THE KERALA STATE LOTTERIES AND ON-LINE LOTTERIES (REGULATION) RULES, 2003

[1][THE KERALA STATE LOTTERIES AND ON-LINE LOTTERIES (REGULATION) RULES, 2003

PREAMBLE

In exercise of the powers conferred by sub-sections (1) and (2) of section 12 of the Lotteries (Regulation) Act, 1998 (17 of 1998), the Government of Kerala hereby make the following rules, namely:-

Rules

Rule - 1. Short title, application and commencement.

(1)     These rules may be called the Kerala State Lotteries and on-line Lotteries (Regulation) Rules, 2003.

(2)     These rules shall apply to the whole of State of Kerala.

(3)     They shall come into force at once.

Rule - 2. Definitions.

In these rules, unless the context otherwise requires.-

(1)     'Act' means the Lotteries (Regulation) Act, 1998.(Central Act 17 of 1998);

(2)     'Agent' means an individual, partnership or body corporate with a legal identity under any Act of the State or Central Government with whom there is an Agency agreement for the sale of lottery tickets of the State and includes Registered Agents, Bulk agents. Stockist, Sole Selling Agent appointed to conduct On-line/Lottery in the state;

(3)     'Agency agreement' means an agreement executed between the Government and the Agent with reference to the sale of Kerala State Lottery tickets;

(4)     'Agency Commission' means any amount or percentage agreed to be paid as agency commission to an agent appointed under the rules;

(5)     'Agency Fee' or 'licensing fee' means any amount or percentage payable by the agent to the State for grant of privilege of agent

(6)     'Agents claims' means claim due to the agents such as commission on sale of tickets, agents prize, common incentive etc.

(7)     'Assessing Authority' means an officer authorized by the Commissioner of Commercial Tax, to make assessment under the Kerala General Sales Tax Act 1963 (15 of 1963);

(8)     'Authority' means the Director of State Lottery and includes any other Authority appointed under rule 3 to organise State Lottery and regulate the sale of other State Lotteries within the State;

(9)     'Bank guarantee' means a guarantee issued by a Nationalised or Scheduled Bank to the Authority, on behalf of the agent as security for sale of Kerala State Lottery tickets;

(10)   'Central Computer Server' means a server class Computer at a Central location under the direct control of the Authority that accepts, processes, stores and validates the on-line lottery transactions and otherwise manages, monitors and controls the entire system of on-line lottery;

(11)   'Draw' means any method by which the prize winning number or numbers are drawn for each lottery, by operation of the draw machine or any other mechanical/electronics method which generates numbers on a random methodology, and where the operation of the randomness is visibly transparent to the viewers;

(12)   'Enforcement Agency' means the District Collector or District Superintendent of Police, Commissioner of Police, Commissioner Commercial Taxes Department and includes any other officer authorised by the Government or the officer mentioned hereinbefore, and they shall exercise powers of enforcement as specified in these rules;

(13)   'Form' means the forms prescribed and appended to these rules;

(14)   'Government' means the Government of Kerala;

(15)   'Lottery terminal' means a terminal connected to the Central Computer Server in possession with the Authority, through which lottery Tickets will be sold in retail;

(16)   'On-line Lottery' means a system created to permit players to purchase Lottery Tickets at the Lottery terminals, where the information about the sale of a ticket and the player's choice of any particular number or combination of numbers etc is simultaneously registered with the Central Computer Server, The system assigns a unique number to each ticket and also verifies the validity of the winning Tickets;

(17)   'Other State' means a State other than State of Kerala and includes any union territory or any other Country having bilateral agreement or treaty with Government of India; .

(18)   'Other State Lottery' means the lottery tickets released by other states, which are sold inside the State of Kerala;

(19)   'Prize payout' means and includes the prize payable to the prize winners;

(20)   "Purchase Advance' means the amount required to be paid in advance by the Agent before lifting the tickets;

(21)   'Security deposit' means a deposit or amount, paid to the Authority by the agent in any form for the due fulfillment of the contract;

(22)   'Services' means the design and procurement, installation and commissioning; operating and maintaining; promotion and marketing; and any further activity required to be carried out for purpose of Online Lottery system;

(23)   'Software' means a set of instructions fixed or stored in any manner and used directly or indirectly in a computer for the purpose of Online Lottery;

(24)   'Sole Selling Agent' means an agent appointed by the Authority under sub rule (3) of Rule 10;

(25)   'Registered agents/bulk agent' means an agent appointed by the authority under rules 4(c) of Lottery Regulation Act 1998;

(26)   'State' means the State of Kerala;

(27)   'State Lottery' means the lottery conducted by the State Government and includes on-line lottery;

(28)   "State On-line Lottery' means On-line Lottery conducted by the State;

(29)   'Sub-agent'/'Retailer' means a person approved by the Authority on recommendation or otherwise of the Agent to operate the Lottery terminals and with whom the Agent (or any other person duly authorised by the Agent) has entered into a bilateral agreement to operate the Lottery terminals or sell Tickets.

(30)   'Ticket' means tickets of the State Lottery, bearing the imprint and logo of the Government of Kerala, which are issued by the Authority, on which prizes are given after conducting of draw;

(31)   'Tender Committee' means a Committee of Officers constituted by the Government under sub-rule (1) of Rule 8;

(32)   'Validation number' means the unique data printed on the ticket, which enables verification of the Tickets by the main computer server;

All words and expressions used in these rules but not defined herein shall have the meanings, respectively, assigned to them in the Act.

