RULE
1
ISSUANCE OF RULES; CONSTRUCTION; DEFINITIONS
1.010
Promulgation, amendment,
modification and repeal. The following Rules are issued pursuant to the
Amendment. The Commission will, from time to time, promulgate, amend and repeal
such Rules, consistent with the policy, objects and purposes of the Arkansas
Racing Commission, as it may deem necessary or desirable in carrying out the
policy and provisions of the Amendment.
1.020
Construction. Nothing
contained in these Rules shall be so construed as to conflict with any
provision of the Amendment or of any other applicable law.
1.030
Severability. If any
provision of these Rules be held invalid, it shall not be construed to
invalidate any of the other provisions of these Rules.
1.040
Definitions, words and terms;
tense, number and gender. The provisions of the Amendment relating to
definitions, tense, number and gender apply and govern the interpretation of
these Rules, except when otherwise plainly declared or clearly apparent from
the context.
1.050 "Amendment"
defined. "Amendment" means Amendment 100 to the Arkansas Constitution, known as
the Arkansas Casino Gaming Amendment of 2018.
1.055 "Automated teller machine" defined.
"Automated teller machine" or "ATM" means an automated bank teller machine
capable of dispensing cash.
1.060
"Card game" defined. "Card game" means a game in which the
licensee is not party to wagers and from which the licensee receives
compensation in the form of a rake-off, a time buyin, or other fee or payment
from a player for the privilege of playing, and includes but is not limited to
the following: Poker, bridge, whist, solo and panguingui.
1.062 "Cashable credits" defined. "Cashable
credits" means wagering credits that are redeemable for cash.
1.065 "Casino" defined. "Casino" means a
facility where casino gaming is conducted as authorized by the Amendment.
"Casino applicant" is defined as any individual,
corporation, partnership, association, trust, or other entity applying for a
license to conduct casino gaming at a casino in Pope County or Jefferson
County, Arkansas, pursuant to Section 4 of the Amendment. Franchise holders
shall be exempt from this definition pursuant to Section 4 of the
Amendment.
"Casino gaming" is defined as dealing, operating, carrying
on, conducting, maintaining, or exposing for play any game played with cards,
dice, equipment, or any mechanical, electromechanical, or electronic device or
machine for money, property, checks, credit, or any representative value.
Casino gaming shall also be defined to include accepting wagers on sporting
events. "Casino gaming" does not include lotteries conducted pursuant to
Amendment 87 and/or The Arkansas Scholarship Lottery Act, Ark. Code Ann. §
23-115-101, et
seq.
"Casino gaming receipts" is defined as gross receipts from
casino gaming.
"Casino license" is defined as a license issued by the
Arkansas Racing Commission to conduct casino gaming at a casino.
"Casino licensee" is defined as any individual,
corporation, partnership, association, trust, or other entity holding a license
issued by the Arkansas Racing Commission to conduct casino gaming at a
casino.
1.066 "Commission"
means the Arkansas Racing Commission.
1.067 "Commission Rules" means Rules and
Regulations Governing Horse Racing in Arkansas, Rules and Regulations Governing
Greyhound Racing in Arkansas, Arkansas Regulations for Franchise Holders
Operating Electronic Games of Skill, and Arkansas Casino Gaming
Rules.
1.080 "Counter game"
defined. "Counter game" means a game in which the licensee is party to wagers
and wherein the licensee documents all wagering activity. The term includes,
but is not limited to bingo, keno, race books, and sports pools. The term does
not include table games, card games and slot machines.
1.085 "Counter games payout" defined.
"Counter games payout" means the total amount of money, chips, wagering
vouchers, payout receipts, and electronic money transfers made from a counter
game through the use of a cashless wagering system, that are distributed to a
patron as the result of a legitimate wager.
1.090 "Counter games write"
defined. "Counter games write" means the total amount of money,
guaranteed drafts, chips, wagering vouchers, unpaid winning tickets, and
electronic money transfers made to a counter game through the use of a cashless
wagering system, that are accepted from a patron as a legitimate
wager.
1.092 "Debit instrument"
defined. "Debit instrument" means a card, code or other device with which a
person may initiate an electronic funds transfer or a wagering account
transfer. The term includes, without limitation, a prepaid access
instrument.
1.093 "Department of
Finance and Administration" or "DF&A" means the Arkansas Department of
Finance and Administration.
1.095
"Drop" defined. "Drop" means:
1. For table
games, the total amount of money, guaranteed drafts, chips, and wagering
vouchers contained in the drop boxes and any electronic money transfers made to
the game through the use of a cashless wagering system.
2. For slot machines, the total amount of
money, and wagering vouchers contained in the drop box, and any electronic
money transfers made to the slot machine through the use of a cashless wagering
system.
