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Oregon Bulletin

February 1, 2011

 

Oregon State Lottery
Chapter 177

Rule Caption: Amends certain rules to streamline retailer application process; housekeeping changes.

Adm. Order No.: LOTT 13-2010

Filed with Sec. of State: 12-20-2010

Certified to be Effective: 1-1-11

Notice Publication Date: 12-1-2010

Rules Amended: 177-040-0000, 177-040-0001, 177-040-0003, 177-040-0070

Subject: The Oregon State Lottery initiated permanent rulemaking to amend the above referenced administrative rules. The amendments streamline the retailer contract application process by amending certain document and personal disclosure requirements and removing the requirement that the Wheelchair Accessibility Affidavit be notarized. Other amendments included housekeeping changes.

Rules Coordinator: Mark W. Hohlt—(503) 540-1417

177-040-0000

Definitions

For purposes of OAR chapter 177 division 40, the following definitions apply except as otherwise specifically provided in OAR Chapter 177 or unless the context requires otherwise:

(1) “Age-controlled area” means an area where a natural person who is under 21 years of age is prohibited from entering or remaining as posted by either the Lottery or the Oregon Liquor Control Commission.

(2) “Applicant” means a person applying for a contract with the Lottery for the purpose of selling Lottery tickets or shares to the public, and any key person.

(3) “Application” means the forms, documents, or other information that the Lottery requires an applicant to submit to the Lottery in order to apply for or maintain a retailer contract.

(4) “Business” includes:

(a) A commercial activity engaged in for profit or gain; or

(b) The activity engaged in by a nonprofit organization; or

(c) The activity engaged in by a private club as described in ORS 471.175(8).

(5) “Complete application” means an application that is completely filled out, and when required, is signed by the applicant, and includes all the documentation and information requested by the Lottery.

(6) “Premises” means the building and grounds occupied by a business (including those areas not normally open to the public), where traditional Lottery game tickets and shares, Video LotterySM game shares, or both, are sold. Premises includes an area designated by the Lottery at any single location identified in an application as a proposed site for Oregon Video LotterySM terminals.

(7) “Key person” means:

(a) Corporations: For any corporation, including a subsidiary of a parent corporation:

(A) Stockholders: Any stockholder of a corporation who owns 10% or more of the outstanding stock in such corporation.

(B) Directors: Any director of a corporation who owns or controls 3% or more of the voting stock in such corporation.

(C) Officers: Any officer of a corporation.

(b) Private Clubs: For a private club as described in ORS 471.175(8):

(A) The treasurer.

(B) Any officers, directors, or trustees who oversee or direct the operation of the food, beverage, Lottery, or other gambling-related activities of the private club, and

(C) Each manager in charge of the food, beverage, Lottery, or other gambling-related activities of the private club.

The provisions of paragraphs (7)(a)(A), (B), and (C) of this rule do not apply to private clubs.

(c) Trusts: The trustee and all persons entitled to receive income or benefit from the trust.

(d) Associations: The members, officers, and directors.

(e) Partnerships and Joint Ventures: All of the general partners, limited partners, or joint venturers.

(f) Limited Liability Companies: Any manager of the limited liability company, and any members of the limited liability company whose investment commitment or membership interest is 10% or more in the limited liability company.

(g) Layered Ownership: If the parent company, general partner, limited partner, joint venturer, stockholder, member or manager of a limited liability company is itself a corporation, trust, association, subsidiary, partnership, joint venture or limited liability company, then the Director may require that the applicant provide disclosure for such entity as if such entity were a key person itself.

(h) Family Members: Immediate family members as required in ORS 461.300(2)(b)(G) and (H).

(i) Sole Proprietors: The sole proprietor, if the retailer is a sole proprietor.

(j) Managers:

(A) General: A person, regardless of title, who acts or who has real or apparent authority to act on behalf of the owner in most matters concerning the operation of the owner’s business during all business hours, or who routinely performs all of the following duties:

(i) The hiring and firing of employees;

(ii) Making purchasing decisions relating to the buying of supplies and inventory; and

(iii) Conducting banking functions for the business.

(B) Exception: This definition does not include a “shift manager” or a “convenience store manager” unless otherwise qualified under this rule.