Rule - 3. Conduct of State Lottery.

(1)     The Director of State Lotteries or any Authority, specifically appointed by the Government for this purpose will be the Authority for the conduct of all or any particular lottery in the State. The authority shall implement the State Lottery according to the provisions of the Act and the rules made thereunder.

(2)     The Authority may appoint an agent or a number of agents to establish, conduct, and promote all or any of its lottery schemes and do all or any of the functions related to the conduct of a lottery, subject to the conditions mentioned in the Act and these rules.

(3)     The authority Shall also be vested with the powers to monitor the sale of lotteries of other States/Union territories or any country having bilateral agreement or treaty with the Government of India, in accordance with the provisions of the Act and the rules made thereunder.

Rule - 4. Organising and conducting State On Line Lottery.

(1)     The Government may, by a general or special order, decide to organise, conduct and promote its own On-line lottery,

(2)     The State On-line Lottery shall be named as Kerala State On-Line Lottery, with such-other sub names as may be decided the Authority.

(3)     The information regarding the On-line Lottery and the prizes shall be made available in the Government Gazette and shall be displayed on the website of the Government and at the retail outlets.

Rule - 5. Appointment of Agent for On Line Lottery.

(1)     The Government may appoint an exclusive Agent at any time authorising to establish, conduct and market the State On-line Lottery. The Government shall call for tenders giving due publicity in newspapers and follow an open tender process for the selection of such agent.

(2)     The Government may prescribe the qualification, experience and terms and condition applicable to the agents, which may include the following namely:-

(a)      the Agent must have sufficient knowledge/experience to conduct the On-line Lottery or have, unconstrained and continuous access there to, and should be able to conduct On-line Lottery strictly in accordance with the Act and the terms and conditions of the Agency Agreement entered into for the conduct of the On-line Lottery.

(b)      no political party in the State or political office bearer(s) shall have any direct financial interest in the applicant or be a shareholder of the applicant;

(c)      the Agent or in case the agent is a company, the Company as well as any of the Directors of the Company should not have been sentenced by any Court of competent jurisdiction for any offence with fine exceeding ten thousand rupees or with imprisonment exceeding six months or both at any time during the preceding seven years;

(d)      the Agent should not have been blacklisted, by any Government in or outside India;

(e)      the Agent if a company should be an Indian Company and should be incorporated and registered in India under the Companies Act, 1956 (Central Act 1 of 1956);

(f)       if the Agent is a company, the Company as well as any of the Directors of the Company should not have been declared insolvent during the last seven years from the date of application;

(g)      the Agency Agreement shall be in writing and shall specify the conditions attached to it and shall be granted for an initial period of seven years:

Provided that the Government, after examining the merits of the case, may at the option of the Government, extend the Agency for a further period not exceeding five years:

Provided further that the Agent shall have no rights or legitimate expectation in respect of an extension of the period of validity of the agency other than the rights afforded by this sub rule and the Authority shall have the right to modify the terms and conditions of the Agreement during such period so extended;

(h)     the Agency Agreement between Government and the Agent shall specify the apportionment of the total revenues accruing from the sale of lottery Tickets;

(i)       The Prize Payout ratio under the agreement shall not be for less than 45% of the total revenue from sale of tickets;

(j)       the Agency commission, which is intended to cover all the costs incurred in the operation and promotion of the lottery, including that resulting from any contract or contracts entered into for promotional, advertising or operational services or for the purchase or lease of lottery equipment and materials; will not be more than 25% of the total revenue from sale of tickets in any year. If the expenses are more than the said limit, it will have to be borne by the Agent company;

(k)      the Agency Fee or License Fee, by whatever name it is called, to be paid to the Government by the Agent for the grant of the privilege to conduct the State's On-line lottery, shall not be less than 25% of the total revenue from the sale of tickets every year;

(l)       besides other conditions to safeguard the interest of the Government, the Agreement shall provide for a certain minimum guaranteed return to the State by the Agent, which the Agent will be bound to pay, irrespective of whether the sales of lottery tickets generates that income or not;

(m)    the agent shall also provide security in the form of Cash, Demand Draft or Bank Guarantee covering at least three months' value of the minimum guaranteed returns to the State.

(3)     The conditions of Agency Agreement executed between the Government and the Agent shall, inter alia, require the agent:

(a)      to do such things in terms of the Agency Agreement including the transfer of the property or any right, excluding intellectual property rights or proprietary software, as the Government may require, upon the expiration of the Agency Agreement, and to do such things as may be required by the Government grant an agency to another body or person;

(b)      to obtain written approval of the Government before doing anything not specified in the Agency Agreement;-

(c)      to ensure that such requirements as the Government/Authority may from time to time determine or approve are complied with;

(d)      to provide to the Authority at times specified by it, with such information as it may require;

(e)      to allow the Authority or his representatives to take copies of any document of the Agent, including any information kept by the Agent relating to the State On-line Lottery or all other ancillary activities;

(f)       where such information is kept by means of a computer, to give the Authority such assistance as he may require to enable him to inspect and take copies of the information in a visible and legible form or to inspect and check the operation of any computer, and any associated apparatus or material, that is or has been in use in connection with the keeping of the information;

