SGC-52-15-00008-P Suspension and Revocation of a Lottery Agent's License
12/30/15 N.Y. St. Reg. SGC-52-15-00008-P
NEW YORK STATE REGISTER
VOLUME XXXVII, ISSUE 52
December 30, 2015
RULE MAKING ACTIVITIES
NEW YORK STATE GAMING COMMISSION
PROPOSED RULE MAKING
NO HEARING(S) SCHEDULED
I.D No. SGC-52-15-00008-P
Suspension and Revocation of a Lottery Agent's License
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:
Proposed Action:
Amendment of section 5001.19 of Title 9 NYCRR.
Statutory authority:
Racing, Pari-Mutuel Wagering and Breeding Law, sections 103(2), 104(1) and (19); Tax Law, sections 1601, 1604, 1605 and 1607
Subject:
Suspension and revocation of a lottery agent's license.
Purpose:
To revise the rules for the procedure and grounds for suspension and revocation of a lottery license for sales agents.
Text of proposed rule:
Section 5001.19 of Title 9 of the NYCRR is amended to read as follows:
§ 5001.19. Suspension and revocation of license.
(a) At the discretion of the commission, the agent's license may be suspended or revoked or have such license renewal rejected for any of the reasons set forth in section 1607 of the Tax Law or for any of the following reasons, or any combination thereof:
[(1) failure to account for lottery tickets received or the proceeds of lottery tickets or failure to comply with instructions of the commission concerning licensed activity;]
[(2) conviction of any offense as defined in the Penal Law;]
[(3)](1) failure to file any returns or reports or to keep records or to pay any fee or tax as may be required by this Part [in or pursuant to the acts];
[(4) fraud, deceit, misrepresentation or conduct prejudicial to public confidence in the Lottery;]
[(5) failure to furnish a surety or other bond in such amount as may be required by the commission;]
[(6) the number of lottery tickets sold by the lottery sales agent is insufficient to meet administrative costs, and public convenience is adequately served by other licensees;]
[(7)](2) a material change since issuance of the license with respect to any matter required to be considered by the commission as provided in [either the acts or] this Part;
(3) failure to sell a sufficient number of lottery tickets required by the licensing agreement between the agent and the commission, when the commission has notified the agent of such insufficiency in writing and the agent fails to make satisfactory improvements, in the discretion of the commission, within the time set forth in the notice of insufficiency;
[(8)](4) [when the agent violates] violation of any of the provisions of the acts, rules and regulations of the [division] commission, the licensing agreement between the agent and the commission or any of the conditions of licensing set forth in section 5000.10 of this Part, or failure to follow procedures, policies or instructions of the commission;
[(9)](5) [whenever] failure of the agent [does not] to display commission point-of-sale material in a manner readily available to the public;
[(10)](6) [whenever] finding by the commission [finds] that the agent's experience, character[,] and general fitness are such that the agent’s participation as a lottery sales agent is inconsistent with public interest or convenience or for any other reason within the discretion of the commission; [or]
[(11)](7) failure to notify the commission, in writing, within a reasonable time of any arrest, indictment, or service of a summons, or conviction for any felony whether within or without the State of New York, or within or without the United States, occurring during the term of the license or the renewal thereof; or
(8) failure to cooperate with an investigation of the commission, attempt to frustrate or obstruct such an investigation or provision of false or misleading information to the commission during the course of such an investigation.
(b) An agent may establish, as an affirmative defense to a suspension or revocation based upon insufficient sales, whether under paragraph (3) of subdivision (a) of this section or otherwise, that such agent’s failure to sell a sufficient number of tickets was caused by factors outside the control of the agent that the agent has taken reasonable steps to mitigate, such as extreme weather, natural disaster, flood, earthquake, war, discharge of hazardous material, blackout or power interruption, civil unrest or other events or circumstances and that nevertheless, despite such mitigation, reasonably excuse such agent’s sales performance.
(c) If the commission orders the temporary suspension of a sales agent’s license pending any prosecution, investigation or hearing, the sales agent shall permit the commission to retrieve lottery equipment, tickets and other material provided by the commission that may be in the sales agent’s possession. Failure to cooperate in the commission’s retrieval effort shall constitute separate grounds for suspension or revocation of the sales agent’s license. A sales agent under a temporary suspension shall continue to remit amounts owed to the commission when required during such temporary suspension.