(C) Examples: The following are examples of managers who are key persons under this definition:

(i) General Manager: A person who operates the business for a corporate or absentee owner.

(ii) Area Manager: A person who operates multiple locations or supervises multiple store managers.

(k) Landlord: A landlord who receives 40% or more of the retailer’s Lottery commissions as a part of lease payments or rent, or any landlord who the Director finds, based on reasonably reliable information, exerts influence over the operation of the retailer’s business.

(l) Contractual Relationship: Any person who has a lease, contract, or other agreement with the applicant or retailer or anyone else, to provide food service or to manage or operate any part of the business in a Video LotterySM retailer’s premises other than as an employee.

(m) Control Person: Any reference to a “control person” of a retailer in OAR Chapter 177, a Lottery retailer contract, or Lottery form in effect or in use on or after the effective date of this rule shall be deemed to refer to a “key person” as defined in this section.

(8) “Personal disclosure” means those documents and information that are part of the application which relate to a natural person’s personal, criminal, and financial background, and associations with other people.

(9) “Mediation” has the meaning as defined in ORS 36.110(4).

(10) “Mediator” means a person who performs mediation.

(11) “Multi-State Retail Chain” means a retailer, including an applicant, who:

(a) Operates five or more retailer locations within the State of Oregon and one or more retail locations outside of the State of Oregon, all of which engage in similar business activities;

(b) Has common ownership and control over each location; and

(c) Sells no Oregon Lottery® games except traditional lottery games within the State of Oregon.

(12) “Public Company” means a retailer, including an applicant, who is a business entity that offers securities registered for sale by the federal Securities and Exchange Commission to the general public and sells no Oregon Lottery® games except traditional lottery games within the State of Oregon.

Stat. Auth.: OR Const. Art. XV, Sec. 4(4)

Stats. Implemented: ORS 461.300

Hist.: SLC 3-1985(Temp), f. & ef. 1-15-85; SLC 8-1985, f. & ef. 6-21-85; LC 11-1987, f. 6-22-87, ef. 7-1-87; LOTT 2-1998, f. & cert. ef. 5-28-98; LOTT 6-2000, f. 7-26-00, cert. ef. 8-1-00; LOTT 11-2002(Temp), f. 9-6-02, cert. ef. 9-9-02 thru 3-6-03; LOTT 22-2002, f. & cert.. ef. 11-25-02; LOTT 3-2004(Temp), f. & cert. ef. 4-6-04 thru 10-1-04; LOTT 6-2004, f. & cert. ef. 5-26-04; LOTT 3-2006, f. 2-16-06, cert. ef. 3-1-06; LOTT 8-2006, f. 12-20-06, cert. ef. 1-1-07; LOTT 13-2010, f. 12-20-10, cert. ef. 1-1-11

177-040-0001

General Application Requirements

(1) General: Any person may request an application from the Lottery.

(2) Disclosure Required: The Director may require any degree or type of disclosure necessary of the applicant or any other person in order to assure the security and integrity of the Lottery. An applicant must disclose to the Lottery all information required by the Director.

(3) Application Required: An applicant must file a complete application. The applicant must provide a complete personal disclosure, including documents and other information requested by the Lottery relating to the applicant’s personal, financial, and criminal background and an applicant’s associations with other persons. The application shall also include, but not be limited to:

(a) Authorization: An authorization, signed by the applicant, to investigate the applicant.

(b) Consent: Written consent to allow the examination of all accounts and records to be considered by the Director to be material to the application.

(c) Disclosure: Disclosure of the source of funds, financing, and business income used for the purchase and operation of the applicant’s business.

(d) Premises Ownership: If the premises are not wholly owned by the applicant, the applicant shall furnish to the Lottery:

(A) A statement of the name and address of the owner or owners of such premises;

(B) Any document requested by the Lottery showing the applicant is entitled to possession of the premises;

(C) Complete information pertaining to the interest held by any person other than the applicant, including interest held under any mortgage, deed of trust, bond or debenture, pledge of corporate stock, voting trust agreement, or other device; and

(D) Such other information as the Lottery may require.

(4) Waiver of Personal Disclosure: Notwithstanding section (3) of this rule:

(a) Public Company or Multi-State Retail Chain: If the applicant for a traditional lottery game retailer contract is a public company or a multi-state retail chain, Lottery will waive the personal disclosure requirements for the manager of each retailer location unless the Director determines such disclosure is necessary for the security and integrity of the Lottery.

