§ 5007.1. Mega Millions purpose.

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(b) During each Mega Millions drawing, six Mega Millions winning numbers will be selected from two fields of numbers in the following manner: five winning numbers from a field of one through [75] 70 numbers[,] and one winning number from a field of one through [15] 25 numbers.

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§ 5007.2. Mega Millions definitions.

(a) The following definitions shall apply to Mega Millions.

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(7) Mega Millions play area is, for the on-line Mega Millions game, the areas on a Mega Millions play slip identified by an alpha character, A through E, containing two separate fields—one field of [75] 70 and a second field of [15] 25—both containing one- or two-digit numbers each. This is the area where the player, or computer if the player is using the quick pick option, will select five one- or two-digit numbers from the first field and will select one one- or two-digit [numbers] number from the second field.

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(10) Mega Millions winning numbers are, for the on-line Mega Millions game, five one- or two-digit numbers, from one through [75] 70 and one one- or two-digit number from one through [15] 25, randomly selected at each Mega Millions drawing, which shall be used to determine winning Mega Millions plays contained on Mega Millions tickets.

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§ 5007.4. Ticket price.

(a) Mega Millions tickets may be purchased for [$1] $2 per play at the discretion of the purchaser, in accordance with the number of game panels and inclusive drawings. The purchaser receives one play for each [$1] $2 wagered in Mega Millions. Tickets may contain multiple plays. The commission may authorize the sale of Mega Millions tickets at a different purchase price. Such a change in the purchase price shall be announced publicly by the commission prior to the effective date of such change.

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§ 5007.7. Prize structure.

(a) For the Mega Millions game[—] the prize structure shall; be a matrix of [5/75] 5/70 and [1/15] 1/25 with [50] an approximately 49.8 percent anticipated prize fund.

(b) Jackpot prize payments. For the Mega Millions game:

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(4) Purchasers in New York must select either an annuity jackpot prize or lump sum jackpot prize. A jackpot prize shall be paid, at the election of a player made no later than 60 days after the player becomes entitled to the prize, with either an annuity or lump sum payment. If the payment election is not made by a player within 60 days after the player becomes entitled to the prize, then the prize shall be paid as an annuity prize. An election to take a lump sum payment may be made at the time of the prize claim or within 60 days after the player becomes entitled to the prize. An election made after the winner becomes entitled to the prize is final and cannot be revoked. Withdrawn or otherwise changed without the approval of the commission.

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(ii) Lump sum option jackpot prizes shall be paid in a single payment upon completion of internal validation procedures. The lump sum option amount offered shall be the amount determined by multiplying the annuitized prize amount by a discount value set by Mega Millions finance committee prior to each drawing (the [“lump sum equivalent jackpot prize”] lump sum equivalent jackpot prize), divided by the number of total jackpot prize winners for the Mega Millions game.

(c) Second- through ninth-level prizes.

(1) Mega Millions panels matching five of the five Mega Millions winning numbers drawn for Field 1, but not matching the Mega Millions winning number drawn for field 2 shall be entitled to receive a second prize of $1,000,000.

(2) Mega Millions panels matching four of the five Mega Millions winning numbers drawn for field 1 and the Mega Millions winning number drawn for field 2 shall be entitled to receive a third prize of [$5,000] $10,000.

(3) Mega Millions panels matching four of the five Mega Millions winning numbers drawn for field 1 but not matching the Mega Millions winning number drawn for field 2 shall be entitled to receive a fourth prize of $500.

(4) Mega Millions panels matching three of the five Mega Millions winning numbers drawn for field 1 and the Mega Millions winning number drawn for field 2 shall be entitled to receive a fifth prize of [$50] $200.

(5) Mega Millions panels matching three of the five Mega Millions winning numbers drawn for field 1 but not matching the Mega Millions winning number drawn for field 2 shall be entitled to receive a sixth prize of [$5] $10.

(6) Mega Millions Panels matching two of the five Mega Millions winning numbers drawn for field 1 and the Mega Millions winning number drawn for field 2 shall be entitled to receive a seventh prize of [$5] $10.

(7) Mega Millions panels matching one of the five Mega Millions winning numbers drawn for field 1 and the Mega Millions winning number drawn for field 2 shall be entitled to receive an eighth prize of [$2] $4.

(8) Mega Millions panels matching no numbers of the five Mega Millions winning numbers drawn for field 1 but matching the Mega Millions winning number drawn for field 2 shall be entitled to receive a ninth prize of [$1] $2.

