NOTICES
DEPARTMENT OF REVENUE
Retail Incentive Program and Related Retailer Incentive Programs for Fiscal Year 2018-2019; Amended Notice
[49 Pa.B. 1630]
[Saturday, March 30, 2019]Under the State Lottery Law (72 P.S. §§ 3761-101—3761-314) and 61 Pa. Code § 803.11 (relating to powers and duties of the Secretary of Revenue), and under Title 4, Amusements, (4 Pa.C.S. §§ 501—505) the Secretary of Revenue hereby provides public notice of changes to the Retail Incentive Program and related Retailer Incentive Programs that were published at 48 Pa.B. 3914 (June 30, 2018), and amended at 48 Pa.B. 6358 (September 29, 2018).
This notice describes the programs, incentives and bonuses (collectively referred to as ''the programs'') available to Retailers throughout fiscal year 2018-2019. The programs that are included in, or are related to, the Retail Incentive Program are set forth in this notice.
The Pennsylvania Lottery amends the notice to clarify which programs are specifically included in the Retail Incentive Program. The notice also clarifies how the Retail Incentive Program and the related Retailer Incentive Programs are funded. The substance and the requirements of the individual programs, including the Sales Growth Incentive Program as described in section 8, below, the Bonus Sales Growth Incentive Program, as described in section 9, below, and the Lottery Best Practices Initiatives as described in section 10 below, have not changed. The correct version of this document is as follows:
1. Effective Date: The Retail Incentive Program and related Retailer Incentive Programs described herein are effective as of the date of publication of this notice in the Pennsylvania Bulletin.
2. Purpose: The Pennsylvania Lottery (hereinafter referred to as ''Lottery''), hereby gives notice of the Retail Incentive Program, as provided for in 4 Pa.C.S. § 504, and of related Retailer Incentive Programs, as provided for in 61 Pa. Code § 803.11 (relating to the powers and duties of the Secretary of Revenue), 61 Pa. Code § 819.222(b) (relating to incentives for the sale of instant tickets), 61 Pa. Code § 875.17 (relating to the sale of terminal based tickets), 61 Pa. Code § 874.17 (relating to the sale of raffle lottery games) in order to detail programs planned by the Lottery for the Fiscal Year beginning July 1, 2018 and ending June 30, 2019. The Retail Incentive Program and the related Retailer Incentive Programs as described herein were developed to create a comprehensive compensation package for Lottery Retailers and reward them for helping the Lottery achieve its goals. Changes or additions to the Retail Incentive Program will be communicated through an amended notice published in the Pennsylvania Bulletin. Changes or additions to the related Retailer Incentive Programs as described herein will be communicated through the usual methods of communication.
3. Definitions:
(a) Agent or Lottery Sales Agent or Retailer: A person licensed under section 305 of the State Lottery Law. For the purposes of this notice each separate retail location with a separate Lottery license shall be considered a separate retailer in all respects.
(b) Fiscal Year: For the purposes of this notice only, the accounting year used by the Lottery beginning on July 1, 2018 and ending on June 30, 2019.
(c) Lottery or Pennsylvania Lottery: The Lottery established under the State Lottery Law.
(d) Traditional Lottery Products: For the purposes of this notice, traditional lottery products are limited to instant lottery games, terminal-based lottery games, Fast Play games, and raffle lottery games.
(e) Retailer in Good Standing: To be a Retailer in Good Standing, the Retailer must meet all of the following requirements:
(1) Must be an active Retailer, with an active sales terminal, permitted to sell Lottery tickets.
(2) Must not have had a Retailer license that is revoked for any reason, including non-payment of Lottery sales.
(3) Must have had fifty-two (52) consecutive settlement weeks prior to the determination of eligibility as described in section 6, below.
(4) The reference to fifty-two (52) consecutive settlement weeks herein does not require the Retailer to have had actual sales for 52 consecutive weeks as described in section 6, below.
(f) Secretary: The Secretary of Revenue of the Commonwealth.
(g) Standard Retailer Commission: The amount of compensation provided to Retailers for selling Lottery products, as set forth in the State Lottery Law and the corresponding regulations. The current commission is defined in 61 Pa. Code § 805.10 (relating to compensation).
(h) State Lottery Law: The Act of August 26, 1971 (P.L. 351, No. 91), known as the State Lottery Law (72 P.S. §§ 3761-101—3761-314).
(i) Quarter: A quarter is a period of time during the year which consists of three consecutive months and which are consistent with the descriptions below.
(1) First quarter is the period of time beginning on July 1 and ending on September 30.
