Chapter 31. Licensing Regulations
11VAC5-31-10. Definitions.
The following words and terms when used in any of the agency's regulations shall have the same meanings as defined in this chapter unless the context clearly indicates otherwise:
"Agency" means the Virginia Lottery created by the Virginia Lottery Law (Chapter 40 (§ 58.1-4000 et seq.) of Title 58.1 of the Code of Virginia).
"Board" means the Virginia Lottery Board established by the Virginia Lottery Law (Chapter 40 (§ 58.1-4000 et seq.) of Title 58.1 of the Code of Virginia).
"Director" means the Executive Director of the Virginia Lottery or his designee.
"Enterprise Series MultiMedia (ESMM) display" means a player display unit that, when connected to the lottery terminal, displays messages to the customer pertaining to lottery products, drawing messages, and other lottery-related messages.
"License" means the certificate issued by the agency to a retailer who has met the requirements established by the agency to sell lottery products.
"Lottery retailer," "lottery sales agent," or "retailer" means a person licensed by the director to sell and dispense lottery tickets or products and act as the agency's representative to collect, preserve, and account for Commonwealth of Virginia trust funds.
"Person," for purposes of licensing, means an individual, association, partnership, corporation, club, trust, estate, society, company, joint stock company, receiver, trustee, assignee, referee, or any other person acting in a fiduciary or representative capacity, whether appointed by a court or otherwise, and any combination of individuals, as well as all departments, commissions, agencies and instrumentalities of the Commonwealth, including its counties, cities, municipalities, political subdivisions, agencies and instrumentalities thereof.
"Vacuum fluorescent display" means a player display unit that, when connected to the lottery terminal, presents messages to the customer, such as customer transaction totals, validation and cancellation amounts, and jackpot drawing messages.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012; Volume 31, Issue 3, eff. November 5, 2014; Volume 32, Issue 3, eff. December 21, 2015.
11VAC5-31-20. Eligibility.
Any person who is 18 years of age or older may submit an application for licensure as a lottery retailer in accordance with the provisions and requirements of the agency's licensing procedures, except no person may submit an application for licensure:
1. Who will be engaged primarily in the business of selling lottery tickets;
2. Who is a board member, officer, or employee of the Virginia Lottery or who resides in the same household as a board member, officer, or employee of the agency; or
3. Who is a board member, officer, or employee of any vendor to the agency of lottery ticket goods or services, working directly on a contract with the agency, or whose business owns, is owned by or controlled by, or affiliated with that vendor.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012; Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-30. Application procedure.
A. Any eligible person shall first file an application with the agency by completing all information requested on forms supplied for that purpose, along with submitting any required fees.
B. The submission of application forms or data for licensure does not in any way entitle any person to receive a license to act as a lottery retailer.
C. In the event an applicant is a former lottery sales agent whose license was suspended, revoked, or refused renewal pursuant to § 58.1-4009 or 58.1-4012 of the Code of Virginia, no application for a new license to sell lottery tickets or shares shall be considered for a minimum period of 90 days following the suspension, revocation, or refusal to renew.
D. The person shall submit all required forms and information to the agency to be considered for licensing. Failure to submit required forms within the agency's licensing procedures may result in the loss of opportunity to become or remain a licensed retailer.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012; amended, Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-40. General standards for licensing.
A. The director or his designee may license those persons who, in his opinion, will best serve the public interest and convenience and public trust in the lottery and promote the sale of lottery tickets. Before issuing or renewing a license, the director may consider factors including, but not limited to, the following:
1. Those factors set out in § 58.1-4009 of the Code of Virginia, these regulations, and the agency's licensing procedures;
2. The ability to offer a high level of customer service to lottery players;
3. The person's prior history, record, and performance with the agency;
4. Whether the place of business caters to or is frequented predominately by persons under 18 years of age;
5. Whether the nature of the business constitutes a threat to the health or safety of prospective patrons;
6. Whether the nature of the business is consonant with the probity of the Commonwealth; and
7. Whether the person or retailer has (i) committed any act of fraud, deceit, misrepresentation, moral turpitude, or illegal gambling or (ii) engaged in conduct prejudicial to public confidence in the state lottery.
