Current through Register Vol. 47, No. 5,
March 10, 2024
BASIS AND PURPOSE FOR AMENDED RULE 2
The purpose of Rule 2 is to establish and provide the
specific factors required for determining eligibility of an applicant desiring
to obtain a license for the sale of Lottery products to the public; to specify
certain duties of the licensees; to authorize the Director to establish bonding
protection for the State of Colorado; to describe the types of limitations
which may be placed upon licenses issued by the Director; to provide for the
circumstances upon which the Director may terminate licenses and issue
duplicate licenses; to specify certain terms, conditions and duties required of
licensees authorized to sell Lottery game products; to specify the rights of
the licensee, as well as the detailed operation of the Lottery at the retail
sales level. The provisions of Rule 2 are necessary in order to promote the
public interest, as well as the security and efficient operation of the
Lottery. The statutory basis for Rule 2 is found in C.R.S.
44-40-107 and
44-40-109(1)(a) and
(2).
2.1
Application for License to Sell
Lottery Products
a. Any person may
apply to the Lottery for a license to sell Lottery products as a licensee by
filing an "Application for Lottery Retail License." Such application shall be
completed under penalty of perjury on a form approved by the
Director.
b. A fee in an amount to
be determined by the Director shall be paid by the applicant to the Lottery.
This fee shall be paid at the time of the issuance of the license.
2.2
Licensee's
Commission
Each licensee shall be entitled to receive a payment for the
sale or authorized disbursement of Lottery products by said licensee as
provided for in Rules 5.10, 10.14, 10.A.15, 10.D.9 and 14.11.
2.3
Eligibility for License
a. The Director shall issue licenses for the
sale of Lottery products in accordance with the provisions of C.R.S.
44-40-107 and these Rules and
Regulations. The Director shall license only such persons who, in the
Director's opinion, will best serve the public interest and trust in the
Lottery and promote the sale of Lottery products. Prior to issuing any license,
the Director shall consider the following factors:
1. The moral character and reputation of the
applicant per C.R.S.
44-40-107(4)
(e).
2. The financial responsibility and security
of the applicant and its business or activity.
3. The accessibility of the public to the
licensed premises proposed by applicant.
4. The number and sufficiency of existing
licenses to serve the public interest.
5. The volume of applicant's expected Lottery
ticket sales.
6. The security and
efficient operation of the Lottery.
7. Whether the applicant is ineligible under
the provisions of C.R.S.
44-40-107(4).
b. In addition, the Director shall
consider the following factors:
1. Business
and security considerations which include but are not limited to:
i.) Past security problems;
ii.) Credit history of owners, officers and
the business entity;
iii.) History
of administrative or regulatory actions.
2. Marketing considerations which include but
are not limited to:
i.) Projected sales of
Lottery products
ii.) Willingness
to promote lottery products.
2.4
Duties of Licensees
In order to promote the public interest and the security and
efficient operation of the Lottery, each applicant shall agree, if granted a
license, to perform the following terms, conditions and duties:
a. To be bound by and comply with all lawful
provisions of Article
40, Title
44, C.R.S. and the Rules and Regulations
adopted pursuant thereto; as well as with any lawful instructions or directives
issued by the Director.
b. To
actively promote the sale of Colorado Lottery products and make them available
for sale at all times the system is available and at the times that are
consistent with the business hours of operation.
c. To pay prizes up to and including $599.00
to the ticket bearer for any scratch and/or online products validated by the
retailer. All products validated by a retailer must be paid by that retailer.
1. The retailer must maintain sufficient
funds to pay all scratch and/or online product claims of $150 or less by cash,
check, or money order.
2. The
retailer will be prompted at the time of validation whether to accept the
validation for prizes greater than $150 but less than $600. If a retailer
accepts and validates the ticket, the prize must be paid.