(5) Compliance Required: An applicant’s failure to comply with any application or disclosure requirement may be grounds for denial or rejection of the application.

(6) Material Change: An applicant must immediately report to the Lottery, in writing, any material changes to the application during the application process. A “material change” means any change that may affect the Lottery’s evaluation of the application based on the requirements contained in Division 40 of these rules.

(7) Waiver: In submitting an application, the applicant expressly waives any claim against the State of Oregon, its agents, officers, employees, and representatives, and the Oregon State Lottery, its Director, agents, officers, employees, and representatives for damages that may result. Each applicant also accepts any risk of adverse public notice, embarrassment, criticism, damages, or claims which may result from any disclosure or publication by a third party of any public information on file with the Lottery.

(8) Resubmission: When an applicant has submitted a complete personal disclosure to the Lottery within the preceding twelve months, the applicant need not necessarily submit a new personal disclosure, but if the applicant does not submit a new personal disclosure, the applicant must submit, on forms approved by the Director, a sworn statement regarding any changes which may have occurred regarding the accuracy of the information provided in the previous personal disclosure. The Director may require the applicant to submit a complete personal disclosure if the Director determines substantial changes have occurred.

Stat. Auth.: OR Const. Art. XV, Sec. 4(4)

Stats. Implemented: ORS 461

Hist.: LOTT 6-2000, f. 7-26-00, cert. ef. 8-1-00; LOTT 11-2002(Temp), f. 9-6-02, cert. ef. 9-9-02 thru 3-6-03; LOTT 22-2002, f. & cert.. ef. 11-25-02; LOTT 12-2008, f. 12-23-08, cert. ef. 1-1-09; LOTT 13-2010, f. 12-20-10, cert. ef. 1-1-11

177-040-0003

Application for Temporary Lottery Retailer Contract

(1) General: For the purposes of this rule, temporary retailer contract means a contract issued to a retailer for a temporary period. A temporary contract may be formed subject to such special terms, conditions, or limitations as the Director may deem prudent.

(2)(a) Submission: To apply for a temporary retailer contract, an applicant must submit a complete application for a retailer contract.

(b) Purchase of Existing Business: When an applicant applies for a temporary contract for a business which the applicant is purchasing from an existing Lottery retailer, the applicant must submit to the Lottery a complete application along with any documentation requested by the Lottery regarding the intended purchase prior to the date the applicant takes possession of the premises pursuant to a purchase agreement. Notwithstanding submission of the application prior to the date of possession, the Lottery shall not enter into a temporary contract with the applicant until on or after the date the applicant takes legal possession of the business.

(3) Investigation: When the Lottery accepts the complete application for a temporary retailer contract, the Director will conduct an abbreviated investigation of the applicant and the business. That investigation includes, but is not limited to:

(a) A computerized background check for criminal arrests and convictions;

(b) A credit check using the services of a commercial credit reporting company; and

(c) An inspection of the business for which the applicant seeks a temporary retailer contract.

(4) Qualifying: An applicant may qualify for a temporary retailer contract if, based on the abbreviated investigation and on the application, all of the following criteria are met:

(a) The applicant is applying for a retailer contract at a specific location;

(b) The “Criteria Precluding Entering Into a Contract” described in OAR 177-040-0005 do not apply to the applicant;

(c) The applicant has no criminal convictions of any kind within five years of the date application is made;

(d) The applicant has no convictions as described in OAR 177-040-0010(3), “Criminal Behavior”;

(e) The applicant has no Class “A” misdemeanor or felony charges pending against the applicant;

(f) The applicant has no outstanding judgments, liens, or collections, except those judgments which the applicant is disputing through a legal process;

(g) The applicant is in compliance with all tax laws;

(h) The applicant has certified that the business location complies with OAR 177-040-0070, “Retailer Wheelchair Accessibility Program”;

(i) The applicant has the appropriate Oregon Liquor Control Commission license, as required by ORS Chapter 461, if applying for a contract to offer Video LotterySM games; and

(j) There are no apparent factors regarding the applicant to cause the Director to reasonably conclude that the applicant poses an actual or apparent threat to the fairness, honesty, integrity, or security of the Lottery and its games. Factors that may pose a threat include, but are not limited to, any of the following examples:

(A) The applicant or key person has one or more criminal arrests or convictions, depending on the nature and severity of the crimes involved; or

(B) The applicant or key person has been involved in any civil action in which the final judgment indicates that the applicant or key person is not financially responsible, depending on the nature, severity, and recency of the action.

