202 KAR 3:030 - Retailers
RELATES TO: KRS Chapter 154A
NECESSITY, FUNCTION, AND CONFORMITY: KRS 154A.400(1) requires the Kentucky Lottery Corporation to develop and maintain a statewide network of lottery retailers that will serve the public convenience to promote the sale of lottery products, while insuring the integrity of the lottery. To govern the selection of lottery retailers, KRS 154A.400(1)(b) requires the Board of Directors of the Kentucky Lottery Corporation to develop a list of objective criteria upon which the selection of lottery retailers shall be based. This administrative regulation lists the objective criteria upon which the selection of lottery retailers shall be based.
Section 1. Definitions.
(1) "Applicant" means the individual or
entity applying for a license to sell lottery products.
(2) "Board" means the Board of Directors of
the KLC as established by
KRS 154A.030(1).
(3) "Cashing agent" means a retailer who has
signed a "Retailer License Agreement Addendum for Cashing Agents" and who is
authorized and required to cash lottery products of a value authorized by the
KLC, up to and including $25,000, during KLC's business hours (8:00 a.m. EST to
5:00 p.m. EST).
(4) "Draw-based
product" means:
(a) Any KLC ticket or product
in which the player may determine if the player has won or lost after the
drawing in which the prize was won; or
(b) Any other KLC ticket or product generated
by the retailer terminal.
(5) "Draw-based retailer" means a retailer
that sells one (1) or more draw-based products.
(6) "Instant product" means any KLC ticket or
product in which the player may determine instantly if the player has won or
lost.
(7) "KLC" means the Kentucky
Lottery Corporation.
(8) "Licensing
documents" means the:
(a) Application for
Retailer License;
(b) Retailer
License Agreement;
(c) Retailer
License Agreement Addendum for Cashing Agents; and
(d) Retailer License Certificate.
(9) "Lottery equipment and
supplies" means all lottery devices and materials provided to retailers by the
KLC or its vendors: terminals, monitors, ticket checkers, communication
devices, advertising materials, play slips, play centers, vending machines,
ticket stock, and ticket dispensers.
(10) "Lottery product" means any KLC
draw-based product, instant product, or a coupon issued by the KLC for a
draw-based or instant product sold or distributed at a retail outlet or
directly by the KLC.
(11) "Owner"
means:
(a) An individual or sole
proprietor;
(b) A
partner;
(c) A member of a limited
liability company;
(d) An
officer;
(e) A director;
or
(f) A shareholder of a
corporation, except that, in the case of owners of equity securities of a
publicly-traded corporation, only the names and addresses of those known to the
corporation to own beneficially five (5) percent or more of the
securities.
(12)
"Retailer" is defined by
KRS 154A.010(7) and includes the
following:
(a) An individual or sole
proprietorship;
(b) A limited or
general partnership, including a registered limited partnership;
(c) A limited liability company;
(d) A corporation;
(e) A trust;
(f) Other entity, business, or enterprise;
or
(g) The owner of a
retailer.
(13) "Retailer
handbook" means the handbook made available to retailers by the KLC, which
describes KLC's billing, ticket validation and ordering procedures, payments to
retailers, lottery products, and the operation and maintenance of lottery
equipment and supplies.
(14)
"Retailer License" means the ability to sell lottery products to the public and
is identified through the issuance of a Retailer License Certificate.
(15)"Retailer License Agreement" means the
agreement executed by the retailer and the KLC, setting forth the terms and
conditions under which the Retailer License is issued.
Section 2. Conditions of Licensing. As a
condition to be licensed to sell lottery products and to act as a retailer,
each applicant shall be deemed to have agreed to the following conditions:
(1) Compliance with law. To fully comply with
applicable laws, rules and regulations of the United States, including the
Americans with Disabilities Act (ADA) (42 U.S.C.
12101 et seq.), the Commonwealth of Kentucky
and its political subdivisions, including KRS Chapter 154A and 202 KAR Chapter
3, and with all policies, procedures, rules, directives, and instructions of
the KLC, including applicable licensing documents and the Retailer Handbook,
all as may be amended.
(2) Sale and
cashing of lottery products.
