Date Printed: 3/14/01

Rules Concerning Promotions, Workers, Rent, and Rental Agreements

C.R.S. references:
12-9-102 (7)
12-9-102.5
12-9-104.5, esp. subsection (8)
12-9-105 (2)
12-9-108 (6)

No change is proposed to Rule 7.

It is shown below for informational purposes, since it relates to proposed changes concerning rent and rental agreements:

RULE 7 - AGREEMENT REQUIRING PAYMENT BY LICENSEE BASED UPON PERCENTAGE OF RECEIPTS FROM AUTHORIZED LICENSEE - PROHIBITED

No bingo-raffle licensee shall conduct any activity authorized under the bingo and raffle law, if the lease, rent, contract or any other arrangement under which the rights to use the premises for the conduct of the activity requires an unauthorized rental or other payment. The rental shall not be based on a percentage of receipts or profits derived from such licensed activities.

Amend Rule 10 as follows:

RULE 10 - WORKERS SHALL NOT PLAY - MEMBERSHIP LISTS - BADGES

1)      No bingo-raffle licensee shall allow any person who works or assists at an occasion in any capacity to play bingo or to purchase or play any pull tabs at that particular occasion, whether for that person or on behalf of another.

2)     AT THE TIME OF FILING AN APPLICATION FOR A BINGO-RAFFLE LICENSE PURSUANT TO SECTION 12-9-105, C.R.S., THE APPLICANT SHALL PROVIDE A LIST OF ACTIVE MEMBERS WHO ARE AUTHORIZED TO ASSIST WITH THE APPLICANT'S BINGO-RAFFLE ACTIVITIES, IF THE LICENSE IS GRANTED. AT ANY TIME AFTER FILING SUCH LIST, A BINGO-RAFFLE LICENSEE MAY FILE WITH THE SECRETARY OF STATE A SUPPLEMENTAL LIST THAT DESIGNATES ADDITIONAL ACTIVE MEMBERS WHO ARE AUTHORIZED TO ASSIST WITH THE LICENSEE'S BINGO-RAFFLE ACTIVITIES. NO BINGO-RAFFLE LICENSEE SHALL ALLOW ANY PERSON TO WORK OR ASSIST AT AN OCCASION IN ANY CAPACITY UNLESS THE NAME OF SUCH PERSON IS ON A LIST OF DESIGNATED ACTIVE MEMBERS ON FILE WITH THE SECRETARY OF STATE.

3) EVERY PERSON WHO WORKS OR ASSISTS AT ANY OCCASION IN ANY CAPACITY SHALL WEAR A BADGE THAT CLEARLY IDENTIFIES THE PERSON'S FIRST AND LAST NAME TO OTHER PERSONS PRESENT AT THE OCCASION. THE BADGE OF THE GAMES MANAGER FOR THE OCCASION SHALL INCLUDE THE WORDS "GAMES MANAGER" BELOW THE NAME. THE BADGE MAY BE HANDWRITTEN IN LEGIBLE PRINT. IF HAND-PRINTED, THE LETTERING ON THE BADGE SHALL BE NO SMALLER THAN ONE-HALF INCH HIGH. IF MACHINE PRINTED, THE FONT SIZE OF THE LETTERING SHALL BE NO LESS THAN 30.

Amend Rule 11 and add a new section (6), as follows:

RULE 11 - ALLOWABLE EXPENSE AMOUNTS AND RENTAL AGREEMENTS

1) A bingo-raffle licensee conducting bingo occasions may not pay more than $40 per occasion for bookkeeper or accountant services in preparing the financial reports for such occasions.

2) A bingo-raffle licensee conducting bingo occasions on premises owned by it, or in its sole control, or which it uses rent free may pay a total of not more than $40 for janitorial services for each occasion it conducts.

3) A bingo-raffle licensee may not rent premises for an occasion except from a landlord licensee. No rental fee may be paid without prior approval of the secretary of state and shall cover the expenses reasonably necessary for the use of the premises for the occasion, PLUS THE EXPENSES AUTHORIZED IN RULE 11.5.

4) Prior to renting a space in a commercial bingo facility and conducting an occasion therein, a bingo-raffle licensee shall file with the secretary of state an executed rental agreement. If the bingo-raffle licensee agrees to use games of chance equipment owned by a landlord or another bingo raffle licensee, the bingo-raffle licensee shall also file an equipment agreement. All such agreements shall be on forms prescribed by the secretary of state or forms approved by the secretary of state, such approval shall be in writing.

5) A rental agreement may be terminated by either party upon at least two week's notice to the other, or upon the voluntary or involuntary suspension of the license of either. The agreement may contain such other terms and conditions upon which the parties shall agree, except:

a. It shall not specify the fee that the bingo-raffle licensee shall charge for a player's right to participate in any games of chance conducted during a bingo occasion.

b. It shall not obligate a bingo-raffle licensee to pay for any canceled occasion.

