(a) Definitions. In addition to the definitions provided in §401.301 of this title (relating to General Definitions), and unless the context in this section otherwise requires, the following definitions apply.
  (1) Available--The status in the lottery management system for a pack of scratch tickets that is stored in the scratch ticket distribution warehouse and is available to be assigned to a retailer's account. Scratch tickets in a pack in this status shall not be sold to the public and prizes contained in scratch tickets in the pack cannot be validated.
  (2) Issued--The status in the lottery management system for a pack of scratch tickets that has been assigned to a retailer's account and is pending confirmation of delivery to the retailer's location. Scratch tickets in a pack in this status shall not be sold to the public and prizes contained in scratch tickets in the pack cannot be validated.
  (3) Confirmed--The status in the lottery management system for a pack of scratch tickets that has been physically received at the retailer's location. A retailer is required to "confirm" receipt of a pack of scratch tickets upon delivery to the retailer's location. Scratch tickets are confirmed using the lottery terminal located in the retailer's business location and the status is recorded in the lottery management system. Scratch tickets in a pack in this status shall not be sold to the public and prizes contained in scratch tickets in the pack cannot be validated.
  (4) Active--The status in the lottery management system for a pack of scratch tickets that has been physically received at the retailer's location and that is being offered for sale to the public. A retailer is required to "activate" a pack of scratch tickets prior to selling the tickets to the public. A pack of scratch tickets is activated using the lottery terminal located in the retailer's location and the status is recorded on the lottery management system. A pack of scratch tickets shall be placed in this status prior to being sold to the public and prizes contained in scratch tickets in the pack may be validated.
  (5) Settled--The status in the lottery management system for a pack of scratch tickets that has been physically received at the retailer's location, has been activated and the cost of the tickets in the pack has been or is being charged to the retailer's account. Scratch tickets "settle" against a retailer's account and the value of the settled packs are swept from the retailer's bank account through an electronic funds transfer. Settled scratch tickets are recorded in the lottery management system. Scratch tickets in a pack in settled status may be sold to the public and prizes contained in scratch tickets in the pack may be validated.
  (6) Unactivated Scratch Tickets--Unactivated scratch tickets are tickets in Available, Issued or Confirmed status. Unactivated tickets have never been activated or settled and no prizes have been validated.
(b) Responsibility for Lottery Tickets Received and Subsequently Stolen or Lost.
  (1) Except as otherwise expressly provided by this subsection, each retailer shall bear the risk of loss for all lottery tickets received. Receipt of tickets by a retailer shall constitute a purchase of such tickets, and each retailer shall be liable to the commission for the retail sales price of such tickets, less any applicable commission or credit.
  (2) Notwithstanding paragraph (1) of this subsection, a retailer may return, and receive an accounting indicating that the packs have been removed from the retailer's inventory for, full and complete packs of unactivated tickets in original condition. Nothing in this subsection waives the requirements of §401.361 of this title (relating to Required Sales of Lottery Tickets).
  (3) Notwithstanding paragraph (1) of this subsection, the director may charge a retailer full face value of an activated pack of tickets if prizes have been paid from the pack. The director may credit a retailer's account for a range of activated tickets in a pack reported as stolen or lost provided that no validations have occurred on tickets in the range reported as stolen or lost if:
    (A) the pack has been stolen and the retailer, within 24 hours of the discovery of the theft, has made a formal report of such theft to both:
      (i) appropriate local law enforcement authorities; and
      (ii) the commission's enforcement division through the lottery operator hotline;
    (B) the pack has been lost and cannot be located by the retailer and the retailer, within 24 hours of discovery of the loss, has made a formal report of the loss to the commission's enforcement division through the lottery operator hotline.
  (4) A retailer shall report each stolen or lost pack of tickets to the commission's enforcement division through the lottery operator hotline within 24 hours of the discovery of the theft or loss.

Source Note: The provisions of this §401.370 adopted to be effective December 1, 2004, 29 TexReg 8810; amended to be effective December 31, 2017, 42 TexReg 7385; amended to be effective November 2, 2023, 48 TexReg 6353