10 Del. Admin. Code § 206-6.0

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

Section 206-6.0 - Licensing of Internet Lottery Service Providers

Classification of Service Providers

6.1 Service providers shall be selected by the Lottery, Internet lottery technology provider and/or the Internet lottery agent to provide ancillary services to support the operation of the Internet lottery system. The ancillary services provided by the service provider shall not contribute to the outcome of Internet lottery games. In cases where the classification of the service provider is unclear, the Director shall make a determination of whether the person should apply for a service provider license.

License Applications

6.2 A service provider that provides goods or services to an Internet lottery agent or technology provider on a regular and continuing basis shall be licensed in accordance with the Delaware Code and these regulations.

6.3 A service provider shall be deemed to be transacting regular and continuing business if:

6.3.1 The total dollar amount of transactions with a single technology provider is or will be equal to or greater than $100,000 within any 12 month period; or

6.3.2 The total dollar amount of such transactions with all technology providers is or will be equal to or greater than $150,000 within any 12 month period.

6.4 Notwithstanding the above, the Director may in his sole discretion determine that a service provider is required to apply for a service provider license.

6.5 Service providers that provide payment processing services licensed by a state bank commission, department of insurance, or equivalent regulatory authority recognized by the Lottery, shall be exempt from the license requirements.

6.6 A technology provider shall provide a record of all contracts which relate to the provision of functions and services to the Lottery, specifying the service provider, date and duration of the contract and the dollar amount of the contract, as follows:

6.6.1 For technology provider defined in section 5.2.1, on a quarterly basis; and

6.6.2 For technology providers defined in sections 5.2.2 and 5.2.3, on an annual basis.

6.7 A service provider that is deemed to be conducting regular and continuing business as defined above shall submit a license application on a form specified and supplied by the agency. The license application shall, among other things:

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

6.7.2 Require the applicant to supply specified information and documents related to the applicant's fitness and the background of its owners, partners, directors, officers, and key employees;

6.7.3 Require the applicant to disclose whether the applicant, or any of its present or former officers, directors, owners, partners, key employees, or gaming 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;

6.7.4 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 and key employees;

6.7.5 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; and

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

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

6.9 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.

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

6.11 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.

6.12 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 gaming employees, and report its findings to the agency.

6.13 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.

6.14 In evaluating applications, the Director shall consider in addition to the license criteria set forth in the Delaware Code:

6.14.1 Whether the applicant has demonstrated an ability to interface its technical capabilities with the selected gaming platform and that it has the resources, experience and ability necessary to provide the services it may be required to supply under a contract with the agency.

6.15 A license shall not be issued to a service provider which has any direct or indirect ownership or financial interest in an Internet lottery agent or Internet lottery technology provider.

6.16 An applicant for a service provider 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.

6.17 Service providers shall be licensed for a term of five years coinciding with the term of the technology provider's contract with the agency.

6.18 At a minimum of 60 days before expiration, each service provider licensee shall submit a new and updated license application form.

6.19 A service provider license shall remain valid pending the disposition of a license renewal application filed in accordance with the timelines set forth herein.

6.20 The fee for a service provider license application and renewal application shall be $2,000. In addition, a service provider shall pay for all unusual or out of pocket expenses incurred by the Division of Gaming Enforcement or Lottery on matters directly related to the applicant or licensee.

License Conditions

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

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

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

6.21.3 Service 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 wrongful operation of the gaming platform;

6.21.4 Service providers shall only provide the services authorized under these regulations.

Modification to and Surrender of License

6.22 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.

6.23 A service provider licensee shall immediately notify the agency of any change in officers, partners, directors, key employees, Delaware 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 service provider's license.

6.24 A service provider may surrender its service 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 § 206-6.0

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