(5) Other Requirements: Prior to the effective date of the temporary retailer contract, the Director may require the applicant to:

(a) Receive training from the Lottery;

(b) Establish an electronic funds transfer (EFT) bank account for Lottery funds;

(c) Pay all necessary fees associated with the installation of telephone lines and telephone service;

(d) Agree to pay all necessary fees associated with amusement device taxes prior to the effective date of a temporary retailer contract; and

(e) Agree to be responsible for and to pay all fees in connection with the application, including any cancellation fees for telephone lines and service.

(6) Other Video LotterySM Requirements: The applicant and the applicant’s business must qualify for the type of Lottery sales sought by the applicant. For example, if the applicant seeks a contract to offer Video LotterySM games, the business must have an appropriate liquor license and an age controlled area that meets the Lottery’s requirements. In addition, the business must not be operating as a casino as described in OAR 177-040-0061.

(7) Guarantor: If the applicant is an entity other than either a sole proprietor who is a natural person or a private club as defined in ORS 471.175(8), at least one natural person who is a principal of the applicant entity and who is a key person may be required to personally guarantee all monies owed to the Lottery.

(8) Bonding: The Director may require the applicant to post a bond, letter of credit, or cash deposit in the form of certified funds prior to the effective date of a temporary retailer contract.

(9) EFT Transfers: If the Lottery enters into a temporary retailer contract with the applicant, the contract will require the applicant to pay the amount due the Lottery from the sale of Lottery tickets or shares by electronic funds transfer (EFT). In most instances, amounts due the Lottery will be collected via EFT at the end of the fourth day after the close of the Lottery business week. If an applicant operates multiple Lottery retail sites before the effective date of this rule, the routine date of the EFT collection may be set beyond the fourth day after the close of the business week in order to accommodate the needs of the combined sites. The applicant must establish an account for deposit of money from the sale of Lottery tickets and shares with a financial institution that has the capability of making EFT draws.

(10) Burden of Proof: The burden for establishing that an applicant qualifies for a temporary retailer contract is on the applicant.

(11) Termination: In the Director’s sole discretion, the Director may immediately terminate a temporary retailer contract if the Director determines that continuing to contract with the applicant is not in the best interest of the Lottery including, but not limited to, when:

(a) The applicant provided false or misleading material information, or the applicant made a material omission in the application for a retailer contract;

(b) The applicant or any key person is arrested or convicted of a Class “A” misdemeanor or felony during the term of the temporary retailer contract;

(c) An EFT payment is rejected for non-sufficient funds (NSF), or the applicant fails to provide timely information to the Lottery regarding any change of the applicant’s EFT bank account;

(d) Any other reason contained in the contract or administrative rules that provides a basis for termination of a retailer contract; and

(e) When the Director concludes that continuing to contract with the applicant may pose a threat to the fairness, honesty, integrity, or security of the Lottery and its games.

(12) Length of Temporary Contract: A temporary retailer contract shall be valid for a specific time period for up to 120 days. A temporary retailer contract may, in the Director’s discretion, be extended for up to 120 additional days.

Stat. Auth.: ORS 461.217, 461.250 & 461.300; Or. Const. Art. XV, Sec. 4(4)

Stats. Implemented: ORS 461.217, 461.250 & 461.300

Hist.: LOTT 5-2000, f. 7-26-00, cert. ef. 11-1-00; LOTT 11-2002(Temp), f. 9-6-02, cert. ef. 9-9-02 thru 3-6-03; LOTT 22-2002, f. & cert.. ef. 11-25-02; LOTT 3-2004(Temp), f. & cert. ef. 4-6-04 thru 10-1-04; LOTT 6-2004, f. & cert. ef. 5-26-04; LOTT 2-2008, f. & cert. ef. 6-2-08; LOTT 13-2010, f. 12-20-10, cert. ef. 1-1-11

177-040-0070

Retailer Wheelchair Accessibility Program

(1) Purpose: The purpose of this rule is to require that all new and existing Lottery retailers provide and maintain access to Oregon Lottery® games and related services to persons who use wheelchairs. Access to Video LotterySM games may be achieved by providing access to at least one Video LotterySM game terminal, regardless of slight variations in game theme or play between the different types of Video LotterySM game terminals.