(a) To offer for
sale in a manner convenient and accessible to the public, and to actively
promote the sale of, in a manner consistent with the directives of the KLC
(including the display of KLC point-of-sale materials, signs or other
displays,) all lottery products the retailer is authorized to sell, and to
abide by all promotional guidelines promulgated by the KLC;
(b) To only use ticket stock issued to the
specific retail outlet, unless otherwise authorized by the KLC;
(c) To cash valid winning lottery products
sold or issued by retailer or by another retailer up to the limit set for the
retailer by Sections 3(3) and 7 of this administrative regulation, or in an
amount as otherwise authorized by the KLC in a manner consistent with the
directives of the KLC throughout the retailer's business hours, by making a
cash payment, or by issuing a check or money order;
(d) To neither charge nor ask for a fee, tip,
tax, or anything of value for cashing a lottery product or for cashing a check
or money order issued by retailer's retail outlet for payment of a
prize;
(e) Upon request by a
lottery player and when the lottery product is validated, to provide a lottery
player with a copy of the validation slip for the lottery product presented;
and
(f) To accept all valid coupons
issued by the KLC and give the bearer of the coupons lottery products or
merchandise in accordance with the terms of the lottery
coupons.
(3) Training of
retailer personnel. To require its employees to attend all training sessions
and review training materials offered by the KLC or its vendors, as needed, to
effectively perform its responsibilities as a KLC retailer.
(4) Accounting records. To maintain for the
prior and current fiscal year (July 1 through June 30) current, accurate, and
detailed accounting records of every operation and transaction relating to the
sale, cashing, or maintenance of lottery products in conformance with the
directives of the KLC, and as otherwise required by law. The records shall be
made available to KLC representatives or agents, the Commonwealth of Kentucky's
Auditor of Public Accounts, and to any other person as otherwise required by
law.
Section 3.
Licensing.
(1) In general.
(a) An applicant for a Retailer License shall
complete, sign, and submit:
1. An application
for Retailer License, including an acknowledgement that the KLC may conduct the
criminal, financial, and other background investigations required by Section 5
of this administrative regulation at any time during any term of the Retailer
License Agreement with or without notice to the retailer;
2. A Retailer License Agreement;
and
3. If a cashing agent, a
Retailer License Agreement Addendum for Cashing Agents.
(b) Upon submission of an application for
Retailer License, an applicant shall tender a $250 fee, which shall be
nonrefundable, except as provided in Section 5(5)(a)2 and (b)3 of this
administrative regulation.
(c)
There shall be a $100 fee per new retail outlet for an existing chain
retailer.
(d) Criminal, financial,
and other background investigations shall be conducted in accordance with
Section 5 of this administrative regulation for the applicant and each owner of
the applicant. If the KLC determines that the applicant or an owner of the
applicant does not meet the criteria established in KRS Chapter 154A and in
this administrative regulation for the issuance of a Retailer License, the
applicant shall be notified in writing, and the Retailer License shall be
denied.
(e) Upon satisfactory
completion of the criminal, financial, and other background investigations
pursuant to paragraph (d) of this subsection, the KLC may:
1. Sign a Retailer License Agreement with the
successful applicant; and
2. Issue
a Retailer License Certificate for the successful applicant.
(f) Unless earlier terminated by
the terms of the Retailer License Agreement in accordance with KRS Chapter 154A
or Section 9 of this administrative regulation, the Retailer License Agreement
shall be in effect for an initial one (1) year term from the date it is signed
by the KLC. At the end of the initial one (1) year term, the Retailer License
Agreement shall automatically renew for additional successive one (1) year
terms, not to exceed four (4) years from the date the Retailer License
Agreement was signed by the KLC. At the expiration of the four (4) years,
unless the Retailer License Agreement was earlier terminated, the retailer
shall seek re-licensing pursuant to subsection (4) of this section.
(2) Special rules relating to
chain retailers. More than one (1) retail outlet with identical owners may be
treated as one (1) chain retailer. Each retail outlet shall be issued a
separate retailer number and a Retailer License. The KLC may issue one (1)
billing statement for all retail outlets or separate billing statements for
each retail outlet. If the chain retailer wishes to add a new retail outlet,
the chain retailer shall not be required to undergo a new background
investigation.
(3) Special rules
relating to cashing agents.
