CO Code § 44-40-107 (2021)
2021 Colorado Code|Title 44 - Revenue - Regulation of Activities|Article 40 - State Lottery Division|§ 44-40-107. Licenses

  The director shall issue, suspend, revoke, and renew licenses for lottery sales agents pursuant to subsection (3) of this section and rules adopted by the commission. Licensing rules shall include requirements relating to the financial responsibility of the licensee, the accessibility of the licensee's place of business or activity to the public, the sufficiency of existing licenses to serve the public interest, the volume of expected sales, the character of the licensee, the security and efficient operation of the lottery, the licensed agent recovery reserve authorized in section 44-40-121, and other matters necessary to protect the public interest and trust in the lottery and to further the sales of lottery tickets or shares. Rules shall also require that licenses be prominently displayed in areas visible to the public.      A license shall be revoked upon a finding that the licensee:   Has provided false or misleading information to the division;    Has been convicted of any gambling-related offense;    Has endangered the security of the lottery;    Has become a person whose character is no longer consistent with the protection of the public interest and trust in the lottery; or    Has intentionally refused to pay a prize in his or her possession to a person entitled to receive the prize under this article 40.       A license may be suspended, revoked, or not renewed for any of the following causes:   A change of business location;    An insufficient sales volume;    A delinquency in remitting money owed to the lottery;    The endangering of the efficient operation of the lottery;    Any violation of this article 40 or any rule adopted pursuant to this article 40; or    Conviction of any felony.          Procedures for issuance, suspension, revocation, and renewal of licenses shall be in accordance with article 4 of title 24, and the director shall have all the powers and shall be subject to all the requirements of article 4 of title 24 in conducting any hearings relating to the granting, suspension, revocation, or renewal of licenses. When a felony conviction or a conviction involving fraud is an issue in the issuance, suspension, revocation, or renewal of a lottery sales agent's license, the director's determination shall be submitted to a three-member panel who shall approve or reject the determination. The panel's decision shall constitute final agency action for the purposes of section 24-4-106. The panel shall be composed of the chairman of the lottery commission, the executive director, and the secretary of state.    Licensed sales agents may include persons, firms, associations, or corporations, profit or nonprofit, but the following are ineligible for any license as a sales agent:   Any person who will engage in business exclusively as a lottery sales agent;    Any person who has been convicted of a gambling-related offense, notwithstanding the provisions of section 24-5-101;    Any person who is or has been a professional gambler or gambling promoter;    Any person who has engaged in bookmaking or any other form of illegal gambling;    Any person who is not of good character and reputation, notwithstanding the provisions of section 24-5-101, in the community where he or she resides;    Any person who has been convicted of a crime involving misrepresentation, notwithstanding the provisions of section 24-5-101;    Any firm or corporation in which a person defined in subsections (4)(b) to (4)(f) of this section has a proprietary, equitable, or credit interest;    Any organization in which a person defined in subsections (4)(b) to (4)(f) of this section is an officer, director, or managing agent, whether compensated or not; or    Any organization in which a person defined in subsections (4)(b) to (4)(f) of this section is to participate in the management or sales of lottery tickets or shares.       Licensed sales agents may include persons, firms, associations, or corporations, profit or nonprofit, but the following may be determined to be ineligible for any license as a sales agent:   Any person who has been convicted of a felony or a crime involving fraud, notwithstanding the provisions of section 24-5-101;    Any firm or corporation in which a person defined in subsection (5)(a) of this section has a proprietary, equitable, or credit interest;    Any organization in which a person defined in subsection (5)(a) of this section is an officer, director, or managing agent, whether compensated or not; or    Any organization in which a person defined in subsection (5)(a) of this section is to participate in the management or sales of lottery tickets or shares.       Each licensed sales agent shall keep a complete set of books of account, correspondence, and all other records necessary to show fully the lottery transactions of the licensee, all of which shall be open at all times during business hours for the inspection and examination of the division or its duly authorized representatives. The division may require any licensed sales agent to furnish the information that the division considers necessary for the proper administration of this article 40 and may require an audit to be made of the books of account and records when the division considers necessary by an auditor, selected by the director, who shall likewise have access to all the books and records of the licensee, and the licensee may be required to pay the expense thereof.    