§ 4-30-9-10 — Bond or letter of credit; alternatives

(a) The commission may require each retailer
to post an appropriate bond or provide a letter of credit as determined
by the commission, using an insurance company acceptable to the
commission. The amount of the bond or letter of credit may not exceed
two (2) times the average lottery ticket sales of the retailer for the
period during which the retailer is required to remit lottery funds to the
commission. For the first ninety (90) days of sales for a new retailer,
the amount of the bond or letter of credit may not exceed two (2) times
the average estimated lottery ticket sales for the period during which
the retailer is required to remit lottery funds to the commission. This
subsection does not apply to lottery tickets that are prepaid by the
retailer.
(b) Instead of a bond or letter of credit, the commission may
purchase blanket bonds or a crime insurance policy endorsed to include
faithful performance covering all or selected retailers, or may allow a
retailer to deposit and maintain with the treasurer of state securities that
are interest bearing or accruing and that, with the exception of those
specified in subdivisions (1) and (2), are rated in one (1) of the four (4)
highest classifications by an established nationally recognized
investment rating service. Securities eligible under this subsection are
limited to the following:
(1) Certificates of deposit issued by solvent banks or savings
associations organized and existing under Indiana law or under
the laws of the United States and having their principal place of
business in Indiana.
(2) United States bonds, notes, and bills for which the full faith
and credit of the government of the United States is pledged for
the payment of principal and interest.
(3) General obligation bonds and notes of a political subdivision
of the state.
(4) Corporate bonds of a corporation that is not an affiliate or
subsidiary of the depositor.
These securities shall be held in trust and must have a market value at
least equal to an amount required by the commission.
(c) Instead of a bond, letter of credit, blanket bond, or crime
insurance policy endorsed to include faithful performance, the
commission may establish a self-insurance fund to provide protection
to the commission for a breach of contract by a retailer. The fund shall
be administered by the treasurer of state. The commission may charge
a fee to a retailer for deposit into the fund. The fee shall be reasonably
calculated to cover the cost of administering the fund, must be
reasonably proportionate to the risk of loss under the contract with the
retailer, as determined by the commission, and must be sufficient to
maintain an appropriate balance in the fund in the determination of the
commission. The expenses of administering the fund shall be paid from
the fund, from the collections of all claims against retailers for which
withdrawals had been made, and by the receipt of all interest and other
earnings of the insurance fund from any source. All fees, interest,
income, or other money or property paid to the fund is exempt from all
taxes imposed by the state or a political subdivision. All fees assessed
by the commission under this section shall be delivered to the treasurer
of state and shall be deposited into an investment account at the bank
providing depository services to the commission. Money in the fund at
the end of a state fiscal year does not revert to the state general fund,
and the money in the fund is continually appropriated to the
commission for the purposes specified in this section. Money in the
fund shall be paid to the commission by the treasurer of state in
reimbursement of monetary loss, costs, or expense, including attorney's
fees, incurred by the commission as a result of a breach of contract by
a retailer. The fees paid by retailers and the money reimbursed to the
commission by the treasurer of state under this section do not constitute
money received by the commission under IC 4-30-15-1.
(d) The commissioner of insurance shall prescribe the form of the
bonds or crime policies required by this section.

Legislative History

As added by P.L.341-1989(ss), SEC.1. Amended by P.L.32-1990, SEC.5; P.L.49-1995, SEC.2.