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Delaware at a Glance
Gaming License: Yes
Non-Gaming License: Yes
Vendor License Exemptions Available: Yes
Temporary License: Yes
Ownership Disclosure Threshold: 5%
Institutional Investor Waiver: Yes
Fees: $2,000 - $4,000
State Gaming Lab: Public
Term of License: 3 - 4 Years
Deadline to Reapply: Prior to Expiration
Political Contribution Restrictions: No

Delaware State Lottery

www.delottery.com
More Delaware State Lottery Info

Delaware Jurisdictional Analysis


Delaware currently has three commercial casinos that offer video lottery terminals and traditional table games. These locations are regulated by the Delaware State Lottery Office (“Office”), which also reviews and approves licensing requests for companies that provide goods or services to gaming facilities. This analysis will provide an overview of the licensing and registration requirements necessary for individuals and entities to provide goods or services to video lottery locations in the state.

Delaware is also one of four states authorized under federal law to operate sports wagering programs. However, the wagering has been limited to certain lottery games and does not allow the full range of sports wagering options available in Nevada. As such, the Office currently operates a limited sports lottery that combines basic elements of sports wagering with traditional lottery games.

Gaming Vendor – Service Company License

All entities or individuals seeking to provide goods or services to a gaming facility in the state must be licensed by the Office. Although the Office defines those providing goods or services to gaming facilities as “gaming vendors,” the license provided is a “service company license.”1

The Office defines a “gaming vendor” as “any vendor offering goods or services relating to the manufacture, operation, maintenance, security, distribution, service or repair of video lottery machines, sports lottery machines or table game equipment.”

“Gaming Equipment” is defined as “any mechanical, electrical or electronic contrivance or machine or equipment used in connection with gaming.”2 Furthermore, the definition explicitly includes roulette wheels, cards, dice, chips, plaques, card shoes, pai gow tiles/shakers, table game layouts, and other traditional casino gaming hardware.

Duration

Gaming vendor licenses are awarded for an initial term of two years, with renewal terms of three years.3

Fees

There is a $4,000 licensing fee associated with all gaming vendor licenses and renewals. In addition, the applicant must reimburse the Office for any out-of-pocket expenses incurred during the licensing process.4

Application

Interested parties must complete the applicable forms to apply for a service company license. In order to complete the forms, the following information is needed:
1. Basic identification information;
2. Description of business;
3. Date applicable contract was entered into;
4. Identity of each individual owning more than 10% of the applicant;
5. Name and address of all subsidiaries;
6. Identity of applicant’s liaison to gaming facility;
7. List of customers who have purchased gaming equipment within the past three years;
8. List of all persons with whom the applicant has a communications protocol agreement;
9. Regulatory investigation history;
10. Criminal/civil action history; and
11. Description of manufacturing/production/distribution process.5

In addition, the following documents must be included with the application materials:

1. Financial statements, past three years;
2. Copy of contract proposal with gaming facility.6

Non-Gaming Vendor – Vendor Registration

Non-gaming vendors must also obtain a license if the non-gaming vendor provides goods or services in excess of $400,000 per year to any single facility, or in excess of $750,000 per year to multiple facilities.7 Non-gaming vendors are defined as “any vendor offering goods or services other than those considered to be a gaming vendor.”8

Duration

A non-gaming vendor license is valid for a period of three years, with renewal terms of four years.9

Fees

There is a $2,000 fee associated with each license and renewal.10

Application

The registration form will include information and documents that provide the following information:
1. Basic identification information;
2. Details regarding the contract entered into with the state gaming facility;
3. Identity of all subsidiaries;
4. Identity of applicant’s liaison with the gaming facility;
5. Regulatory investigation history;
6. Identity of those holding a beneficial ownership of 5% or more in the applicant; and
7. Estimated dollar value of any contracts with state gaming facilities.

In addition, applicants must also include with the application materials a copy of the proposed contract with the gaming facility.11

Contract Requirements

In addition to the licensing and registration requirements listed above, the Office requires that service company contracts contain certain provisions.12 These include language that requires service companies to provide technical support upon request, to submit items for testing, to certify all required parts software, as well as reporting requirements and other related provisions.
13

Technical Requirements

The Office requires that all video lottery equipment be tested and certified prior to being placed on the gaming floor.14 The Office may require that a licensed company submit two prototype machines for testing and may further require a brief testing period prior to issuing a final approval of the game or device.15 The Office also requires that each licensed provider of gaming equipment conform to certain reporting requirements related to the continued operation of the licensee’s games or devices.16

Exemptions

Banks and other lending institutions are exempt from the licensing and registration processes required of gaming and non-gaming vendors.17

Online Gambling

On June 28, 2012, Gov. Jack Markell signed into law the Delaware Gaming Competitiveness Act, a law that will allow online gaming in the state. The law will allow players who are physically located in the state, verified through computer software, to wager on a variety of casino-style gambling games over the Internet. It is expected that the first sites offering this type of gaming to Delaware residents will begin operating in 2013.
110-200 Del. Code Regs. § 4.1.1.
210-200 Del. Code Regs. § 2.0.
310-200 Del. Code Regs. § 4.19.
410-200 Del. Code Regs. § 4.23.
5See 10-200 Del. Code Regs. § 4.2.
6See 10-200 Del. Code Regs. § 4.2.
710-200 Del. Code Regs. § 4.6.
810-200 Del. Code Regs. § 2.0.
910-200 Del. Code Regs. § 4.20.
1010-200 Del. Code Regs. § 4.24.
11See 10-200 Del. Code Regs. § 4.9.
12See 10-200 Del. Code Regs. § 5.0 et seq.
13See 10-200 Del. Code Regs. § 5.2.
14See 10-200 Del. Code Regs. § 5.2.
15 10-200 Del. Code Regs. § 5.8.
16See 10-200 Del. Code Regs. § 5.11 et seq.
1710-200 Del. Code Regs. § 4.5.1.

This article is provided by Regulatory Management Counselors, P.C. For information about the services they provide please visit our information on gaming licensing and compliance advisors.