{"data":{"id":"us-ky/krs-154a.110","jurisdiction":"us-ky","citation":"KRS 154A.110","heading":"Prizes taxable -- Withholdings from prize -- Verification rules and prize","body":"payments, exceptions -- Unclaimed prize money -- Corporation's liability --\nIneligibility to purchase tickets and receive prizes -- Conditions for assignment\nof prize.\n(1) Proceeds of lottery prizes shall be subject to Kentucky state income tax. Any\nattachments, garnishments, or executions authorized and issued pursuant to statute\nshall also be withheld if served upon the process agent of the corporation. This\nsection shall not apply to a retailer.\n(2) The board shall adopt rules to establish a system of verifying the validity of tickets\nclaimed to win prizes and to effect payment of such prizes, except that:\n(a) No prize, nor any portion of a prize, nor any right of any person t o a prize\nawarded shall be assignable, except as provided in subsection (6) of this\nsection. Any prize, or portion thereof, remaining unpaid at the death of a prize\nwinner shall be paid to the estate of such deceased prize winner or to the\ntrustee under a revocable living trust established by the deceased prize winner\nas settlor, provided that a copy of such a trust has been filed with the\ncorporation along with a notarized letter of direction from the settlor and no\nwritten notice of revocation has been re ceived by the corporation prior to the\nsettlor's death. Following such a settlor's death and prior to any payment to\nsuch a successor trustee, the corporation shall obtain from the trustee and each\ntrust beneficiary a written agreement to indemnify and hol d the corporation\nharmless with respect to any claims that may be asserted against the\ncorporation arising from payment to or through the trust. Notwithstanding any\nother provisions of this section, any person, pursuant to an appropriate judicial\norder, shall be paid the prize to which a winner is entitled.\n(b) No ticket shall knowingly be sold to any person under the age of eighteen\n(18), but this section does not prohibit the purchase of a ticket by a person\neighteen (18) years of age or older for the pur pose of making a gift to any\nperson of any age. In such case, the corporation shall direct payment to an\nadult member of the person's family or the legal guardian of the person on\nbehalf of such person. The person named as custodian shall have the same\npowers and duties as prescribed for a custodian pursuant to the Uniform\nTransfers to Minors Act.\n(c) No prize shall be paid arising from claimed tickets that are stolen, counterfeit,\naltered, fraudulent, unissued, produced or issued in error, unreadable, not\nreceived or not recorded by the corporation within applicable deadlines,\nlacking in captions that conform and agree with the play symbols as\nappropriate to the lottery game involved, or not in compliance with such\nadditional specific rules and public or confidential validation and security tests\nof the corporation appropriate to the particular lottery game involved.\n(d) No particular prize in any lottery game shall be paid more than once, and in\nthe event of a binding determination that more than one claima nt is entitled to\na particular prize, the sole remedy of such claimants is the award to each of\nthem of an equal share in the prize.\n(e) A holder of a winning cash ticket from a Kentucky lottery game shall claim a\nprize within three hundred sixty -five (365 ) days (for a ticket issued before\nJanuary 1, 1995), and within one hundred eighty (180) days (for a ticket issued\non or after January 1, 1995), or for a multistate lottery game within one\nhundred eighty (180) days, after the drawing in which the prize was  won. In\nany Kentucky lottery game in which the player may determine instantly if he\nhas won or lost, he shall claim a prize within three hundred sixty -five (365)\ndays (for lottery games commenced or tickets printed or reprinted before\nJanuary 1, 1995), and within one hundred eighty (180) days (for lottery games\ncommenced or tickets printed or reprinted on or after January 1, 1995), or for\na multistate lottery game within one hundred eighty (180) days, after the end\nof the lottery game as announced by the c orporation. However, a holder of a\npull-tab lottery ticket shall claim a prize within the time period and in the\nmanner printed on the ticket. If a valid claim is not made for a prize within the\napplicable period, the prize shall constitute an unclaimed prize for purposes of\nsubsection (3) of this section.\n(f) No prize shall be paid upon a ticket purchased or sold in violation of this\nchapter. Any such prize shall constitute an unclaimed prize for purposes of\nsubsection (3) of this section.\n(3) Any unclaimed prize money may be retained by the corporation and added to the\npool from which future prizes are to be awarded or used for special prize\npromotions, or may be appropriated by the General Assembly directly from the\ncorporation for any public purpose. For  fiscal years 2000-2001 and 2001-2002, any\nunclaimed prize money in excess of six million dollars ($6,000,000) shall be\ntransferred to the affordable housing trust fund established by KRS 198A.710.\n(4) The corporation is discharged of all liability upon payment of a prize.\n(5) No ticket shall be purchased by and no prize shall be paid to any of the following\npersons:\n(a) Any member of the board of directors, officers, or employees of the\ncorporation;\n(b) Any vendors or related entities, or any member of the  board of directors,\nofficers, employees of, partners in, or owners of any vendors or related entities\nto the vendors; or\n(c) Any spouse, child, brother, sister, or parent residing as a member of the same\nhousehold in the principal place of abode of any such person.