10 Del. Admin. Code § 206-5.0

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

Section 206-5.0 - Licensing of Technology Providers

5.1 As deemed necessary, the Director shall give public notice of the agency's intent to select technology providers of Internet lottery systems that consist of the hardware software and expertise to operate a gaming platform providing an integrated suite of modules including player account management, network management, multi-level tracking and reporting and integration with multiple game content vendors through a request for proposal and qualifications by advertising in a newspaper of general circulation in Delaware and in a prominent trade publication requesting expressions of interest to be selected as a technology provider. The licensing of a technology provider shall not serve as the basis of requiring the Director to select the technology provider under the procurement procedures set forth in Ch. 69 of Title 29 of the Delaware Code.

Classification of Technology Providers

5.2 A person or entity shall be classified as a technology provider if:

5.2.1 It provides the hardware, software or operational services required to operate the Internet lottery gaming platform; or

5.2.2 It provides game content to the Internet lottery gaming platform using one or more connections from an external gaming platform; or

5.2.3 The operation of the person's products or services contributes directly to the outcome of Internet lottery games.

License Applications

5.3 Each person desiring to obtain a license from the agency as a technology provider shall submit a license application on a form specified and supplied by the agency. Any person who proposes to contract with an Internet lottery agent or the Lottery for the provision of goods or services related to Internet lottery operations, must obtain a technology provider license in response to these Internet Lottery Regulations. The license application shall, among other things:

5.3.1 Give notice that the applicant will be required to submit to a background investigation, the cost of which must be borne by the applicant.

5.3.2 Require the applicant to supply specified information and documents related to the applicant's fitness and the background of its owners, partners, directors, officers, key employees, and Internet lottery operations employees, including but not limited to copies of financial statements, tax returns, insurance policies, and lists of creditors.

5.3.3 Require the applicant to disclose the identity of all customers to whom it has furnished Internet lottery systems within the three years immediately preceding the date of the application.

5.3.4 Require the applicant to disclose whether the applicant, or any of its present or former officers, directors, owners, partners, key employees, or Internet lottery operations employees, is or has been the subject of an investigation in another jurisdiction, the nature of the investigation, and the outcome, if any, of such investigation.

5.3.5 Provide a description of the means by which the applicant exercises security and financial control over the activities of technical staff in order to insure the integrity of Internet lottery operations.

5.3.6 Require the applicant to disclose its legal name, form or entity (e.g., general or limited partnership, corporation), the names, addresses, social security numbers and dates of birth of its directors, officers, partners, owners, key employees and Internet lottery operations employees.

5.3.7 Require the applicant to disclose the names and addresses of individuals who have been authorized by the applicant to engage in dealings with the agency for purposes of representing the interests of the applicant.

5.3.8 Require the applicant to enclose copies of its audited financial statements for the preceding five fiscal years and a copy of internally prepared financial statements for the current fiscal year or at the close of the most recent fiscal quarter.

5.3.9 Require the applicant to provide a description of its risk management capabilities, engineering and software development resources, technical and maintenance support capabilities and ability to develop and deliver the Internet lottery system.

5.3.10 Require persons who are proposing to contract with the agency or a Internet lottery agent to provide a copy of their contract proposal.

5.4 On request, the applicant shall supplement the information provided in the application form as deemed necessary by the Director.

5.5 To the extent, if any, that the information in the application or the supplemental information provided by the applicant 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 make the application or supplementary information accurate and complete.

5.6 The applicant shall cooperate fully with the agency and the DGE in any background investigation of the applicant.

5.7 The applicant, on request of the agency or the DGE, shall make any and all of its books and records available for inspection by the agency or the DGE. Provided, however, that any information obtained in response to this subsection shall, to the extent provided by law, be held in confidence and not subject to the Delaware Freedom of Information Act.

5.8 As soon as the agency has determined that the application form is complete and that the applicant is otherwise qualified, it shall forward the same to the DGE which shall conduct as soon as practicable a background investigation of the applicant, its officers, partners, owners, directors, key employees, and Internet lottery operations employees, and report its findings to the agency.

5.9 Notwithstanding any other provision contained herein to the contrary, the Director may determine, on review of the licensing standards of another state, that such standards are so comprehensive, thorough, and provide similar adequate safeguards, that the license of an applicant in such other state precludes the necessity of a full application and background check. In such case, the Director shall require a limited application and background check, as determined by the Director in his sole discretion, as are necessary to assure that the applicant is fit for the license and does not pose a threat to the public interest of the State or to the reputation of or effective regulation of the Internet lottery.