B. Special retailer licensing.
1. The director may license special lottery retailers subject to such conditions or limitations as the director may deem prudent and if the director finds there is a need to develop alternative business models to engage in partnerships with certain retailers that are consistent with the laws of the Commonwealth of Virginia and these regulations. These limitations or conditions may include, but are not limited to:
a. Length of license period;
b. Hours or day of sale;
c. Selling of only limited products;
d. Specific persons who are allowed to sell lottery tickets;
e. Specific sporting, charitable, social, or other special events where lottery tickets may be sold if in conformity with law; or
f. Different commission and payment structures and bonding requirements.
2. Special licensed agents will be subject to these regulations.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012; Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-50. Bonding of lottery retailers.
A. A lottery retailer shall have and maintain a surety bond from a surety company entitled to do business in this Commonwealth. The surety bond shall be in an amount as deemed necessary to secure the interests of the Commonwealth and the agency, in the sole discretion of the director, and shall be payable to the agency and conditioned upon the faithful performance of the lottery retailer's duties.
B. The agency may establish a sliding scale for surety bonding requirements based on the average volume of lottery ticket sales by a retailer to ensure that the Commonwealth's interest in tickets to be sold by a licensed lottery retailer is adequately safeguarded.
C. Prior to issuance of a license, every lottery sales agent shall either (i) be bonded by a surety company entitled to do business in this Commonwealth in such amount and penalty as may be prescribed by the regulations of the department or (ii) provide such other surety as may be satisfactory to the director, payable to the agency, and conditioned upon the faithful performance of his duties. Such alternate surety instruments or arrangements may include, but not be limited to, a combination of surety instruments, including cash.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012; Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-60. Lottery bank accounts and electronic funds transfer (EFT) authorization.
A. A lottery retailer shall have and maintain a separate bank account in a bank participating in the Automatic Clearing House (ACH) system. This account shall be styled in the name of the retailer followed by "Virginia Lottery Trust" and shall be used exclusively for lottery business.
B. The lottery account shall be used by the retailer to make funds available to permit withdrawals and deposits initiated by the agency through the EFT process to settle a retailer's account for funds owed by or due to the retailer from the sale of tickets and the payment of prizes. All retailers shall make payments to the agency through the EFT process in accordance with the agency's licensing procedures, unless the director designates another form of payment and settlement under terms and conditions he deems appropriate.
C. The retailer shall be responsible for payment of any fees or service charges assessed by the bank for maintaining the required account.
D. The director will establish a schedule for processing the EFT transactions against retailers' lottery trust accounts and issue instructions regarding the settlement of accounts.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-70. License term and periodic review.
A. A general license for an approved lottery sales agent shall be issued for a specific term and is thereafter subject to a periodic determination of continued retailer eligibility and the payment of any fees fixed by the board.
B. The director may issue special licenses to persons for specific events and activities in accordance with the requirements of the agency's licensing procedures.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012; Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-80. License fees.
An initial licensing fee up to $100 and an annual license fee up to $70 shall be collected from each lottery sales agent and shall be paid in accordance with the agency's licensing procedures. These fees are nonrefundable, unless otherwise determined by the director in his sole discretion or specified in the agency's procedures. The license fees shall be paid for each location.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012; Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-90. Transfer of license prohibited.
A license issued by the director authorizes a specified person to act as a lottery sales agent at a specified location or locations. The license is not transferrable or assignable to any other person or persons or location or locations.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012.
11VAC5-31-100. Display of license.
Each licensed lottery retailer shall display his lottery license upon request by any member of the general public.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012.
11VAC5-31-110. (Repealed.)
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; repealed, Virginia Register Volume 28, Issue 26, eff. September 26, 2012.
11VAC5-31-120. (Repealed.)
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; repealed, Virginia Register Volume 28, Issue 26, eff. September 26, 2012.