(g)      to obtain the approval of the Government for any lottery before that lottery is conducted under the Agency for the State On-line Lottery;

(h)     to allow the Authority or any officer authorised by the Government or Authority, to enter premises or facility belonging to or under control of the agent or a member of the management of the agent, or any Sub-agent or employee or contractor of the agent, or premises to which the agent has right of access at any reasonable time, if such entry is necessary for the protection of the integrity and the interest of the State On-line Lottery;

(i)       to examine or inspect anything, machine, document, account books or data captured in any form excluding proprietary software, found on or in the premises of the facility, and make copies of or make extracts from that thing machine document or data;

(j)       seize, for the purpose of further examination or securing information, any thing, machine, document or data, excluding proprietary software, on or in such premises or facility which has a bearing on the conduct of the State On-line Lottery;.

(k)      seal or otherwise secure any such premises, facility, thing or machine on or in which any document or data which has a bearing on the conduct of the State On-Line Lottery is stored or captured:

(l)       take such steps as may be necessary to protect the integrity and conduct of the State On-Line Lottery.

(4)     The agent shall satisfy any other relevant condition, deemed necesary by the Government and mentioned in the tender notification for appointment as agent.

(5)     The Government shall secure valid enforceable undertaking in writing from the Agent. The Agent shall not change the control of the Agency Agreement for the duration of the Agency Agreement. The Agent shall not transfer, cede or in any other way encumber the Agency Agreement to another person,

(6)     One month before the closure of the agency, the agent shall settle all the dues, if any, and the agent shall not have any right to seek for any waiver or any concession in respect of any of the conditions or the money payable, by him to the Government.

(7)     Under no circumstances the agent shall meddle with the system which is working for the performance of the On-line Lottery and if it is found that he has meddled with the recorded material or the stored system or any input, he shall be prosecuted,

(8)     Utmost integrity shall be maintained at all times by the agent in running the lottery,

(9)     The Government shall secure a valid and enforceable undertaking in writing from the agent that the agent shall not permit, require or compel any of its employee or sub-agents knowingly to sell the Ticket or to award or to pay, any prize to;

(a)      a director of the agent or director of a holding or share holder company of the agent, an employee, agent or consultant of the agent or a member employee of sub-agent of its board.

(b)      a person who prints or in any other way manufactures a ticket for the State On-Line Lottery or any of his employees.

(c)      a person who supplies, operates, maintains or repairs any computer or any other electronic device, or system, of any kind, or part thereof or software for those computers or devices in respect of the State On-line Lottery or any of his employees; or

(d)      a person who is responsible for the marketing and advertising in respect of the State On-line Lottery, or any of his Directors or employees, as the case may be.

(10)   The agent shall submit weekly financial statements to the Authority. The agent shall submit fortnightly reports and financial statements, as prescribed to the Authority and to the Government. The Government may under its discretion make these accounts available to other auditing bodies.

(11)   The Government may recover any of its dues from the agent, by encashing bank guarantees or as arrears of land revenue or by filing a civil suit or by any other method.

(12)   The agent shall not be entitled to any immunity by virtue of being an agent of the Government.

(13)   The Government may vary any condition in the Agency Agreement granted to the extent that the variation is provided for within the frame work of the Act or to the extent provided for in the Agency Agreement.

Rule - 6. Duties and Responsibilities of the On-line Lottery Agent.

(1)     The agent appointed shall prepare and submit detailed accounts of sale of tickets every day to the Authority in such form as may be specified by the Government. He shall also prepare and submit a statement showing the aggregate value of all tickets sold per draw before the draw is conducted.

(2)     The agent shall ensure that the terminals including all component parts and accessories used in the networks from retail outlet to control system are new at the time of installation.

(3)     The agent shall ensure that any data and information relating to Online Lottery cannot be accessed, read, Inserted, removed or altered by any unauthoried person. A logbook shall be maintained to prevent unauthorised infringement of the place where such system is installed.

(4)     The agent shall be responsible to protect the secrecy of the process of production and distribution of the lottery tickets and other items in On-line Lottery and for the safety of such materials and equipments that could be used to produce forged tickets.

(5)     The agent shall ensure the security and safety of the Central Computer System, equipment's data, ticket materials and other consumables used in production of tickets, the communication net work and retail terminal so as to prevent theft, fraud, misuse or total destruction from fire, accidents or such other natural disasters. He shall abide by any security measure that may be ordered by the Government in this behalf.

(6)     The agent shall ensure that the On-line Lottery tickets are not sold in 'Lottery Free Zone' States or Union Territories.

(7)     The agent shall not sell or allow other State Lotteries to be sold through the same terminals from which the tickets of Kerala State On-line Lottery are sold.

(8)     The agent shall provide adequate security management system to ensure that the On-line Lottery system provided by him accords clear confidence and provides adequate integrity aspects to the system.

(9)     The agent shall be directly responsible for the appointment of such persons as retailers/sub-agents who operate at Lottery terminals. However, the agent shall be required to obtain general approval of the Authority by ensuring that sub-agents/retailers satisfy the following qualifications/ requirements, namely:-

(a)      he must have completed eighteen years of age;

(b)      proof of credit worthiness should be furnished;

(c)      no due certificate from competent Authority of Sales Tax and Income Tax department should be obtained;

(d)      place of business should not be in near vicinity of educational institution, religious institution like temple, church, mosque and the like. Local sentiments shall be taken into consideration;

(e)      should not have been black listed by Government in the last three years.

