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

To amend sections 1309.109 and 3770.07 and to enact

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sections 3770.10 to 3770.15 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 and to establish

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procedures for application for such approval.

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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	6
sections 3770.10, 3770.11, 3770.12, 3770.13, 3770.14, and 3770.15	7
of the Revised Code be enacted to read as follows:	8

Sec. 1309.109.  (A) Except as otherwise provided in	9
divisions (C) and (D) of this section, this chapter applies to:	10

(1) A transaction, regardless of its form, that creates a	11
security interest in personal property or fixtures by contract;	12

(2) An agricultural lien;

13

(3) A sale of accounts, chattel paper, payment intangibles,	14
or promissory notes;	15

(4) A consignment;

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(5) A security interest arising under section 1302.42,	17
1302.49, division (C) of section 1302.85, or division (E) of	18
section 1310.54 of the Revised Code, as provided in section	19
1309.110 of the Revised Code; and	20

(6) A security interest arising under section 1304.20 or	21
1305.18 of the Revised Code.	22

(B) The application of this chapter to a security interest	23
in a secured obligation is not affected by the fact that the	24
obligation is itself secured by a transaction or interest to which	25
this chapter does not apply.	26

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

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(1) A statute, regulation, or treaty of the United States	28
preempts this chapter; or	29

(2) The rights of a transferee beneficiary or nominated	30
person under a letter of credit are independent and superior under	31
section 1305.13 of the Revised Code.	32

(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	35
section and other than an agricultural lien, given by statute or	36
other rule of law for services or materials, including any lien	37
created under any provision of Chapter 926., sections 1311.55 to	38
1311.57, sections 1311.71 to 1311.80, section 1701.66, or Chapter	39
4585. of the Revised Code;	40

(b) Notwithstanding division (D)(2)(a) of this section,	41
section 1309.333 of the Revised Code applies with respect to	42
priority of the lien.	43

(3) An assignment of a claim for wages, salary, or other	44
compensation of an employee;	45

(4) A sale of accounts, chattel paper, payment intangibles,	46
or promissory notes as part of a sale of the business out of which	47
they arose;	48

(5) An assignment of accounts, chattel paper, payment	49
intangibles, or promissory notes that is for the purpose of	50
collection only;	51

(6) An assignment of a right to payment under a contract to	52
an assignee that is also obligated to perform under the contract;	53

(7) An assignment of a single account, payment intangible,	54
or promissory note to an assignee in full or partial satisfaction	55
of a preexisting indebtedness;	56

(8) A transfer of an interest in or an assignment of a claim	57
under a policy of insurance, other than an assignment by or to a	58
health-care provider of a health-care-insurance receivable and any	59
subsequent assignment of the right to payment, but sections	60
1309.315 and 1309.322 of the Revised Code apply with respect to	61
proceeds and priorities in proceeds;	62

(9) An assignment of a right represented by a judgment,	63
other than a judgment taken on a right to payment that was	64
collateral;	65

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

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(a) Section 1309.340 of the Revised Code applies with	67
respect to the effectiveness of rights of recoupment or set-off	68
against deposit accounts; and	69

(b) Section 1309.404 of the Revised Code applies with	70
respect to defenses or claims of an account debtor.	71

(11) The creation or transfer of an interest in or lien on	72
real property, including a lease or rents under a lease, except to	73
the extent that provision is made for:	74

(a) Liens on real property in sections 1309.203 and 1309.308	75
of the Revised Code;	76

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

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(c) Fixture filings in sections 1309.501, 1309.502,	78
1309.512, 1309.516, and 1309.519 of the Revised Code; and	79

(d) Security agreements covering personal and real property	80
in section 1309.604 of the Revised Code.	81

(12) An assignment of a claim arising in tort, other than a	82
commercial tort claim, but sections 1309.315 and 1309.322 of the	83
Revised Code apply with respect to proceeds and priorities in	84
proceeds;	85

(13) An assignment of a deposit account in a consumer	86
transaction, but sections 1309.315 and 1309.322 of the Revised	87
Code apply with respect to proceeds and priorities in proceeds; or	88

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

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(E) The sale, pledge, assignment, or granting of a security	90
interest in all or any part of a lottery prize award for	91
consideration is also subject to sections 3770.10 to 3770.15 of	92
the Revised Code.	93

