§ 1201. 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 Liquor and Lottery.
(3)(A) “Distributor” means a person that 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
that has a duty to act for the corporation in complying with the requirements of this
chapter.
(B) “Distributor” shall not include a person who distributes only jar tickets that are
used only for merchandise prizes.
(4) “Manufacturer” means a person that designs, assembles, fabricates, produces, constructs,
or otherwise prepares a break-open ticket for sale to a distributor.
(5) “Nonprofit organization” means a nonprofit corporation that is qualified for tax exempt
status under I.R.C. § 501(c), as amended, and that has engaged, in good faith, in charitable, religious, educational,
or civic activities in Vermont 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
that have engaged, in good faith, in charitable, religious, educational, or civic
activities in Vermont on a regular basis during the preceding year. An organization
shall be considered a nonprofit organization under this subdivision only if it certifies
annually, on a form with whatever information is required by the Commissioner, how
it meets the definition under this subdivision. (Added 2017, No. 73, § 13, eff. Sept. 1, 2017; amended 2019, No. 73, § 37.)
§ 1202. 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. 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 shall also be:
(1) a natural person who is a resident of Vermont;
(2) a partnership in which the majority of partners are residents of Vermont;
(3) a corporation incorporated under the laws of Vermont, provided that a majority of
the ownership interest is held by residents of Vermont; or
(4) a person who is not a resident of Vermont and whose state of residence allows residents
or corporations of Vermont to distribute break-open tickets in that state under similar
terms and conditions as provided under this chapter. (Added 2017, No. 73, § 13, eff. Sept. 1, 2017.)
§ 1203. Distribution; retail purchase and sale
(a) Only nonprofit organizations may purchase break-open tickets from a distributor licensed
under this chapter.
(b) No person, other than a licensed distributor or a nonprofit organization acting under
subsection (f) of this section, shall distribute a box of break-open tickets. 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.
(c) A distributor licensed under this chapter may sell break-open tickets only to nonprofit
organizations as defined in subdivision 1201(5) of this chapter, except that a person
other than a licensed distributor may sell such tickets to a licensed distributor
upon written approval of the Commissioner.
(d) Only nonprofit organizations may sell break-open tickets at retail.
(e) Break-open tickets shall not be sold at premises licensed to sell alcoholic beverages
except:
(1) at clubs as defined in 7 V.S.A. § 2; or
(2) 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:
(A) actual cost of the break-open tickets;
(B) the prizes awarded;
(C) reasonable legal fees necessary to organize the nonprofit organization and to ensure
compliance with all legal requirements; and
(D) reasonable accounting fees necessary to account for the proceeds from the sale of
break-open tickets.
(f) A nonprofit organization that sells break-open tickets, other than a club as defined
in 7 V.S.A. § 2, shall report to the Department of Liquor and Lottery on a quarterly basis the number
of tickets purchased and distributed, and the corresponding serial numbers of those
tickets, the amount of revenue realized by the nonprofit organization, and the amounts
accounted for under subdivisions (e)(2)(A)-(D) of this section. The nonprofit organization
shall also identify an individual from the organization responsible for the reporting
requirements under this subsection. If the Department of Liquor and Lottery determines
that a nonprofit organization has failed to comply with the requirements of this subsection,
the Department of Liquor and Lottery shall notify the nonprofit organization and any
licensed distributors of this failure, and any licensed distributor that continues
to sell break-open tickets to that nonprofit organization after notice shall be considered
in violation of the requirements of this chapter until the Department of Liquor and
Lottery has determined the nonprofit organization is back in compliance with this
subsection.
(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 2017, No. 73, § 13, eff. Sept. 1, 2017; amended 2019, No. 73, § 38.)
§ 1204. 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 Liquor Control
Enterprise Fund. (Added 2017, No. 73, § 13, eff. Sept. 1, 2017.)
§ 1205. 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; and
(3) the ticket denomination and serial numbers of tickets for each box.
(c) Records and reports filed under this section shall be designated confidential unless,
under State or federal law or regulation, the record or information may be disclosed
to specifically designated persons.
(d) Notwithstanding subsection (c) of this section, the Commissioner of Liquor and Lottery
shall provide the records and reports filed under this section to the Attorney General,
upon request. (Added 2017, No. 73, § 13, eff. Sept. 1, 2017; amended 2019, No. 73, § 39.)
§ 1206. Enforcement
(a) Any person who intentionally violates section 1203 of this chapter shall be fined
not more than $500.00.
(b) Any person who intentionally violates section 1202, 1204, or 1205 of this chapter
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 2017, No. 73, § 13, eff. Sept. 1, 2017.)
§ 1207. Appeals
Any licensee aggrieved by an action taken under subsection 1206(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 3 V.S.A.
chapter 25 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 2017, No. 73, § 13, eff. Sept. 1, 2017.)
§ 1208. Rulemaking
The Department of Liquor and Lottery may regulate the licensing and reporting requirements
of manufacturers and distributors of break-open tickets under this chapter. The Commissioner
of Liquor and Lottery may adopt rules for licensure and indicia for boxes of break-open
tickets, for record keeping relating to the distribution and sale of break-open tickets,
and for the remittance of net proceeds from sales of break-open tickets to the intended
eligible charitable recipients. The rules shall permit no proceeds to be retained
by the operators of for-profit bars, except for:
(1) the actual cost of the break-open tickets;
(2) the prizes awarded; and
(3) any sales tax due on the sale of break-open tickets under 32 V.S.A. chapter 233. (Added 2017, No. 73, § 13, eff. Sept. 1, 2017; amended 2019, No. 73, § 40.)