(2) Second quarter is the period of time beginning on October 1 and ending on December 31.
(3) Third quarter is the period of time beginning on January 1 and ending on March 31.
(4) Fourth quarter is the period of time beginning on April 1 and ending on June 30.
4. Program Goals: The Lottery seeks to attain the following business goals through the operation of the Retail Incentive Program:
(a) Adoption of Lottery Best Practices: The Lottery has identified certain best practices as described in section 5, below, and desires to encourage the adoption of these best practices by all Retailers.
(b) Increasing Retailer Sales: Traditional Lottery Products can only be sold at physical, retail locations and the Lottery desires to award retailers who increase their sales for the benefit of older Pennsylvanians through the operation of the Retail Incentive Program.
(c) Supporting and Rewarding Retailers: The Lottery has undertaken to establish the Lottery Best Practices Initiatives as identified in section 10, below, in select retail locations throughout the Commonwealth that elect to do so through the Retail Incentive Program.
5. Lottery Best Practices: The Lottery has identified the following ten best practices that Lottery retailers are encouraged to adopt and adhere to in order to maximize Lottery sales and player engagement in Lottery products at retail locations.
(a) Ask for the Sale: Retailers can maximize their Lottery sales and player engagement by encouraging customers to buy Lottery products.
(b) Keep Lottery Fresh and Clean: Retailers can maximize their Lottery sales and player engagement by maintaining and keeping clean the area of their establishment in which Lottery products are sold and displayed.
(c) Know Lottery Products: Retailers can maximize their Lottery sales and player engagement by being knowledgeable about the wide variety of Lottery products.
(d) Pay Winning Tickets: Retailers can maximize their Lottery sales and player engagement by paying winning Lottery tickets of $2,500, or less, that players present at their retail locations.
(e) Post Winning Tickets: Retailers can maximize their Lottery sales and player engagement by posting winning tickets sold at their retail locations.
(f) Maintain Inventory: Retailers can maximize their Lottery sales and player engagement by maintaining their inventory of Lottery products and introducing the Lottery's new products promptly upon issuance.
(g) Post Jackpot Amounts: Retailers can maximize their Lottery sales and player engagement by posting jackpot amounts prominently in places where they are highly visible to customers.
(h) Make Lottery Visible: Retailers can maximize their Lottery sales and player engagement by making Lottery products easily visible in their retail locations.
(i) Display Indoor Signs: Retailers can maximize their Lottery sales and player engagement by posting Lottery signs and advertisements inside of their retail locations.
(j) Display Outdoor Signs: Retailers can maximize their Lottery sales and player engagement by posting Lottery signs and advertisements outside of their retail locations.
6. Program Requirements:
(a) To be eligible to participate in the Retail Incentive Program, the Retailer must be a Retailer in Good Standing.
(b) The determination of a Retailer's eligibility for participation will be made at the end of each quarter of the Retail Incentive Program for the Fiscal Year beginning on July 1, 2018 and ending on June 30, 2019, and shall be based on the financial data existing in the Lottery's financial accounting system for the Retailer and the status of the Retailer's license.
(1) The determination will be made based on the information in the Lottery's financial accounting system for the Retailer and the status of the Retailer's license as of September 30, 2018 for the first quarter.
(2) The determination will be made based on the information in the Lottery's financial accounting system for the Retailer and the status of the Retailer's license as of December 31, 2018 for the second quarter.
(3) The determination will be made based on the information in the Lottery's financial accounting system for the Retailer account and the status of the Retailer's license as March 31, 2019 for the third quarter.
(4) The determination will be made based on the information in the Lottery's financial accounting system for the Retailer and the status of the Retailer's license as of June 30, 2019 for the fourth quarter.
(c) A Retailer may be eligible to participate in and receive the incentives provided in sections 8 and 9, below, for each quarter in which the Retailer satisfies the eligibility requirements of this section and the requirements of sections 8 and 9.
(d) A Retailer may be eligible to participate in and receive the incentives provided in section 10, below, one time during the Fiscal Year if the Retailer satisfies the eligibility requirements of this section and the requirements of section 10 and is approved for participation.
(e) If a Retailer was licensed after July 1, 2017, the Retailer will be eligible to participate in the Retail Incentive Program at the beginning of the quarter, as described in section 6(b), above, immediately following the corresponding quarter in which the Retailer was licensed. For example, if a Retailer was licensed on November 29, 2017, that Retailer would be first eligible to participate in the Retail Incentive Program beginning on January 1, 2019.