(2) General Requirements: All Lottery retailers shall provide and maintain access to all persons who use wheelchairs to enable their full and equal enjoyment of Lottery games and related services. Retailers shall comply with the Retailer Wheelchair Accessibility Program by installing required accessibility features, by removing identified barriers through structural modifications, or by creating alternative methods of providing access to Lottery games and related services.

(a) Barrier Removal and Accessibility Features: All barriers must be removed that impede wheelchair access to Lottery games and related services. Examples of barrier removal or accessibility features include, but are not limited to:

(A) Installing ramps;

(B) Making curb cuts in sidewalks and entrances;

(C) Creating designated accessible parking spaces;

(D) Widening doors;

(E) Rearranging tables, chairs, vending machines, display racks, and other furniture;

(F) Installing offset hinges to widen doorways;

(G) Installing accessible door hardware;

(H) Installing elevators; and

(I) Relocating Lottery games and related services within the retailer’s premises to accommodate persons who use wheelchairs.

(b) Alternative Methods: Alternative methods of providing access to Lottery games and related services must be appropriate or reasonable for the person using a wheelchair, and will apply only when accessibility to the Lottery game or related service does not require physical access by the person using a wheelchair to a specific area of the premises. (For example, playing Keno does not require physical access to a Lottery terminal if the retailer provides table service to persons who use wheelchairs. Conversely, playing Video LotterySM games does require physical access to the Video LotterySM game terminal.) All alternative methods of providing access must be approved by the Director and will only be permitted when the retailer demonstrates to the satisfaction of the Director the necessity of offering alternative methods of access instead of removing barriers or installing accessibility features. The Director’s decision is final.

(c) Costs of Modifications: The retailer is responsible for all costs related to removing barriers, installing accessibility features, or offering alternative methods of access for the purpose of making a retailer’s premises wheelchair accessible.

(3) Retailer Wheelchair Accessibility Certification: All applicants shall submit with the application, a signed Wheelchair Accessibility Certification form certifying that the retail location is wheelchair accessible. The Certification form shall be provided by the Lottery and shall contain the Lottery’s wheelchair accessibility standards. The Wheelchair Accessibility Certification form must be completed and signed by the applicant.

(4) Permitted Exemptions:

(a) The Director may grant the following exemptions to the requirements of this rule. The Director shall review the circumstances and supporting documentation provided by a retailer to determine if a retailer’s request for an exemption should be granted. The Director shall determine the type and scope of documentation to be required for each exemption classification. All decisions made by the Director are final. A retailer or applicant whose request for an exemption is denied by the Director is required to satisfy the requirements of this rule as a condition for maintaining its eligibility for a Lottery retailer contract.

(A) Historic Properties: To the extent a historic building or facility is exempt under federal law, this rule does not apply to a qualified historic building or facility that is listed in or eligible for listing in the National Register of Historic Places under the National Historic Preservation Act or is designated as historic under state or local law. Qualified means exempt from accessibility requirements under the federal historic preservation laws.

(B) Legal Impediment to Barrier Removal: Any law, act, ordinance, state regulation, ruling or decision which prohibits a Lottery retailer from removing a structural impediment or for making a required improvement may be the basis for an exemption to this rule. A Lottery retailer requesting an exemption under this subsection will not be required to seek a zoning variance to establish the legal basis for the impediment, but is required to document and attest to the legal impediment.

(C) Landlord Refusal: An exemption granted to an existing Lottery retailer based on the refusal of a landlord to grant permission to a Lottery retailer to make the structural improvements required by the Lottery under this rule shall only apply to the retailer’s current lease term. No new landlord refusal exemptions are authorized after August 1, 2000. All existing exemptions granted before August 1, 2000 may be continued until the retailer’s contract expires.

(D) Undue Financial Hardship: Undue financial hardship exemptions are not authorized. Any existing exemptions granted before August 1, 2000 may be continued until the retailer’s contract expires.

