AN ACT CONCERNING LOTTERY VENDOR, AFFILIATE AND OCCUPATIONAL LICENSES

This bill expands the types of people and business organizations dealing with the Connecticut Lottery Corporation (CLC) that must be licensed by the Division of Special Revenue (DSR), thus making the law conform to regulations, in some cases. It requires DSR to issue all the licenses in accordance with the bill and prescribe the form and manner of applications. The licenses, fees, and licensing procedures are generally the same as those that apply to pari-mutuel wagering, which DSR regulates. The bill gives DSR explicit authority to regulate CLC activities in connection with these licensing activities.

The bill makes the law conform to agency regulations by requiring a different occupational license for CLC upper management employees than the one for other CLC employees.

The bill gives the DSR executive director specific authority to reject license applications or suspend or revoke licenses for good cause and impose a civil fine of up to $ 2,500 on licensees who violate CLC laws or regulations. The amount is the same as what he may now levy on people to whom he issues licenses pertaining to off-track betting activities. The executive director may impose the fines only after a hearing held in accordance with the Uniform Administrative Procedures Act (UAPA).

The bill allows the executive director to adopt necessary implementing regulations.

Current law requires any person or business organization awarded CLC's primary contract to provide it with necessary goods, services, facilities, or components for the state lottery to (1) undergo both state and national criminal history record checks and (2) either undergo a State Police background check or obtain a DSR vendor license (which process includes a State Police background check).

The bill makes the law conform to agency practice by requiring vendors with a primary contract to be licensed. It changes the standard for vendor licensing by requiring the license for businesses or persons with a primary contract to provide facilities, components, goods, or services necessary for, and directly related to, CLC's secure operation. It defines a "primary contract" as one under which a person or business organization that (1) provides any lottery game or any online wagering system-related facilities, components, goods, or services and receives or, in the exercise of reasonable business judgment, may be expected to receive more than $ 75,000 or 25% of its gross annual sales from CLC or (2) has access to CLC facilities and provides services there without CLC supervision.

The bill establishes a Class II affiliate license for any person or business organization, other than shareholders in a publicly traded corporation, with a subcontract to provide facilities, components, goods, or services that are necessary for, and directly related to, the secure operation of CLC activities. The license is also required for businesses that exercise control in or over a vendor licensee.

By law, CLC employees must have an occupational license, which is not subject to renewal and valid for as long as they are employed by CLC.

The bill requires a separate Class IV occupational license for those employees the executive director believes will exercise authority over or direct CLC's management and policies and a Class III license for other employees. The bill retains the executive director's discretionary authority to have Class IV employees update information on their financial standing and credit annually but eliminates it for the other employees.

The nonrefundable license fee for a Class III license is $ 10, and for a Class IV, $ 50.

The bill makes the law conform to practice by requiring a Class I occupational license for a vendor's employees who have access to CLC facilities and work there unsupervised by CLC or perform duties directly related to CLC activities. It establishes the same license requirements for an affiliate's employees with the same status.

The bill also establishes a Class II occupational license for officers, directors, partners, trustees, or owners of a business organization licensed as a vendor or affiliate and shareholders, executives, agents, or other people connected with such licensees if the executive director believes they will exercise control in or over the vendor or affiliate.

In determining whether to grant any license, the executive director may require applicants to provide him with the same information that CLC ccupational licensees must now provide by law. He may request information on their:

1. financial standing and credit, which must be updated annually, at the director's request (except for CLC Class III licensees);

2. moral character;

3. criminal record, if any;

4. previous employment;

5. corporate, partnership, or association affiliations; and

6. ownership of personal assets.

The director may also ask for other information he deems pertinent to secure the lottery's integrity.

The bill requires all licensees to undergo state and national criminal history record checks, which are already required for the primary vendor and CLC occupational licenses, and it allows the executive director to require applicants to undergo international criminal history record checks as well. If an applicant satisfies the licensing requirements and the executive director deems him qualified, he must issue the license. He may reject all license applications for good cause.

The executive director may require that vendors and affiliate licensees maintain their books in any manner he considers best and prepare financial or other statements based on them in accordance with generally accepted accounting principles in the form he prescribes. He or his designee may visit, investigate, and place expert accountants and others he considers necessary in the licensees' offices or business places to determine if they are complying with DSR regulations.

As with current practice for existing licensees, the executive director may suspend or revoke any license for good cause after a UAPA hearing. He may also order summary suspension of any license. An applicant or licensee aggrieved by the executive director's action on any license or application may appeal to the Gaming Policy Board within 15 days after the action and may appeal the board's decision to Superior Court.

The executive director may, after a UAPA hearing, impose a civil penalty on any licensee of up to $ 2,500 for a violation of the laws governing licensees or regulations implementing the licensing provisions.

Under the bill, (1) a business organization is a partnership, incorporated or unincorporated association, firm, corporation, trust, or other form of business or legal entity and (2) a person has control if he has the power to exercise authority over or direct the management and policies of a licensee.

Yea

Nay