(a) The KLC may
designate one (1) or more retailers as cashing agents. A cashing agent shall
sign a Retailer License Agreement Addendum for Cashing Agents for cashing
lottery products of a value up to an amount authorized by the KLC, not to
exceed $25,000. If internet is available and if the KLC determines internet is
necessary and in the best interest of the KLC to complete the claim process,
the retailer may be required to maintain internet access during KLC's business
hours.
(b) All cashing agents
shall:
1. During the KLC's business hours,
cash validated winning lottery products by making a cash payment, or by issuing
a check or money order;
2. Follow
all KLC practices and procedures; and
3. Take all reasonable steps necessary to
protect a player's private information, including address, telephone number,
Social Security number, and birth date from public disclosure or any disclosure
beyond that which is necessary for awarding the prize to the player. If any
private information is disclosed, the KLC shall be immediately
notified.
(c) The KLC may
terminate a retailer's status as a cashing agent with or without revocation of
the retailer's Retailer License.
(4) Relicensing.
(a) At least ninety (90) days prior to the
expiration of the Retailer License Agreement as established in subsection
(1)(f) of this section, each retailer shall seek relicensing by completing the
application process in subsection (1) of this section, except the retailer
shall not be required to tender the fees required by subsection (1)(b) and (c)
of this section. If the retailer is a cashing agent, the retailer shall also
complete the process in subsection (3) of this section.
(b) If a retailer continues to sell lottery
products beyond the term of the Retailer License Agreement, the retailer shall
continue to be liable to the KLC for all products sold.
(5) Change in Information. A retailer shall
promptly notify the KLC of a change in information previously given to the KLC.
For a complete or partial change in ownership, the retailer shall comply with
Section 4 of this administrative regulation.
Section 4. Rules for Change in Ownership.
(1) Special rules relating to transfer of
ownership of existing retailers.
(a) A
Retailer License shall not be sold, transferred, assigned, pledged, or
otherwise conveyed.
(b) A retailer
shall give thirty (30) days prior written notice to the KLC of its intent to
vacate or convey its retail outlet or business, change its location, or change
the form of the business of the retailer. Retailer acknowledges that a complete
change in ownership shall be accomplished by tendering to the KLC:
1. An application for Retailer
License;
2. A Retailer License
Agreement;
3. If a cashing agent, a
Retailer License Agreement Addendum for Cashing Agents;
4. The fees required by Section 3(1)(b) and
(c) of this administrative regulation; and
5. Proof of conveyance documentation
acceptable to the KLC.
(c) The KLC may, for a period not to exceed
sixty (60) days, temporarily license an owner or applicant who has acquired the
retail outlet or business of an existing retailer, so that the sale of lottery
products will not be interrupted during the application process. The temporary
licensing of an owner or applicant to sell lottery products shall not limit the
KLC's right to exercise its discretion regarding issuance of a Retailer License
to the owner or applicant. If the retail outlet or business of a retailer is
conveyed and the sale of lottery products continues without issuance of a
temporary or new Retailer License to the acquiring owner, the conveying
retailer and the acquiring owner shall be jointly and severally liable for all
debts and other obligations incurred to the KLC prior to and after the
conveyance, and shall remain liable for all debts and other obligations until
paid.
(d) In addition to other
grounds for denial of a Retailer License or termination of a Retailer License
Agreement, the KLC may deny issuance of a Retailer License to an owner or
applicant acquiring or seeking to acquire the retail outlet or business of a
retailer, until all debts and other obligations of the conveying retailer to
the KLC are paid in full.
(2) Special rules relating to a partial
change in ownership of a retailer.
(a) To the
extent possible, retailers shall provide the KLC with thirty (30) days prior
written notice of any partial change in owners, and in any event, shall provide
the KLC with written notice within fifteen (15) days after any partial change
in owners. Failure to do so may result in termination of the retailer's
Retailer License. Written notice of a partial change shall be accomplished by
tendering to the KLC a new application for Retailer License and a fee in the
amount of fifty (50) dollars.
(b)
The KLC shall conduct background and financial investigations of and make
inquiries of the Kentucky Revenue Cabinet regarding a new owner of retailers in
accordance with Section 5 of this administrative regulation.
Section 5. Requirements
and selection criteria for applicants, retailers, and owners.