6) THE RENTAL AGREEMENT SHALL DISCLOSE CLEARLY AND CONSPICUOUSLY ALL OF THE MATERIAL TERMS OF THE AGREEMENT INCLUDING, BUT NOT LIMITED TO:

a. THE AMOUNT OF RENT TO BE CHARGED FOR EACH OCCASION AND THE METHOD USED TO CALCULATE THE AMOUNT OF RENT;

b. THE LOCATION OF THE RENTED PREMISES, THE TERM OF THE RENTAL AGREEMENT, THE DAY OR DAYS OF THE WEEK UPON WHICH BINGO-RAFFLE OCCASIONS WILL BE CONDUCTED, THE NUMBER OF HOURS PER OCCASION, AND THE BEGINNING AND ENDING TIMES OF EACH OCCASION;

c. A DESCRIPTION OF ANY PROMOTION OR ADVERTISING TO BE CONDUCTED IN THE COMMERCIAL BINGO FACILITY BY THE BINGO-RAFFLE LICENSEE OR BY THE LANDLORD LICENSEE DURING THE BINGO-RAFFLE LICENSEE'S OCCASIONS, THE AMOUNTS, IF ANY, TO BE PAID BY THE BINGO-RAFFLE LICENSEE TO PARTICIPATE IN ANY PROMOTION OR ADVERTISING CONDUCTED BY THE LANDLORD LICENSEE, THE FREQUENCY OF SUCH PROMOTIONS, AND THE TERMS AND CONDITIONS UPON WHICH SUCH PAYMENTS ARE TO BE MADE;

d. THE AMOUNT, IF ANY, TO BE CHARGED FOR SECURITY SERVICES, BUT NO BINGO-RAFFLE LICENSEE MAY BE REQUIRED TO USE A LANDLORD LICENSEE'S SECURITY SERVICES IN ORDER TO RENT THE PREMISES.

e. THE CONDITIONS UNDER WHICH THE PARTIES MAY CANCEL ANY OCCASION PERMITTED UNDER THE RENTAL AGREEMENT.

7) NO PAYMENT FROM A BINGO-RAFFLE LICENSEE TO A LANDLORD LICENSEE MAY BE MADE OR ACCEPTED UNLESS MADE BY CHECK. SUCH PAYMENTS MAY BE MADE AND ACCEPTED ONLY FOR THE AMOUNTS AGREED UPON AND IDENTIFIED IN THE RENTAL AGREEMENT AND ANY AMENDMENTS FILED WITH THE SECRETARY OF STATE PURSUANT TO SECTION 12-9-104.5 (8), C.R.S.

8) THE RENT TO BE CHARGED FOR EACH OCCASION SHALL BE DETERMINED TO BE UNREASONABLE IN AMOUNT BY THE SECRETARY OF STATE PURSUANT TO SECTION 12-9-108 (6), C.R.S., IF A REASONABLE DEGREE OF COMPETITION DOES NOT EXIST IN THE AREA WITH RESPECT TO THE TYPE OF FACILITIES AND SERVICES PROVIDED AND IF THE RENT CHARGED IS LIKELY TO PRODUCE A PROFIT THAT IS UNREASONABLY HIGH FOR THE FACILITIES AND SERVICES PROVIDED. IF THE SECRETARY OF STATE FINDS THAT THE AMOUNT OF RENT TO BE CHARGED IS UNREASONABLE IN AMOUNT, THE SECRETARY OF STATE SHALL ISSUE A LETTER RULING TO THAT EFFECT. BEFORE MAKING SUCH A FINDING, THE LANDLORD LICENSEE SHALL BE AFFORDED THE OPPORTUNITY TO PRESENT EVIDENCE IN JUSTIFICATION FOR SUCH AMOUNT, INCLUDING THE COMMERCIAL SETTING, PURPOSE, AND EFFECT.

a. FOR PURPOSES OF THIS RULE, IT SHALL BE PRESUMED THAT "A REASONABLE DEGREE OF COMPETITION DOES NOT EXIST IN THE AREA WITH RESPECT TO THE TYPE OF FACILITIES AND SERVICES PROVIDED" UNLESS THERE IS ANOTHER COMMERCIAL BINGO HALL WITHIN FIVE MILES DRIVING DISTANCE THAT IS OWNED BY A DIFFERENT LICENSEE.

b. THE RENT CHARGED FOR EACH OCCASION SHALL BE PRESUMED "TO PRODUCE A PROFIT THAT IS UNREASONABLY HIGH FOR THE FACILITIES AND SERVICES PROVIDED" IF THE AMOUNT EXCEEDS _______DOLLARS PER SQUARE FOOT OF PREMISES RENTED.