(f)       individual should not have been convicted for any criminal offence during the last three years for any offence with imprisonment of six months or with fine of rupees five thousand only or with both;

(g)      the agent shall enter into bilateral agreements with their sub-agents/retailers to sell tickets and, such agreement shall specify:-

(i)       The manner and amount of compensation/commission if any, to be paid to these sub-agents/retailers necessary to provide for the adequate availability of Tickets, 

(ii)      Any other relevant details.

Rule - 7. Restrictions on Sale of On-line Lottery Tickets by Lottery Terminals.

Notwithstanding any other provision of law to the contrary, no On-line Lottery or type of lottery or any other lottery game shall be authorised or conducted which uses any video mechanical, electrical or other video device, contrivance or machine which, upon payment of any consideration whatsoever, is available to play or operate, the play or operation of which, whether by reason of the skill of the operator or application of the element of chance, or both, may deliver or entitle the person playing or operating the machine to receive cash, tokens to be exchanged for cash, or any other prize, whether the pay off is made automatically from the machine or in any other manner whatsoever.

Rule - 8. The Tender Committee.

(1)     The Government shall constitute a Tender Committee consisting of not less than five officers including the Chairman to finalise the process of conduct of bids for the selection of agent to conduct the On-line lottery of the State, whenever it is decided to have such lottery conducted through an agent. The committee shall have members representing Law, Taxes, Industries, Information Technology and Finance Department of the State, and one or more experts as the Government may deem fit.

(2)     the tender Committee shall be responsible for finalising the tender bidding process, analysing and short-listing the bidders when necessary, finalising the terms of agreement with such agent and for making recommendation to the Government for the appointment of agent for the conduct of On-line Lottery of the State.

Rule - 9. Qualifications and disqualifications for appointment as a Lottery Agent.

(1)     No person shall be appointed as a lottery agent unless he possesses the following qualifications:-

(a)      must be a citizen of India and

(b)      must have completed 18 years of age.

(2)     No person shall be appointed as a lottery agent, if he:

(a)      was sentenced by a Court with a fine exceeding five thousand rupees or with imprisonment exceeding six months or with both at any time during the preceding three years.

(b)      is an undischarged insolvent

(c)      is blacklisted by the Government for any breach of contract with the Government in the last five years.

Rule - 10. Appointment of Lottery Agents other than On-line Lottery.

(1)     Any person with qualifications as mentioned in sub rule 1 of rule 9 if interested in taking agency, shall apply in the prescribed form (Form No. 1) by remitting a registration fee of rupees four hundred in cash or by Demand Draft at the time of registration itself.

(2)     The appointment of agent, other than sole selling agents, shall be made by the Authority for one year on the basis of calendar year and shall be renewable by paying rupees hundred as agency renewal fee.

(3)     The Government may, in the interest of proper conduct and implementation of specified lotteries, decide to appoint a Sole Selling Agent, instead of appointing a number of agents, for specified areas, for a period exceeding one year. This Sole Selling Agent will have the authority to appoint sub-agents as per the agreement with the Government.

(4)     The sole selling agent shall have to enter into agreement in writing with the Government or the authority if so authorised by the Government, specifying the required terms and conditions.

(5)     The agency agreement executed between the Government and or authority and the sole selling shall, inter alia, provide for the following conditions:-

(a)      responsibility of the agent to seek approval of the appropriate Government and other authorities before doing anything not specified in the agreement.

(b)      to comply with the directions from Government in relation to the terms of the agreement.

(c)      for adequate security in the form of advance deposit of Cash, Demand Draft or Bank guarantee for the performance of the promises made by the agent as per the terms of the agency agreement.

(d)      the sole selling agent shall not be entitled to any immunity, by virtue of being an agent from the Government.

(e)      to provide for indemnification of the Government against all liabilities arising out of the conduct of the lottery by the agent, or otherwise by any other act in relation thereto.

(f)       authority to vary any condition in the agency agreement, and if the agent does not consent to the variation, the agent shall be given an opportunity to represent to the Government on the point of variation.

(g)      for the agent or the sole selling agent shall have no right to continue as such or to be appointed again after the expiry of the agency period or if the agency has been terminated.

(h)     the authority shall have the power to recover any sum due to the Government from the agent or the Sole Selling Agent, by forfeiting security deposit, and by collecting it as arrears of Land Revenue or by filing suit or by any other method.

Rule - 11. Duties and Responsibilities of the Lottery Agents.

The agent may sell lottery tickets through any number of dealers, sub agents, retailers appointed by him as per the terms of the agreements with the Government or the Authority as the case may be. The agent shall be responsible for the proper observation of the provisions in the Act and rules and of the terms and conditions imposed by the agreement executed by him for grant of agency. The agent or sole selling agent shall be ready with all particulars of the sub-sellers, in case any verification has to be made by the authority.

Rule - 12. Printing of Lottery Tickets.

(1)     All the State Lottery tickets shall bear the imprint and logo of the State Government in a clear and visual manner.