[(b)](d) Upon termination of an agent's license for any reason, the agent shall [go to the agent’s assigned bank on a date designated by the commission for the purpose of rendering the agent’s final lottery accounting. Surrender] comply with the commission's instructions in regard to payment of remaining amounts owed by the agent and surrender of the agent's license, lottery equipment, tickets and other material provided by the commission [shall be as prescribed by the commission. Upon failure of any agent to settle such agent’s accounts on or before the designated date,]. If the agent fails to comply with such instructions, the commission may take steps to impose such penalties and exercise such enforcement powers as may be provided for by law, including referral of the debt for collection or further action. The sales agent may be liable in the amount of the debt, plus any collection costs, penalties, interest and attorney fees to which the commission may be entitled.
Text of proposed rule and any required statements and analyses may be obtained from:
Kristen Buckley, New York State Gaming Commission, 1 Broadway Center, P.O. Box 7500, Schenectady, New York 12301, (518) 388-3407, email: gamingrules@gaming.ny.gov
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
45 days after publication of this notice.
Regulatory Impact Statement
1. Statutory authority: The New York State Gaming Commission (“Commission”) is authorized to promulgate this rule by Tax Law Sections 1601, 1604, 1605 and 1607, and by Racing, Pari-Mutuel Wagering and Breeding Law (“Racing Law”) Sections 103(2) and 104(1, 19). Tax Law Section 1601 describes the purpose of the New York State Lottery for Education Law (Tax Law Article 34) as being to establish a lottery operated by the State, the net proceeds of which are applied exclusively to aid to education. Tax Law Section 1604 authorizes the promulgation of rules governing the establishment and operation of such lottery. Tax Law Section 1605 authorizes the licensing of lottery sales agents and sets forth criteria for licensing, while Tax Law Section 1607 establishes that a lottery license may be suspended or revoked.
Racing Law Section 103(2) provides that the Commission is responsible to operate and administer the state lottery for education, as prescribed by Article 34 of the Tax Law. Racing Law Section 104(1) provides the Commission with general jurisdiction over all gaming activities within the State and over any person, corporation or association engaged in such activities. Section 104(19) of such law authorizes the Commission to promulgate any rules it deems necessary to carry out its responsibilities.
2. Legislative objectives: To refine a current rule that sets forth grounds for suspension and revocation of a lottery sales agent license.
3. Needs and benefits: This rulemaking will refine 9 NYCRR Section 5001.19 of the Commission’s regulations, which sets forth grounds for suspension and revocation of licenses issued to lottery sales agents. Amendments to Section 5001.19 are proposed to eliminate duplication of Tax Law Section 1607, to make non-substantive and stylistic corrections to the text of the rule and to make explicit additional grounds for suspension or revocation of a sales agent license. Overall, the rulemaking will benefit sales agents by providing a more complete and detailed description of the grounds for license suspension and revocation, which the Commission hopes will limit the instances in which agents engage in such conduct. By clarifying the Commission’s authority to discipline agents under such circumstances, the Commission’s ability to suspend or revoke the license of an unsuitable agent is also improved.
The amendments will revise Section 5001.19 of the Commission’s regulations to provide that an agent’s failure to meet minimally acceptable sales levels as determined by the Commission for that particular agent is grounds for suspension or revocation of the agent’s license. Section 5001.10(a) of the Commission’s current regulations requires a sales agent, as a condition of licensing, to comply with the licensing agreement and any rules, regulations, procedures, policies and instructions promulgated or issued by the Commission. The lottery sales agent licensing agreement contains an obligation of the agent to achieve the level of sales required by the Commission. Thus, maintaining sufficient sales is currently a condition of licensing. The proposed amendments would make explicit that failure to meet this condition is grounds for suspension or revocation of an agent license.
To protect the sales agent, the amendments would require the Commission to notify the sales agent of a sales deficiency in writing and set forth a time in which the sales agent could show satisfactory improvement. The amendment would also allow the sales agent to raise, as an affirmative defense to a suspension or revocation based on insufficient sales, that the agent’s sales performance is reasonably excused by factors outside the control of the agent that the agent has taken reasonable steps to mitigate. Examples are extreme weather, natural disaster, flood, earthquake, war, discharge of hazardous material, blackout or power interruption, civil unrest or other events or circumstances.
