Sections 9-1301 to 9-1313 shall be known and may be cited as the Gambling Winnings Setoff for Outstanding Debt Act.

The purposes of the Gambling Winnings Setoff for Outstanding Debt Act are to:

(1) Establish and maintain a procedure to set off against an obligor's casino winnings, parimutuel winnings, sports wagering winnings, or cash device winnings any debt (a) that is assigned to the Department of Health and Human Services or that any individual not eligible as a public assistance recipient is attempting to collect through the Title IV-D child support enforcement program, (b) that has accrued through written contract, subrogation, or court judgment, and (c) that is in the form of a liquidated amount due and owing for the care, support, or maintenance of a child or for medical or spousal support; and

(2) Establish and maintain a procedure to set off against a taxpayer's casino winnings, parimutuel winnings, sports wagering winnings, or cash device winnings the amount of such taxpayer's outstanding state tax liability as determined by the Department of Revenue.

For purposes of the Gambling Winnings Setoff for Outstanding Debt Act, unless the context otherwise requires:

(1) Applicable winnings means any casino winnings, parimutuel winnings, sports wagering winnings, or cash device winnings;

(2) Cash device winnings means any cash prize won by a player of a cash device as defined in section 77-3001 that requires the operator, distributor, or manufacturer of such cash device to provide the player with an Internal Revenue Service Form 1099;

(3) Casino winnings means any winnings that are required to be reported on Internal Revenue Service Form W-2G won by a player from a game of chance at a licensed racetrack enclosure under the jurisdiction of the State Racing and Gaming Commission;

(4) Claimant means:

(a) The Department of Health and Human Services with respect to collection of a debt owed by a parent in a case involving a recipient of aid to dependent children in which rights to child, spousal, or medical support payments have been assigned to this state;

(b) An individual who is not eligible as a public assistance recipient and to whom a debt is owed that the individual is attempting to collect through the Title IV-D child support enforcement program; or

(c) Any person or entity entitled to receive child support, spousal support, or medical support as defined in section 43-1712.01 pursuant to an order issued by a court or agency of another state or jurisdiction, including an agency of another state or jurisdiction to which a person has assigned his or her right to receive such support. Such a claimant shall submit certification and documentation to the Department of Health and Human Services sufficient to satisfy the requirements of section 43-1730;

(5) Collection system means the collection system developed and implemented pursuant to section 9-1304;

(6) Debt means any liquidated amount of arrears that has accrued through assignment, contract, subrogation, court judgment, or operation of law, regardless of whether there is an outstanding judgment for such amount, and that is for the care, support, or maintenance of a child or for medical or spousal support;

(7) Net winnings payment means the winnings payment amount minus the debt and outstanding state tax liability balance;

(8) Obligor means any individual (a) owing money to or having a delinquent account with any claimant that has not been satisfied by court order, set aside by court order, or discharged in bankruptcy or (b) owing money on an outstanding state tax liability;

(9) Operator means an authorized gaming operator as defined in section 9-1103, any corporation or association licensed under sections 2-1201 to 2-1218 and authorized to conduct parimutuel wagering at a licensed racetrack, and any operator, distributor, or manufacturer of a cash device licensed under the Mechanical Amusement Device Tax Act;

(10) Outstanding state tax liability means any liability arising from any tax or fee, including penalties and interest, under any tax program administered by the Tax Commissioner, Department of Labor, or Department of Motor Vehicles;

(11) Parimutuel winnings means any winnings that are required to be reported on Internal Revenue Service Form W-2G and have tax withheld by the operator and that are won by a player from a parimutuel wager at a licensed racetrack under the jurisdiction of the State Racing and Gaming Commission;

(12) Sports wagering winnings means any winnings that are required to be reported on Internal Revenue Service Form W-2G and have tax withheld by the operator and that are won by a player from sports wagering as defined in section 9-1103 on a sports wager authorized by the State Racing and Gaming Commission;

(13) Spousal support has the same meaning as in section 43-1715; and

(14) Winnings payment means a payout of casino winnings, parimutuel winnings, sports wagering winnings, or cash device winnings to which an individual is entitled as a result of playing or wagering.

(1)(a) The Department of Revenue, in consultation with the Department of Health and Human Services, shall develop and implement a secure, electronic collection system to carry out the purposes of the Gambling Winnings Setoff for Outstanding Debt Act.