(1) Criminal and other background
investigations. The KLC may investigate, at any time and during any license
term, the criminal and other background history of, and existence of any
statutory or regulatory violations by, an applicant, an owner, a retailer
seeking relicensing, a retailer seeking licensing due to a complete change in
ownership, or a retailer reporting a partial change in ownership.
(a) The KLC may, unless required by statute,
deny the application of an applicant, and suspend or revoke the license of an
existing retailer:
1. For any reason
established in
KRS 154A.400 for denying the issuance of a
Retailer License;
2. For any reason
established in
KRS 154A.410(1) for terminating
an existing Retailer License Agreement;
3. If the applicant, owner, or retailer has
been convicted of any offense that relates to or may adversely impact the
security or integrity of, or public confidence in, the KLC or its retailers.
The KLC shall consider:
a. The physical and
fiscal security of the KLC and its retailers and the integrity of the KLC's
games;
b. Public perception of and
public confidence in the KLC and its retailers; and
c. Other relevant
factors;
4. If an
applicant, owner, or retailer has been found by the Chief Financial Officer or
his designee to have made a statement of material fact to the KLC while the
person was serving as a previous owner or related entity, and the person knew
or should have known that the statement was false or untrue in any respect,
unless at least ten (10) years have passed since the statement was
made;
5. If an applicant, owner, or
retailer has been found by the Chief Financial Officer or his designee to have
provided false or misleading information, or failed to provide material
information the failure of which to provide is false or misleading, to the KLC
or to a law enforcement agency with respect to obtaining or retaining a
Retailer License;
6. If an
applicant, owner, or retailer provides products, services, or entertainment
that may have an adverse effect upon the credibility, integrity, and reputation
of the KLC;
7. If an applicant,
owner, or retailer sells products, services, or entertainment that constitutes
products or services deceptively similar to or in competition with the KLC's
products or services; or
8. If an
applicant, owner, or retailer does not demonstrate the ability to sell and
continue to sell an acceptable level of lottery products.
(b) The KLC may permit the applicant or
retailer a period of time, not to exceed thirty (30) days, to remove the person
as owner or to correct the situation resulting in an unsatisfactory criminal,
financial, or other background check.
(c) If an existing retailer is requesting a
relicensing, seeking to open a new retail outlet, or is an entity related to an
existing retailer, or who shares one (1) or more owners with an existing
retailer, and facts are disclosed that would cause the KLC to deny an
application for licensing or a relicensing if tendered by the existing
retailer, the KLC may:
1. Immediately revoke
or suspend all existing Retailer Licenses of the retailer in accordance with
KRS Chapter 154A; or
2. Notify all
the retailers that their licenses will be revoked within thirty (30) days if
the conditions justifying revocation are not corrected.
(2) Financial investigations.
(a) The KLC shall conduct a financial
investigation of each applicant applying for a Retailer License, and of each
retailer under consideration for licensing due to a change of ownership. In
addition to information available from other sources, the KLC shall maintain,
and shall review during each financial investigation, a database regarding
existing, suspended, and canceled retailers and their owners. The KLC may
consider in its determination regarding the financial responsibility of an
applicant or retailer undergoing relicensing, the connection of the owner or
related entity with any retailer whose Retailer License was suspended or
canceled due to a default in its obligations to the KLC.
(b) If, as a result of financial
investigation of the applicant or retailer and its owners, the KLC determines
that a prospective or existing retailer poses a financial risk, the KLC may:
1. Deny the application or revoke the
Retailer License in accordance with
KRS 154A.410(2); or
2. License an applicant or permit an existing
retailer to retain its Retailer License upon receipt of the letters of credit,
bonds, personal guaranty agreements, or other security or assurances of payment
as the KLC may deem satisfactory, in an amount based upon actual or potential
sales.
(3)
Kentucky Department of Revenue inquiries.
(a)
Except as provided in Section 4(1)(c) of this administrative regulation, a
Retailer License shall not be issued to an applicant which is not, or has an
owner which is not, and a retailer shall not be permitted to retain a Retailer
License which is not, or has an owner which is not, current in the payment of
taxes, interest and penalties owed to, and current in filing of applicable tax
returns with, the Commonwealth of Kentucky.