3. Prizes shall be paid during the normal
business hours of the licensee provided the validation system is operational
and claims can be validated. The licensee shall not charge the claimant a fee
for payment of a prize or for cashing a business check drawn on the licensee's
account.
d. To maintain
authorized displays, notices, and other materials used in connection with the
sale of Lottery products in accordance with reasonable instructions or
directives issued by the Director.
e. To maintain a complete and accurate set of
books of account, correspondence and records of all Lottery transactions and
operations, including but not limited to the receipt, sale, handling,
inventory, and returns for credit for all Lottery game products received by
licensee, and any books of account, correspondence, reports and records that
may be required for Lottery game products. Books, correspondence and records
referencing the Lottery account must be made available during normal business
hours, with or without prior notice, to any duly authorized representative of
the Lottery for inspection and audit by an auditor selected by the Commission
or Director.
f. To allow
inspections of the licensed premises by duly authorized representatives of the
Division during normal business hours, to determine compliance with the
provisions of the Act, Rules and Regulations, instructions and directives of
the Lottery Director.
g. To
indemnify and hold the State of Colorado, the Colorado Lottery and the Colorado
Lottery Commission harmless from any and all liabilities, claims, actions, and
judgments of any kind or nature arising from or relating to the licensee's acts
or omissions in the operation and conducting of the sale of Lottery
products.
h. To pay an
administrative fee, to be determined by the Lottery Director, to reimburse the
Colorado Lottery for inactive scratch tickets that are lost due to negligence
or misconduct of the licensee.
i. To
provide confirmation that the licensee is not a member of the Lottery
Commission, employee of the Lottery or current Lottery contractor.
j. To agree that all Lottery products shall
be deemed to have been purchased by the licensee as of the date each book of
Instant/Scratch products is activated, at the price, less applicable
commission, established by the Commission; and that the licensee shall make
payment to the Colorado Lottery in a timely manner as established by the
Lottery's electronic funds transfer (EFT) policy for any and all Lottery
Instant/Scratch products which are activated and offered for sale to the public
including products that have been sold, but not activated.
k. To pay a communication and/or
administrative fee at the discretion of the Director in an amount to be
determined by the Director to cover operational costs to the Lottery in
servicing said retailer account.
l.
To maintain a secure place for unsold Lottery products upon instruction or
directive by the Director or designee.
m To prominently display the Colorado Lottery
license in an area visible to the general public.
n. To agree that all unclaimed prizes from
all Lottery products remain the property of the State of Colorado as set forth
in C.R.S. 44-40-113 and C.R.S. 40.40.114.
o. To pay, without reimbursement,
all electricity charges in conjunction with the operation of the terminal
equipment related to the sale of Lottery products.
p. To participate in Lottery training
sessions and provide staff training.
q. To use signage identifying the location as
a Lottery retailer. Nothing herein shall require retailer to install signage
which is in violation of any state, local, or municipal code.
r. To provide authorization for an account
with EFT (Electronic Funds Transfer) capability to be used for weekly billing
of all Lottery products;
s. To
maintain a balance in the account sufficient to cover payment due the Lottery
for the established billing period. The Lottery shall utilize EFT to withdraw
the amount due the Lottery on the day specified by the Director. In the event
the day specified for withdrawal occurs on a legal holiday, withdrawal shall
occur on the following business day.
t. To sell Scratch products in consecutive,
numerical order.
u. To sell Lottery
products for cash only, inclusive of checks, money orders and debit cards, and
shall not sell Lottery products on a credit or any other non-cash basis.
Licensee shall not exchange Lottery products and/or books with any other
person, including other licensees.
v. To play Lottery games, if so desired, in a
responsible and fair manner. Licensees are prohibited from playing Lottery
games by using any method other than random, fair chance, or by any method
contrary to the principle that every Lottery ticket has an equal and random
chance of winning.
w. In addition
to the requirements listed in the previous sub-paragraphs of 2.4, a licensee
authorized to sell online game products shall agree to the following terms,
conditions and duties:
1. To print online
products only on the specific ticket stock issued by the Lottery to the
specific retail outlet and not transfer ticket stock to any other
outlet;
2. To acknowledge that the
online terminal and supplies issued by the Lottery or the online vendor remain
the property of Lottery or online vendor. The licensee shall exercise due
diligence in the operation of the online terminal and immediately notify the
Lottery and the central computer facility of any equipment, communications line
or online systems malfunction, such as the issuance of an invalid online
ticket, or the inability to generate or redeem an online ticket. The licensee
shall not perform any mechanical or electrical maintenance on the online
terminal. The licensee shall not move, alter or tamper with the terminal except
as required by the Lottery or its agent.
