Current through Register Vol. 63, No. 9, September 1, 2024
(1) General: It is the policy of the Oregon
State Lottery to place Video Lottery game terminals in retail businesses which
are viable businesses on their own without benefit of selling Video Lottery. At
any point in the application process, the director or director's designee may
require additional documentation and explanation about the applicant's business
operation plans such as, but not limited to, length of experience in the type
of business, prior ownership and/or management of businesses in general, sales
and profitability projections, and location suitability, as deemed necessary to
evaluate the viability of the business.
(2) Exceptions:
(a) When the contract for a retailer premises
is terminated due to sale of business, change of ownership, or 100% stock
buyout, the resulting contract application for the same retailer premises is
exempt from the interest form, waitlist, and open and operating requirements of
this rule so long as the data line is not removed from the retailer
premises.
(b) A Video Lottery
retailer contract applicant who meets the requirements for the alternative
disclosure process authorized by OAR 177-040-0001(4)(a)(B) is exempt from the
interest form, waitlist, and open and operating requirements of this
rule.
(3) Interest Form
Required. On July 5, 2023, the Lottery shall establish a Video Lottery Retailer
Contract Application Waitlist. The waitlist shall be comprised of persons
described in section (5) of this rule and any other interested applicant who
has submitted an interest form to the Lottery at
https://www.oregonlottery.org/vlform/
and who meet the requirements of this rule. Interested applicants will be
ordered on the waitlist based on the date their interest from was received by
the Lottery. The Lottery may remove an interested applicant from the waitlist
if the Lottery determines the person does not meet the requirements in this
section or if the applicant withdraws from the process or is otherwise
determined by the Lottery to be uninterested or ineligible.
(a) An interested applicant must provide all
information requested by the Lottery on the interest form so the Lottery can
verify the potential applicant meets Lottery retailer contract requirements
such as, but not limited to, business registration, OLCC licensure, and
willingness to pay a nonrefundable network service installation fee if selected
to start the application process.
(b) Unless an exception is approved, an
interested applicant must attest that the establishment where Video Lottery
terminals will be placed if approved for a Video Lottery retailer contract has
been open to the public and operating continuously for nine months as described
in section (4) of this rule. Current Video Lottery retailers who may qualify
for an exception under subsection (4)(b) of this rule must provide all
requested information regarding their current Video Lottery retailer
locations.
(4)
Requirement to be open to the public and operating continuously for at least
nine months. Unless an exception is approved under subsection (b) of this
section, the establishment where Video Lottery terminals will be placed if
approved for a Video Lottery retailer contract must have been open to the
public and operating continuously for at least nine months. Lottery may require
any documentation or explanation from the applicant that Lottery deems
necessary to determine whether the applicant's business has been open to the
public and operating continuously for the required period.
(a) For the purpose of this rule, "operating
continuously" means a business is open to the public and makes available for
sale all products or services the applicant sells. For purposes of this
definition, opening for brief periods of time and/or offering limited products
and/or services will be considered an attempt to circumvent the intent of this
section and will not be considered as operating continuously.
(A) Interruptions: The continuous period of
operation shall not be considered interrupted if any suspension of operations
was for two days or less. The intent of this subsection is that there will not
be a significant interruption of the business during the continuous period of
operation so that the Lottery may reasonably rely on sales information and
business history which remains relevant to the application. The Director may
find that the continuous period of operation was not interrupted when the
suspension of operation is for an aggregate of more than two business days upon
a showing by the applicant that the sales information and business history
remains relevant.
(B) Purchase: If
the substantial assets of a business or premises were purchased by the person
applying for a Video Lottery retailer contract prior to the date the
application process is initiated, the period of operations under the prior
owner shall be considered in determining the period of operations, provided
that the new business is being operated as the same or similar type of business
and the primary business of the prior owner was the offering of meals or
alcoholic beverages for on-premise consumption. The intent of this rule section
is to prevent evasion of the rule's requirement by means of superficial
transactions such as the mere purchase of a business trade name rather than a
bona fide acquisition of the substantial operating assets.
(C) Move: If a business moves to a different
location prior to the date the application process is initiated, the period of
operations at the old location shall be considered if:
(i) The new location is in essentially the
same community as the old location and serves essentially the same customer
base; and
(ii) The business
conducted at the new premises is a continuation of the business conducted at
the old premises rather than the establishment of an additional
location.
(iii) The burden of proof
for establishing subsections (A) and (B) of this subsection is on the
applicant.
(b)
The Assistant Director for Security or designee may waive the requirement that
a business be open and operating for nine months prior to application only if
the following criteria apply.