5.10 In evaluating applications, the Director shall consider:

5.10.1 Whether the applicant has demonstrated that it has the resources, experience and ability necessary to supply the necessary Internet lottery systems as may be required under a contract with the agency.

5.10.2 Any past conduct of the applicant, or any of its present or former officers, directors, partners, owners, key employees, or Internet lottery operations employees which may adversely reflect on the applicant, the nature of the conduct, the time that has passed since the conduct, the frequency of the conduct and any extenuating circumstances that affect or reduce the impact of the conduct or otherwise reflect on the applicant's fitness for the license. 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.

5.10.3 Any findings provided by the DGE following its background investigation.

5.10.4 The extent, if any, to which the applicant has failed to follow any applicable tax laws of the Federal, State or local governments.

5.10.5 The association of the applicant, or any of its officers, directors, owners, partners, key employees, or Internet lottery operations employees with persons of known criminal background or persons of disreputable character, that may adversely affect the general credibility, security, integrity, honesty, fairness or reputation of Internet lottery operations.

5.10.6 Any other information supplied in connection with the application, including substantially similar background investigations performed by other agencies or jurisdictions, which relates to the applicant's competence, financial capability, honesty, integrity, reputation, habits, or associations.

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

5.10.8 A license shall not be issued to a technology provider if the applicant technology provider has any direct or indirect financial interest in an agent licensee or the real or personal property of an agent licensee.

5.11 A license shall be issued to the applicant if the Director is satisfied, on consideration of the factors specified in subsection 5.10, that the applicant would be a fit technology provider and not pose a threat to the public interest, the reputation of the lottery or to the effective control of the lottery.

5.12 An applicant for a technology provider's license shall, before issuance of the license, post a bond or irrevocable letter of credit in a manner and in an amount established by the agency. Any such bond shall be issued by a surety company authorized to transact business in Delaware and said company shall be approved by the State Insurance Commissioner as to solvency and responsibility.

5.13 The fee for a technology service provider license application and renewal application shall be $4,000. To the extent the vendor is already licensed as a gaming vendor under the Video Lottery and Table Games regulations, a second license is not required.

5.14 The agency, with the assistance of the DGE, may require licensed technology providers to annually update information submitted with their initial license application.

License Conditions

5.15 The approval of any license or the renewal of a license to a technology provider is subject to the following conditions:

5.15.1 Technology providers shall, if required by law, 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;

5.15.2 Technology providers shall provide such bonds and provide evidence of such insurance as the Director shall require from time to time and in such amounts and issued by such companies as the Director shall approve;

5.15.3 Technology providers shall agree to modify their hardware and software as necessary to accommodate Internet lottery changes directed by the agency from time to time;

5.15.4 Technology providers shall agree to promptly report any violation or any facts or circumstances that may result in a violation of these rules;

5.15.5 Technology providers shall attend all trade shows or conferences as required by the Director;

5.15.6 Operation in response to a license issued under these regulations shall signify agreement by the technology provider to abide by all provisions of the regulations, including those contained in this section;

5.15.7 Conduct Internet lottery operations in a manner which does not pose a threat to the public health, safety, or welfare of the citizens of Delaware, or reflect adversely on the security or integrity of the Internet lottery;

5.15.8 Technology providers shall hold harmless the agency, the State of Delaware, and their respective employees for any claims, loss, cost, damage, liability or expense, including, without limitation, legal expense arising out of any hardware or software malfunction resulting in the wrongful award or denial of credits or cash.

5.15.9 The technology provider shall make its premises available for inspection by authorized representatives of the agency or the DGE personnel, on the provision of 24 hours notice by the agency. The agency and the DGE shall be authorized entry to the premises and access to any internet lottery equipment or records of the technology provider without acquiring a warrant;

5.15.10 The technology provider shall maintain all operational records as required by these regulations, the technical standards specified by the agency and the MICS specified by the agency;

5.15.11 To the extent permitted by law, a technology provider 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 technology provider's operations;

5.15.12 The technology provider shall provide only the Internet lottery products and services authorized under these regulations.

Modification to and Surrender of License

5.16 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.

5.17 A technology provider licensee shall immediately notify the agency of any change in officers, partners, directors, key employees, Internet lottery operations employees, or owners. These individuals shall also be subject to a background investigation. The failure of any of the above-mentioned individuals to satisfy a background investigation may be cause for the suspension or revocation of the technology provider's license.

5.18 A technology provider may surrender its technology provider's 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 § 206-5.0

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