§ 44-40-106. Contractors Supplying Services, Equipment, or Materials – Gaming Equipment – Disclosures – Criminal History Record Check – Definitions

1. Any person, firm, association, or corporation, referred to in this section as “supplier”, that enters into a contract to supply services, equipment, or materials or gaming materials or equipment for use in the operation of the state lottery shall first disclose to the division:
   1. In addition to the supplier’s business name and address, the names and addresses of the following:
      1. If the supplier is a partnership, all of the general and limited partners;
      2. If the supplier is a limited liability company, all of the members;
      3. If the supplier is a trust, the trustee and all persons entitled to receive income or benefit from the trust;
      4. If the supplier is an association, the members, officers, and directors;
      5. If the supplier is a corporation, the officers, directors, and each owner or holder, directly or indirectly, of any equity security or other evidence of ownership of any interest in the corporation; except that, in the case of owners or holders of publicly held equity securities of a publicly traded corporation, only the names and addresses of those owning or holding five percent or more of the publicly held securities need be disclosed;
      6. If the supplier is a subsidiary or intermediary company, the intermediary company, holding company, or parent company involved therewith, and the officers, directors, and stockholders of each; except that, in the case of owners or holders of publicly held securities of an intermediary company or holding company that is a publicly traded corporation, only the names and addresses of those owning or holding five percent or more of the publicly held securities need be disclosed;
   2. If the supplier is a corporation, all the states in which the supplier is incorporated to do business, and the nature of that business;
   3. Other jurisdictions in which the supplier has contracts to supply gaming materials or equipment;
   4. The details of any criminal conviction, state or federal, of the supplier or any person whose name and address are required by subsection (1)(a) of this section. This subsection (1)(d) applies irrespective of any of the laws of the state to the contrary regarding expungement or sealed records.
   5. The details of any disciplinary action taken by any state against the supplier or any person whose name and address are required by subsection (1)(a) of this section regarding any matter related to the selling, leasing, offering for sale or lease, buying, or servicing of gaming materials or equipment;
   6. A statement of the gross receipts realized in the preceding year from the sale, lease, or distribution of gaming materials or equipment to states operating lotteries and to private persons licensed to conduct gambling, which statement shall differentiate that portion of the gross receipts attributable to transactions with states operating lotteries from that portion of the gross receipts attributable to transactions with private persons licensed to conduct gambling;
   7. The name and address of any source of gaming materials or equipment for the supplier;
   8. The number of years the supplier has been in the business of supplying gaming materials or equipment;
   9. Any other information, accompanied by any documents, that the commission, by rule, may require as being necessary or appropriate in the public interest to accomplish the purposes of this article 40.
2. If the supplier is a subsidiary or intermediary company, the intermediary company, holding company, or parent company involved therewith shall supply the same information required by this section of the supplier.
3. The costs of any investigation into the background of the apparent successful bidder shall be assessed against the bidder and shall be paid by the bidder at the time of billing by the state. The investigation may be conducted by the department or the attorney general, and no contract may be signed until the investigation is completed. Investigators shall have peace officer authority during the period of investigation.
4. No person, firm, association, or corporation contracting to supply services, equipment, or materials or gaming equipment or materials to the state for use in the operation of the state lottery shall be directly or indirectly connected with any person, firm, association, or corporation licensed as a sales agent under this article 40, any employee of the department, the director, or the members of the commission.
5. No contract shall be formed with any supplier if:
   1. A person disclosed pursuant to subsection (1)(a) or (1)(g) of this section is a person who has been convicted of a felony or gambling-related offense, who has engaged in any form of illegal gambling, who is not of good character and reputation relevant to the secure and efficient operation of the lottery, or who has been convicted of a crime involving fraud or misrepresentation. However, when a felony conviction, other than a gambling-related offense, is an issue in the formation of a contract with a supplier, the director may determine that the supplier is otherwise of good character and reputation. 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 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. Upon the determination and approval, the director may enter into a contract with the supplier.
   2. A disciplinary action disclosed pursuant to subsection (1)(e) of this section was resolved adversely to the supplier.