(f) A Retailer is only eligible for participation in the Retail Incentive Program for those quarters in which the Retailer remains eligible for the entire quarter. Failure to maintain the requirements of a Retailer in Good Standing for any reason for any quarter shall preclude the Retailer from receiving any payment(s) that the Retailer would otherwise be entitled to for that quarter.
(g) The final determination of a Retailer's eligibility will be made by the Secretary, whose judgment will be final and binding.
7. How to Enroll:
(a) Participation in any component of the Retail Incentive Program is voluntary on the part of each Retailer and requires the Retailer to opt-in as described herein.
(b) Retailers who wish to enroll in any component of the Retail Incentive Program are responsible for reading this notice and any Lottery materials advertising the Retail Incentive Program, and must communicate an interest in participating in one or more components of the Retail Incentive Program to the Lottery through their Lottery Sales Representative or by emailing the Lottery at PALotteryRetailIncentive@pa.gov.
(c) Retailers who communicate an interest in participating in the Sales Growth Incentive Program and the Bonus Sales Growth Incentive Program will be provided with a form by the Lottery. Retailers must sign and deliver the form to the Lottery to complete their registration in the Sales Growth Incentive Program and the Bonus Sales Growth Incentive Program.
(d) Retailers who want to opt-in to one or more of the Lottery Best Practices Initiatives, as described in section 10, below, must indicate the same through the Lottery's Retailer Portal at https://www.paretailer.lottery.state. pa.us/RetailerPortal/ or by completing a form provided by the Lottery.
(e) There is no requirement to opt-in to the Quarterly Bonus Retailer Incentive Program, as described in section 14 below.
8. Sales Growth Incentive Program: As part of the Retail Incentive Program, Retailers may qualify for a Sales Growth Incentive, in addition to the Standard Retailer Commission, by meeting the requirements of this section.
(a) The Lottery will establish a sales baseline for each Retailer based on that Retailer's prior year sales for each quarter that the Retailer is eligible for the Sales Growth Incentive under sections 6 and 7.
(b) A Retailer who exceeds their prior year sales figure by at least 4%, but not more than 7.99%, for any quarter in the Fiscal Year to which this notice applies, shall be eligible for the Sales Growth Incentive.
(c) The Sales Growth Incentive shall be awarded as an additional 0.75% commission above the Standard Retailer Commission.
(d) For example, assuming that the Retailer has met all other requirements of this notice, a Retailer with a sales baseline of $100,000 for a quarter, who raises their sales by 4% to $104,000, shall be entitled to Sales Growth Incentive of 0.75% in addition to the Standard Retailer Commission, and will be entitled to a Sales Growth Incentive payment of $780. With the Standard Retailer Commission of $5,200 on sales of $104,000, the Retailer would receive a total payment of $5,980 for that quarter.
(e) Each Retailer who elects to participate in the Sales Growth Incentive Program portion of the Retail Incentive Program shall be provided with their sales baseline figures and sales goals by the Lottery in writing.
(f) Sales baseline figures may account for periods in which the Retailer did not have Lottery sales but met the definition of Retailer in Good Standing.
9. Bonus Sales Growth Incentive Program:
(1) A Retailer who meets the eligibility requirements in section 6, above, who is enrolled in the Sales Growth Incentive Program as described in section 7, above, and who exceeds their sales baseline figure, as provided for in section 8, above, for any quarter by at least 8% shall be eligible for the Bonus Sales Growth Incentive.
(2) The Bonus Sales Growth Incentive shall be an additional 0.75% incentive above the Standard Retailer Commission and the incentive due pursuant to the Sales Growth Incentive Program.
(3) For example, assuming that the Retailer has met all other requirements of this notice, a retailer with a sales baseline of $100,000 for a quarter, who raises their sales by 8% to $108,000, shall be entitled to the Sales Growth Incentive of 0.75%, and the Bonus Sales Growth Incentive of 0.75%, for a total Incentive of 1.50% in addition to the Standard Retailer Commission and will be entitled to an Incentive payment of $1,620. With the Standard Retailer Commission of $5,400 on sales of $108,000, the Retailer would receive a total payment of $7,020 for that quarter.
10. Lottery Best Practices Initiatives:
(a) Qualifying Retailers: In order to participate in one or more of the Lottery Best Practices Initiatives as described below, the Retailer must meet the eligibility requirements as set forth in section 6. Only Retailers who agree to participate and are approved by the Lottery shall be eligible for the program. Retailers that are engaging in the best practices or who have already received equipment or material listed below are not eligible to participate in the applicable initiative(s) unless they are increasing their level of engagement relative to the specific initiative.
