# COMAR Title 36 — Maryland State Lottery and Gaming Control Agency

## Subtitle 02 — Lottery Provisions

### Chapter 02 — Retailer Licensing

**Authority:** State Government Article, §§9-101, 9-111—9-116, and 9-119, Annotated Code of Maryland

**Administrative History:** Effective date: May 13, 2013 (40:9 Md. R. 790)

**Administrative History:** Regulation .01B amended effective January 14, 2019 (46:1 Md. R. 13); May 26, 2025 (52:10 Md. R. 439)

**Administrative History:** Regulation .02 amended effective May 26, 2025 (52:10 Md. R. 439)

**Administrative History:** Regulation .02D amended effective January 14, 2019 (46:1 Md. R. 13)

**Administrative History:** Regulation .02E repealed effective January 14, 2019 (46:1 Md. R. 13)

**Administrative History:** Regulation .03A, B amended effective May 26, 2025 (52:10 Md. R. 439)

**Administrative History:** Regulation .03C adopted effective May 26, 2025 (52:10 Md. R. 439)

**Administrative History:** Regulation .04 amended effective May 26, 2025 (52:10 Md. R. 439)

**Administrative History:** Regulation .05 amended effective January 14, 2019 (46:1 Md. R. 13); May 26, 2025 (52:10 Md. R. 439)

**Administrative History:** Regulation .06 amended effective May 26, 2025 (52:10 Md. R. 439)

**Administrative History:** Regulation .06B amended effective January 14, 2019 (46:1 Md. R. 13)

**Administrative History:** Regulation .07 amended effective May 26, 2025 (52:10 Md. R. 439)

**Administrative History:** Regulation .08 amended effective May 26, 2025 (52:10 Md. R. 439)

**Administrative History:** Regulation .09 amended effective May 26, 2025 (52:10 Md. R. 439)

**Administrative History:** Regulation .10 amended effective May 26, 2025 (52:10 Md. R. 439)

**Administrative History:** Regulation .10A, E amended effective January 14, 2019 (46:1 Md. R. 13)

#### Regulation .01 Definitions.

*COMAR 36.02.02.01*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Applicant” means a person applying for a retailer license and includes the individual completing the application.

  (2) “Probationary license” means a retailer license issued by the Director to a new retailer that is valid for a 12-month period, beginning with the first week of sales.

  (3) “Regular license” means a retailer license issued by the Director to a retailer who has satisfactorily completed the requirements of a probationary license.

  (4) “Special license” means a license issued within the Director’s authority for special purposes.

  (5) “Terminate” or “revoke” means, with regard to a retailer license or special license, or removal of the right to sell lottery tickets.

  (6) “Total sales” means the value of lottery products sold or settled lottery by a retailer, less the value of canceled or returned lottery tickets.

#### Regulation .02 License Required.

*COMAR 36.02.02.02*

A. A person who sells a lottery ticket shall be licensed by the Agency as a retailer.

B. A person to be licensed as a retailer shall be issued a probationary license before being eligible to receive a regular license.

C. No individual younger than 21 years old may be licensed as a lottery retailer.

D. A governmental entity that seeks a license as a lottery retailer shall demonstrate to the satisfaction of the Director the permission of any other person, board, commission, agent, or instrumentality of the State or its subdivisions that may have controlling authority over the applicant. A. A person who sells a ticket shall be licensed by the Agency as a retailer.

B. A person licensed as a retailer shall be issued a probationary license before being eligible to receive a regular license.

C. No individual younger than 21 years old may be licensed as a  retailer.

D. A governmental entity that seeks a license as a retailer shall demonstrate to the satisfaction of the Director the permission of any other person, board, commission, agent, or instrumentality of the State or its subdivisions that may have controlling authority over the applicant.

#### Regulation .03 License Restrictions.

*COMAR 36.02.02.03*

A. A retailer license is specific to an individual and may not be transferred or sold.

B. A retailer license may not be issued to a person to engage in business primarily as a lottery retailer.

C. A retailer license does not permit a retailer to:

  (1) Have a system or program that allows a person to purchase a ticket through a device that connects to the Internet;

  (2) Sell a ticket over the phone or other manner of electronic communication;

  (3) Sell a ticket over the Internet; or

  (4) Sell a ticket at a price higher than the price established by the Director; or

  (5) Sell a ticket at a location other than the location identified in the license.

#### Regulation .04 Application Process.

*COMAR 36.02.02.04*

A. To obtain a retailer license, a person shall electronically submit to the Agency:

  (1) A completed application on a form required by the Director; and

  (2) Any other information and documentation required by the Director.