6. No contract for the supply of services, equipment, or materials or gaming materials or equipment for use in the operation of the state lottery shall be enforceable against the state if the provisions of this section are not complied with.
7. In the case of any procurement for a contract for lottery tickets, lottery consulting services, or lottery terminals or equipment having a value of one hundred thousand dollars or more, or in the case of procurement for a contract for drawing equipment regardless of value, each prospective corporate supplier shall, prior to entering into a contract, provide a verified affidavit as to ownership, if any, of any interest, direct or indirect, in any operator of a casino, jai alai fronton, racetrack, or other gaming establishment, a current personal financial statement, and individual federal and state income tax returns from the past three years for each of its officers and each of the directors. The executive director shall determine, depending upon the organization of each company, by rule, which officers of any parent, intermediary, and holding companies, and which directors of the supplier or of a parent, intermediary, or holding company, are affiliated with the lottery and are required to file a current personal financial statement and individual federal and state income tax returns from the past three years. The provision of said affidavit, financial statement, and tax returns shall not be required at the time of submission of the prospective corporate supplier’s bid or proposal.
8. 1. Any contractor that has entered into a contract to supply gaming materials or equipment to the lottery shall report to the division any change in, addition to, or deletion from the information disclosed to the division in accordance with the provisions of subsections (1)(a), (1)(d), (1)(e), (2), and (7) of this section. The report shall be written and addressed to the division and shall be mailed or delivered to the division within thirty days of the date the change in, addition to, or deletion from the information takes place or becomes effective.
   2. Any costs associated with an investigation regarding the information disclosed in the report shall be paid by the contractor who shall remit the costs within thirty days of billing by the division.
   3. 1. If the report contains any information, or if the division receives any information from any source other than the contractor, which information would have prohibited the director from awarding the contract to the contractor if the information had been provided or had been effective before the director awarded the contract, the director may terminate the contract following an investigation.
      2. If the report contains any information, or if any information is discovered by the division from any source other than the contractor, which information would have given the director discretion to refuse to enter the contract had the information been provided or been effective before the director awarded the contract, the director, following an investigation, may terminate the contract.
      3. Any termination shall be accomplished in accordance with the termination provisions of the contract.
9. Every contract for the supply of gaming equipment or material shall provide the following:
   1. The director shall exclude from lottery facilities an employee of a contractor who has been convicted of a felony.
   2. The director shall also exclude employees of a contractor from participating in activities involving the gaming materials or equipment supplied pursuant to the contract.
10. 1. Each supplier, prior to entering into a contract to supply gaming materials or equipment, 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 supplier. Nothing in this subsection (10) shall preclude the division from making further inquiries into the background of the supplier.
    2. When the results of a fingerprint-based criminal history record check of a supplier performed pursuant to this subsection (10) reveal a record of arrest without a disposition, the division shall require the supplier to submit to a name-based criminal history record check, as defined in section 22-2-119.3 (6)(d).
    3. Notwithstanding any other provision of this section to the contrary, for purposes of this subsection (10), “supplier” means an individual or any person described in subsection (1)(a) or (1)(g) of this section.
11. The requirements of the “Procurement Code”, articles 101 to 112 of title 24, shall apply to all contracts entered into by the lottery. The executive director shall ensure that any competitive solicitation process conducted by the lottery is designed to encourage broad vendor competition.
12. The evaluation team for any bid for a contract for services, equipment, or materials or for the purchase or lease of gaming equipment and materials, the amount of which bid is in excess of one million dollars, shall include an individual who is neither employed by nor affiliated with the division and who possesses specific expertise in the procurement of the services, equipment, or materials or in the purchase or lease of the gaming equipment or materials that are the subject of the bid. The individual shall be selected by the executive director in accordance with the requirements of this subsection (12).

Source: L. 2018: Entire article added with relocations, (HB 18-1027), ch. 31, p. 338, § 2, effective October 1. L. 2019: (10)(a.5) added, (HB 19-1166), ch. 125, p. 564, § 66, effective April 18.

Editor’s note: This section is similar to former § 24-35-205 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.