SENATORS Blessing, Robert Gardner, Goodman, Fingerhut, DiDonato, Mallory

To amend sections 1309.109 and 3770.07 and to enact

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sections 3770.10 to 3770.16 of the Revised Code to

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permit the transfer of a lottery prize award upon

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the prior approval of a court, to establish

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procedures for application for such approval, and

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to require each transferee to obtain a certificate

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of registration from the Director of Commerce.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 1309.109 and 3770.07 be amended and	8
sections 3770.10, 3770.11, 3770.12, 3770.13, 3770.14, 3770.15,	9
and 3770.16 of the Revised Code be enacted to read as follows:	10

Sec. 1309.109.  (A) Except as otherwise provided in	11
divisions (C) and (D) of this section, this chapter applies to:	12

(1) A transaction, regardless of its form, that creates a	13
security interest in personal property or fixtures by contract;	14

(2) An agricultural lien;

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(3) A sale of accounts, chattel paper, payment intangibles,	16
or promissory notes;	17

(4) A consignment;

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(5) A security interest arising under section 1302.42,	19
1302.49, division (C) of section 1302.85, or division (E) of	20
section 1310.54 of the Revised Code, as provided in section	21
1309.110 of the Revised Code; and	22

(6) A security interest arising under section 1304.20 or	23
1305.18 of the Revised Code.	24

(B) The application of this chapter to a security interest	25
in a secured obligation is not affected by the fact that the	26
obligation is itself secured by a transaction or interest to which	27
this chapter does not apply.	28

(C) This chapter does not apply to the extent that:

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(1) A statute, regulation, or treaty of the United States	30
preempts this chapter; or	31

(2) The rights of a transferee beneficiary or nominated	32
person under a letter of credit are independent and superior under	33
section 1305.13 of the Revised Code.	34

(D) This chapter does not apply to:

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(1) A landlord's lien, other than an agricultural lien;

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(2)(a) A lien, not enumerated in division (D)(2) of this	37
section and other than an agricultural lien, given by statute or	38
other rule of law for services or materials, including any lien	39
created under any provision of Chapter 926., sections 1311.55 to	40
1311.57, sections 1311.71 to 1311.80, section 1701.66, or Chapter	41
4585. of the Revised Code;	42

(b) Notwithstanding division (D)(2)(a) of this section,	43
section 1309.333 of the Revised Code applies with respect to	44
priority of the lien.	45

(3) An assignment of a claim for wages, salary, or other	46
compensation of an employee;	47

(4) A sale of accounts, chattel paper, payment intangibles,	48
or promissory notes as part of a sale of the business out of which	49
they arose;	50

(5) An assignment of accounts, chattel paper, payment	51
intangibles, or promissory notes that is for the purpose of	52
collection only;	53

(6) An assignment of a right to payment under a contract to	54
an assignee that is also obligated to perform under the contract;	55

(7) An assignment of a single account, payment intangible,	56
or promissory note to an assignee in full or partial satisfaction	57
of a preexisting indebtedness;	58

(8) A transfer of an interest in or an assignment of a claim	59
under a policy of insurance, other than an assignment by or to a	60
health-care provider of a health-care-insurance receivable and any	61
subsequent assignment of the right to payment, but sections	62
1309.315 and 1309.322 of the Revised Code apply with respect to	63
proceeds and priorities in proceeds;	64

(9) An assignment of a right represented by a judgment,	65
other than a judgment taken on a right to payment that was	66
collateral;	67

(10) A right of recoupment or set-off, but:

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(a) Section 1309.340 of the Revised Code applies with	69
respect to the effectiveness of rights of recoupment or set-off	70
against deposit accounts; and	71

(b) Section 1309.404 of the Revised Code applies with	72
respect to defenses or claims of an account debtor.	73

(11) The creation or transfer of an interest in or lien on	74
real property, including a lease or rents under a lease, except to	75
the extent that provision is made for:	76