B. The Director shall consider:

  (1) The financial responsibility and security of the applicant and the applicant's business or activity;

  (2) The ownership interests of the applicant;

  (3) The honesty and integrity of the applicant;

  (4) The accessibility of the applicant's place of business or activity to the public;

  (5) The suitability of the applicant's business for the sale of lottery tickets;

  (6) The applicant’s compliance with State and local business and taxation requirements;

  (7) The sufficiency of existing licenses to serve the public convenience;

  (8) The volume of the applicants expected total sales;

  (9) The accuracy of the information supplied in the application for a lottery retailer’s license;

  (10) The status or enforcement actions taken on any licenses related to the applicant’s business; and

  (11) Any other relevant information.

#### Regulation .05 Security.

*COMAR 36.02.02.05*

A. The Director may require an applicant or retailer to obtain security of at least $5,000.

B. The security may be:

  (1) A surety bond;

  (2) An irrevocable letter of credit;

  (3) A cash security deposit;

  (4) Lottery escrow deposit; or

  (5) Any other form of security approved by the Director.

C. The Agency may require security:

  (1) To protect the financial contributions to the State;

  (2) If a retailer fails to make a payment to the Agency or has insufficient funds for a lottery transfer;

  (3) To ensure the integrity of an applicant or the owner of an applicant and is based on a financial evaluation; and

  (4) To pay for damage, loss or misuse of supplies, equipment, or tickets.

D. The Agency may use the security:

  (1) To offset amounts due from the retailer for the proceeds from the sale of tickets; or

  (2) To pay for the cost of damaged, stolen, lost or misused supplies, equipment, or tickets.

E. The security shall remain in place until such time that the Director determines it may be removed.

#### Regulation .06 Probationary License.

*COMAR 36.02.02.06*

A. New Retailer.

  (1) A license issued by the Director to a new retailer shall be a probationary license.

  (2) The Director may terminate a probationary license without a hearing upon the determination of the Director that the retailer has violated a provision in this subtitle.

B. Termination.

  (1) Before terminating a probationary license, the Director shall send written notice to the retailer of the Agency’s intent to terminate the probationary license.

  (2) The notice shall include:

    (a) The reason for the termination of the probationary license; and

    (b) A statement that the retailer, upon written request, may appear before the Director or the Directors designee to present the retailers views.

  (3) A written request to appear before the Director or the Director’s designee shall be submitted within 10 days of the date of the notice of termination.

  (4) Failure to timely submit a written request to appear before the Director or the Director’s designee shall result in termination of the probationary license

  (5) The decision of the Director to terminate a probationary license is final and not appealable.

#### Regulation .07 Special License.

*COMAR 36.02.02.07*

A. The Director may issue a special license, subject to those conditions or limitations as the Director considers appropriate.

B. The conditions or limitations for the special license may include:

  (1) The type of lottery operation;

  (2) The length of the license period;

  (3) The hours or days when tickets may be sold;

  (4) The location where tickets may be sold;

  (5) Those persons who are allowed to sell tickets;

  (6) Those sporting, charitable, social, or other special events where tickets may be sold; or

  (7) Any other condition or limitation the Director considers appropriate.

C. The Director may deny or terminate a special license for any reason.

D. The decision of the Director to deny or terminate a special license is final and not appealable.

#### Regulation .08 Denial of a License.

*COMAR 36.02.02.08*

A. If the Director recommends the denial of a license, the Director shall promptly provide the applicant with written notice of the:

  (1) Basis for the recommended denial; and

  (2) Applicant’s right to request a reconsideration meeting with the Director or the Director’s designee.

B. An applicant may submit to the Director a written request for a reconsideration meeting within 15 days of the date of the notice described in §A of this regulation.

C. If an applicant fails to timely submit a written request for a reconsideration meeting, the Commission may adopt as final the recommendation of the Director.

D. During a reconsideration meeting, an applicant may:

  (1) Be represented by counsel; and

  (2) Present evidence as to why the license should be granted;

E. If after the reconsideration meeting the applicant is dissatisfied with the recommendation of the Director or the Director’s designee, the applicant may submit to the Commission, in writing:

  (1) A request for a hearing before the Commission to appeal the recommended denial of the license; and

  (2) The applicant’s legal and factual basis for disagreeing with the recommended denial of the license.

F. An applicant must submit a hearing request to the Commission within 15 days of the date of the recommendation of the Director or the Director’s designee after the reconsideration meeting.

G. If an applicant fails to submit a hearing request that complies with §§E and F of this regulation, the Commission may adopt as final the recommendation of the Director or the Director’s designee to deny the license.