All licenses for lottery sales agents shall specify the place that sales shall take place, and no license shall be effective upon residential premises.    The costs of any investigation into the background of an applicant seeking a license for a lottery sales agent shall be assessed against the applicant and shall be paid by the applicant at the time of billing by the state. The investigation may be conducted by the division or the attorney general. Investigators shall have peace officer authority during the period of investigation.    If there are more applications to operate lotto than there are outlets available, then at least one hundred locations will be decided by a drawing by lot with the balance of all lotto outlets to be located at the direction of the division. Any person licensed as a lottery sales agent pursuant to the provision of this section shall be eligible to enter into this drawing by lot to determine if the person will be allowed to operate a lotto game at the same location.    If the rental payments for the business premises of any lottery sales agent are based in whole or in part on a percentage of retail sales, and the computation of retail sales in the rental agreement does not specifically include the sale of tickets or shares in the lottery, the compensation received by the sales agent, as determined by the commission pursuant to section 44-40-109 (2)(h), and not the gross revenues from the sale of lottery tickets or shares shall be the amount of the retail sale for the purpose of computing the rental payment.      Each applicant for a lottery sales agent license, with the submission of the application, shall submit a set of fingerprints to the division. The division shall forward the fingerprints to the Colorado bureau of investigation for the purpose of conducting a state and national fingerprint-based criminal history record check utilizing records of the Colorado bureau of investigation and the federal bureau of investigation. Only the actual costs of the record check shall be borne by the applicant. Nothing in this subsection (11) shall preclude the division from making further inquiries into the background of the applicant.  (a.5) When the results of a fingerprint-based criminal history record check of an applicant performed pursuant to this subsection (11) reveal a record of arrest without a disposition, the division shall require the applicant to submit to a name-based criminal history record check, as defined in section 22-2-119.3 (6)(d) .     For purposes of this subsection (11), “applicant” means an individual or each officer or director of a firm, association, or corporation that is applying for a license pursuant to this section.        History. Source: L. 2018: Entire article added with relocations,(HB 18-1027), ch. 31, p. 342, § 2, effective October 1. L. 2019: (11)(a.5) added,(HB 19-1166), ch. 125, p. 564, § 67, effective April 18.    Editor's note:   This section is similar to former § 24-35-206 as it existed prior to 2018.   Cross references:   For those who serve as peace officers within the criminal code when enforcing laws and rules regarding the lottery, see § 16-2.5-121 .   ANNOTATION   Annotator's note. Since § 44-40-107 is similar to § 24-35-206 as it existed prior to its 2018 relocation to this section, relevant cases construing that provision have been included in the annotations to this section.   Exhaustion of administrative remedies was not required by this section with respect to plaintiff's claims that lottery division and lottery commission knew that the last grand prize for a particular scratch game had been claimed, continued to sell tickets for the scratch game, did not inform potential ticket purchasers that the grand prize was no longer available, and continued to represent the availability of the grand prize. Subsections (1) and (2)(a)(IV) are general in nature and did not establish that plaintiff's claims, if true, would constitute lottery statute violations for which plaintiff could seek administrative remedies. Bazemore v. Colo. State Lottery Div., 64 P.3d 876 (Colo. App. 2002).   When an agency seeks revocation of an existing license, the agency is the proponent of the order and bears the burden of proof. The state lottery division was required to prove that the licensee was not a person of good character or reputation in the community within the meaning of paragraph (e) of subsection (4). Q & T Food Stores, Inc. v. Zamarripa, 910 P.2d 44 (Colo. App. 1995), aff'd, 929 P.2d 1332 (Colo. 1997).   The Administrative Procedure Act is applicable to lottery sales agent licensure and revocation proceedings. Zamarripa v. Q & T Food Stores, Inc., 929 P.2d 1332 (Colo. 1997).   Paragraph (2)(b) provides that conviction of a non-gambling, non-misrepresentation felony is a discretionary, not a mandatory, basis for a suspension, revocation, or non-renewal of a license. Zamarripa v. Q & T Food Stores, Inc., 929 P.2d 1332 (Colo. 1997).   The creation of the felony review panel in subsection (3) demonstrates that the general assembly intended non-gambling, non-misrepresentation felony only to be considered in determining licensure decisions. Zamarripa v. Q & T Food Stores, Inc., 929 P.2d 1332 (Colo. 1997).   Court reversed and remanded decision of state lottery director to revoke lottery sales agent license solely on the basis of a non-gambling, non-misrepresentation felony. Zamarripa v. Q & T Food Stores, Inc., 929 P.2d 1332 (Colo. 1997).