(2)     The lottery tickets, except in case of On-line Lottery, shall be printed by the Authority at Government Presses or at other high security presses approved by the Government. The On-line Lottery tickets can be printed, when authorised by the Government, at the point of sale terminals, as per the terms and conditions and specifications of the agreement under which such issue of tickets is authorised. All the Lottery tickets shall contain the signature of the Secretary to Government, Taxes Department, or any other officer of the State Government authorised for this purpose.

(3)     All the tickets should contain the number of lottery ticket, date of draw, series etc., on the front, and the terms and condition, prize structure etc. in English and/or in Malayalam, on the reverse.

(4)     The Authority shall be responsible for ensuring security in the printing of tickets. The Authority shall frequently inspect the place of printing either personally or through any one.

(5)     The agent shall purchase the tickets by remitting cash directly or by Money Order, Demand Draft or postal order and by exchange of prize won tickets. Cheques shall not be accepted. As for the case of tickets to be purchased by sole selling agent, the cost shall be remitted in advance by cash or by bank guarantee.

(6)     The agent/sole selling agent shall verify and ascertain that all tickets are free from defects. They shall not sell any defective ticket to the public. If any defective ticket happens to be sold, the agent/sole selling agent shall be held responsible and if any loss arises to Government on such issue, the amount due thereon shall be recovered from the agents/sole selling agents.

(7)     An On-line lottery ticket shall be issued from a Lottery terminal only after the Lottery number is selected by the player and is validated by a validation number given by the Central Computer server which is in possession of the Authority.

(8)     The form, size, model, colour and design of Tickets shall be distinct for each draw and series, and it shall be decided by the Authority.

(9)     The stationary on which the On-line lottery Tickets is issued shall be printed by the Authority from the Government Press or any private high Security Press under the panel of Reserve Bank of India/Indian Banks Association. Mumbai, by calling open Tender. The Agent shall pay the printing cost of the Tickets shall be paid to the Authority by the Agent in advance.

(10)   The Agent for the On-line lottery shall verify at the Office of the Directorate, Kerala State Lotteries whether all the ticket formats are correctly printed without any defect. If any defect is noticed he shall immediately bring the defect to the notice of the Director. The agent shall not sell any defective ticket to the public or on any format other than what is issued from the Authority. If it is found that the Agent is responsible for the sale of defective tickets, or on stationary other than what is provided by the Department, his Agency shall be terminated without any notice besides forfeiting his security deposits. If any loss arises to the Government the Authority shall recover from the Agent.

Rule - 13. Sale of Lottery Tickets (Other than On Line Lottery) to Lottery Agent.

(1)     Lottery tickets shall be sold to agents/sole selling agent appointed by the authority against full payment after adjusting a discount allowed at sources sales.

(2)     The Government will be at liberty to change the rate of discount and commission etc., to agents if found necessary.

(3)     The agents/sole selling agents should keep the full details of the tickets purchased by him and also the details of tickets issued to his sub agents. The sole selling agents shall be held personally responsible for any violation of rules by himself and by subagents.

(4)     The sole selling agents should intimate the authority sufficiently in advance, the number of tickets they intend to buy. If they fail to purchase the intended number, the difference amount between the intended number and actual purchase will be recovered from their purchase advance or security amount.

(5)     The sale of Kerala State Lottery tickets shall be done through the District Lottery Offices and through other state section in the Directorate of State Lotteries, following the terms and conditions meant for sale.

(6)     The tickets to sole selling agents shall be arranged through the Regional Deputy Directorate, Ernakulam by Exchange of tickets/payment in cash.

(7)     The sale proceeds of Kerala State Lotteries shall be credited to the general revenue of the State. The tickets once sold shall not be taken back at any cost.

(8)     the sole selling agents shall lift a specified number of tickets as agreed upon. If any lapse occur in the lifting of specified number of tickets, the loss thereon shall be made good from such sole selling agents.

(9)     The sole selling agent shall furnish a security deposit or bank guarantee, as may be specified by the authority.

Rule - 14. Depositing of the Sale proceeds of the Tickets.

(1)     The agent shall deposit the sale proceeds of the tickets, within a period of three days from the date of draw, with the Government Treasury or in designated Bank Account of the Government. In the case of Online Lottery, all the money realised from the sale of tickets after retention of the agency commission will be paid in the designated account of the Government on the ensuing day of the draw itself.

(2)     The authority may allow the agent to deposit the sale proceeds, net of any commission due to the agent and prize-money paid by the agent.

(3)     The Government may also, at its discretion, allow the agent to keep the account of prize money for a draw in an escrow account (special purpose) with the Bank from where the money can be drawn by the agent/Government only for the purpose of payment of prize money.

(4)     In case the deposit of dues to the Government as per the sub-rules (1), (2) and (3) above is delayed beyond seven days, the agent shall pay penalty at the rate of 2% per month for each day of such delayed deposit and shall also be liable to termination of such agency.

Rule - 15. Enforcement of Condition of agency Agreement.

(1)     If the Authority has reason to believe:-

(a)      that a person is likely to contravene a condition in the Agency Agreement and/or

(b)      that a person has contravened such a condition and there is a reasonable likelihood that the contravention will continue or to be repeated and/or

(c)      that a person has contravened such a condition and that the contravention can be remedied, the Authority may give direction to the agent prohibiting such contravention. If the agent persists in his action of contravention he will be given a notice for termination of the said Agency Agreement which after due procedure as required by laws and after giving due opportunity of being heard shall then be terminated.