(b) The collection system shall include access to the name of an obligor, the social security number of an obligor, and any other information that assists the operator in identifying an obligor. The collection system shall inform the operator of the total amount owed without detailing the source of any of the amounts owed.

(2) The Department of Health and Human Services may submit any certified debt of twenty-five dollars or more to the collection system except when the validity of the debt is legitimately in dispute. The submission of debts of past-due support shall be a continuous process that allows the amount of debt to fluctuate up or down depending on the actual amount owed.

(3) The Department of Revenue may submit to the collection system any amount of outstanding state tax liability owed by a taxpayer except when the validity of the outstanding state tax liability is legitimately in dispute. The inclusion of outstanding state tax liability in the amount owed shall be a continuous process that allows the amount owed to fluctuate up or down depending on the actual amount of outstanding state tax liability owed.

(4) If the name of the obligor is retrieved from the collection system by the operator, the retrieval of such name shall be evidence of a valid lien upon and claim of lien against any applicable winnings of the obligor whose name is electronically retrieved from the collection system. If an obligor's applicable winnings are required to be set off pursuant to the Gambling Winnings Setoff for Outstanding Debt Act, the full amount of the debt and outstanding state tax liability shall be collected from any applicable winnings due the obligor.

(5) The information obtained by an operator from the collection system in accordance with this section shall retain its confidentiality and shall only be used by the operator for the purposes of complying with the Gambling Winnings Setoff for Outstanding Debt Act. An employee or prior employee of an operator who unlawfully discloses any such information for any other purpose, except as otherwise specifically authorized by law, shall be subject to the same penalties specified by law for unauthorized disclosure of confidential information by an agent or employee of the operator.

(6) The information obtained by the Department of Health and Human Services or the Department of Revenue from the operator in accordance with this section shall retain its confidentiality and shall only be used by either department in the pursuit of such department's debt or outstanding state tax liability collection duties and practices. An employee or prior employee of the Department of Health and Human Services or the Department of Revenue who unlawfully discloses any such information for any other purpose, except as specifically authorized by law, shall be subject to the penalties specified by law for unauthorized disclosure of confidential information by an agent or employee of either such department.

(7) The amount of debt and outstanding state tax liability owed shall be prima facie evidence of the validity of the liability.

(1) Beginning on the applicable implementation date designated by the Tax Commissioner pursuant to subsection (1) or (2) of section 9-1312, prior to making a winnings payment, an operator shall check the collection system to determine if there is a debt or an outstanding state tax liability owed by the winner. An operator shall have access to the collection system to look up winners that are due winnings payments for purposes of complying with the Gambling Winnings Setoff for Outstanding Debt Act. An operator shall not access the system for any other purpose.

(2)(a) An operator at a licensed racetrack enclosure or licensed racetrack that fails to check the collection system for a debt or an outstanding state tax liability or fails to collect the amounts owed shall be subject to a fine by the State Racing and Gaming Commission of not more than ten thousand dollars.

(b) The State Racing and Gaming Commission shall establish a schedule for fines pursuant to this section that considers both the proportionality of the offense and the number of instances of past offenses.

(3) An operator licensed by the Department of Revenue that fails to check the collection system for a debt or an outstanding state tax liability or collect the amounts owed may be considered in violation of such license and subject to any penalties authorized for a violation of the license under the Mechanical Amusement Device Tax Act.

(1) Beginning on the applicable implementation date designated by the Tax Commissioner pursuant to subsection (1) or (2) of section 9-1312, prior to making a winnings payment and after the operator has checked the collection system as provided in section 9-1305, the operator shall deduct the amount of debt and outstanding state tax liability identified in the collection system from the winnings payment and shall remit the net winnings payment, if any, to the winner and the amount deducted to the Department of Revenue in a manner prescribed by the department.

(2) If an operator determines that an obligor identified using the collection system is entitled to a winnings payment, the operator shall notify the Department of Revenue in a manner prescribed by the department that a balance of debt or outstanding state tax liability owed by the winner is being remitted to the department.

(3) The Department of Revenue shall first credit any such winnings payment against any debt of such winner certified by the Department of Health and Human Services until such debt is satisfied and then against any outstanding state tax liability owed by such winner until such liability is satisfied on a pro rata basis.