Sec. 3770.07.  (A)(1) Lottery prize awards shall be claimed	94
by the holder of the winning lottery ticket, or by the executor or	95
administrator, or the trustee of a trust, of the estate of a	96
deceased holder of a winning ticket, in a manner to be determined	97
by the state lottery commission, within one hundred eighty days	98
after the date on which such prize award was announced if the	99
lottery game is an on-line game, and within one hundred eighty	100
days after the close of the game if the lottery game is an instant	101
game. Except as otherwise provided in division (B) of this	102
section, if no valid claim to the prize award is made within the	103
prescribed period, the prize money or the cost of goods and	104
services awarded as prizes, or if such goods or services are	105
resold by the commission, the proceeds from such sale, shall be	106
returned to the state lottery fund and distributed in accordance	107
with section 3770.06 of the Revised Code.	108

(2) If a person entitled to a prize award is under eighteen	109
years of age, or is under some other legal disability, and the	110
prize money or the cost of goods or services awarded as a prize	111
exceeds one thousand dollars, the director shall order that	112
payment be made to the order of the legal guardian of such winning	113
ticket holder. If the amount of the prize money or the cost of	114
goods or services awarded as a prize is one thousand dollars or	115
less, the director may order that payment be made to the order of	116
the adult member, if any, of such winning ticket holder's family	117
legally responsible for the care of such winning person.	118

(3) No right of any person to a prize award shall be the	119
subject of a security interest or used as collateral, except as	120
provided in sections 3770.10 to 3770.14 of the Revised Code.	121

(4)(a) No right of any person to a prize award shall be	122
assignable, or subject to garnishment, attachment, execution,	123
withholding, or deduction, except as follows: as provided in	124
sections 3119.80, 3119.81, 3121.02, 3121.03, and 3123.06 of the	125
Revised Code; when the payment is to be made to the executor or	126
administrator or the trustee of a trust of the estate of a winning	127
ticket holder; when the award of a prize is disputed, any person	128
may be awarded a prize award to which another has claimed title,	129
pursuant to the order of a court of competent jurisdiction; or	130
when the director is to make a payment pursuant to section	131
3770.071 of the Revised Code; or as provided in sections 3770.10	132
to 3770.14 of the Revised Code.	133

(b) The commission shall adopt rules pursuant to section	134
3770.03 of the Revised Code concerning the payment of prize awards	135
upon the death of a prize winner. Upon the death of a prize	136
winner, the remainder of the prize winner's prize award, to the	137
extent it is not subject to a transfer agreement under sections	138
3770.10 to 3770.14 of the Revised Code, may be paid to the	139
executor, administrator, or trustee in the form of a discounted	140
lump sum cash settlement.	141

(5) No lottery prize award shall be awarded to or for any	142
officer or employee of the state lottery commission, any officer	143
or employee of the auditor of state actively coordinating and	144
certifying commission drawings, or any blood relative or spouse of	145
such officer or employee of the commission or auditor of state	146
living as a member of such officer's or employee's household, nor	147
shall any such employee, blood relative, or spouse attempt to	148
claim a lottery prize award.	149

(6) The director may prohibit vendors to the commission and	150
their employees from being awarded a lottery prize award.	151

(7) Upon the payment of prize awards pursuant to this	152
section the director and the commission are discharged from all	153
further liability therefor.	154

(B) The commission may adopt rules governing the	155
disbursement of unclaimed prize awards as all or part of the prize	156
award in a lottery and may, pursuant to those rules, conduct the	157
lottery and disburse any such unclaimed prize awards. Any lottery	158
in which all or any part of the prize award is paid from unclaimed	159
prize awards shall be conducted in accordance with all of the	160
other requirements of this chapter, including, but not limited to,	161
the time and proof requirements for claiming awards and the	162
disposition of unclaimed prize awards when the prescribed period	163
for claiming the award has passed. A prize award or any part of a	164
prize award that is paid from an unclaimed prize award shall not	165
be reapplied toward the satisfaction of the requirement of	166
division (A) of section 3770.06 of the Revised Code that at least	167
fifty per cent of the total revenues from ticket sales be	168
disbursed for monetary prize awards, if such unclaimed prize award	169
was previously applied toward the satisfaction of that	170
requirement. On or before the last day of January and July each	171
year, the commission shall report to the general assembly the	172
gross sales and net profits the commission obtained from the	173
unclaimed prize awards in lotteries conducted pursuant to this	174
division during the preceding two calendar quarters, including the	175
amount of money produced by the games funded by the unclaimed	176
prize awards and the total revenue accruing to the state from the	177
prize award lotteries conducted pursuant to this division.	178