(5) Complaints Relating to Non-Accessibility: The Director will receive and process all accessibility complaints concerning a Lottery retailer as follows:

(a) Initial Complaint and Investigation: When possible, complaints must be in writing and submitted to the Lottery on a Lottery retailer wheelchair accessibility complaint form. The Lottery will investigate the complaint. If the retailer is found to be in compliance with this rule, a letter will be mailed to the retailer and complainant.

(b) Letter of Impending Rule Violation: If the Lottery determines that there are any violations of this rule, the Lottery shall issue a letter of impending rule violation to the retailer. The retailer shall submit a response no later than 30 days after mailing of the letter of impending rule violation. The Director shall determine if the retailer’s response is acceptable under this rule. If the retailer is found to be in compliance with this rule, a letter will be mailed to the retailer and the complainant.

(c) Letter of Rule Violation: If the retailer’s response to the Lottery’s letter of impending rule violation is unacceptable under this rule, or if the retailer does not provide an explanation in the 30 day response period, the Lottery shall issue a letter of rule violation. The letter of rule violation shall describe the violations found at the retailer’s location under the terms of this rule.

(d) Corrective Action Plan: The Lottery retailer shall submit a corrective action plan to the Lottery within 30 days of the issuance of the letter of rule violation. The Director may extend the response time for reasons beyond the reasonable control of the retailer. The plan shall describe in detail how the retailer will comply with this rule. The Lottery shall notify the retailer of the Lottery’s acceptance or rejection of the plan. If the plan is rejected, the notification shall contain the reasons for rejection of the plan and the corrections needed to make the plan acceptable to the Lottery. If the retailer agrees to make the required corrections, the Lottery shall accept the plan as modified. If a retailer fails to submit a plan within 30 days of issuance of the letter of rule violation and has not requested an extension of time to submit a plan, or if a retailer has requested an extension but the request is denied by the Lottery, the Lottery may terminate the retailer contract.

(e) Time Line for Implementation of Corrective Actions: The retailer must complete corrective actions within 90 days of the date the Lottery accepts the retailer’s corrective action plan. If the retailer has not eliminated the violations cited in the letter of rule violation within 90 days of mailing, but has requested an extension of time, the Lottery may grant an extension of no more than 90 days. The Lottery will send a notice of the extension to the retailer and the complainant. Any extension commences immediately upon expiration of the original 90 day period. In no event shall the total amount of time exceed 180 days from the date the Lottery accepts the retailer’s corrective action plan.

(f) Notice of Rule Compliance: If the retailer corrects the violations specified in the letter of rule violation, and the retailer has provided an updated Wheelchair Accessibility Certification form certifying full compliance, the Lottery will issue a notice of rule compliance. Until this notice is issued, a complaint is considered pending.

(g) Termination: Failure of the retailer to make timely corrections in compliance with this rule and the retailer’s corrective action plan may result in termination of the retailer contract.

(6) Inspections and Audits: The Director may inspect and audit any Lottery retailer’s premises for compliance with this rule at any time including random compliance audits. The Lottery will conduct the audit and inspection during the retailer’s regular business hours or at such other time as agreed upon by the retailer and the Lottery. The burden of proof to establish that a retailer’s premises are in compliance with this rule is on the Lottery retailer.

Stat. Auth.: OR Const. Art. XV, Sec. 4(4) & ORS 461

Stats. Implemented: ORS 461.300

Hist.: LC 5-1997, f. 6-13-97, cert. ef. 7-1-97; LOTT 6-2000, f. 7-26-00, cert. ef. 8-1-00; LOTT 8-2003, f. & cert. ef. 6-30-03; LOTT 13-2010, f. 12-20-10, cert. ef. 1-1-11

 

Rule Caption: Establish process for requesting study on Video LotterySM retailer compensation rates.

Adm. Order No.: LOTT 14-2010

Filed with Sec. of State: 12-20-2010

Certified to be Effective: 1-1-11

Notice Publication Date: 12-1-2010

Rules Adopted: 177-040-0024

Subject: The Oregon State Lottery adopted the above referenced administrative rule to establish a process for requesting a study on Video LotterySM retailer compensation rates for the Oregon Lottery Commission. This study is to be done in conjunction with a review of the Video LotterySM retailer compensation rates set forth in OAR 177-040-0028 on or after October 2014 and prior to the expiration of the current Retailer Contract on June 28, 2015.