11VAC5-31-130. Retailers' conduct.
A. Each retailer shall comply with all applicable state and federal laws and regulations, as well as all rules, policies and procedures of the agency, license terms and conditions, specific rules for all applicable lottery games, directives and instructions that may be issued by the director, and licensing and equipment agreements and contracts signed by the retailer.
B. No retailer or his employee or agent shall attempt through any means whatsoever to identify or otherwise determine whether any unsold ticket creates a winning play. This includes, but is not limited to, trying to determine the numbers or symbols appearing under the removable latex or electronically produced coverings or otherwise attempting to identify unsold winning tickets. However, this shall not prevent the removal of the covering over the validation code or validation number after the ticket is sold.
C. No retailer or his employee or agent shall impose a fee or additional charge for selling a lottery game ticket or for cashing a winning lottery game ticket.
D. No retailer or his employee or agent shall purchase a winning lottery game ticket from a player at a discounted price.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012; Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-140. Deposit of lottery receipts; interest and penalty for late payment; dishonored EFT transactions or checks.
A. Payments shall be due from retailers as specified by the director in accordance with agency policies.
B. Any retailer who fails to make payment when payment is due will be contacted by the agency and instructed to make immediate deposit of the funds due. If the retailer is not able to deposit the necessary funds or if the item is returned to the department unpaid for a second time, the retailer's license may be inactivated. If inactivated, the license will not be reactivated until payment is made by cashier's check, certified check or EFT transaction, and if the retailer is deemed a continuing credit risk by the agency, not until an informal conference is held to determine if the licensee is able and willing to meet the terms of his retailer contract. Additionally, interest may be charged on the moneys due plus a $25 penalty. The interest charge will be equal to the "Underpayment Rate" established pursuant to § 58.1-15 of the Code of Virginia. The interest charge will be calculated beginning the date following the retailer's due date for payment through the day preceding receipt of the late payment by the agency for deposit.
C. In addition to the penalty authorized by subsection B of this section, the director may assess a $25 service charge against any retailer whose payment through EFT transaction or by check is dishonored.
D. The service charge, interest, and penalty charges may be waived if it is determined by the agency that the event that otherwise would result in the assessment of a service charge, interest, or penalty is not in any way the fault of the lottery retailer.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-150. Licensed retailers' compensation.
A. A licensed retailer shall receive up to 5.0% compensation based on his net ticket sales and up to 1.0% of the cash value of all prizes which the retailer paid.
B. Except as provided pursuant to the State Lottery Law (§ 58.1-4000 et seq. of the Code of Virginia), the board shall approve any bonus or incentive system for payment to retailers. The director may then award such cash bonuses or other incentives to retailers.
C. Retailers may not accept any compensation for the sale of lottery tickets other than compensation approved under this section, regardless of the source.
D. Nothing in this regulation shall be inconsistent with §§ 58.1-4006 D and 58.1-4007 A 11 of the Code of Virginia.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012.
11VAC5-31-160. Denial, suspension, revocation, or noncontinuation of license.
A. The director may refuse to issue a license to a person if the person does not meet the eligibility criteria and standards for licensing as set out in § 58.1-4009 of the Code of Virginia, this chapter, and in the agency's licensing procedures, or if:
1. The person's place of business caters to or is frequented predominantly by persons under 18 years of age, but excluding family-oriented businesses;
2. The nature of the person's business constitutes a threat to the health or safety of prospective lottery patrons;
3. The nature of the person's business is not consonant with the probity of the Commonwealth;
4. The person has committed any act of fraud, deceit, misrepresentation, moral turpitude, or illegal gambling or engaged in conduct prejudicial to public confidence in the state lottery;
5. The person falsifies or misrepresents a material fact on any application, form, document, or data submitted during the licensure process;
6. The person has an unsatisfactory prior history, record, or performance with the lottery;
7. The person's place of business represents a substantial risk for the collection, deposit, preservation, accounting, or safeguarding of Commonwealth of Virginia Trust Funds, irrespective of the bond or surety provided by the person;
8. The person has been suspended permanently from a federal or state licensing or authorization program and that person has exhausted all administrative remedies pursuant to the respective agency's regulations or procedures; or
9. The proposed retailer's licensed location or locations do not comply with the requirements of the department's Retailer Accessibility Guidelines effective January 1, 2011, as applicable.