(b) A Retailer License shall not be issued to
an applicant which has not previously been issued a federal employment tax
identification number, or if the applicant is an individual, a Social Security
number, and, if applicable, a Kentucky sales tax license number. The KLC shall
confirm with the Kentucky Department of Revenue that an applicant for a
Retailer License, and an existing retailer seeking relicensing, complies with
this paragraph. The KLC shall rely upon information received from the Kentucky
Department of Revenue. The KLC may permit an existing retailer a period of time
not to exceed thirty (30) days within which to meet or cause the owner in
question to meet its obligations with the Kentucky Department of Revenue prior
to revocation of the retailer's Retailer License or prior to final denial of
issuance of a relicensing of the Retailer License.
(4) Kentucky Secretary of State Inquiries. An
applicant shall be registered and in good standing with the Kentucky Secretary
of State if the applicant is a corporation or limited liability
company.
(5) Selection criteria.
(a) In order to sell draw-based products, an
applicant shall meet the following criteria:
1. Whether, based on historic traffic
patterns in the geographic area of the proposed retail outlet, the applicant is
likely to have sales equal to or in excess of $100 per week in draw-based
product; and
2. If the KLC
determines that the applicant is not likely to have the expected draw-based
product sales, the KLC may deny the applicant's application for a Retailer
License and refund any license fee previously paid by the applicant.
(b) In order to sell instant
products, an applicant shall meet the following criteria:
1. Whether, based on historic traffic
patterns in the geographic area of the proposed retail outlet, the applicant is
likely to have sales equal to or in excess of $300 per week in draw-based and
instant products;
2. Whether the
applicant will agree to and has the physical space to carry a minimum of six
(6) unique instant products at its retail outlet at all times; and
3. If the KLC determines that the applicant
is not likely to have the expected draw-based and instant product sales, the
KLC may deny the applicant's application for a Retailer License and refund any
license fee previously paid by the applicant.
(c) Retailers shall sell both draw-based
products and instant products unless specifically authorized by the KLC to sell
one (1) or more draw-based products only based on the retailer's type of
business.
(6) Storage of
unsold products. A retailer shall store unsold lottery products and ticket
stock in a safe and secure place to minimize the risk of loss, theft, damage,
or destruction. The KLC may inspect, and require alteration or relocation of,
the storage place.
(7) Reasonable
access to lottery products, equipment, and supplies. A retailer shall provide
the KLC with reasonable access to lottery products, equipment, and supplies
upon reasonable notice.
(8) Game
end dates. A retailer shall adhere to the KLC's directives and policies on game
end dates and return dates for lottery products. A retailer shall adhere to the
KLC's directives on return of unsold lottery products upon the announcement of
game end dates.
(9) Loss,
destruction, or theft of lottery products, equipment, or supplies.
(a) A retailer shall promptly report to the
Security Division of the KLC and to the appropriate local law enforcement
agency, a loss, destruction, or theft of lottery products, equipment, or
supplies and cooperate, and cause its employees to cooperate, fully with the
investigations of the KLC's Security Division and law enforcement
officials.
(b) The retailer shall
be liable to the KLC for payment in full for all lottery products allegedly
lost, destroyed, or stolen after activation of the relevant pack of
products.
(c) Retailers shall
receive reimbursement for activated products stolen during a robbery or
burglary, if the Security Division and law enforcement each receive accurate
game, pack, and ticket number ranges in a timely manner, followed-up by a copy
of the police offense report submitted to the Security Division within ten (10)
business days.
(10)
Security Inspection and Investigations. The KLC Security Division may inspect
the retail outlet to ensure that lottery products, equipment, and supplies are
maintained in an environment that will minimize the risk of loss, theft,
damage, or destruction. The KLC may require alteration of the environment or
relocation of lottery products, equipment, or supplies if a security risk is
evident. The retailer shall cooperate, and cause it employees to cooperate,
fully with all investigations of the KLC's Security Division and law
enforcement officials.
Section
6. Lottery equipment and supplies.
(1) Criteria for allocation of lottery
equipment and supplies.
(a) Installation and
retention of lottery equipment and supplies at a retail outlet shall be
determined by the KLC, based upon the following criteria, as appropriate:
1. The probable future or actual historic
sales at the retail outlet relative to the installation costs of any lottery
equipment and supplies and ongoing communications charges associated with any
lottery equipment and supplies;
2.