Add the following new Rule 11.5 to the Bingo-Raffles Rules:

RULE 11.5 - PROMOTIONS

1) AS USED IN THIS RULE 11.5, A "PROMOTION" MEANS THE CONDUCT OF A GAME DURING ANY OCCASION FOR PROMOTIONAL PURPOSES THAT WOULD CONSTITUTE A "GAME OF CHANCE" AS DEFINED IN SECTION 12-9-102 (7), C.R.S., EXCEPT FOR THE FACT THAT THE SHARES OR TICKETS OR RIGHTS TO PARTICIPATE IN THE GAME ARE GIVEN AWAY AT NO CHARGE.

2) IN ANY PROMOTION, THE SHARES, TICKETS, OR RIGHTS TO PARTICIPATE IN THE PROMOTION MUST BE OFFERED FREE OF CHARGE AND ON AN EQUAL BASIS TO ALL PERSONS PRESENT. IN ACCORDANCE WITH SECTION 12-9-102.5, C.R.S., ONLY MERCHANDISE OR OTHER TANGIBLE PRODUCTS MAY BE GIVEN AWAY AS PRIZES, AND NO CASH PRIZE MAY BE OFFERED OR AWARDED IN ANY PROMOTION.

3) A LANDLORD LICENSEE MAY CONDUCT A PROMOTION ON THE LANDLORD'S PREMISES PRIOR OR SUBSEQUENT TO A BINGO-RAFFLE LICENSEE'S RENTAL TERM. A LANDLORD LICENSEE MAY CONDUCT A PROMOTION DURING AN OCCASION HELD ON THE LANDLORD'S PREMISES IF THE PROMOTION AND ITS COST TO THE BINGO-RAFFLE LICENSEE IS CLEARLY DISCLOSED IN THE RENTAL AGREEMENT IN ACCORDANCE WITH RULE 11.

4) IF A LANDLORD LICENSEE USES BINGO PREMISES DURING A RENTAL PERIOD PAID FOR BY A BINGO-RAFFLE LICENSEE, THE LANDLORD LICENSEE SHALL PROVIDE REASONABLE COMPENSATION TO THE BINGO-RAFFLE LICENSEE BY MEANS A REDUCTION IN THE RENT FOR THAT OCCASION.

5) A LANDLORD LICENSEE MAY NOT REQUIRE ANY BINGO-RAFFLE LICENSEE TO PARTICIPATE IN OR CONDUCT ANY PROMOTION.

6) A BINGO-RAFFLE LICENSEE MAY CONDUCT ITS OWN PROMOTION DURING AN OCCASION IF NO FUNDS OF THE LICENSEE ARE USED AS A PRIZE OR EXPENDED TO ACQUIRE A PRIZE OFFERED IN THE PROMOTION.

7) THE GAMES MANAGER FOR ANY OCCASION MAY NOT ASSIST IN ANY PROMOTION CONDUCTED DURING THE OCCASION.

8) NO MEMBER OF THE BINGO-RAFFLE LICENSEE'S ORGANIZATION MAY BE PAID BY A LANDLORD LICENSEE TO PARTICIPATE OR ASSIST IN A PROMOTION OFFERED DURING THE BINGO-RAFFLE LICENSEE'S OCCASION.

9) PRIZES OFFERED AS PART OF A PROMOTION SHALL NOT BE CONSIDERED AS PART OF THE PRIZE LIMITS SPECIFIED IN THE BINGO-RAFFLE LAW.

10) PRIOR TO CONDUCTING A PROMOTION, THE LANDLORD LICENSEE OR BINGO-RAFFLE LICENSEE SHALL PROVIDE A BOND OR INSURANCE POLICY IN A SUFFICIENT AMOUNT TO GUARANTEE THAT ANY PRIZE OFFERED IN THE PROMOTION IS AVAILABLE AND WILL BE AWARDED.

11) THE LANDLORD LICENSEE OR BINGO-RAFFLE LICENSEE OFFERING ANY PROMOTION SHALL DISCLOSE FULL INFORMATION AT THE BEGINNING OF THE PROMOTION, IDENTIFYING THE PRIZES TOBE AWARDED AND THE METHOD BY WHICH SUCH PRIZES MAY BE WON. THIS DISCLOSURE NEED NOT BE MADE SEPARATELY AND PERSONALLY TO EACH PARTICIPANT, BUT MAY BE MADE BY CONSPICUOUSLY POSTING OR DISPLAYING UPON THE PREMISES WHERE THE GAMES ARE OPERATED, EITHER THE AVAILABLE PRIZES OR A LIST AND COMPLETE DESCRIPTION THEREOF, TOGETHER WITH A DESCRIPTION OF THE METHOD BY WHICH SUCH PRIZES MAY BE WON.

The list of violations in Rule 21 will need to be updated to include violations of any new rules.