Sec. 10. (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.

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