(a) Liens on real property in sections 1309.203 and 1309.308	77
of the Revised Code;	78

(b) Fixtures in section 1309.334 of the Revised Code;

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(c) Fixture filings in sections 1309.501, 1309.502,	80
1309.512, 1309.516, and 1309.519 of the Revised Code; and	81

(d) Security agreements covering personal and real property	82
in section 1309.604 of the Revised Code.	83

(12) An assignment of a claim arising in tort, other than a	84
commercial tort claim, but sections 1309.315 and 1309.322 of the	85
Revised Code apply with respect to proceeds and priorities in	86
proceeds;	87

(13) An assignment of a deposit account in a consumer	88
transaction, but sections 1309.315 and 1309.322 of the Revised	89
Code apply with respect to proceeds and priorities in proceeds; or	90

(14) A transfer by a government, state, or governmental unit.

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(E) The granting of a security interest in all or any part	92
of a lottery prize award by a prize winner for consideration is	93
also subject to sections 3770.10 to 3770.16 of the Revised Code.	94

Sec. 3770.07.  (A)(1) Lottery prize awards shall be claimed	95
by the holder of the winning lottery ticket, or by the executor or	96
administrator, or the trustee of a trust, of the estate of a	97
deceased holder of a winning ticket, in a manner to be determined	98
by the state lottery commission, within one hundred eighty days	99
after the date on which such prize award was announced if the	100
lottery game is an on-line game, and within one hundred eighty	101
days after the close of the game if the lottery game is an instant	102
game. Except as otherwise provided in division (B) of this	103
section, if no valid claim to the prize award is made within the	104
prescribed period, the prize money or the cost of goods and	105
services awarded as prizes, or if such goods or services are	106
resold by the commission, the proceeds from such sale, shall be	107
returned to the state lottery fund and distributed in accordance	108
with section 3770.06 of the Revised Code.	109

(2) If a person entitled to a prize award is under eighteen	110
years of age, or is under some other legal disability, and the	111
prize money or the cost of goods or services awarded as a prize	112
exceeds one thousand dollars, the director shall order that	113
payment be made to the order of the legal guardian of such winning	114
ticket holder. If the amount of the prize money or the cost of	115
goods or services awarded as a prize is one thousand dollars or	116
less, the director may order that payment be made to the order of	117
the adult member, if any, of such winning ticket holder's family	118
legally responsible for the care of such winning person.	119

(3) No right of any person to a prize award shall be the	120
subject of a security interest or used as collateral, except as	121
provided in sections 3770.10 to 3770.14 of the Revised Code.	122

(4) No right of any person to a prize award shall be	123
assignable, or subject to garnishment, attachment, execution,	124
withholding, or deduction, except as follows: as provided in	125
sections 3119.80, 3119.81, 3121.02, 3121.03, and 3123.06 of the	126
Revised Code; when the payment is to be made to the executor or	127
administrator or the trustee of a trust of the estate of a winning	128
ticket holder; when the award of a prize is disputed, any person	129
may be awarded a prize award to which another has claimed title,	130
pursuant to the order of a court of competent jurisdiction; or	131
when the director is to make a payment pursuant to section	132
3770.071 of the Revised Code; or as provided in sections 3770.10	133
to 3770.14 of the Revised Code.	134

The commission shall adopt rules pursuant to section 3770.03	135
of the Revised Code concerning the payment of prize awards upon	136
the death of a prize winner. Upon the death of a prize winner,	137
the remainder of the prize winner's prize award, to the extent it	138
is not subject to a transfer agreement under sections 3770.10 to	139
3770.14 of the Revised Code, may be paid to the executor,	140
administrator, or trustee in the form of a discounted lump sum	141
cash settlement.	142

(5) No lottery prize award shall be awarded to or for any	143
officer or employee of the state lottery commission, any officer	144
or employee of the auditor of state actively coordinating and	145
certifying commission drawings, or any blood relative or spouse of	146
such officer or employee of the commission or auditor of state	147
living as a member of such officer's or employee's household, nor	148
shall any such employee, blood relative, or spouse attempt to	149
claim a lottery prize award.	150

