Colorado § 44-40-109 - Commission - powers and duties - rules.

§ 44-40-109. Commission - powers and duties - rules.

(1) In addition to any other powers and duties set forth in this article 40, the commission has the following powers and duties:

(a) To promulgate rules governing the establishment and operation of the lottery as it deems necessary to carry out the purposes of this article 40. The director shall prepare and submit to the commission written recommendations concerning proposed rules for this purpose. Although the commission is a type 2 entity, as defined in section 24-1-105, the commission has full and exclusive authority to promulgate rules related to the lottery without any approval by, or delegation of authority from, the department.

(b) To conduct hearings upon complaints charging violations of this article 40 or rules promulgated pursuant to this article 40, other than any hearings relating to the granting, suspension, revocation, or renewal of licenses for lottery sales agents, and to conduct other hearings as may be provided by rules of the commission;

(c) To carry on a continuous study and investigation of the lottery throughout the state for the purpose of ascertaining any defects in this article 40 or in the rules issued under this article 40 whereby any abuses in the administration and operation of the lottery or any evasion of this article 40 or the rules may arise or be practiced, for the purpose of formulating recommendations for changes in this article 40 and the rules to prevent any abuses and evasions, to guard against the use of this article 40 and the rules as a cloak for the carrying on of organized gambling and crime, and to ensure that the law and rules shall be in the form and be so administered as to serve the true purposes of this article 40;

(d) To report immediately to the governor, the attorney general, the speaker of the house of representatives, the president of the senate, the minority leaders of both houses, and any other state officers, as from time to time the commission deems appropriate, any matters that it deems to require an immediate change in the laws of this state in order to prevent abuses and evasions of this article 40 or rules promulgated thereunder or to rectify undesirable conditions in connection with the administration or operation of the lottery;

(e) To require any special reports from the director that it may consider desirable;

(f) To authorize and issue revenue bonds pursuant to the provisions of section 44-40-122;

(g) To annually set the amount of the performance bond required of persons entering into contracts to provide materials, equipment, or supplies used in the operation of the lottery or to design or install games or lotteries; and

(h) To investigate and participate in multistate agreements and to regulate multistate lotteries. The director shall act as the commission's agent in the investigations if the commission so directs.

(2) Except as provided in subsection (3) of this section, rules promulgated pursuant to subsection (1) of this section must include:

(a) The types of lotteries to be conducted, but no lottery conducted under this article 40 other than instant scratch games shall be based upon the game of chance commonly known as bingo, nor shall any lottery be conducted that depends upon the outcome of any athletic contest except races at state-licensed dog or horse tracks if approved by the Colorado racing commission;

(b) The price of tickets or shares in the lottery;

(c) The numbers, sizes, and payment of the prizes on the winning tickets or shares;

(d) The manner of selecting the winning tickets or shares. All drawings shall be held in public and witnessed by an independent auditor employed by a certified public accountant firm, and all drawing equipment used in the public drawings must be examined prior to and after each public drawing by an independent auditor employed by a certified public accountant firm.

(e) The frequency of the drawing or selection of winning tickets or shares, without limitation;

(f) Without limit to number, the types of locations where tickets or shares may be sold; except that the commission shall not promulgate any rule, issue any order, or adopt any policy or interpretation before July 1, 2017, that authorizes or permits the purchase of tickets, including instant scratch tickets, or shares by means of the internet, telephone, computer, or any other electronic device or equipment that the purchaser can access or use to purchase lottery tickets other than by doing so personally at a licensed lottery sales agent's physical place of business;

(g) The method to be used in selling tickets or shares;

(h) The manner and amount of compensation, if any, to be paid licensed sales agents necessary to provide for the adequate availability of tickets or shares to prospective buyers and for the convenience of the public;

(i) The manner in which lottery sales revenues are to be collected; and

(j) A prohibition on the lottery or a licensee's sale of any lottery tickets produced by the lottery for sale to the public, directly or through the licensee, on credit.

(3) (a) The commission shall promulgate rules pursuant to subsection (1) of this section for the general administration of all instant scratch games. The rules must include:

(I) The method to be used in selling instant scratch game tickets;

(II) The method of paying prizes on winning instant scratch game tickets;

(III) The manner and amount of compensation, if any, to be paid to licensed sales agents necessary to provide for the adequate availability of instant scratch game tickets to prospective buyers and for the convenience of the public; and

(IV) A prohibition on the sale of instant scratch game tickets produced by the lottery for sale to the public, either directly or through the licensee, on credit.

(b) (I) The commission shall establish and approve all instructions governing instant scratch games. The instructions shall include, but shall not be limited to:

(A) The method for determining instant scratch game winners;

(B) The establishment of claim periods;

(C) The price of instant scratch game tickets;

(D) The numbers and sizes of prizes; and

(E) The method for selecting and validating winning instant scratch game tickets.

(II) The commission shall publish all approved instructions governing instant scratch games in a clearly identifiable section on the official website of the state lottery. The published instructions shall be binding on purchasers and claimants of instant scratch game tickets.

(III) The procedural rule-making requirements of section 24-4-103 shall not apply to the commission's duties specified in this subsection (3)(b).

Source: L. 2018: Entire article added with relocations, (HB 18-1027), ch. 31, p. 346, § 2, effective October 1. L. 2022: IP(1) and (1)(a) amended, (SB 22-162), ch. 469, p. 3363, § 38, effective August 10; IP(2), (2)(g), IP(3)(a), and (3)(a)(I) amended, (HB 22-1402), ch. 402, p. 2868, § 7, effective August 10. L. 2026: (2)(i), (3)(a)(II), and (3)(a)(III) amended and (2)(j) and (3)(a)(IV) added, (SB 26-117), ch. 215, p. 1258, § 2, effective May 29.

Editor's note: This section is similar to former § 24-35-208 as it existed prior to 2018.

Cross references: For the short title (the "Debbie Haskins 'Administrative Organization Act of 1968' Modernization Act") in SB 22-162, see section 1 of chapter 469, Session Laws of Colorado 2022.

ANNOTATION

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. Because subsection (1)(b) merely allows, but does not require, the lottery commission to conduct hearings on complaints charging violations of lottery laws and rules and regulations and does not specify defined procedures for submission, evaluation, and resolution of complaints by ticket purchasers, it does not constitute an adequate administrative remedy that must be exhausted. Bazemore v. Colo. State Lottery Div., 64 P.3d 876 (Colo. App. 2002) (decided under former § 24-35-208).