The retailer's and the retailer's owners' and related entities' history with
the KLC;
3. The number of games
carried by the retailer; and
4. The
retailer's retail outlet, including business, location, size, and
hours.
(b) In calculating
the probable future or actual historic sales, the KLC shall consider:
1. Actual historic sales of the lottery
products sought to be sold by similarly situated retailers; and
2. Total actual historic sales by the
retailer in question.
(c)
The KLC may establish initial fees and periodic charges with respect to
installation or maintenance of lottery equipment and
supplies.
(2) Title,
placement, and removal of lottery equipment and supplies.
(a) Lottery equipment and supplies provided
to retailers are and shall remain the property of the KLC or its vendors, and
shall not be or become property of a retailer or person claiming an interest in
lottery equipment and supplies through a retailer including, without
limitation, the holder of any lien.
(b) Before placement of lottery equipment and
supplies within a retailer's retail outlet, the retailer shall obtain KLC
approval of the proposed location for the lottery equipment and supplies. The
retailer shall not move, modify, or alter the equipment or supplies.
(c) The KLC shall have the right to enter a
then-present or former retail outlet, during normal business hours, or at any
other time with the consent of the holder of any interest in the real property
on which the retail outlet is situated, to remove lottery products, equipment,
and supplies.
Section
7. Prize Payments.
(1) Prize
payments up to and including $600. During its business hours, a retailer shall
pay the nonminor holder of a validated winning lottery product the amount of
the prize to which the winner is entitled, up to and including the sum of $600,
by making a cash payment, or by issuing a check or money order.
(2) Prize payments up to $25,000. The KLC may
establish a network of cashing agents. During the KLC's business hours,
authorized cashing agents shall pay the nonminor holder of a validated winning
lottery product the amount of the prize to which the winner is entitled, up to
and including any sum that the KLC has authorized the cashing agent to pay, not
to exceed the sum of $25,000, by making a cash payment, or by issuing a check
or money order.
Section
8. Retailer Accounting.
(1)
Lottery product purchases, billings, and payment. The KLC shall make available
to all retailers detailed accounting procedures regarding purchases of and
billings for lottery products, which procedures shall be deemed to be a part of
the Retailer License Agreement. The KLC may establish payment terms with
individual retailers to address situations unique to those retailers. All
proceeds from the sale of lottery products shall be deposited not later than
the close of the next banking day after the date of their collection by the
retailer and shall be held in an account designated, in writing, by the
retailer to the KLC in the application for Retailer License. The account shall
be in an institution insured by the Federal Deposit Insurance Corporation or
Federal Savings and Loan Insurance Corporation, or their successors. All
proceeds of the sale of lottery products, net of credits for compensation due
to retailers and for prizes paid by retailers, are the property of the KLC and
shall be held by retailers in trust and in a fiduciary capacity for the benefit
of the KLC.
(2) Credits. Retailers'
accounts with the KLC shall be credited by the KLC in accordance with its
retailer compensation policies, as established by the KLC pursuant to
KRS 154A.050(1)(d) 8.
(3) Delinquent accounts. In addition to all
other rights and remedies available to the KLC at law or in equity, including
the rights and remedies provided in KRS Chapter 154A, the KLC shall have the
following rights and remedies:
(a) The right
to set off against and recoup from sums due by the KLC to a delinquent retailer
or owner any sums due the KLC by the delinquent retailer or owner, or by any
other retailer in which the delinquent retailer or owner is an owner;
(b) The right to request the Commonwealth of
Kentucky to set off against and recoup from sums due any delinquent retailer,
owner, or other retailer which is in part owned by an owner of the delinquent
retailer by the Kentucky Department of Revenue, any sums due to the KLC by the
delinquent retailer;
(c) The right
to require payment of all sums due the KLC by a retailer prior to issuance of a
Retailer License to a new retailer at the same retail outlet; and
(d) The right to write off a retailer's
obligations to the KLC, without releasing any retailer from its obligations for
repayment of sums owed the KLC, and reimburse its operating accounts in the
amount of the write-off from a segregated account that may be established from
all licensing fees received by the KLC, including any additional sums
authorized for that purpose by the board. The board may increase or reduce the
amount held in the segregated account.