H. A timely written hearing request shall be the subject of a Commission hearing conducted pursuant to COMAR 36.01.02.06.

I. Judicial Review. The Commission’s final action on a license denial is subject to judicial review as provided in State Government Article, Title 10, Subtitle 2, Annotated Code of Maryland.

J. Limitation on Reapplication. An applicant may not submit an application or be included in the application of another person for 1 year after the later of:

  (1) The final action on the denial of a license; or

  (2) If judicial review of the final action on a license denial is taken, the date an adverse decision is entered against the retailer by the highest court to which an appeal is taken.

#### Regulation .09 Corrective Action.

*COMAR 36.02.02.09*

A. Deficiency. If the Director determines that a retailer no longer meets a license requirement of this chapter, or that there is cause for imposing sanctions under Regulation .10 of this chapter, the Director shall:

  (1) Assess the seriousness of the deficiency;

  (2) Determine whether it is necessary to emergently suspend the retailer’s license;

  (3) Determine whether to allow a retailer to submit a corrective action plan.

B. If the Agency permits a retailer to submit a corrective action plan:

  (1) Evaluate the corrective action plan;

  (2) If acceptable to the Agency, approve the corrective action plan;

  (3) Determine appropriate timelines for the completion of corrective action;

  (4) Conduct periodic monitoring of a retailer to assess the retailer’s progress toward remedying the deficiencies; and

  (5) Recommend that the Commission impose a sanction under Regulation .10 of this chapter if a deficiency is not remedied.

C. The Agency may determine whether to permit a retailer to submit a corrective action plan.

D. Corrective Action Plan.

  (1) Within 10 days of receipt of a deficiency notice under §F of this regulation, the retailer shall submit a corrective action plan to the Director for the Director’s approval.

  (2) The Director shall review the corrective action plan and inform the retailer whether the corrective action plan is acceptable.

  (3) If the retailer fails to submit an acceptable corrective action plan within the time described under §D(1) of this regulation, the Director may:

    (a) Provide the retailer with additional time within which to submit a revised corrective action plan; or

    (b) Impose a sanction on the retailer under Regulation .10 of this chapter.

  (4) If the Director provided a retailer notice under §F of this regulation and received no timely written response, the Commission may adopt as final the Director’s decision to impose a sanction under Regulation .10 of this chapter.

E. Corrective Action Outcomes.

  (1) If at any time during the corrective action period the Director determines that the retailer has failed to fulfill a requirement of the corrective action plan or has made insufficient progress toward remedying a deficiency, the Director may:

    (a) For good cause, extend the time for completion of a corrective action plan; or

    (b) Emergently suspend the retailer’s license.

  (2) If at the end of the corrective action period the retailer has failed to adequately remedy a deficiency, the Director may impose a sanction under Regulation .10 of this chapter.

F. Deficiency Notice. Upon determining that corrective action is required to remedy a deficiency, the Director shall give written notice to a retailer that includes:

  (1) A description of the violation;

  (2) A description of the possible sanctions; and

  (3) The requirement for the retailer to submit a corrective action plan to the Director within a time frame established by the Director.

#### Regulation .10 Sanctions and Agency Actions on a License.

*COMAR 36.02.02.10*

A. The Director may impose sanctions on a retailer or take action on a license for:

  (1) Violating or failing to fulfill the retailer’s responsibilities or a condition of a license under this subtitle;

  (2) Violating:

    (a) A provision of the lottery law or other applicable law;

    (b) A regulation adopted under the lottery law; or

    (c) An order or directive of the Agency;

  (3) Providing the Agency with false or misleading information;

  (4) Failing to cooperate with the Agency;

  (5) Failing to remit, or failing to make timely remittance of, funds owed to the Agency;

  (6) Failing to meet the retailers sales requirements as set by the Agency;

  (7) Failing to display lottery point of sale material and equipment as directed by the Agency;

  (8) Failing to make tickets available for sale as directed by the Agency;

  (9) Taking tickets, vouchers, or coupons intended for players;

  (10) Failing to provide a player their voucher, coupon, cash or other item of value;

  (11) Discounting lottery prizes;

  (12) Selling lottery tickets by phone or other electronic means;

  (13) Selling lottery tickets over the Internet;

  (14) Selling lottery tickets at a price higher than the price established by the Director;

  (15) Extending credit for the purchase of lottery tickets;

  (16) Facilitating a person other than the owner of the lottery ticket under COMAR 36.02.06.02 to claim a prize;

  (17) Conducting or permitting any illegal activity on the premises;

  (18) Allowing an individual who is not a retailer employee to operate lottery equipment;

  (19) Improperly managing customer data;