(6) The director may prohibit vendors to the commission and	151
their employees from being awarded a lottery prize award.	152

(7) Upon the payment of prize awards pursuant to this	153
section the director and the commission are discharged from all	154
further liability therefor.	155

(B) The commission may adopt rules governing the	156
disbursement of unclaimed prize awards as all or part of the prize	157
award in a lottery and may, pursuant to those rules, conduct the	158
lottery and disburse any such unclaimed prize awards. Any lottery	159
in which all or any part of the prize award is paid from unclaimed	160
prize awards shall be conducted in accordance with all of the	161
other requirements of this chapter, including, but not limited to,	162
the time and proof requirements for claiming awards and the	163
disposition of unclaimed prize awards when the prescribed period	164
for claiming the award has passed. A prize award or any part of a	165
prize award that is paid from an unclaimed prize award shall not	166
be reapplied toward the satisfaction of the requirement of	167
division (A) of section 3770.06 of the Revised Code that at least	168
fifty per cent of the total revenues from ticket sales be	169
disbursed for monetary prize awards, if such unclaimed prize award	170
was previously applied toward the satisfaction of that	171
requirement. On or before the last day of January and July each	172
year, the commission shall report to the general assembly the	173
gross sales and net profits the commission obtained from the	174
unclaimed prize awards in lotteries conducted pursuant to this	175
division during the preceding two calendar quarters, including the	176
amount of money produced by the games funded by the unclaimed	177
prize awards and the total revenue accruing to the state from the	178
prize award lotteries conducted pursuant to this division.	179

There is hereby established in the state treasury the	180
unclaimed lottery prizes fund, to which all unclaimed prize awards	181
shall be transferred. Any interest whichthat accrues on the	182
amounts in the fund shall become a part of the fund and shall be	183
subject to any rules adopted by the commission governing the	184
disbursement of unclaimed prize awards.	185

Sec. 3770.10.  As used in sections 3770.10 to 3770.16 of the	186
Revised Code:	187

(A) "Court of competent jurisdiction" means the court of	188
common pleas of Franklin county, the court of common pleas of the	189
county in which the prize winner resides, or a federal court	190
having jurisdiction over the lottery prize award.	191

(B) "Discounted present value" means the present value of	192
the future payments of a lottery prize award that is determined by	193
discounting those payments to the present, using the most recently	194
published applicable federal rate for determining the present	195
value of an annuity as issued by the United States internal	196
revenue service and assuming daily compounding.	197

(C) "Independent professional advice" means the advice of an	198
attorney, a certified public accountant, an actuary, or any other	199
licensed professional adviser if all of the following apply:	200

(1) The prize winner has engaged the services of the	201
licensed professional adviser to render advice concerning the	202
legal and other implications of a transfer of the lottery prize	203
award.	204

(2) The licensed professional adviser is not affiliated in	205
any manner with or compensated in any manner by the transferee of	206
the lottery prize award.	207

(3) The compensation of the licensed professional adviser is	208
not affected by whether or not a transfer of a lottery prize award	209
occurs.	210

(D) "Prize winner" means any person that holds the right to	211
receive all or any part of a lottery prize award.	212

(E) "Transfer" means a grant of a security interest in, or a	213
sale, assignment, pledge, hypothecation, or any other form of	214
alienation or encumbrance of, all or any part of a lottery prize	215
award by a prize winner for consideration.	216

(F) "Transfer agreement" means the agreement that provides	217
for the transfer of all or any part of a lottery prize award	218
from a prize winner to a transferee.	219

(G) "Transferee" means a party acquiring or proposing to	220
acquire all or any part of a lottery prize award through a	221
transfer.	222