The amendments also make explicit a rule that failure to cooperate with an investigation of the Gaming Commission, or any attempt to frustrate or obstruct an investigation by the Gaming Commission, is grounds for suspension or revocation. This amendment is necessary to ensure that sales agents cooperate with investigations conducted by the Commission to ensure the highest integrity of sales agents and lottery games.
New subdivision (c) of Section 5001.19 incorporates an existing provision of the sales agent licensing agreement requiring the agent to allow the Commission to retrieve lottery equipment, tickets and other material provided by the Commission that may be in the agent’s possession if the Commission orders the temporary suspension of the sales agent’s license pending any prosecution, investigation or hearing. The rule will require a sales agent under temporary suspension to continue to remit amounts owed to the Commission when required during such temporary suspension. Subdivision (c) will also provide that failure to cooperate in the Commission’s retrieval effort shall constitute separate grounds for suspension or revocation of the agent’s license. These provisions will limit loss of revenue resulting from the Commission’s inability recover amounts owed by the agent, lottery tickets, equipment or signage that can be used by other sales agents.
Revised subdivision (d) of Section 5001.19 updates procedures for winding up terminated sales agent licenses to align such procedures with preferred practice. Upon termination of an agent's license for any reason, the rule will require the agent to comply with the commission's instructions in regard to payment of remaining amounts owed by the agent and surrender of the agent's license, lottery equipment, tickets and other material provided by the commission. Revised subdivision (d) will further state that the Commission may take steps to impose penalties and exercise enforcement powers as may be provided for by law, including referral of the debt for collection. The sales agent may be liable in the amount of the debt, plus any collection costs, penalties, interest and attorney fees to which the Commission may be entitled. Therefore, this rule decreases the risk of lost revenue when an agent’s license is revoked.
4. Costs:
a. Costs to regulated parties for the implementation and continuing compliance with the rule: There are no costs to stakeholders. A lottery sales agent is already required, as a condition of licensing, to comply with the licensing agreement and the Commission’s instructions regarding licensed activity. This rulemaking will make explicit the Commission’s authority to suspend or revoke an agent that violates such conditions of licensing.
b. Costs to the agency, the State, and local governments for the implementation and continuation of the rule: No additional operating costs are anticipated.
c. Sources of cost evaluations: The foregoing cost evaluations are based on the Commission’s experience operating State Lottery games for more than 40 years.
5. Local government mandates: The proposed amendment does not impose any new programs, services, duties or responsibilities upon any country, city, town, village school district, fire district or other special district.
6. Paperwork: There are no changes in paperwork requirements.
7. Duplication: There are no relevant State programs or regulations that duplicate, overlap or conflict with the proposed amendment.
8. Alternatives: No other alternatives were considered.
9. Federal standards: There are no relevant standards imposed by the federal government.
10. Compliance schedule: The Commission believes that regulated persons will be able to achieve compliance with the rule upon adoption of this rule.
Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement
A regulatory flexibility analysis for small business and local governments, a rural area flexibility analysis, and a job impact statement are not required for this rule making because it will have no adverse effect on small businesses, local governments, rural areas, or jobs.
This rulemaking will make explicit the Commission’s authority to suspend or revoke the license of an agent that violates existing conditions of licensing. While an agent is required to achieve the level of sales required by the Commission for such agent, the amendments are helpful to small businesses that hold lottery licenses because the Commission will be required to notify an underperforming sales agent of any sales deficiency in writing and set forth a reasonable time in which the sales agent can show satisfactory improvement. The revised regulation will permit a small business facing possible disciplinary action for sales deficiency to argue that its performance is reasonably excused by factors outside the control of the agent that the agent has taken reasonable steps to mitigate. Overall, the rulemaking will benefit sales agents, including small businesses, by providing a more complete and detailed description of the grounds for license suspension and revocation, which the Commission hopes will limit the instances in which agents engage in such conduct. There will be no new reporting, record keeping or other compliance requirements imposed upon small businesses or local governments or rural areas. The proposed rulemaking will not adversely affect employment opportunities or jobs.
Based on the foregoing, no regulatory flexibility analysis for small businesses and local governments, rural area flexibility analysis, or a job impact statement is required for this proposed rule making.