(1) Within twenty days after a remittance pursuant to section 9-1306 due to an outstanding state tax liability, the Department of Revenue shall notify the winner of the remittance. The notice shall state (a) the basis for the claim to the outstanding state tax liability by the Department of Revenue, (b) the application of the winnings payment against the outstanding state tax liability of the obligor, (c) the obligor's opportunity to give written notice of intent to contest the validity of the claim before the Department of Revenue within thirty days after the date of the mailing of the notice, (d) the mailing address to which the request must be sent, and (e) that a failure to contest the claim in writing within the thirty-day period will be deemed a waiver of the opportunity to contest the claim resulting in a setoff by default.

(2)(a) Within twenty days after notification from the Department of Revenue of a remittance pursuant to section 9-1306 due to owing a debt certified by the Department of Health and Human Services, the Department of Health and Human Services shall send written notification to the obligor of an assertion of its rights, or of the rights of an individual not eligible as a public assistance recipient, to all or a portion of the obligor's winnings payment.

(b) The written notification shall clearly set forth (i) the basis for the claim to the winnings payment, (ii) the intention to apply the winnings payment against the debt owed to a claimant, (iii) the obligor's opportunity to give written notice of intent to contest the validity of the claim before the Department of Health and Human Services within thirty days after the date of the mailing of the notice, (iv) the mailing address to which the request for a hearing must be sent, and (v) that failure to apply for a hearing in writing within the thirty-day period will be deemed a waiver of the opportunity to contest the claim resulting in a setoff by default.

(1)(a) A written request by a winner pursuant to subsection (1) of section 9-1307 shall be effective upon mailing the request, postage prepaid and properly addressed, to the Department of Revenue.

(b) Any appeal or action taken as a result of a decision pursuant to subdivision (1)(a) of this section shall be in accordance with the Administrative Procedure Act.

(2)(a) A written request for a hearing by a winner pursuant to subsection (2) of section 9-1307 shall be effective upon mailing the request, postage prepaid and properly addressed, to the Department of Health and Human Services.

(b) If the Department of Health and Human Services receives a written request for a hearing contesting a claim, the department shall grant a hearing to the obligor to determine whether the claim is valid. If the amount asserted as due and owing is not correct, an adjustment to the claimed amount shall be made. No issues shall be reconsidered at the hearing which have been previously litigated.

(c) Any appeal of an action taken at or as a result of a hearing held pursuant to subdivision (2)(b) of this section shall be in accordance with the Administrative Procedure Act.

The collection remedy authorized by the Gambling Winnings Setoff for Outstanding Debt Act is in addition to and not in substitution for any other remedy available by law.

An operator, acting in good faith, shall not be liable to any person for actions taken pursuant to the Gambling Winnings Setoff for Outstanding Debt Act. Neither the State Racing and Gaming Commission nor the Department of Revenue shall initiate any administrative action or impose penalties on an operator who voluntarily reports to the commission activity described in section 9-1311.

Any person who knowingly or intentionally attempts to avoid the application of a setoff under the Gambling Winnings Setoff for Outstanding Debt Act by passing any applicable winnings to another person to present for a cash payout or by providing fraudulent identification during a cash payout is guilty of a Class I misdemeanor.

(1) The Tax Commissioner shall designate an implementation date for the required use by operators of the collection system developed pursuant to section 9-1304 prior to making a winnings payment for casino winnings, parimutuel winnings, or sports wagering winnings, which date shall be on or after January 1, 2025, but on or before January 1, 2026. The Tax Commissioner shall provide at least ninety days' notice of the implementation date on the Department of Revenue's website before such implementation date goes into effect.

(2) The Tax Commissioner shall designate an implementation date for the required use by operators of the collection system developed pursuant to section 9-1304 prior to making a winnings payment for cash device winnings, which date shall be on or after January 1, 2025, and after the establishment of the control server by the Department of Revenue to receive data and accurate revenue and income reporting from cash devices pursuant to the Mechanical Amusement Device Tax Act, but on or before January 1, 2027. The Tax Commissioner shall provide at least ninety days' notice of the implementation date on the Department of Revenue's website before such implementation date goes into effect.

The Department of Health and Human Services, the Department of Revenue, and the State Racing and Gaming Commission may adopt and promulgate rules and regulations to carry out the Gambling Winnings Setoff for Outstanding Debt Act.