Sec. 3770.11. Prior to the date on which a prize winner	224
becomes obligated under a transfer agreement, the transferee shall	225
provide to the prize winner a disclosure statement, in boldface	226
type of the minimum size of fourteen points, setting forth all of	227
the following:	228

(A) The amounts and due dates of the lottery prize award	229
payments that would be transferred under the transfer agreement;	230

(B) The aggregate amount of the lottery prize award payments	231
described in division (A) of this section;	232

(C) The discounted present value of the lottery prize award	233
payments described in division (A) of this section, calculated as	234
of the date the disclosure statement is provided to the prize	235
winner, and the amount of the applicable federal rate used in	236
determining the discounted present value;	237

(D) The gross amount payable to the prize winner in exchange	238
for or as consideration for the transfer of the lottery prize	239
award payments described in division (A) of this section;	240

(E) An itemized listing of all brokers' commissions, service	241
charges, application fees, processing fees, closing costs, filing	242
fees, administrative fees, legal fees, notary fees, and other	243
commissions, fees, costs, expenses, and charges payable by the	244
prize winner or deductible from the gross amount otherwise payable	245
to the prize winner as described in division (D) of this section;	246

(F) The net amount payable to the prize winner after	247
deduction from the gross amount payable to the prize winner as	248
described in division (D) of this section of all commissions,	249
fees, costs, expenses, and charges described in division (E) of	250
this section;	251

(G) The quotient, expressed as a percentage, obtained by	252
dividing the net amount payable to the prize winner as described	253
in division (F) of this section by the discounted present value of	254
the payments described in division (C) of this section.	255

Sec. 3770.12.  A court of competent jurisdiction may approve	257
a transfer of a lottery prize award only in a final order that is	258
based on the express findings of the court, and the express	259
findings shall include all of the following:	260

(A) The transferee has provided to the prize winner a	261
disclosure statement that complies with section 3770.11 of the	262
Revised Code, and the prize winner has confirmed the prize	263
winner's receipt of the disclosure statement, as evidenced by the	264
prize winner's notarized signature on a copy of the disclosure	265
statement.	266

(B) The prize winner has established that the transfer is	267
fair and reasonable and in the best interests of the prize winner.	268

(C) The prize winner has received independent professional	269
advice regarding the legal and other implications of the transfer.	270

(D) The transferee has given written notice of the	271
transferee's name, address, and taxpayer identification number to	272
the state lottery commission and has filed a copy of that notice	273
with the court in which the application for approval of the	274
transfer was filed.	275

(E) The transferee holds a valid certificate of registration	276
issued under section 3770.15 of the Revised Code.	277

(F) The transfer complies with all applicable requirements	278
of the Revised Code and does not contravene any applicable law.	279

(G) The transfer does not include or cover the amounts of	280
the lottery prize award that are required to be withheld or	281
deducted pursuant to section 3119.80, 3119.81, 3121.02, 3121.03,	282
3123.06, 3770.071, or 3770.072 of the Revised Code.	283

(H) Any amounts described in division (G) of this section	284
that are required to be withheld or deducted, as of the date of	285
the court order, will be offset by the commission first against	286
remaining payments due the prize winner and then against payments	287
due the transferee.	288

Sec. 3770.13.  (A) A person shall file an application under	290
sections 3770.10 to 3770.14 of the Revised Code for the approval	291
in advance of a transfer of a lottery prize award in a court of	292
competent jurisdiction.	293

(B) The following procedures shall apply to an application	294
for the approval in advance by a court of a transfer of a lottery	295
prize award under division (A) of this section:	296

(1) Upon the filing of the application, the court shall set	297
a date and time for a hearing on the application and shall notify	298
the transferee of the date, time, and place of the hearing.	299

(2) Not less than fourteen days prior to the date set by the	300
court for the hearing on an application filed pursuant to this	301
section, the transferee shall file with the court and shall serve	302
on the court and on the state lottery commission, in the manner	303
prescribed in the Rules of Civil Procedure for the service of	304
process, a notice of the proposed transfer and the application for	305
its approval in advance. The notice shall include all of the	306
following:	307

