                                 CODE OF VIRGINIA

VOLUNTARY ASSIGNMENT OF LOTTERY PRIZES OR PLEDGE AS COLLATERAL FOR A LOAN;
REQUIREMENTS FOR THE ASSIGNEES AND LENDERS (§ 58.1-4020.1)

A. Lottery prizes, payable in installments over a period of time, excluding
prizes payable for the winner&#8217;s life, may be voluntarily assigned or
pledged as collateral for a loan, in whole or in part, by the person entitled to
such installments, by written contract affirming that the requirements of this
section have been met and endorsed by written order of a court of competent
jurisdiction after a hearing. The order shall specify the name, address and
social security number or tax identification number of the assignee or lender
and shall specifically describe the payments be assigned or pledged as
collateral by date and gross pre-tax amount. The Department shall be given
notice of any hearing held pursuant to this section and shall have the right to
appear and participate in such hearing. Venue for hearings held pursuant to this
section shall be in the Circuit Court of the City of Richmond.
			The rate charged for any such assignment or loan shall not exceed 15 percent.
			The contract shall:

   1. Be signed by the assignor and the assignee or the lender and the borrower,
   and the assignor or borrower shall affirm the assignment or loan has been
   voluntarily executed.

   2. Include or be accompanied by a sworn statement attesting that the assignor
   or borrower (i) is of sound mind and not acting under duress; (ii) has been
   advised in writing by the assignee or lender to seek independent legal counsel
   and independent financial counsel concerning the implications of the
   assignment or loan, including the tax consequences, and has either received
   such advice or knowingly waived such advice in writing; (iii) understands that
   he is relinquishing or limiting his rights to receive the lottery proceeds;
   and (iv) has received from the Virginia Lottery, in response to a written
   request therefor, confirmation of the assignee&#8217;s or lender&#8217;s
   registration with the Virginia Lottery in accordance with subsection E of this
   section.

   3. Include a disclosure statement setting forth (i) the amounts assigned or
   loaned; (ii) the dates such amounts are payable; (iii) the purchase price paid
   for the assignment or loan; (iv) the rate of discount to present value,
   assuming daily compounding and funding on the contract date; (v) the amount of
   any fees associated with the assignment or loan and by whom such fees are
   payable; and (vi) the tax identification number of the assignee.

   4. Expressly state that the assignor or borrower has three business days after
   signing the contract to cancel the assignment or loan.

   5. Expressly state that the assignee or lender is eligible to purchase, share
   or receive prizes of the Virginia Lottery pursuant to &#xA7;&#xA7; 58.1-4015,
   58.1-4016 and subsection A of &#xA7; 58.1-4019, and that the Virginia Lottery
   has complied with subsection B of &#xA7; 58.1-4019 in that the original
   prizewinner is (or if deceased, was) a natural person if and to the extent
   that the prize was awarded on or after the effective date pursuant to
   subsection B of &#xA7; 58.1-4019.

   6. Expressly state that no amounts assigned or loaned are subject to setoff
   pursuant to Article 21 (&#xA7; 58.1-520 et seq.) of Chapter 3 of this title.

B. The Commonwealth, the Virginia Lottery and any employee or representative of
either shall be indemnified and held harmless upon payment of amounts due as set
forth in the court order.

C. The Lottery may establish a reasonable fee to process the assignments
provided for in this section and to receive, review and file the registration
required by subsection E and confirm compliance with the registration
requirements. The fee shall be reflective of the direct and indirect costs of
processing the assignments or registrations.

D. Notwithstanding the provisions of this section, the Commonwealth and the
Virginia Lottery shall not accept any assignment if either of the following has
occurred:

   1. Federal law provides that the right to assign lottery proceeds is deemed
   receipt of income in the year the lottery prize is won for all installment
   lottery prize winners. &#8220;Federal law&#8221; includes statutory law,
   rulings of courts of competent jurisdiction, and published rulings by the
   Internal Revenue Service.

   2. State law provides that the right to assign lottery proceeds is deemed
   receipt of income in the year the lottery prize is won for all installment
   lottery prize winners. &#8220;State law&#8221; includes statutory law, rulings
   of courts of competent jurisdiction, and published rulings by the Department
   of Taxation.

E. An assignee, prospective assignee, lender or prospective lender shall not
make any representation in any written or oral communications with a lottery
winner that implies that the assignee, prospective assignee, lender or
prospective lender is associated with or an agent of the Virginia Lottery. Every
prospective assignee or prospective lender shall register with the Virginia
Lottery, prior to contracting for any assignment or loan pursuant to this
section. The registration shall include (i) the assignee&#8217;s or
lender&#8217;s standard information packet or materials given or sent to
prospective assignees or borrowers, (ii) the assignee&#8217;s or lender&#8217;s
standard form of agreement, (iii) the assignee&#8217;s or lender&#8217;s federal
tax identification number, and (iv) where applicable, the assignee&#8217;s or
lender&#8217;s most recent public financial statement. The Director may deny,
suspend or revoke a registration for a violation of this chapter or for such
other reason as the Board, by regulation, may establish.

HISTORY: 2003, c. 924; 2004, c. 630.