10 Del. Admin. Code § 206-4.0

Current through Reigster Vol. 28, No. 6, December 1, 2024

Section 206-4.0 - Licensing of Agents

License Applications

4.1 Any potential Internet lottery agent who is already licensed as a Delaware State Lottery video lottery agent is not required to apply for a separate Internet lottery license. Any such agent must, however, file with the agency, the names, addresses, employer identification or social security numbers (if applicable) and dates of birth of its directors, officers or partners, owners, key employees and Internet lottery operations employees not already provided under the agent's video lottery license application. The agent must also submit an amendment to its video lottery business plan.

4.2 Any applicant desiring to obtain a license to act as an Internet lottery agent shall apply to the agency on forms specified by the Director from time to time. Application forms shall require the applicant to provide the following, without limitation:

4.2.1 The applicant's legal name and form of entity (e.g., general or limited partnership, corporation);

4.2.2 The names, addresses, employer identification or social security numbers (if applicable) and dates of birth (if applicable) of its directors, officers, partners, owners, key employees, and Internet lottery operations employees.

4.2.3 A Statement of Eligibility to hold an Internet lottery license, including disclosure regarding the applicant, or any persons identified in subparagraph 4.2.2, who have:

4.2.3.1 Been convicted of an offense other than a traffic violation;

4.2.3.2 Been subject to any disciplinary action, past or pending, by any administrative, government, or regulatory body;

4.2.3.3 Been charged with a violation of any statute, rule, regulation, or ordinance of any administrative, regulatory, or other government body; or

4.2.3.4 Been in default of any taxes, fees, or other obligations owed to the State of Delaware, local or federal government.

4.2.4 The following documentation in conjunction with application forms as required by the Director:

4.2.4.1 A copy of a license issued by the Delaware Division of Revenue to conduct business in the State of Delaware;

4.2.4.2 A personal financial statement of and for the applicant, or any persons identified in subparagraph 4.2.2, OR, at the Director's discretion, copies of the applicant's audited financial statements for the previous three years;

4.2.4.3 Copies of the State and Federal tax returns for the most recent three completed tax years for the applicant, or any persons identified in subparagraph 4.2.2;

4.2.4.4 Personal Guaranty (corporations only);

4.2.4.5 Notarized Criminal History Affidavit signed by the applicant and all persons identified in subparagraph 4.2.2;

4.2.4.6 Delaware criminal history record for the applicant and any persons identified in subparagraph 4.2.2;

4.2.4.7 Federal criminal history record for the applicant and any persons identified in subparagraph 4.2.2; and

4.2.4.8 Any and all other information as the Director may require to determine the competence, honesty and integrity of the applicant as required by Title 29 of the Delaware Code.

4.3 The application, as well as other documents submitted to the agency by or on behalf of the applicant for purposes of determining the qualifications of the applicant or agent, shall be sworn to or affirmed before a notary public. If any form or document is signed by an attorney for the applicant, the signature shall certify that the attorney has read the forms or documents and that, to the best of his knowledge, information and belief, based on diligent inquiry, the contents of the form or documents so supplied are true.

4.4 On request of the agency, the applicant shall supplement the information provided in the application form as deemed necessary by the agency. The applicant shall furnish all information, including financial data and documents, certifications, consents, waivers, individual history forms, tax returns, cancelled checks or other materials required or requested by the agency for purposes of determining the qualifications of the applicant or agent.

4.5 To the extent, if any, that the information supplied in the application or otherwise supplied by the applicant or on the applicant's behalf, becomes inaccurate or incomplete, the applicant shall so notify the agency in writing as soon as it is aware that the information is inaccurate or incomplete, and shall at that time supply the information necessary to correct the inaccuracy or incompleteness of the information.

4.6 The applicant shall cooperate fully with the agency and the Division of Gaming Enforcement (DGE) with respect to its background investigation of the applicant. Among other things, the applicant, on request, shall make available any and all of its books or records for inspection by the agency or the DGE.

4.7 The Director shall weigh the following factors in evaluation of the application:

4.7.1 The criminal background, if any, of the applicant, or any of its officers, directors, partners, owners, key employees, and Internet lottery operations employees. No license shall be issued to any applicant if any of the persons identified in this subsection have been convicted, within 10 years before the filing of the application, of any felony, a crime of moral turpitude or a crime involving gambling;

4.7.2 The extent to which, if any, the applicant would be subject to the control or influence of its activities by any person having a financial interest pertaining to the applicant, including a mortgage or other lien against property of the applicant or, who in the opinion of the agency, might otherwise influence its activities. In such case the Director shall consider the character, honesty and integrity of whoever has the ability to control or influence the activities of the applicant.

4.7.3 The degree to which the applicant has supplied accurate and complete information in response to the requirements of these regulations.

4.7.4 Whether the applicant has demonstrated the business ability and experience necessary to satisfactorily conduct the Internet lottery operations.