(a) A copy of the application;

308

(b) A copy of the transfer agreement;

309

(c) A copy of the disclosure statement provided by the	310
transferee pursuant to section 3770.11 of the Revised Code and	311
signed by the prize winner pursuant to division (A) of section	312
3770.12 of the Revised Code;	313

(d) Notification of the date, time, and place of the hearing	314
on the application.	315

(3) The commission shall not be required to appear in or be	316
named as a party to a hearing on the application, but may	317
intervene as of right in the proceeding.	318

(4) At the conclusion of the hearing on an application under	319
this section, the court may grant or deny the approval of the	320
transfer. The court shall enter its order accordingly. If the	321
court grants the approval of the transfer, it shall include in its	322
order all of the express findings specified in section 3770.12 of	323
the Revised Code. If the court denies the approval of the	324
transfer, it shall include in its order the reasons for the	325
denial.	326

(5) An order of the court made under division (B)(4) of this	327
section is a final and appealable order.	328

Sec. 3770.14. (A) Upon receipt of a court order issued under	330
section 3770.12 of the Revised Code, the transferee shall provide	331
a certified copy of the court order to the director of the state	332
lottery commission. Not later than ten days after receipt of the	333
certified copy of the court order, the director shall acknowledge	334
to the transferee in writing the commission's intent to comply	335
with the court order in making future payments.	336

(B) The director shall make payments of the lottery prize	337
award in accordance with the terms specified in the certified copy	338
of the court order. The director may charge a processing fee, in	339
an amount determined by the commission by rule pursuant to section	340
3770.03 of the Revised Code, to cover any direct or indirect costs	341
associated with making the prize award payments in accordance with	342
the terms specified in the certified copy of the court order.	343

(C) Upon payment of the lottery prize award pursuant to	344
this section, the director and the commission are discharged from	345
all further liability therefor.	346

Sec. 3770.15. (A) Before a transferee may enter into a	347
transfer agreement with a prize winner for the transfer of all or	348
any part of a lottery prize award, the transferee shall submit an	349
application for a certificate of registration, along with a	350
registration fee of five hundred dollars, to the director of	351
commerce. The application shall be on a form prescribed by the	352
director and shall set forth all of the following:	353

(1) The name and business address of the transferee and any	354
of the following that applies:	355

(a) If the transferee is a general partnership, the names	356
and residence addresses of all of the partners;	357

(b) If the transferee is a limited partnership that existed	358
prior to July 1, 1994, and that has not registered with the	359
secretary of state pursuant to Chapter 1782. of the Revised Code,	360
the name of the Ohio county in which its certificate of limited	361
partnership or application for registration as a foreign limited	362
partnership is filed;	363

(c) If the transferee is a limited partnership to which	364
division (A)(1)(b) of this section does not apply, or is a	365
corporation, professional association, limited liability company,	366
or other entity, the form of the entity and the state under the	367
laws of which it was formed.	368

(2) The general nature of the business conducted by the	369
transferee;	370

(3) The length of time the transferee has conducted that	371
business;	372

(4) The signature of the transferee or of an authorized	373
representative of the transferee.	374

(B) Upon compliance with division (A) of this section, the	375
director shall issue a certificate of registration to the	376
transferee. Each certificate shall remain in force for two years	377
from the date of issuance. After that time, a renewal certificate	378
may be issued upon compliance with division (A) of this section.	379

(C) Fees collected under this section shall be paid into the	380
state treasury to the credit of the division of administration	381
fund created under section 121.08 of the Revised Code.	382

Sec. 3770.16. The transfer of all or any part of a lottery	383
prize award under sections 3770.10 to 3770.14 of the Revised Code	384
is also subject to the applicable provisions of Chapter 1309. of	385
the Revised Code.	386

Section 2. That existing sections 1309.109 and 3770.07 of the	387
Revised Code are hereby repealed.	388