at least 50% of annual lottery revenues to be returned to the public in the form of prizes. Existing law, to become operative following notification from the Controller to the Legislature and the Governor that certain events have occurred, changes the revenue allocation formula so that not less than 84% of the total annual revenues of the state lottery be returned to the public in the form of prizes and net revenues to benefit public education, as specified, and requires 50% of the total annual revenues to be returned to the public in the form of prizes. This bill would require the director, on or before August 1, 2021, to conduct a study to determine the optimal prize payout rate to maximize the amount of funding allocated to public education each year by the lottery and would require the director to recalculate the optimal prize payout rate at least once every five years. The bill would require the commission, commencing with the 2022–23 fiscal year, and consistent with the above formula, to use the optimal prize payout rate to set the lottery's budget each fiscal year. Existing law requires the director, after the first full year of lottery ticket sales to the public, and from time to time thereafter, to engage an independent firm experienced in the analysis of advertising, promotion, public relations, incentives, and other aspects of communications to conduct a special study of the effectiveness of those communication activities and make recommendations to the commission on the future conduct and future rate of expenditure for those activities. This bill would require the director to annually demonstrate and document a positive return on investment for any advertising programs that award free tickets to the public, as specified. Existing law authorizes the director to purchase or lease goods and services as are necessary for effectuating the purposes of the lottery act. Existing law requires the commission to adopt and publish competitive bidding procedures for the award of any procurement or contract involving an expenditure of more than $100,000. This bill would require the commission, on or before August 1, 2021, to develop procurement procedures that explain how the commission determines which contracts for goods and services are exempt from competitive bidding and to make the procedures publicly available on its internet website.