B. The director may suspend, revoke, or refuse to continue a license for any of the reasons enumerated in § 58.1-4012 of the Code of Virginia, in subsection A of this section, in the agency's procedures, or for any of the following reasons:
1. Failure to maintain the required lottery trust account;
2. Failure to comply with lottery game rules;
3. Failure to properly care for, or prevent the abuse of, the agency's equipment, or failure to properly position and display the vacuum fluorescent display or Enterprise Series MultiMedia (ESMM) display;
4. Failure to meet minimum point-of-sale standards;
5. Failure to continue to meet the eligibility criteria and standards for licensing; or
6. Failure to comply with (i) any applicable law or statute, rule, policy, or procedure of the agency; (ii) license terms and conditions; (iii) specific rules for all applicable agency games; (iv) directives and instructions that may be issued by the director; and (v) licensing and equipment agreements and contracts signed by the retailer.
C. Any person refused a license under subsection A or B of this section may appeal the director's decision in the manner provided by 11VAC5-20-150.
D. Before taking action under subsection A or B of this section, the director will notify the retailer in writing of his intent to suspend, revoke, or deny continuation of the license. The notification will include the reason or reasons for the proposed action and will provide the retailer with the procedures for requesting a conference. Such notice shall be given to the retailer in accordance with the provisions of the agency's regulations.
E. If the director deems it necessary in order to serve the public interest and maintain public trust in the lottery, he may temporarily suspend a license without first notifying the retailer. Such suspension will be in effect until any prosecution, hearing, or investigation into alleged violations is concluded.
F. A retailer shall surrender his license to the director by the date specified in the notice of revocation or suspension. The retailer shall also surrender the lottery property in his possession and give a final lottery accounting of his lottery activities by the date specified by the director.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012; Volume 31, Issue 3, eff. November 5, 2014; Volume 32, Issue 3, eff. December 21, 2015.
11VAC5-31-170. License termination by retailer.
The licensed retailer may voluntarily terminate his license with the agency by first notifying the agency in writing at least 15 calendar days before the proposed termination date. The agency will then notify the retailer of the date by which settlement of the retailer's account will take place. The retailer shall maintain his bond and the required accounts and records until settlement is completed and all lottery property has been surrendered.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-180. Inspection of premises.
Each lottery retailer shall provide access during normal business hours or at such other times as may be required by the director or agency representatives to enter the premises of the licensed retailer. The premises include the licensed location where lottery tickets are sold or any other location under the control of the licensed retailer where the director may have good cause to believe lottery materials, equipment, or tickets are stored or kept in order to inspect the licensed premises and inspect, or if necessary remove lottery materials, equipment, or tickets.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012; Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-190. Examination of records and equipment; seizure of records and equipment.
A. Each lottery retailer shall make all books and records pertaining to his lottery activities available for inspection, auditing and copying, and make all equipment related to his lottery activities available for inspection, as required by the director or agency representatives during normal business hours of the licensed retailer.
B. All books, records and equipment pertaining to the licensed retailer's lottery activities may be seized with good cause by the director or agency representatives without prior notice.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 28, Issue 26, eff. September 26, 2012; Volume 31, Issue 3, eff. November 5, 2014.
11VAC5-31-200. Audit of records.
The director may require a lottery retailer to submit to the agency an audit report conducted by an independent certified public accountant on the licensed retailer's lottery activities. The retailer shall be responsible for the cost of only the first such audit in any one license term.
Statutory Authority
§ 58.1-4007 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 19, Issue 15, eff. May 7, 2003; amended, Virginia Register Volume 31, Issue 3, eff. November 5, 2014.
Forms (11VAC5-31)