(2)     The liability of the agent to pay any sum in terms of the Act or the rules made thereunder or the Agency Agreement pertaining thereto shall not be affected by the Agency Agreement ceasing to be valid for any reason and such sum may not be set off by the Agent against any amount due and payable.

(3)     However, notwithstanding anything done or any action taken under sub-rule (1), the authority may impose a compounding fee for the first contravention and any other subsequent contravention.

Rule - 16. Suspension of Agency Agreement.

(1)     The Authority may order suspension of the Agency Agreement as from the date of service of that notice for a period not more than thirty days if it has sufficient reasons to believe that the agent has breached any of such conditions of the agreement which makes his agency liable for termination, and continuing the agency will result in loss to the Government or amount to fraud to lottery playing public or for any pertinent reasons to be recorded in writing.

(2)     If the Authority suspends the Agency Agreement under sub-rule (1) it shall forthwith give due publicity to suspension of the Agency Agreement.

Rule - 17. Grounds for Termination of Agency.

(1)     The Government, on any of the following grounds, may terminate the agency agreement including that of an On-line Lottery.

(a)      If the agent is no longer fit to conduct the sale of Kerala State Lottery, as agreed in the agreement, because of insolvency or any other reason.

(b)      If any of the conditions contained in the Agency Agreement, has been contravened; or

(c)      If any of the information furnished is false,

(i)       in or in connection with the application for the appointment of Agent, 

(ii)      in connection with a condition in the Agency Agreement, 

(iii)     in respect of financial matters regarding the appointment of a Sole Selling Agent or an Agent for the On-line Lottery.

(d)      If the agent fails to take steps to prevent the commission of any fraud by him or his employees, retailers/sub-agents; representatives, suppliers or by any other participant in the Lottery system, including On-line Lottery, after having been alerted to or becoming aware of conditions conducive to the commission of fraud, or to instances of fraud or dishonesty; or

(e)      If the Agent or any of his employees, retailers, sub-agents, etc. prevent the Authority or other officers authorised by the Government or the authority from exercising any function entrusted to them by the Government by any general or special order;

(f)       If the agent is not able to execute the agreement within the prescribed time; or

(g)      If the agent fails to pay the required security amount within the prescribed time.

(h)     If the agent violates any of the conditions agreed to in the agency agreement

(i)       When the Government is satisfied, that it is not in the public interest to continue with the agency agreement; or

(j)       If any person who is managing the business or any part of the business of the agent or who is a supplier of goods or services to the agent is not a fit and proper person to do so, whether because of insolvency, liquidation, incarceration in a prison or other institution or for any other relevant reason, unless the agent immediately takes steps to effectively dissociate himself or itself from that person; or

(k)      If any person for whose benefit the agency has been acquired or who is a holding company of the agent or who in any other way controls the Agent, is not a fit and proper person to benefit from it, whether because of insolvency, liquidation, incarceration in a prison or other institution or for any other relevant reason; or

(l)       If the agent or any of its employees or retailers/sub-agents repeatedly and knowingly sell tickets or awards or pays prizes to any person in contravention of sub-rule (7) of Rule 5.

(m)    If application has been made to a High Court for the sequestration or liquidation, as the case may be, of the agent or of a person who in any way controls the agency;

(n)     For any other reasons mentioned in the agreement;

Rule - 18. Notice for termination of Agency Agreement.

If the Government or the Authority is satisfied that grounds exist for the termination of agency agreement, it shall issue notice to the agent stating the grounds and direct the agent to furnish reasons within 15 days (or such higher period as may be agreed to in the Agency Agreement), against such termination. If no reply is furnished or the reasons adduced are not found satisfactory, the agency agreement shall be terminated. The fact shall be intimated to the agent/sole selling agent forthwith by the Authority, and wide publicity should be given to the termination of agency, stating the grounds of termination and the date on which the termination shall take effect.

Rule - 19. Appeal against Termination of Agent.

(1)     Any agent other than Sole Selling Agent or an Agent for the On-line Lottery can appeal against the order of termination of the agency within 30 days of termination, by an application to the Director of State Lotteries.

(2)     The application against termination of a Sole Selling Agency and agency for an On-line Lottery shall be addressed to the Secretary to Government, Taxes Department within thirty days of the receipt of the termination order.

(3)     The Secretary, after examining all facts in details shall allow a hearing to the agent on a specified date.

(4)     After considering the grounds of appeal and further representations, if any received from the agent, the Government shall pass final orders in the matter.

Rule - 20. Review against Termination of Agency Agreement.

(1)     any person aggrieved by an order under rule 19 above may prefer an application to Government, against any order of the Director. The application shall be addressed to the Secretary to Government, stating the grounds for review, within thirty days from the receipt of termination order.

(2)     The Secretary to Government, after examining all the particulars shall hold a review, after allowing a specified date for appearance.

(3)     After considering the ground of review, and further representation received during the review Government shall pass final orders in the matter.

Rule - 21. Conduct of draw and Results.

(1)     The draw of State Lotteries shall be conducted at Thiruvananthapuram or at any other place in the State, recommended by the director and approved by Government.

(2)     The draw shall be conducted under the supervision of a panel of judges including a chairman recommended by the Director and approved by the Government.