4.7.5 Whether the person, or any of its officers, directors, partners, owners, key employees, or gaming employees are known to associate with persons of nefarious backgrounds or disreputable character such that the association could adversely affect the general credibility, security, integrity, honesty, fairness or reputation of the lottery.

4.7.6 With respect to any past conduct which may adversely reflect on the applicant, the nature of the conduct, the time which has passed since the conduct, the frequency of the conduct and any extenuating circumstances which affect or reduce the impact of the conduct or otherwise reflect on the applicant's fitness for the license.

4.7.7 The extent, if any, to which the applicant has failed to follow any applicable tax laws of the federal, state or local governments.

4.7.8 Any other information before the Director, including substantially similar background investigations performed by other agencies or jurisdictions, which relates to the applicant's competency, financial capability, honesty, integrity, reputation, habits, or associations.

4.8 A license shall be issued to the applicant if the Director is satisfied, on consideration of the factors specified in subsection 4.7, that the applicant would be a fit agent and not pose a threat to the public interest, the reputation of the lottery, or the effective control of the lottery. At the discretion of the Director, a license may be issued as "conditional" based on information received or determinations made during the Internet lottery application process.

4.9 If the Director proposes to deny a license application and the agency is subject to the requirements contained in subchapter IV of 29Del.C. Ch. 101, the agency shall first give written notice to the applicant of the intended action, the reasons therefore, and the right to a hearing as provided for in 29Del.C. Ch. 101.

4.10 To the extent provided by law, any information obtained in response to this Section 4 shall be held in confidence and not subject to the Delaware Freedom of Information Act, 29Del.C. Ch. 100.

License Conditions

4.11 The approval of any license or the renewal of a license to an agent is subject to the following conditions:

4.11.1 Agents shall have a valid license to conduct business in the State of Delaware, shall follow all applicable tax provisions, and shall in all other respects be qualified to conduct business in Delaware.

4.11.2 Operation in response to a license issued under these regulations shall signify agreement by the agent to abide by all provisions of the regulations, including those contained in this section.

4.11.3 The agent shall submit a business plan for the conduct of Internet lottery operations to the agency. Such plan shall be submitted in conformity with a separate form specified and supplied by the agency. The plan shall include, without limitation, the requirements specified in the MICS.

4.11.4 The agent shall submit to the Director a description of its system of internal procedures and administrative and accounting controls which shall conform to the rules and regulations of the agency and be otherwise satisfactory to the Director in his sole discretion.

4.11.5 The agent shall keep current on all payments, tax obligations and other obligations to the agency and other licensees with whom Internet lottery business is conducted. The agent shall pay the players and transfer the net proceeds to the State lottery fund in conformity with the requirements set forth in these regulations and 29Del.C. Ch. 48.

4.11.6 The agent shall at all times make its premises available for inspection by authorized representatives of the agency or the DGE personnel, on a 24-hour unannounced basis. The Lottery and the DGE shall be authorized entry to the premises and access to any Internet lottery equipment or records of the agent without acquiring a warrant.

4.11.7 The agent and any entity owned by the agent in which the agent has a controlling ownership interest shall consent in writing to the examination of all accounts, bank accounts, and records under the control of the agent or the owned entity; and, on request of the agency, shall authorize all third parties in possession or control of the said documents to allow the agency to examine such documents.

4.11.8 To the extent permitted by law, an agent accepts all risks of adverse public notice, embarrassment, criticism, damages, or financial loss which may result from any disclosure or publication of material or information supplied to the agency in connection with the application for the agent's operations.

4.11.9 An agent has a continuing duty to maintain suitability for licensure. A license does not create a property right, but is a revocable privilege contingent on continuing suitability for licensure.

Modification to and Surrender of License

4.12 Any license granted may not be transferred, assigned or pledged as collateral. A change of ownership which occurs after the Director has issued a license shall automatically terminate the license ninety (90) days thereafter. Provided, however, that the Director may issue a license to the new owner if satisfied, after the submission of an application that the new owner has met the requirements contained in 29Del.C. § 4806 (a)(1-4), as well as the fitness and background standards contained in such law and these regulations. In the case of a death of an owner, the estate of such owner shall be deemed to have met the requirements of §4806(a)(1-4) for a period of one year following such death without the need for submitting an application, and, thereafter, need only supply such additional information as the Director may request. In the case of a shift in equity positions of owners, or a transfer among owners, notice shall be given the Director, but the license shall not terminate so long as no new owner is created or results. An agent may also seek approval of a proposed change in ownership prior to the actual change.

4.13 An agent shall immediately notify the agency of any proposed or effective change regarding the makeup of the owners, directors, officers, partners, or key employees of the agent.

4.14 An agent may surrender its Internet lottery license by written notice to the Director. The surrender takes effect on the day specified in the surrender notice, or if no day is specified on the surrender notice, one month after the surrender notice is given to the Director.

10 Del. Admin. Code § 206-4.0

17 DE Reg. 317 (9/1/2013) (Final)