Section 9. Termination or Suspension.
(1) Termination for cause. Unless required by
statute, the KLC may terminate or suspend a retailer's Retailer License and
Retailer License Agreement at any time, for good cause, upon a finding that:
(a) The retailer or an owner has committed
any act or omission established in
KRS 154A.410(1) for termination
of a Retailer License Agreement;
(b) The retailer or an owner has committed
any act or omission that would prevent the issuance of a Retailer License for
any reason in this administrative regulation;
(c) The retailer or an owner has committed a
material breach of any provision of its Retailer License Agreement with the
KLC;
(d) The retailer or an owner
has provided false or misleading information in obtaining or attempting to
obtain a Retailer License and Retailer License Agreement;
(e) The retailer or an owner been convicted
of, or has entered a plea of guilty or nolo contendere, regardless of
adjudication, to an offense punishable as a felony, or to any gambling-related
offense, unless the time established in
KRS 154A.400(1)(b)(3) has
expired;
(f) The retailer or an
owner has outstanding tax delinquencies owed to the federal government or any
taxing authority within the Commonwealth of Kentucky;
(g) The retailer or an owner has jeopardized
the integrity, security or efficient operation of the KLC;
(h) The ownership or location of the business
has changed without providing prior notice to the KLC as provided in this
administrative regulation;
(i) The
retailer has failed to accurately account for lottery tickets, revenues, or
prizes as required by the KLC;
(j)
The retailer has failed to remit or is delinquent in remitting money owed to
the KLC;
(k) The retailer or owner
has committed any fraud, deceit, or misrepresentation to the KLC or to any
individual purchasing a lottery ticket or tickets from retailer;
(l) The retailer has sold a lottery ticket or
paid a prize to any person under eighteen (18) years of age;
(m) The retailer has sold a lottery ticket at
any place other than the place authorized in its Retailer License;
(n) If required by statute, the retailer has
not prominently displayed its Retailer License Certificate at the approved
sales location;
(o) The retailer
has not prominently displayed and maintained ticket displays/dispensers and
points-of sale materials provided by the Lottery;
(p) The retailer has not made point-of-sale
information for lottery products accessible to the public;
(q) The retailer has sold tickets at a price
other than established by the KLC;
(r) The retailer or an owner has committed a
material violation of any rule or administrative regulation promulgated by the
KLC;
(s) The retailer has violated
any directive or instruction issued by the KLC;
(t) The retailer or an owner has committed a
material violation of KRS Chapter 154A;
(u) The retailer's reputation is no longer
consistent with the protection of the public interest;
(v) The retailer has materially changed any
factor considered by the KLC in selecting the retailer;
(w) The retailer or an owner has engaged in
conduct prejudicial to public confidence in the lottery;
(x) The retailer has charged a fee or tip to
redeem a lottery ticket or has required a customer to purchase another item in
order to purchase a lottery ticket;
(y) The retailer has paid a prize valued
greater than the retailer is authorized to cash by the KLC, or the retailer has
refused to cash a winning lottery prize, properly validated, up to the amount
authorized by the KLC; or
(z) The
retailer has insufficient sales of lottery products.
(2) Termination without cause. The KLC may
terminate a retailer's Retailer License and Retailer License Agreement without
cause, upon thirty (30) days prior written notice.
(3) Termination by retailer. A retailer may
terminate its Retailer License and Retailer License Agreement upon thirty (30)
days prior written notice. The KLC may, at its option, elect to terminate the
retailer's Retailer License and Retailer License Agreement prior to the end of
the thirty (30) day period.
(4)
Effect of termination or suspension. If a retailer possesses multiple retail
outlets, suspension or termination of one (1) outlet is grounds for suspension
or termination of the others. Every obligation of a retailer to the KLC shall
survive termination or suspension of the Retailer License and Retailer License
Agreement. Upon termination or suspension of a Retailer License and Retailer
License Agreement, the retailer shall immediately pay to the KLC all sums owed
to the KLC and shall surrender to the KLC the retailer's Retailer License
Certificate and all lottery products, equipment and supplies.