Rules Coordinator: Mark W. Hohlt—(503) 540-1417

177-040-0024

Compensation Rate Study for Video LotterySM Retailers

(1) Purpose: The purpose of this rule is to direct the Director of the Oregon State Lottery to conduct a comprehensive Video LotterySM retailer compensation study to assist the Lottery Commission in determining what retailer compensation system will best fulfill its legal obligation to determine the compensation to be paid to Video LotterySM retailers for their sales of Lottery tickets or shares by undertaking to develop a compensation system that maximizes the net revenue to the state for the public purpose consistent with providing a reasonable rate of return for Video LotterySM retailers, for the Lottery Retailer Contract which term begins June 28, 2015.

(2) Selection of Independent Consulting Company or Consultant: The Video LotterySM retailer compensation study shall be completed by an independent economic consulting company or economic consultant chosen by the Director. The Director may select a consulting company or consultant using any procurement process deemed appropriate by the Director, but in selecting the consulting company or consultant, the Director shall determine that the company or consultant has the requisite experience, expertise, and knowledge for this type of study. The Director shall submit a report to the Lottery Commission before entering into any contract for services with the consulting company or consultant selected by the Director.

(3) Analysis of Video LotterySM Retailer Compensation Systems: The study shall provide an analysis and comparison of various Video LotterySM retailer compensation systems, and shall set forth the pros and cons for each system and the estimated costs to Lottery if it were to use each system. The analysis shall include, but is not limited to, the following Video LotterySM retailer compensation systems:

(a) Tiered compensation rate system where retailer compensation is calculated as a percentage of net receipts, but the percentage declines as net receipts increase over a business year. The higher the net receipts, the lower the percentage paid. This analysis shall include, but is not limited to, the current compensation system described in OAR 177-040-0026.

(b) Single compensation rate system where the retailer compensation is calculated by applying a single, specified percentage to a retailer’s net receipts over a business year. This analysis shall include a method or methods for determining the single percentage rate.

(c) Individualized compensation rate system where compensation is calculated based on a percentage of net receipts as determined individually for each Video LotterySM retailer. This analysis shall include the method or methods the Lottery would use to determine the percentage rate or rates for each individual retailer.

(4) Lottery Commission Responsibilities To Be Addressed: In analyzing the various compensation rate systems, as required in section (3) of this rule, the study must consider and address the following constitutional and statutory responsibilities of the Lottery Commission and the Lottery Director to:

(a) Insure the integrity, security, honesty, and fairness of the Lottery (Article XV, section 4, 4(a), and ORS 461.150);

(b) Undertake to develop a system to maximize net revenue while providing a reasonable rate of return for contractors (ORS 461.445);

(c) Select as Lottery game retailers such persons to best serve the public convenience and promote the sale of Lottery tickets or shares (ORS 461.300);

(d) Provide adequate and convenient availability of Video LotterySM games in both rural and metropolitan locations to promote sales (ORS 461.300);

(e) Determine retailer compensation (ORS 461.310); and

(f) Make ongoing study and comparison of the operations of lotteries in other states and countries (ORS 461.180).

(5) Other Factors: Notwithstanding subsection (4) of this rule, the Director shall determine what other factors are necessary for consideration and review in order to complete a comprehensive Video LotterySM retailer compensation rate study.

(6) Completion: This study is to be completed no later than October 1, 2014.

Stat. Auth.: ORS 461

Stats. Implemented: ORS 461.300, 461.310, 461.445

Hist.: LOTT 14-2010, f. 12-30-10, cert. ef. 1-1-11

Notes
1.) This online version of the OREGON BULLETIN is provided for convenience of reference and enhanced access. The official, record copy of this publication is contained in the original Administrative Orders and Rulemaking Notices filed with the Secretary of State, Archives Division. Discrepancies, if any, are satisfied in favor of the original versions. Use the OAR Revision Cumulative Index found in the Oregon Bulletin to access a numerical list of rulemaking actions after November 15, 2010.

2.) Copyright 2011 Oregon Secretary of State: Terms and Conditions of Use

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