3. To provide without reimbursement the full
cost of terminal installation and hookup charges any and all charges related to
the sale of Lottery products, as specified by the Lottery.
4. To provide, without reimbursement, any
requirement the Lottery deems necessary for terminal installation and
maintenance of equipment related to the sale of Lottery products;
5. To pay, without reimbursement, all
communication charges in conjunction with the operation of the terminal
equipment related to the sale of Lottery products, unless otherwise specified
by the Director.
2.5
ADA - American's with Disabilities
Act
To prohibit discrimination, no Lottery retailer shall
discriminate against any individual on the basis of disability in the full and
equal enjoyment of Lottery-related goods, services, facilities, privileges,
advantages or accommodations of any Lottery Licensed Facility.
a. Each applicant for a Lottery license shall
review his/her retail facility for compliance with the Federal ADA (American's
with Disabilities Act) as it pertains to the sale of Colorado Lottery
products.
b. To assist applicants
with this inspection, the Lottery will include a list of compliance
requirements with the retailer application paperwork.
c. The facility analysis shall begin where
the customer parks, moves through the path of travel to the Lottery sales area
of the store.
d. The applicant is
required to correct any ADA noncompliant areas prior to applying for a Colorado
Lottery sales license.
e. The
applicant must complete the Lottery license application form pertaining to ADA
status.
f. Any physical
modifications or changes to a licensed location must be in compliance with the
ADA requirements for Colorado Lottery licensed retailers.
g. The Colorado Lottery allows for
alternatives to barrier removal at retail locations. Such alternatives may
include, but are not limited to:
1. Providing
curb service; and/or
2. Drive thru;
and/or
3. Relocating activities to
accessible licensed locations
h. The Colorado Lottery will actively pursue
any complaint it receives regarding the inaccessibility of Lottery products at
any of its licensed locations. If a location is found to be noncompliant, the
retailer is required to correct the area(s) of noncompliance. Noncompliance of
Colorado Lottery ADA requirements may result in license suspension or
revocation proceedings.
The ADA guidelines listed for potential retail outlets were
written following the directives enacted by the Federal ADA Act of 1990. The
requirements listed in the Federal ADA Act of 1990 are not solely specific to
the Colorado Lottery and its retailers. The Federal ADA Act of 1990 is enforced
by the United States Department of Justice.
2.6
Licensing Disqualifications
A license shall not be granted to:
a. Any person who will engage in business
exclusively as a Lottery sales agent, unrelated to any other commercial
business activity.
b. Any person
who has provided false or misleading information to the Lottery.
c. Any person who is deemed not financially
responsible to operate a business.
d. Any person whose proposed licensed
premises is a residence or, by reason of its location is not accessible to a
sufficient number of persons so as to reasonably justify the Lottery's
expenditure of public monies to provide and deliver Lottery products, services,
and supplies to such a location. In making such a determination, the Director
shall consider the possible economic benefit to the State and the convenience
to the public to be gained from licensing such person.
e. Any person whose volume of Lottery ticket
sales projected or anticipated is such as not to reasonably justify the
Lottery's expenditure of public monies to provide and deliver Lottery products,
services, and supplies to such a location, when considering the possible
economic benefit and convenience to the public to be gained there from. For the
purpose of initial licensing, a projected or anticipated volume of instant game
Lottery ticket sales must meet the current minimum sales requirement as
determined by the Lottery Director.
f. Any sole proprietor who is not a resident
of the State of Colorado.
g. Any
corporation that is neither incorporated in, nor authorized to do business in,
the State of Colorado.
h. Any
Limited Liability Company (L.L.C.), that is not incorporated in or authorized
to do business in the State of Colorado.
i. Any partnership, or association, or other
type of business entity, none of whose general partner(s), member(s), or
representative(s) is a resident of the State of Colorado.
j. Any person who has been convicted, within
ten years of an application, of a felony crime, including but not limited to,
robbery, burglary, theft, trespass, criminal mischief, forgery, computer crime,
bribery, perjury, offenses related to judicial and other proceedings,
telecommunications crimes, racketeering, or the distribution, sale,
manufacturing, dispensation or possession of drugs or drug paraphernalia. Other
convictions, whether felony or misdemeanor, may relate to a determination that
the person is not of good character and reputation and may lead to the denial
of a license.
k. Any business
entity member that has an outstanding liability with the Colorado Lottery
including amounts transferred to Central Collection Services or has been
written off by the Colorado Lottery due to bankruptcy or for
non-payment.