\n(6) The right of any person to receive payments due under a prize that is paid in\ninstallments over time by the corporation, excluding prizes payable for the winner's\nlife, may be voluntarily assigned, in whole or in part, if the assignment is made to a\nperson or entity designated pursuant to an order of the Circuit Court located in the\njudicial circuit where the headquarters of the corporation is located. The Circuit\nCourt shall issue an order approving a voluntary assignment, specifying the exact\ndollar amount of each prize payment or payments assigned, or any portion thereof,\nthe dates of the payments being assigned, the name of the assignor as it appears on\nthe lottery claim form or the full legal name of the assignor if different than the\nname as it appears on the lottery claim form, and the full legal name of the assignee\nto whom the assigned payments will be made, and directing the corporation to make\nthe specified payments to the assignee, if all of the following conditions have been\nmet:\n(a) The assignment is in writing, executed by the assignor either before or after\nJuly 12, 2006, and by its terms, subject to the laws of this Commonwealth;\n(b) The assignor provides a sworn affidavit attesting that the assignor:\n1. Is of sound mind, in full command of hi s or her faculties, and is not\nacting under duress;\n2. Has had the opportunity to receive independent legal, financial, and tax\nadvice concerning the effects of the assignment;\n3. Understands that he or she will not receive the prize payments, or\nportions thereof, for the years assigned;\n4. Understands and agrees that with regard to the assigned payments, the\nCommonwealth, the corporation, and its respective officials and\nemployees will have no further liability or responsibility to make the\nassigned payments to the assignor;\n5. Has been provided with a one (1) page written disclosure statement in\nbold type, fourteen (14) point font or larger, setting forth:\na. The payments being assigned, by amounts and payment dates;\nb. The purchase price being paid; and\nc. The amount, if any, of any origination or closing fees that will be\ncharged to the lottery winner; and\n6. Has disclosed the existence or nonexistence of a current spouse; and, if\nmarried, unless the court finds the assignor may make the assignment\nwithout the spouse's consent, the assignor has submitted to the court a\nsigned and notarized statement wherein the spouse consents to the\nassignment.\n(7) Written notice of any petition seeking court approval of an assignment under\nsubsection (6) of this section and of a court hearing, if any, concerning the proposed\nassignment shall be delivered by certified mail, return receipt requested, to the\ncorporation's registered agent at least fifteen (15) days prior to entry of the court\norder or a court hearing, if any . The corporation is not a necessary or indispensable\nparty and is not required to appear in or be named as a party to any action seeking\ncourt approval of a voluntary assignment, but may intervene as of right in any such\nproceeding.\n(8) A voluntary assign ment under subsection (6) of this section shall not include or\ncover payments or portions of payments that are, at the time of entry of the court\norder, subject to offset or withholding due to:\n(a) A defaulted or delinquent child support obligation;\n(b) A debt owed to a state agency; or\n(c) Any attachments, garnishments, or executions authorized and issued pursuant\nto statute and served upon the process agent of the corporation as set forth in\nsubsection (1) of this section;\nunless appropriate provision is  made in the court order to satisfy the obligation or\nobligations giving rise to the offset or withholding at the time of closing of the\nassignment transaction. Each court order shall provide that any delinquent child\nsupport obligation owed by the assigno r as of the date of the court order and any\ndebts owed to a state agency by the assignor as of the date of the court order shall be\noffset by the corporation first against remaining payments or portions thereof then\ndue the assignor and then against paymen ts due the assignee each year until paid in\nfull.\n(9) A court order approving a voluntary assignment under subsection (6) of this section,\ntogether with any other order issued in connection with any one (1) prize drawn,\nshall not require the corporation to  divide any single prize payment among more\nthan three (3) different persons or entities.\n(10) The Commonwealth, the corporation, and their respective officials and employees\nshall be discharged of all further liability upon payment of a prize pursuant to court\norder issued under subsection (6) of this section. It shall be the responsibility of the\nassignor or the assignee to provide the corporation information necessary for the\ncorporation to identify the parties to any assignment under subsection (6) of t his\nsection and to make the payments assigned.\n(11) The Kentucky Lottery Corporation may establish a reasonable fee, not to exceed\none thousand dollars ($1,000), to defray any administrative expenses associated\nwith processing each assignment made pursuant  to subsection (6) of this section.\nThe fee amount shall reflect the direct and indirect costs associated with processing\nthe assignments. A court order approving an assignment under subsection (6) of this\nsection shall direct the assignee to pay the fee t o the corporation no later than ten\n(10) days after entry of the order.\n(12) A certified copy of a court order approving a voluntary assignment under subsection\n(6) of this section shall be delivered by certified mail, return receipt requested, to\nthe corp oration's registered agent at least thirty (30) days prior to the date upon\nwhich the first assigned payment is to be paid to the assignee. Within ten (10) days\nof receipt of the court order, the corporation shall acknowledge in writing to both\nthe assignor and the assignee its receipt of the court order and that the corporation\nshall thereafter make the prize payments in accordance with the court order.\n(13) Subsection (6) of this section supersedes and prevails over any provision in the\nUniform Commercial Code, including KRS 355.9-406.\n(14) The right to assign prize payments pursuant to subsection (6) of this section shall be\nsuspended upon:\n(a) The publication by the United States Internal Revenue Service, hereinafter\nreferred to in this subsection as the  \"Service,\" of a revenue ruling or other\npublic ruling of the Service, which rules that, based upon the right of\nassignment provided in subsection (6) of this section, Kentucky lottery\nprizewinners who do not assign any prize payments would be subject to a n\nimmediate income tax liability for the value of the entire prize rather than\nannual income tax liability for each installment when paid; or\n(b) The issuance by a court of competent jurisdiction of a published decision\nholding that, based upon the right o f assignment provided in subsection (6) of\nthis section, a lottery prizewinner who does not assign any prize payments\nunder that subsection would be subject to an immediate income tax liability\nfor the value of the entire prize rather than annual income tax liability for each\ninstallment when paid.","path":["KRS Chapter 154A"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=3019","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:58Z","sha256":"769f68e1db02ff052b0095c78306c9a3e0442d63108baf4c775b4fbc29601868","source_id":"us-ky","stale":false,"prev":"us-ky/krs-154a.100","next":"us-ky/krs-154a.120"},"notice":"GroundRules: Original legal text. Not legal advice."}