10 Del. Admin. Code § 203-4.0

Current through Register Vol. 28, No. 7, January 1, 2025

Section 203-4.0 - Licensing of Service Companies; Gaming and Non-Gaming Vendors

Gaming Vendors

4.1 As deemed necessary, the Director shall give public notice of the agency's intent to select gaming 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 gaming vendor. The issuance of a service company license to a gaming vendor shall not serve as the basis for requiring the Director to select the gaming vendor under the procurement procedures set forth in Ch. 69 of Title 29 of the Delaware Code.

4.1.1 A person expressing an interest to be selected as a gaming vendor pursuant to subsection 4.1 shall file an application for a service company license in accordance with these regulations.

4.1.2 A gaming vendor shall be licensed in accordance with the Delaware Code prior to conducting any business with the lottery office, provided, however, that upon a finding of good cause by the Director for each business transaction, the Director may permit an applicant for said license to conduct business transactions prior to the issuance of the license.

4.2 Each person desiring to obtain a service company license from the agency as a gaming vendor shall submit a license application on a form specified and supplied by the agency. The license application shall, among other things:

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

4.2.2 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 gaming employees, including but not limited to copies of financial statements, tax returns, insurance policies, and lists of creditors.

4.2.3 Require the applicant to disclose the identity of all customers to whom it has furnished video games or other gambling equipment or technology within the 3 years immediately preceding the date of the application.

4.2.4 Require the applicant to list all persons with whom the applicant has a communications protocol agreement.

4.2.5 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.

4.2.6 Provide a description of the means by which the applicant exercises security and financial control over the activities of service technicians in order to insure the integrity of video lottery operations.

4.2.7 Require the applicant to disclose its legal name, form or entity (e.g., general or limited partnership, corporation, etc.), the names, addresses, social security or federal employment identification or federal individual taxpayer identification numbers and dates of birth or formation dates of its directors, officers, partners, owners, key employees and gaming employees.

4.2.8 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.

4.2.9 Require the applicant to enclose copies of its audited financial statements for the preceding 5 fiscal or calendar years, as applicable, and a copy of internally prepared financial statements for the current fiscal year or calendar year, as applicable, or at the close of the most recent fiscal quarter.

4.2.10 Require the applicant to provide a description of its engineering and software development resources, technical support capabilities and ability to manufacture and deliver the video lottery machines.

4.2.11 Require persons who are proposing to contract with the agency or a video lottery agent to provide either a copy of their contract proposal or contact information for the agent that can confirm interest in conducting business with the applicant.

Non-Gaming Vendors and Gaming Excursion Providers

4.3 A non-gaming vendor and gaming excursion provider may transact business upon the filing of a vendor registration form (VRF) in accordance with this subsection. A VRF shall be required only for a non-gaming vendor that transacts business in excess of $10,000 per year.

4.4 An agent shall file a vendor registration form for each non-gaming vendor and gaming excursion provider that is not required to file an application for a service company license. The vendor registration form shall, among other things, include:

4.4.1 Company identification information as follows:

4.4.1.1 Nature of business;

4.4.1.2 The date on which a formal offer and acceptance of the agreement to conduct business occurred;

4.4.1.3 Names and addresses of all subsidiaries;

4.4.1.4 The name, address and percentage of ownership of each entity directly owning more than 10% of the non-gaming vendor or gaming excursion provider.

4.4.2 The names of each of the following:

4.4.2.1 Any individual who entered into the agreement with or will deal directly with the agent, including sales representatives, the immediate supervisors of such persons, and all persons responsible for the office out of which such supervisors work;

4.4.2.2 Any officer, partner, or director who will be significantly involved in the conduct of the non-gaming vendor's or gaming excursion provider's business with the agent;

4.4.2.3 If the non-gaming vendor or gaming excursion provider is a sole proprietorship, the name of the sole proprietor;

4.4.2.4 Each beneficial owner of more than 5% of the outstanding voting securities or other type of beneficial or legal ownership interests of the non-gaming vendor or gaming excursion provider, and the percentage of ownership; and

4.4.2.5 The name and position or title of the individual who supplied the information in the VRF.

4.4.3 Estimated dollar amount of the contract with the agent.

4.5 A non-gaming vendor and gaming excursion provider that provides goods or services to an agent on a regular and continuing basis shall be licensed in accordance with the Delaware Code and these regulations.