(3)     The Chairman and panel members will consist of reputed and prominent persons representing all sections of the society.

(4)     The Director shall manage and supervise the whole draw system. In his/her absence the Director may authorise any one of his subordinates not below the rank of Deputy Director, for the conduct of the draw.

(5)     The draw shall be conducted with due diligence and care and it should be ensured that no mistake or deviation takes place in the process of the draw.

(6)     The Director shall conduct by the draw by operating the draw machine, or any other mechanical, electrical or electronic device which generates numbers in a total random fashion, in a manner that is fully transparent and visible to all observers.

(7)     The ordering or the sequencing of draws when multiple draws are required, re-drawing of numbers, when the scheme of the draw so demands, shall be done as per the pre-announced and transparent drawing procedure for each and every lottery scheme. The Director, or the authorised person shall be responsible for conducting the draws exactly as per the scheme and will be empowered to announce the result of the draw. The results of the draw shall also be arranged to be published in the newspapers, on the same or next day itself, and in the Government Gazette at the earliest.

(8)     Whenever possible, the conduct of draws, especially of the On-line Lottery shall be done in such a fashion that it is capable of being directly televised and shown live to the bulk of the Television viewers in the state. Failure, for any reason, of such live telecast, shall not render the draw illegal, if all other requirements are compiled with.

(9)     The Director shall have the power to postpone the draw on genuine grounds. However, the postponement and the postponed date, shall be given wide publicity.

Rule - 22. Price and Price Claims.

(1)     The Government shall guarantee the prize and prize amount of lotteries.

(2)     The payment of prize money may be in the form of Demand Draft/ Exchange of tickets/by cash as the may be after deducting the prescribed Agent's Commission and Income Tax etc.

(3)     The prize-winners may claim the prize amount either directly or by post or through Banks. Before making the claim the prize-winners should affix the name, address and signature on the reverse of the ticket.

(4)     All qlaims on prizes above five thousand rupees shall be presented to the Director of State Lotteries, within one month from the date of draw. Commission, bonus or incentive due to the agents, should be claimed within three months.

(5)     The District Lottery Officers are empowered to pay prizes upto the denomination of rupees five thousand. Claims above five thousand rupees will be entertained by the Director of State Lotteries.

(6)     The District Lottery Officers may condone delay on prize tickets up to ninety days from date of draw.

(7)     The Deputy Director at the Directorate of State Lotteries may entertain claims upto the denomination of rupees One lakh and the Director of State Lotteries will entertain claims beyond that.

(8)     The agent shall make payment of prizes upto the value of five thousand rupees to the prize-winners on behalf of the Government and collect prized tickets for seeking reimbursement from the Government. The reimbursement will be allowed if sought within a period of 120 days from the date of the draw and will be done by way of sale of fresh tickets/payment in cash.

(9)     No ticket shall be eligible for more than one prize in a draw. In any event of a ticket winning more than one prize in a draw, the ticket shall be eligible only for the highest prize awarded to it.

(10)   Income-Tax and surcharge will have to be deducted from the prize claims and remited to Income Tax Department, as per rules.

(11)   The prize won tickets shall be surrendered to the Directorate/District Lottery Offices, in good condition. Torn, tampered on mutilated tickets shall be rejected outright. In case of doubt on the genuineness of ticket the report of Forensic Science Laboratory shall be obtained and criminal action shall be initiated against those, who produce forged tickets.

(12)   The agents shall affix their seal on the reverse of the ticket before it is put to sale. They shall also take care to see that defective tickets are not sold. The agents concerned will be held responsible, if any defective ticket is sold in their agency.

(13)   Prizes, which are not claimed within a period of thirty days from the date of publication of the results, will not be disbursed and the prize-money of these tickets will become the property of the Government.

Provided that the Director may, up to a period of one hundred and eighty days after the draw, and the Government, up to a period of one year from a draw, allow the disbursement of the prize-money, if on an application by the prize-winner, the Director or the Government, as the case may be, is satisfied, for reasons to be recorded in writing, that there are cogent reasons for the delayed claim, it can be accepted.

Rule - 23. Checking of Prize Winning Tickets.

The Internal Audit Wing of the Directorate of State Lotteries will do the checking of prize won tickets. An Accounts Officer shall lead the Internal Audit Wing and two senior auditors deputed from Accountant General's Office and shall be under the control of the Finance Officer.

Rule - 24. Sale of other State On-line Lotteries and other Lottery tickets in Kerala.

(1)     Any other State or Union Territory or any Country having bilateral Agreement or treaty with Government of India organising, conducting or promoting Lottery as per section 4 of the Act, shall submit to Taxes Department, Government of Kerala through the Director of State Lotteries, the following documents and details before starting the sale through On-line Lottery/other Lotteries namely:-

(a)      the details as per section 4 of the Act.

(b)      copy of the rules, if any, made under section 12 of the Act.

(c)      Specimen ticket shall be submitted with name of the On-line Lottery/ other Lotteries and type of scheme, order of draws along with details of-the prize structure of every scheme and any subsequent addition or deletion to the scheme made from time to time.

(d)      details of the Agents, sub-agents or selling agents appointed for selling its Lottery tickets in the State and the cancellation and fresh appointment thereof.

(e)      details of methodology for conducting the draw by the concerned State Government/Country and details of Prize Winners of each scheme.