(b) Levels of Participation: Consistent with the Lottery's objectives, qualifying Retailers will fall in one of two levels for participation in the Lottery Best Practices Initiatives. The levels for participation are as follows:
(1) Level 1 Retailer: Level 1 Retailers are those Retailers that have a quarterly average of $150,000 or more in sales of Traditional Lottery Products for the year beginning on July 1, 2017 and ending on June 30, 2018.
(2) Level 2 Retailer: Level 2 Retailers are those Retailers that have a quarterly average of less than $150,000 in sales of Traditional Lottery Products for the year beginning on July 1, 2017 and ending on June 30, 2018.
(c) Enrollment in the Lottery Best Practices Initiatives: A Retailer who wants to participate in one or more of the Lottery Best Practices Initiatives must opt-in by March 31, 2019.
(d) Schedule for Delivery of Materials and Equipment: For each Retailer that has opted-in to one or more of the Lottery Best Practices Initiatives and has been approved for participation, the Lottery will determine when the materials and equipment for each of the Lottery Best Practices Initiatives will be delivered. Delivery and installation dates will be scheduled at the Lottery's discretion.
(e) Lottery Best Practices Initiatives:
(1) Increased Counter Facings Initiative:
(i) A Retailer that agrees to participate in the Increased Counter Facings Initiative must agree to display all Lottery provided bins on the counter with nothing impeding the view of the bin and agree to maintain the display.
(ii) Level 1 Retailers are eligible to receive a one-time payment of $100 following agreement and approval to participate in the Increased Counter Facings Initiative.
(2) Designated Lottery Space Initiative:
(i) A Retailer that agrees to participate in the Designated Lottery Space Initiative must create and maintain a physical location within the Retailer's location designated for customers to play the Lottery, such as a keno/Xpress Sports viewing area, as provided by the Lottery.
(ii) Level 1 Retailers are eligible to receive a one-time payment of $100 following agreement and approval to participate in the Designated Lottery Space Initiative.
(3) Winner Awareness Area Initiative:
(i) A Retailer that agrees to participate in the Winner Awareness Area Initiative must create and maintain a physical location within the Retailer's location, of a minimum of six (6) square feet, designated to display winning tickets paid by the Retailer and must update the area with tickets paid by the Retailer, on a monthly basis. The Lottery will provide the Retailer with the materials necessary to display winning tickets.
(ii) Level 1 Retailers are eligible to receive a one-time payment of $100 following agreement and approval to participate in the Winner Awareness Area Initiative.
(4) Signage Initiative:
(i) A Retailer that agrees to participate in the Signage Initiative must increase and maintain the amount of Lottery provided indoor and outdoor signage displayed at the Retailer's location above the amount the Retailer displays prior to agreeing to participate in the Signage Initiative.
(ii) Level 1 Retailers are eligible to receive a one-time payment of $100 following agreement and approval to participate in the Signage Initiative.
(5) Ask For The Sale Initiative:
(i) A Level 2 Retailer that agrees to participate in the Ask for the Sale Initiative must conduct an Ask for the Sale promotion at the Retailer's location once during the Fiscal Year.
(ii) To conduct an Ask for the Sale promotion, the Retailer must agree to ask every customer to purchase a Lottery ticket during the agreed upon timeframe and must display Lottery provided materials advertising the promotion. Level 2 Retailers shall receive up to $100 worth of Lottery coupons or promotional tickets to support the promotion by awarding any player not asked to purchase a Lottery ticket a Lottery coupon or promotional ticket.
(iii) Prohibitions:
(A) Level 1 Retailers are not eligible for the Ask for the Sale Initiative.
(B) Level 2 Retailers who opt-in to the Second-Chance Drawing Initiative as described herein are not eligible for the Ask for the Sale Initiative.
(6) Second-Chance Drawing Initiative:
(i) A Retailer that agrees to participate in the Second-Chance Drawing Initiative must conduct a Second-Chance Drawing during the Fiscal Year.
(ii) To conduct a Second-Chance Drawing, Retailers must conduct a drawing for Lottery players in which they randomly select one or more winners. The Retailer shall receive at least $100 worth of Lottery coupons or promotional tickets to support the drawing.
(iii) Level 1 Retailers that agree to participate in the Second-Chance Drawing Initiative must also supply a prize, not otherwise prohibited by law, that matches or exceeds the monetary value of the Lottery coupons or promotional tickets provided to support the drawing. The prize supplied by the Retailer may be made using money, merchandise or any other item of value provided by the Retailer.
(iv) Level 1 and Level 2 Retailers are eligible to receive the Lottery coupons or promotional tickets following agreement and approval to participate in the Second-Chance Drawing Initiative.