  (20) Damaging or altering, or allowing another person to damage or alter, materials or equipment provided to the retailer by the Agency or a contractor of the Agency;

  (21) Interfering with a lottery game;

  (22) Failing to prepare, submit, or implement an adequate corrective plan under Regulation .09 of this chapter;

  (23) Changing ownership of the retailer’s business without prior notice to the Agency;

  (24) Closing the retailer’s operations without prior notice to the Agency;

  (25) Engaging in conduct, or permitting an employee to engage in conduct, that impairs the reputation of the lottery, or would otherwise bring the State into disrepute;

  (26) Being the subject of administrative or judicial charges related to the conduct of:

    (a) Illegal gaming;

    (b) Failing to pay taxes;

    (c) Defrauding the government, a government program, or government services; or

    (d) Any other fraudulent activity;

  (27) Possessing an illegal gaming device;

  (28) Possessing materials or equipment indicating involvement by the retailer or the retailer’s employees in the conduct of illegal gaming;

  (29) Having a history of thefts or other forms of losses of Lottery tickets or revenue; or

  (30) Other activities or actions deemed by the Director to require the imposition of a sanction.

B. Types of Sanctions and Agency Actions.

  (1) Sanctions or Agency actions may include:

    (a) The Agency temporarily disabling a retailer’s terminal;

    (b) The Agency disabling specific game sales on a retailer’s terminal;

    (c) Emergency suspension of a retailer’s license;

    (d) Suspension of a retailer’s license;

    (e) Termination of a retailer’s probationary or special license;

    (f) Revocation of a retailer’s license; or

    (g) Placing a limitation of the license of a retailer.

  (2) Limitations on a license may include:

    (a) Ineligibility for or removal from the Expanded Cashing Authority Program under COMAR 36.02.03.08; and

    (b) Placement of conditions on the retailer’s operations.

C. Disabling a Retailer’s Terminal.

  (1) If a retailer fails to timely remit funds or if the required funds are not available for withdrawal, the Agency shall disable the retailer’s terminal.

  (2) If the retailer pays the Agency for any outstanding amount owed, including bank charges, the Agency may re-enable the retailer’s terminal.

D. Suspension, Revocation, and Limitation.

  (1) Except as set forth in §E of this regulation, the Director shall give the retailer notice of the intended suspension or revocation at least 15 days before the imposition of the intended sanction.

  (2) A retailer may appeal the Directors imposition of a sanction before the date the sanction is imposed by submitting a request for a hearing before the Commission.

  (3) The Commissions final action on a sanction is subject to judicial review as provided in State Government Article, Title 10, Subtitle 2, Annotated Code of Maryland.

E. Emergency Suspension.

  (1) Notwithstanding any other requirement of this chapter, if the Director determines that immediate action is necessary to protect against an imminent, serious threat by a retailer to the security, financial stability, reputation, or integrity of the lottery, the Director may suspend the license of a retailer without prior notice.

  (2) If the Director emergently suspends a retailer’s license, the Director shall provide the retailer with written notice that includes:

    (a) A statement of the authority upon which the suspension is based;

    (b) The nature of the violation;

    (c) The duration of suspension;

    (d) Information about the retailer’s obligation to submit to the Agency a corrective plan; and

    (e) A statement of the retailers right to request a Commission hearing.

  (3) A hearing on an emergency suspension of a retailer license shall be conducted in accordance with the hearing requirements in COMAR 36.01.02.06.

  (4) If after a license is emergently suspended, the retailer does not submit a timely written request for a Commission hearing, the Director may move to revoke the retailers license by giving the retailer notice under §C(1) of this regulation.

F. Agency Action. After the Director terminates a probationary or special license or imposes an emergency suspension or sanction on a retailer with a regular license, the Agency may:

  (1) Disable the retailer’s terminal;

  (2) Require the retailer to surrender, or direct the Lottery Central System contractor to remove, any materials or equipment that were provided to the retailer by the Agency or the Lottery Central System contractor;

  (3) Direct the retailer to immediately:

    (a) Cease selling or displaying lottery products;

    (b) Render a final accounting to the Agency in a manner specified by the Director; and

    (c) Pay all funds owed the Agency;

    (d) Return all unsold lottery tickets;

    (e) Remove or cover any signage advertising lottery products or services; and

  (4) Take any other action necessary to protect the security, financial stability, reputation, or integrity of the Agency.

G. Reapplication. A person may not reapply to be a retailer or be included in the application of another person for 1 year after the later of:

  (1) The final action on a sanction; or

  (2) If judicial review of the final action on a sanction is taken, the date an adverse decision is entered against the retailer by the highest court to which an appeal is taken.