(f)       details of the designated Authority or body entrusted to conduct the lottery draw by the concerned State Government/Country.

(g)      details of the procedure for publishing the lottery results.

(h)     any other relevant information as directed by the authority so as to enable it to verify that the scheme is conducted as per the provisions of the Act.

(2)     In the absence of complete details the Authority may return the Scheme to the concerned State Government/Country, directing to furnish the complete details within a period of 15 days. The Authority shall verify all the details furnished and sent report to Secretary to Government. Taxes Department who shall assess the report independently taking into account various other information available with him from the Commercial Taxes Department, Police or any other source if any, and decide as to whether the scheme satisfies all the provisions of the Act and pass appropriate orders.

(3)     No lottery shall be marketed until appropriate orders under sub-rule (1) above are issued by the Secretary to Government, Taxes Department. Enforcement Agency may seize such Ticket marketed before passing any order in this regard.

(4)     The enforcement Agency may-

(a)      seize, for the purpose of further examination or securing information or investigation any lottery, thing, machine, document, account books or data excluding proprietary software, on or in such premises of facility which has bearing on conduct of On-line Lottery.

(b)      seal or otherwise secure any such premises; facility, thing or machine or in which any document or data which has bearing on the conduct of On-line Lottery is stored.

(c)      take such legal action as per the Act, which may be necessary to protect the integrity and conduct of On-line Lottery.

(5)     The Other States or Union Territories or any Country having bilateral Agreement or treaty with the Government of India while selling the Lottery Tickets in the State shall ensure the Following, namely,-

(a)      In Lottery tickets issued by the Government of other States, the name of the agents in any form or their logo shall not be printed.

(b)      The results of the prize Winners shall be announce by the Government of other States, which results alone shall be reproduced in the newspapers by the agent and the agents shall not publish the results on their own or in a form or method of their own.

(c)      The particulars of the prize winers shall be furnished every month to the Authority, after furnishing copy of the same to the Director of concerned State Lotteries.

(6)     Respective State Governments shall also obtain prior approval of the Authority for its sub-agents/retailers for point of sales in the State by furnishing all relevant details. Such sub-agents/retailers shall satisfy the following qualifications/requirements, namely,-

(a)      he must have completed eighteen years of age.

(b)      proof of credit worthiness should be furnished.

(c)      place of business should not be in the near vicinity of educational institutions/religious institutions like temple, church, mosque and the like.

(d)      place of business should be with the clear title on ownership or lease or rent.

(e)      Government of Kerala should not have been blacklisted him in the last three years.

(f)       Person should not have been convicted for any criminal offence in the last three years for any offence with imprisonment of six months or with fine of rupees five thousand only or with both.

(7)     If any other State On-line Lottery is approved by the Government for sale within the State, it shall require the respective State, their/agent or its sub-agent/retailer to allow the Authority or any Officer authorised by him or Enforcement Agency to,-

(a)      enter any premises or facility belonging to or under the control of the agent or a member of the management of the agent or any sub-agent/ retailer or employee of contractor of the agent or premises to which agent has a right of access, at any reasonable time, if such entry is necessary for the public interest or protection of the integrity and interest of the On-line Lottery.

(b)      examine or inspect anything; machine, document or data captured in any form excluding proprietary: software, found on or in the premises or facility and make copies of or make extracts from that thing, machine, document or date.

(c)      to take copies of any document, including any information kept by the agent or sub-agent or retailer relating to the On-line Lottery or all other ancillary activity within the State.

(d)      assist to inspect and take copies of the information in a visible and legible form from the Computer or to inspect and check the operation of any Computer, and any associated apparatus or materials, that is or has been in use in connection with the keeping of the information.

(8)     No other State selling their tickets in the State of Kerala shall use a name of prefix or suffix in the name of a Lottery (e.g. Kerala, name of the cities and town or any such other name which can be used as a prefix or suffix or otherwise) which could mislead people to believe that the said Lottery is organised, conducted or promoted by Government of Kerala and where the State Government is satisfied that such use is misleading or is likely to mislead people to believe that the lottery is run or conducted by the Government of Kerala, the Government may cause seizure of such Tickets within the State of Kerala through its enforcing Agency.

(9)     Any agent selling Lottery Tickets of any particular draw should have in possession a copy of the certificate issued by the Assessing Authority to the effect that the licensing fee in respect of the draw has been paid to the Government and they shall show it to the Enforcement Agency whenever it is demanded. On non production of such certificate, Enforcement Agency is empowered to seize such tickets.

(10)   Where the Government either suo-motu or on a complaint in that behalf are satisfied after verifying the necessary information that sale of tickets in the state of a lottery organised, conducted or promoted by any other State, is in contravention of the provisions of the Act or the rules made there under, it may temporarily suspend the sale of such tickets within the State, and report the matter to the Government of India seeking its final order in the matter under section 6 of the Act.

(11)   The un-sold tickets and un-used counterfoils of lottery tickets shall be disposed of, as per Government orders issued from time to time.

Rule - 25. Repeal and Savings.

(1)     The Kerala State Lottery Rules 1977 is hereby repealed: Provided that such repeal shall not affect

(a)      the previous operation of the said rules or anything done or suffered there under.

(b)      any right, privilege, obligation and liability required or incurred of the said rules.