(5) Other remedies. In addition to the
remedies of termination or suspension, the KLC may avail itself of any other
remedies available to it at law or in equity, including, without limitation,
injunctive relief.
Section
10. Retailer Remedies.
(1) Right
to protest. An applicant for a Retailer License or a retailer aggrieved in
connection with an action taken by the KLC pursuant to KRS Chapter 154A or this
administrative regulation may protest, in writing, to the president of the KLC.
The protest shall be submitted within thirty (30) calendar days after the
aggrieved applicant or retailer knows or should have known of the facts giving
rise to the protest. An applicant or retailer shall be deemed to have knowledge
of the facts giving rise to the protest within thirty (30) days of the KLC's
issuance of a written notification to the retailer or applicant for a Retailer
License regarding the action or decision of the KLC.
(2) Effect of protest. If a timely protest is
filed under this section and the action protested is the termination of a
Retailer License, the Retailer License shall be temporarily suspended rather
than terminated until all administrative and judicial remedies have been
exhausted. In all other circumstances, the KLC's action or decision shall stand
unless and until reversed or revised as a result of the protest.
(3) Action by President and Right to Appeal.
The decision of the president shall be promptly issued in writing and shall be
immediately furnished to the protesting person by hand-delivery, telecopier
(with a hard copy sent by certified mail, return receipt requested,) certified
mail (return receipt requested), or by appropriate electronic means. A notice
shall be deemed received on the date hand-delivered or sent by telecopier,
three (3) business days after deposit of the notice in the United States Mail,
postage prepaid, if sent by certified mail, return receipt requested and upon
receipt, if sent electronically. The decision shall recite the grounds relied
upon by the president in reaching the decision and shall inform the protesting
party of its further appellate rights under subsections (4) and (5) of this
section. The president's decision shall be final and conclusive, unless within
ten (10) calendar days from the date of receipt of the decision, the protesting
party delivers a written appeal to the board, by hand, by telecopier (with a
hard copy sent by certified mail, return receipt requested) or by certified
mail, return receipt requested, all pursuant to KRS Chapter 154. The address
is: Board of Directors, Kentucky Lottery Corporation, 1011 West Main Street,
Louisville, Kentucky 40202, Telecopier No. (502) 560-1532.
(4) Board appeal.
(a) After receipt of an appeal, the board
shall schedule a hearing for the protesting party which shall be scheduled as
soon as practicable; and
1. The hearing shall
be conducted in accordance with KRS Chapter 13B; or
2. The chairman of the board may determine
that the hearing will be conducted by a hearing officer. The chairman shall
determine whether the hearing officer will conduct the hearing in the presence
of a quorum of the board, who renders a decision without the recommended order
of the hearing officer, or whether the hearing officer will conduct the hearing
outside of the presence of the board and will complete and submit to the board
a written recommended order, which shall include findings of fact, conclusions
of law, and recommended disposition, as provided in
KRS 13B.110.
The decision of the board shall be made by a majority of the board members
present at the meeting in which the appeal is decided.
(b) The decision of the board shall be final
unless the decision is appealed as provided by subsection (5) of this section
and other applicable law.
(5) Access to state courts. A person
aggrieved by a decision of the board under this section may appeal the
decision, within thirty (30) calendar days of its date of issuance, to a court
of competent jurisdiction, in accordance with KRS Chapter 154A.
Section 11. Sales of Lottery
Products by KLC. Nothing in 202 KAR Chapter 3, licensing documents, or any
other document shall limit the right of the KLC to sell lottery products
directly to the public, in person, electronically, by mail, by subscription, or
otherwise.
Section 12.
Incorporation by Reference.
(1) The following
material is incorporated by reference:
(a)
"Application for Retailer License", 12/8/17;
(b) "Retailer License Agreement",
12/8/17;
(c) "Retailer License
Agreement Addendum for Cashing Agents", 12/8/17; and
(d) "Retailer License Certificate",
12/8/17.
(2) This
material may be inspected, copied, or obtained, subject to applicable copyright
law, at the Kentucky Lottery Corporation, 1011 West Main Street, Louisville,
Kentucky 40202-2623, Monday through Friday, 8:00 a.m. through 5:00 p.m.
EST.
Notes
STATUTORY AUTHORITY: KRS 154A.050(1)(d), 154A.400(1)(b)
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