There is hereby established in the state treasury the	179
unclaimed lottery prizes fund, to which all unclaimed prize awards	180
shall be transferred. Any interest whichthat accrues on the	181
amounts in the fund shall become a part of the fund and shall be	182
subject to any rules adopted by the commission governing the	183
disbursement of unclaimed prize awards.	184

Sec. 3770.10.  As used in sections 3770.10 to 3770.15 of the	185
Revised Code:	186

(A) "Court of competent jurisdiction" means the probate	187
court of the county in which the prize winner resides, or, if the	188
prize winner is not a resident of this state, the probate court of	189
Franklin county or a federal court having jurisdiction over the	190
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 other than by	212
transfer, and includes a person who receives all or any portion of	213
the lottery prize award under division (A)(4)(b) of section	214
3770.07 of the Revised Code, as a result of the prize winner's	215
death.	216

(E) "Transfer" means a grant of a security interest in, or a	217
sale, assignment, pledge, hypothecation, or any other form of	218
alienation or encumbrance of, all or any part of a lottery prize	219
award for consideration.	220

(F) "Transfer agreement" means the agreement that provides	221
for the transfer of all or any part of a lottery prize award	222
from a transferor to a transferee.	223

(G) "Transferee" means a party acquiring or proposing to	224
acquire all or any part of a lottery prize award through a	225
transfer.	226

(H) "Transferor" means a prize winner or a grantee in an	227
earlier transfer whose interest is acquired by or is sought to be	228
acquired by a transferee through a transfer.	229

Sec. 3770.11. Prior to the date on which a transferor becomes	231
obligated under a transfer agreement, the transferee shall provide	232
to the transferor a disclosure statement, in boldface type of the	233
minimum size of fourteen points, setting forth all of the	234
following:	235

(A) The amounts and due dates of the lottery prize award	236
payments that would be transferred under the transfer agreement;	237

(B) The aggregate amount of the lottery prize award payments	238
described in division (A) of this section;	239

(C) The discounted present value of the lottery prize award	240
payments described in division (A) of this section, calculated as	241
of the date the disclosure statement is provided to the	242
transferor, and the amount of the applicable federal rate used in	243
determining the discounted present value;	244

(D) The gross amount payable to the transferor in exchange	245
for or as consideration for the transfer of the lottery prize	246
award payments described in division (A) of this section;	247

(E) An itemized listing of all brokers' commissions, service	248
charges, application fees, processing fees, closing costs, filing	249
fees, administrative fees, legal fees, notary fees, and other	250
commissions, fees, costs, expenses, and charges payable by the	251
transferor or deductible from the gross amount otherwise payable	252
to the transferor as described in division (D) of this section;	253

(F) The net amount payable to the transferor after deduction	254
from the gross amount payable to the transferor as described in	255
division (D) of this section of all commissions, fees, costs,	256
expenses, and charges described in division (E) of this section;	257

(G) The quotient, expressed as a percentage, obtained by	258
dividing the net amount payable to the transferor as described in	259
division (F) of this section by the discounted present value of	260
the payments described in division (C) of this section.	261

Sec. 3770.12.  A court of competent jurisdiction may approve	263
a transfer of a lottery prize award only in a final order that is	264
based on the express findings of the court, and the express	265
findings shall include all of the following:	266

(A) The transferee has provided to the transferor a	267
disclosure statement that complies with section 3770.11 of the	268
Revised Code, and the transferor has confirmed the transferor's	269
receipt of the disclosure statement, as evidenced by the	270
transferor's notarized signature on a copy of the disclosure	271
statement.	272

(B) If the transferor is a prize winner, the prize winner has	273
established that the transfer is fair and reasonable and in the	274
best interests of the prize winner.	275

(C) If the transferor is a prize winner, the prize winner	276
has received independent professional advice regarding the legal	277
and other implications of the transfer.	278

(D) The transferee has given written notice of the	279
transferee's name, address, and taxpayer identification number to	280
the state lottery commission and has filed a copy of that notice	281
with the court in which the application for approval of the	282
transfer was filed.	283

