3770:2-3-03 Video lottery licenses; issuance of license.

(A) If after a review of an application and consideration of factors deemed relevant to the efficient and proper administration of video lottery, and provided that the director determines that a video lottery applicant has met the requirements for issuance of a video lottery license, the director may license a video lottery applicant as a video lottery sales agent on such terms and conditions, and for such length of time, deemed appropriate, including issuance of a temporary license.

(B) No video lottery license shall be issued until licensing fees are paid in accordance with and in the amount set forth in rules promulgated by the commission under Chapter 3770:2-11 of the Administrative Code.

(C) No video lottery license shall be issued to an entity that is not a permit holder.

(D) Video lottery licenses are subject to suspension, modification, revocation or fines as authorized by the Lottery Act, rule, regulation, policy order or directive of the commission or director. Further, as necessary for reasons related to public safety, convenience or trust which require immediate action, the director may order the immediate and indefinite disabling of all or a portion of the video lottery operations and/or removal of video lottery equipment at a video lottery sales agent's video lottery facility. In the event of such action, the director must continue to comply with the requirements of the Administrative Procedure Act in affording the video lottery sales agent a subsequent opportunity for an adjudication hearing.

(E) License transfer.

(1) A video lottery license is not transferable for five years after the initial issuance of an operating license. Any person or entity holding an ownership interest in the video lottery applicant or holding, directly of indirectly, an ownership interest through a holding company of the video lottery applicant, as of the date of issuance of an operating license to the video lottery sales agent, may increase such ownership interest thereafter and any such increase or increases shall not be considered a transfer of license under this rule.

(2) Any ownership interest in the video lottery sales agent or ownership, directly or indirectly, through a holding company of a video lottery sales agent, that is acquired after the date of issuance of an operating license to the video lottery sales agent by a person or entity not previously holding an ownership interest, which would result in such person or entity obtaining control of the video lottery applicant shall be considered a prohibited transfer under paragraph (E)(1) of this rule during the five year period set forth in that paragraph.

(3) Any changes in ownership under paragraph (E)(1)or (E)(2) of this rule shall be subject to supplemental requirements set forth in paragraph (B) of rule 3770:2-3-01 of the Administrative Code.

(4) As used in this paragraph, "control" means either of the following:

(a) Holding fifty per cent of more of the outstanding voting securities of an applicant; or having the right in the event of dissolution to fifty per cent or more of the assets of the applicant; or, for an unincorporated applicant, having the right to fifty per cent or more of the profits of the applicant; or

(b) Having the contractual power presently to designate fifty per cent or more of the directors of a for-profit or not-for-profit corporation, or in the case of trusts described in paragraphs (c)(3) to (5) of 16 C.F.R. 801.1(2011) , the trustees of such a trust.

(5) Notwithstanding any other provision of this rule, the director shall have authority to permit a transfer otherwise prohibited by this rule if the director determines that due to the financial, operational or security integrity of the licensed agent, such transfer is needed to protect the public interest or trust. If the director permits a transfer under this subsection, the director may also reduce, but shall not be required to reduce, any fee otherwise payable under division 3770:2 of the Administrative Code.

(F) The relationship between the lottery and a video lottery sales agent is one of trust and a video lottery sales agent collects funds as a fiduciary on behalf of and in trust for the lottery through the sale of video lottery tickets for which a video lottery sales agent receives compensation.

(G) Video lottery games sold and video lottery terminals operated by a licensed video lottery sales agent must be approved by the director, commission or commissioners, as applicable.

(H) A video lottery license shall authorize a video lottery sales agent to offer video lottery games for sale and engage in authorized video lottery activity.

(I) Upon issuance of a video lottery license, a video lottery sales agent shall be obligated to comply with the applicable provisions of the Lottery Act, all rules, regulations, policies and directives of the commission or director and all terms and conditions of the license as set forth in the application, or any amendments or modifications thereto. Failure to comply with any and all obligations required of a video lottery sales agent may subject the video lottery sales agent's video lottery license to suspension or revocation as set forth in rule 3770:2-3-05 of the Administrative Code, or to imposition of monetary penalties as set forth in rule 3770:2-3-06 of the Administrative Code. A temporary video lottery license, if issued, does not guarantee the issuance of a video lottery license.

(J) In addition to selling video lottery games, a video lottery sales agent shall be required to sell other lottery games authorized by the commission and allocated to the video lottery sales agent by the director.

(K) There shall not be more than seven video lottery sales agent licenses issued to permit holders at any one time during the ten year period following the issuance of the first video lottery sales agent license.

Effective: 06/27/2013
R.C. 119.032 review dates: 03/01/2018
Promulgated Under: 119.03
Statutory Authority: 3770.03
Rule Amplifies: 3770.01 , 3770.02 , 3770.03 , 3770.06 , 3770.21
Prior Effective Dates: 8/18/09(Emer), 10/28/10, 01/16/2012