2.7
License Suspension/Revocation
a. The
Director may order the removal of such terminal from a location after
considering factors which include but are not limited to:
1. Sales volume which does not meet
established standards;
2. Failure
to generate sufficient sales volume to cover the Lottery's administrative
costs.
b. The Director
may immediately suspend a retailer's Lottery operation, order removal of an
online terminal from a retail location, or take any other action necessary in
the event the licensee:
1. Fails to comply
with any rule established by the Commission or any instruction issued by the
Director.
2. Tampers with or
attempts to tamper with the online terminal or system.
3. Fails to make payment of a validated prize
or makes payment and the payment is dishonored for any reason.
4. Fails to make payment to the Lottery or
makes payment to the Lottery and the payment is dishonored for any
reason.
2.8
Bonding Requirement
No license shall be issued or renewed by the Director, unless
the applicant or licensee is first bonded in such an amount and type as may be
required by the Director to protect the State against any monetary loss that
may arise from the licensee's purchase and sale of Lottery products.
Such bonding may take the form of any instrument that is
determined by the Director to satisfy the requirements of C.R.S.
44-40-107(1) and
C.R.S. 44-40-121.
2.9
Limitations on Licenses
a. Unless otherwise limited or conditioned
pursuant to the provisions contained in subparagraph 2.9 c) hereof, each
license issued by the Director for the sale of Lottery products shall limit the
sale thereof solely to the licensed premises; and shall terminate unless timely
renewed. The Director may limit a licensee to a particular type of Lottery
game.
b. A license may be renewed
upon the timely payment of a renewal fee to be determined by the
Director.
c. In order to protect
the public interest and trust in the Lottery and to further the sale of Lottery
products, the Director may, but shall not be required to, issue a license for
special events containing reasonable limitations or conditions. Such
limitations and conditions may include any one or all of the following:
1. The length of license period;
2. The hours and days of Lottery ticket
sales;
3. The location of
sale;
4. The specific person who
may be allowed to sell Lottery products;
5. The specific sporting, charitable, social,
or other special event where Lottery products may be sold;
6. Such other limitations or conditions of
licensing as determined by the Director to best serve the public convenience;
to promote the sale of Lottery products; to protect the security and integrity
of the Lottery games; or as may be otherwise necessary or desirable for the
efficient and economical operation and administration of the Lottery.
d. For the purpose of 2.9 c), a
special event shall mean a specific sporting, charitable, social event, or
other specific location or activity, such as a fair, which, by reason of its
limited duration or other special character requires the issuance of a license
containing such limitations or conditions as described above in order to
protect the security and integrity of Lottery games.
2.10
Provisional License
a. The Director may issue a provisional
license to an applicant pending the completion of the processing required under
Paragraph 2.3, after receipt of the person's fully completed application and
completion of a preliminary background check. The provisional license shall
expire at the time of issuance of the general license or ninety (90) days from
the date the provisional license is issued, whichever occurs first. The
provisional license may be extended by the Director for one additional ninety
(90) day period of time.
b. The
Director may issue a provisional license to an applicant for renewal of a
general license when a determination has been made and it becomes necessary to
authorize a licensee to sell products pending approval of the application for
general license renewal. The provisional license shall expire at the time of
the issuance of the general license renewal or ninety (90) days from the date
the provisional license is issued, whichever occurs first.
2.11
Non-Transferability of
License
A license issued pursuant to these Rules and Regulations
shall not be assignable or transferable. If either the person who has signed
the application for licensure is no longer employed by the licensee in the
capacity stated on the application or if the ownership of the licensee
substantially changes, the Director reserves the right to terminate the
license. The licensee shall notify the Director in writing at least thirty (30)
days prior to any such proposed change. A substantial change in ownership shall
mean a transfer of ten percent (10%) or more of either the equity of such
business, or the decision-making authority thereof.
2.12
Duplicate Licenses
Upon the loss, mutilation or destruction of any license
issued by the Director, a duplicate license can be issued. A mutilated license
shall be surrendered to the Director upon issuance or denial of a duplicate
license. A lost license, when found, must be immediately surrendered to the
Director.