(A) The
applicant currently has active Video Lottery retailer contracts at two or more
locations;
(B) The applicant has
held active Video Lottery retailer contracts at two or more locations for at
least two years;
(C) The
applicant's new location(s) have the same ownership as the locations identified
in subsections (a) and (b) of this section;
(D) The applicant's new location(s) will have
the same business model as other current locations; and
(E) Contracting with the applicant for an
additional location will not jeopardize the fairness, integrity, security, and
honesty of Lottery's operations, as determined by the Assistant Director for
Security or designee.
(5) Other Applicants Eligible for Waitlist.
Any interest form submitted to the Lottery at
https://www.oregonlottery.org/vlform/
by December 30, 2022 at 11:59 p.m., but not otherwise selected to move forward
in the Video Lottery retailer contract application process, will be placed at
the front of the waitlist. These interested applicants will be ordered on the
list based on the date the Lottery received their interest form with those
submitted first in time listed before interest forms submitted later in
time.
(6) Processing the Waitlist.
On July 5, 2023, and no less than annually thereafter, the Director shall
determine if there is sufficient Video Lottery Terminal inventory to process
additional Video Lottery retailer contract applications, and whether such
additional contracts will maximize revenue to benefit the public purposes
described in Article XV, section 4, of the Oregon Constitution, commensurate
with the public good. The Director shall make these determinations no less than
annually; apart from that requirement, the frequency of these determinations
shall be left to the Director's discretion.
(a) If applications will be processed for a
given time period, the Director shall determine the number that will be
processed and Lottery shall process applicants from the waitlist in the order
received. The number of applications to be processed for a given time period
may be subject to adjustment at the Director's discretion, based on
availability of inventory and other relevant considerations. (The order
received is based on the date stamp indicating when the interest from was
received by the Lottery after being submitted by the applicant at
https://www.oregonlottery.org/vlform/.)
(b) Notwithstanding subsection (a), the
Lottery may prioritize an applicant on the waitlist if the Lottery has reason
to believe that approving a contract for that applicant may meet any of the
following goals in ORS
461.300:
(A) The applicant would best serve the public
convenience by improving the availability of Video Lottery games in a
particular geographic area. (For example, the Lottery may consider VLTs per
capita or other metrics and prioritize applicants from geographic areas that
are likely to best support additional Video Lottery retailer
locations.)
(B) The applicant would
promote the sale of tickets or shares because, for example, the applicant or
applicant's business model has demonstrated success in selling Video Lottery
games.
(c) Unless
otherwise determined uninterested or ineligible, any applicant selected from
the waitlist shall have the opportunity to complete the full retailer contract
application process, including the background check process. Selection to apply
does not guarantee the applicant will be approved for a contract and such
approval remains subject to Lottery's discretion.
(d) In addition to the requirements in
section (4) of this rule:
(A) Except as
provided in paragraph (B) of this subsection, any applicant selected from the
waitlist must be currently open and operating to initiate an
application.
(B) If the business is
not open and operating due to a remodel, renovation, or repair, the Lottery may
allow the business no more than 90 days to become open and operating to
initiate the application process.
(7) Managing Video Lottery Retailer
Applications to Prevent a Concentration: The Lottery will manage the Video
Lottery retailer application process to avoid creating a concentration as
defined in OAR 177-045-0000(1):
(a) The
Lottery will not initiate the application process or consider or process an
application when the application would, if approved, create a
concentration.
(b) When there is an
area at risk for a concentration, the Lottery will manage the application
process such that no concentration is created. For example, the Lottery will
only allow one application to be processed or considered at a time if more than
one application would, if approved, create a concentration. In the event that
more than one applicant has requested to initiate the application process, the
Lottery will use a first come, first serve basis to select among applicants as
needed to avoid creating a concentration.
(8) Selection Process Where Concentration of
Video Lottery Retailers Exists: If there is a location of existing Video
Lottery retailers that creates a concentration of Video Lottery retailers, the
director must resolve the concentration by selecting retailer locations to
either relocate or terminate their retail contract:
(a) Except as provided in subsection (b) of
this section, the director must select as many retailers as needed to relocate
or terminate their retail contract based on last-in, first-out, meaning that
the retailer locations with the most recently-approved retail contract will be
required to relocate or terminate their retail contract to resolve the
concentration.
(b) If a retailer
location selected under the last-in, first-out standard in subsection (a) of
this section is owned by a person who owns other retailer locations in the
concentration, the director may consult with the owner when selecting which
location must relocate or terminate their retail contract.
Statutory/Other Authority: Or Const, Art XV, § 4(4)(a),
ORS 461.120,
461.200,
461.217 & 461.300
Statutes/Other Implemented: Or Const, Art XV, § 4, ORS
461.150, ORS
461.200, ORS
461.215, ORS
461.120,
461.200,
461.217 &
461.300