4.5.1 Banks and other licensed lending institutions and insurance companies that are licensed by a state bank commission or department of insurance shall be exempt from the license requirements under Section 4.0.

4.6 A non-gaming vendor shall be deemed to be transacting regular and continuing business if:

4.6.1 The total dollar amount of transactions with a single agent is or is expected to be equal to or greater than $400,000 within any 12 month period; or

4.6.2 The total dollar amount of such transactions with multiple agents is or is expected to be equal to or greater than $750,000 within any 12 month period.

4.7 A gaming excursion provider shall be deemed to be transacting regular and continuing business if:

4.7.1 The total dollar amount of transactions with a single agent is or is expected to be equal to or greater than $150,000 within any 12 month period; or

4.7.2 The total dollar amount of such transaction with multiple agents is or is expected to be equal to or greater than $300,000 within any 12 month period.

4.8 A non-gaming vendor or gaming excursion 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:

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

4.8.2 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 gaming employees;

4.8.3 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;

4.8.4 â?~ Require the applicant to disclose its legal name, form or entity (e.g., general or limited partnership, corporation, etc.), the names, addresses, social security or federal employer identification or federal individual identification numbers and dates of birth of its directors, officers, partners, owners, key employees and gaming employees;

4.8.5 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

4.8.6 Require persons who are proposing to contract with the agency or a video lottery agent to provide either a copy of their contract proposal or contact information for the agent or the agency that can confirm interest in conducting business with the applicant.

For Gaming Vendors, Non-Gaming Vendors, and Gaming Excursion Providers

4.9 Upon request, the service company applicant shall supplement the information provided in the application form as deemed necessary by the Director.

4.10 To the extent, if any, that the information in the application or the supplemental information provided by the service company 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.

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

4.12 Subject the limitations in 29 Del.C. § 4829(d) and (e), the service company applicant, upon 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 pursuant to this subsection shall, to the extent provided by law, be held in confidence and not subject to the Delaware Freedom of Information Act.

4.13 As soon as the agency receives the service company application, it shall forward the same to the DGE, which shall conduct as soon as practicable a background investigation of the applicant and all associated license applications and report its findings to the agency.

4.14 Notwithstanding any other provision contained herein to the contrary, the Director may determine, upon review of the licensing standards of another state, that such standards are so comprehensive, thorough, and provide similar adequate safeguards, that the license of a service company 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 service company 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 lottery.

4.15 In evaluating service company applications, the Director shall consider, in addition to the license criteria set forth in the Delaware Code, the following:

4.15.1 Whether the gaming vendor or non-gaming vendor applicant has demonstrated an ability to interface its technical capabilities with the selected central system and that it has the resources, experience and ability necessary to manufacture, deliver, install and service such number of video lottery machines as it may be required to supply under a contract with the agency.

4.16 A license shall not be issued to a service company that has any direct or indirect ownership or financial interest in an agent or the real or personal property of an agent.

4.17 An applicant for a service company license shall, prior to 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.

4.18 Gaming vendors shall be licensed for a term of 3 years. The term of a gaming vendor license shall expire and be renewable on the last day of the month on the third anniversary of the issuance date.

4.19 Non-gaming vendors and gaming excursion providers shall be licensed for a term of 4 years. The term of a license for a non-gaming vendor or a gaming excursion provider shall expire and be renewable on the last day of the month on the fourth anniversary of the issuance date.

4.20 At a minimum of 60 days prior to expiration, each service company licensee shall submit a new and updated license application form.

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

4.22 The fee for a service company license application and renewal application shall be $4,000 for a gaming vendor. In addition, a gaming vendor shall pay for all unusual or out of pocket expenses incurred by the Division of Gaming Enforcement or lottery office on matters directly related to the applicant or licensee.

4.23 The fee shall be $2,000 for a non-gaming vendor and gaming excursion provider application and renewal application.

10 Del. Admin. Code § 203-4.0

22 DE Reg. 500 (12/1/2018)
27 DE Reg. 678 (3/1/2024)
28 DE Reg. 342 (11/1/2024) (Errata)
28 DE Reg. 386 (11/1/2024) (Final)