(E) The transferee is a trust, limited partnership, general	284
partnership, corporation, professional association, limited	285
liability company, or other entity that is qualified to do	286
business in this state and meets the registration requirements for	287
that type of entity under Title XVII of the Revised Code.	288

(F) The transfer complies with all applicable requirements	289
of the Revised Code and does not contravene any applicable law.	290

(G) The transfer does not include or cover the amounts of	291
the lottery prize award that are required to be withheld or	292
deducted pursuant to section 3119.80, 3119.81, 3121.02, 3121.03,	293
3123.06, 3770.071, or 3770.072 of the Revised Code.	294

(H) Any amounts described in division (G) of this section	295
that are required to be withheld or deducted, as of the date of	296
the court order, will be offset by the commission first against	297
remaining payments due the transferor and then against payments	298
due the transferee.	299

(I) Except as provided in divisions (G) and (H) of this	300
section, that the transferor's interest in each and all of the	301
future payments from a particular lottery prize award is to be	302
paid to a single transferee, or, if the payments from the lottery	303
prize award are divided between and among multiple transferees,	304
the state lottery commission has promulgated rules under section	305
3770.03 of the Revised Code permitting transfers to multiple	306
transferees, and the transfer is consistent with such rules.	307

Sec. 3770.13.  (A) A transferee shall file an application	309
under sections 3770.10 to 3770.14 of the Revised Code for the	310
approval in advance of a transfer of a lottery prize award in a	311
court of competent jurisdiction.	312

(B) The following procedures shall apply to an application	313
for the approval in advance by a court of a transfer of a lottery	314
prize award under division (A) of this section:	315

(1) Upon the filing of the application, the court shall set	316
a date, time, and place for a hearing on the application and shall	317
notify the transferee and transferor of the date, time, and place	318
of the hearing.	319

(2) Not less than fourteen days prior to the date set by the	320
court for the hearing on an application filed pursuant to this	321
section, the transferee shall file with the court and shall serve	322
on the court and on the state lottery commission, in the manner	323
prescribed in the Rules of Civil Procedure for the service of	324
process, a notice of the proposed transfer and the application for	325
its approval in advance. The notice shall include all of the	326
following:	327

(a) A copy of the application;

328

(b) A copy of the transfer agreement;

329

(c) A copy of the disclosure statement provided by the	330
transferee pursuant to section 3770.11 of the Revised Code and	331
signed by the transferor pursuant to division (A) of section	332
3770.12 of the Revised Code;	333

(d) Notification of the date, time, and place of the hearing	334
on the application.	335

(3) The commission shall not be required to appear in or be	336
named as a party to a hearing on the application, but may	337
intervene as of right in the proceeding.	338

(4) At the conclusion of the hearing on an application under	339
this section, the court may grant or deny the approval of the	340
transfer. The court shall enter its order accordingly. If the	341
court grants the approval of the transfer, it shall include in its	342
order all of the express findings specified in section 3770.12 of	343
the Revised Code. If the court denies the approval of the	344
transfer, it shall include in its order the reasons for the	345
denial.	346

(5) An order of the court made under division (B)(4) of this	347
section is a final and appealable order.	348

Sec. 3770.14. (A) Upon receipt of a court order issued under	350
section 3770.13 of the Revised Code, the transferee shall provide	351
a certified copy of the court order to the director of the state	352
lottery commission. Not later than ten days after receipt of the	353
certified copy of the court order, the director shall acknowledge	354
to the transferee in writing the commission's intent to comply	355
with the court order in making future payments.	356

(B) The director shall make payments of the lottery prize	357
award in accordance with the terms specified in the certified copy	358
of the court order. The director may charge a processing fee, in	359
an amount determined by the commission by rule pursuant to section	360
3770.03 of the Revised Code, to cover any direct or indirect costs	361
associated with making the prize award payments in accordance with	362
the terms specified in the certified copy of the court order.	363

(C) Upon payment of the lottery prize award pursuant to	364
this section, the director and the commission are discharged from	365
all further liability therefor.	366

Sec. 3770.15. The transfer of all or any part of a lottery	367
prize award under sections 3770.10 to 3770.14 of the Revised Code	368
is also subject to the applicable provisions of Chapter 1309. of	369
the Revised Code.	370

Section 2. That existing sections 1309.109 and 3770.07 of the	371
Revised Code are hereby repealed.	372