1. STATUTORY AUTHORITY: The New York State Gaming Commission (“Commission”) is authorized to promulgate the proposed rules by Tax Law Sections 1601, 1604, 1612(a) and 1617 and by Racing, Pari-Mutuel Wagering and Breeding Law (“Racing Law”) Sections 104(1) and 104(19).

Tax Law Section 1601 describes the purpose of Article 34 of the Tax Law, also known as the New York State Lottery for Education Law, as being to establish a lottery operated by the State, the net proceeds of which are applied exclusively to aid to education. Tax Law Section 1604 authorizes the promulgation of rules governing the establishment and operation of such lottery. Tax Law Section 1612(a) describes the distribution of revenues for a joint, multi-jurisdiction and out-of-state lottery and Section 1617 authorizes the Commission’s Director of the Lottery Division to enter into an agreement with a government-authorized group of one or more jurisdictions for the operation and administration of such a lottery.

Racing Law Section 104(1) grants the Commission general jurisdiction over all gaming activities within the State. Racing Law Section 104(19) authorizes the Commission to promulgate any rules it deems necessary to carry out its responsibilities.

2. LEGISLATIVE OBJECTIVES: To permit the State’s continued participation in the Mega Millions multi-jurisdiction lottery game and to implement changes to the game that are expected to generate more revenue for education.

3. NEEDS AND BENEFITS: Mega Millions is a multi-state lottery game that New York offers pursuant to an agreement among various state lotteries, as authorized by Tax Law Sections 1617, 1612(a) and 1604. A consortium of state lotteries that participate in the Mega Millions game has approved and adopted amendments to the game intended to be effective nationwide with sales effective on October 28, 2017 for the drawing on October 31, 2017. Consortium participants are required to comply with official Mega Millions game rules, as amended. The proposed rulemaking incorporates amendments necessary for New York’s continued participation in the Mega Millions game. In addition, these amendments are expected to increase ticket sales and generate more revenue for education.

Mega Millions awards prizes to holders of tickets matching specified combinations of numbers randomly selected in regularly scheduled drawings. Players select five numbers from one set and one number from a second set. The proposed rules are intended to create larger jackpot prize amounts. This would be accomplished by decreasing the size of the first set of numbers from which a player chooses (from 75 to 70), while increasing the size of the second set of numbers (from 15 to 25). Finally, the set prize amounts for various non-jackpot prizes will increase as follows: a third-level prize will increase from $5,000 to $10,000; a fifth-level prize will increase from $50 to $200; a sixth-level or seventh-level prize will increase from $5 to $10; an eighth-level prize will increase from $2 to $4; and a ninth-level prize will increase from $1 to $2.

Without the proposed rules, the Commission would need to remove the Mega Millions game from its portfolio of offerings and aid to education would be negatively affected. In the last fiscal year, $280.8 million in Lottery sales were from the Mega Millions game. This change to the Mega Millions matrix is predicted to increase the average overall jackpot throughout the year and increase sales in New York and aid to education from this product.

4. COSTS:

(a) Costs to regulated parties for the implementation and continuing compliance with the rule: None.

(b) Costs to the regulating agency, the State, and local governments for the implementation and continued administration of the rule: No additional operating costs are anticipated as a result of the proposed rules, because current funds reserved for administrative expenses of operating lottery games are expected to be sufficient.

(c) The information, including the source or sources of such information, and methodology upon which the cost estimate is based: The cost estimates are based on the New York Lottery’s experience regulating lottery games for more than 50 years.

5. LOCAL GOVERNMENT MANDATES: There are no local government mandates associated with the proposed rules.

6. PAPERWORK: The proposed rules impose no changes in paperwork requirements. Game information will be issued by the New York Lottery for public convenience on the Lottery’s website and through point of sale advertising materials at retailer locations.

7. DUPLICATION: The proposed regulations do not duplicate any existing State or federal requirements of the same or similar subject matter.

8. ALTERNATIVES: Without the amended rules, the New York Lottery would need to remove the game from its portfolio of offerings and aid to education would be affected negatively.

9. FEDERAL STANDARDS: The proposed amendments do not exceed any minimum standards of the federal government for the same or similar subject areas.

10. COMPLIANCE SCHEDULE: The proposed rules will become effective on October 28, 2017.

The proposed rules changes do not require a Regulatory Flexibility Analysis, Rural Area Flexibility Analysis or Job Impact Statement. There will be no adverse impact on small businesses, local governments, rural areas or jobs.

The proposed rules would permit New York’s continued participation in the Mega Millions multi-jurisdiction lottery game and implement changes to the game that are expected to generate more revenue for education.

The proposed rules will not impose any adverse economic impacts or reporting, recordkeeping or other compliance requirements on small businesses, local governments, rural areas or employment opportunities.