(v) Retailers who participate in the Second-Chance Drawing Initiative are responsible for developing and communicating the rules for the Second-Chance Drawings conducted by the Retailer. Retailers who participate in the Second-Chance Drawing Initiative are responsible for implementing and adhering to the rules that they develop for the Second-Chance Drawings they conduct. The Lottery does not administer and is not responsible for the conduct or the outcome of the Second-Chance Drawings as described herein.
(vi) Level 2 Retailers are not eligible to participate in the Second-Chance Drawing Initiative if that same Retailer opted-in and was approved for the Ask for the Sale Initiative as described above.
(7) All-In Initiative:
(i) A Level 1 Retailer that agrees to participate in the All-In Initiative must conduct the Lottery Best Practices Initiatives as described in section 10(e)(1), (2), (3), (4) and (6) for Level 1 Retailers.
(ii) A Level 1 Retailer is eligible to receive a one-time payment of $400 as well as the Lottery coupons or promotional tickets used to support the Second-Chance Drawing Initiative, following agreement and approval to participate in the All-In Initiative.
(iii) A Level 2 Retailer that agrees to participate in the All-In Initiative must conduct the Lottery Best Practices Initiatives as described in section 10(e)(1), (2), (3) and (4) for Level 2 Retailers in addition to one of the following: the Ask for the Sale Initiative pursuant to section 10(e)(5) or the Second-Chance Drawing Initiative pursuant to section 10(e)(6) for Level 2 Retailers.
(f) Level 2 Retailers that have opted-in to one or more on the Lottery Best Practices Initiatives, that have been approved for participation, and that reach an average of $150,000 in sales for any quarter during the Fiscal Year shall be entitled to the same cash payment, if any, associated with the specific Lottery Best Practices Initiative the Retailer participated in.
11. Funds for the Retail Incentive Program: For fiscal year 2018-2019, the Pennsylvania Lottery caps expenditures of the Sales Growth Incentive Program as described in section 8, above, the Bonus Sales Growth Incentive Program as described in section 9, above, and the Lottery Best Practices Initiatives as described in section 10, above, to the statutory requirement of 0.5% of the sale of traditional lottery products at Retailers' physical lottery sales location within fiscal year 2017-2018 as required pursuant to 4 Pa.C.S. § 504(b).
12. Nonlapse: Amounts remaining in the Retail Incentive Program at the end of the Fiscal Year shall not lapse, but shall be used to fund retail sales initiatives, including, but not limited to, new equipment, signage, training, coupons, consumer and agent in-store promotions and sales makeovers, designed to improve in-store merchandising, foot traffic and sales, as determined by the Lottery.
13. Retailer Incentive Programs: The Pennsylvania Lottery is authorized to offer Retailer Incentive Programs pursuant to 61 Pa. Code § 811.41. Any expenditures by the Pennsylvania Lottery that exceed the limit set forth at 4 Pa.C.S. § 504(b) in section 11, above, will be attributed to a Retailer Incentive Program authorized pursuant to 61 Pa. Code § 811.41.
The Retail Incentive Program will run concurrently with and in conjunction with Retailer Incentive Programs including, the Quarterly Bonus Retailer Incentive Programs. A description of the Quarterly Bonus Retailer Incentive Programs can be found in section 14, below.
14. Quarterly Retailer Incentive Programs.
(a) The Lottery will conduct quarterly programs that provide Retailers with an opportunity to earn a reward by conducting various Lottery product promotions.
(b) The Lottery will advise Retailers of the Quarterly Bonus Commission Program promotions through Lottery sales terminal messages, information provided by Lottery Sales Representatives and information provided on the Retailer's Corner of the Lottery website, https://www. palottery.state.pa.us/About-PA-Lottery/For-Retailers.aspx.
(c) The rewards to Retailers issued through the quarterly promotions may include, but are not limited to, bonus commissions and entries into drawings.
15. Payments: Payments due to Retailers pursuant to the requirements of the Retail Incentive Program and the related Retailer Incentive Programs will be credited to the Retailer's account on file with the Lottery.
16. Applicability: This notice applies only to the Retail Incentive Program for the Fiscal Year beginning on July 1, 2018 and ending on June 30, 2019, and the related Retailer Incentive Programs described herein. Additional related Retailer Incentive Programs may be conducted throughout the Fiscal Year pursuant to the State Lottery Law and corresponding regulations and will be communicated through normal methods of communication.
C. DANIEL HASSELL,
Secretary
[Pa.B. Doc. No. 19-471. Filed for public inspection March 29, 2019, 9:00 a.m.]
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