1.100
"Drop
box" defined. "Drop box" means:
1. For
table games, a locked container permanently marked with the game, shift, and a
number corresponding to a permanent number on the table. All markings must be
clearly visible from a distance of at least 20 feet. The container must be
locked to the table, separately keyed from the container itself. All currency
exchanged for chips or credit instruments at the table and all other items or
documents pertaining to transactions at the table must be put into the
container.
2. For slot machines, a
container in a locked portion of the machine or its cabinet used to collect the
money retained by the machine that is not used to make automatic payouts from
the machine.
1.103
"Electronic money transfer" defined. "Electronic money transfer"
means the transfer to or from a game or gaming device of a patron's cashable
credits, through the use of a cashless wagering system, that have either been
provided to the patron by the licensee, or for which the licensee or its
affiliates have received cash through a wagering account. The term also
includes electronic funds transferred from a financial institution to a game or
gaming device as a result of an electronic funds transfer through a cashless
wagering system.
1.110
"Establishment" defined. "Establishment" means any premises where
business is conducted, and includes all buildings, improvements, equipment and
facilities used or maintained in connection with such business.
1.125
"Funds" defined. "Funds"
means money or any other thing of value.
"Franchise holder" is defined as any individual,
corporation, partnership, association, trust, or other entity holding a
franchise to conduct horse racing under the Arkansas Horse Racing Law, Ark.
Code Ann. § 23110-101 et seq., or greyhound racing under the Arkansas
Greyhound Racing Law, Ark. Code Ann. §
23-111-101 et
seq. as of December 31, 2017.
"Game" and "gambling game" defined. "Game" or "gambling
game" means any game played with cards, dice, equipment or any mechanical,
electromechanical or electronic device or machine for money, property, checks,
credit or any representative of value, including, without limiting the
generality of the foregoing, faro, monte, roulette, keno, bingo, fan-tan,
twenty-one, blackjack, seven-and-a-half, big injun, klondike, craps, poker,
chuck-a-luck, Chinese chuck-a-luck (dai shu), wheel of fortune, chemin de fer,
baccarat, pai gow, beat the banker, panguingui, slot machine, any banking or
percentage game or any other game or device approved by the
Commission
1.135
"Guaranteed draft" defined. "Guaranteed draft" means a draft or
check accepted by a licensee for gaming purposes whose drawer is a patron and
whose drawee unconditionally guarantees payment provided that all required
issuance and acceptance procedures are adhered to by the drawee and the
licensee. The term includes, but is not limited to, traveler's checks. The term
does not include personal checks.
1.139 "Independent accountant" defined.
"Independent accountant" means a certified public accountant licensed by this
state or another state or territory of the United States, who is qualified to
practice public accounting in Arkansas.
"Intoxicating liquor" is defined as any beverage
containing more than one-half of one percent of alcohol by
weight.
1.140 "Jackpot
payout" defined. "Jackpot payout" means money, payout receipts, wagering
vouchers, electronic money transfers made from a slot machine through the use
of a cashless wagering system and the actual cost to the licensee of personal
property, other than travel expenses, food, refreshments, lodging or services
distributed to a slot machine player as a result of a legitimate wager.
"Net casino gaming receipts" is defined as gross receipts
from casino gaming less amounts paid out or reserved as winnings to casino
patrons.
"Net casino gaming receipts tax" is defined as a tax on
net casino gaming receipts.
1.143 "Payout receipt" defined. "Payout
receipt" means an instrument that is redeemable for cash and is either issued
by a game or gaming device, or as a result of a communication from a game or
gaming device to associated equipment that cannot be used for wagering
purposes.
1.145 "Premises" defined.
"Premises" means land together with all buildings, improvements and personal
property located thereon.
1.146
"Prepaid access instrument" defined. "Prepaid access instrument" means a card,
code, electronic serial number, mobile identification number, personal
identification number or similar device that allows patron access to funds that
have been paid in advance and can be retrieved or transferred at some point in
the future through such a device. To transfer funds for gaming purposes, a
prepaid access instrument must be used in conjunction with an approved cashless
wagering system, race book or sports pool wagering account, or interactive
gaming account.
1.147 "Progressive
keno game" defined. "Progressive keno game" means a game with a payoff limit
that increases by predetermined amount as the game is played, which limit is at
all times exhibited on an indicator visible to the public. "Progressive keno
game" does not include video progressive keno devices.
1.150 "Rake-off" defined.
"Rake-off" means a percentage of the total amount anted and wagered by players
during a hand in a card game.
1.155
"Registration" defined. "Registration" means:
1. A final order of the Commission which
authorizes a corporation, firm, partnership, limited partnership, association,
limited liability company, trust, or other form of business organization not a
natural person to be a holding company or
2. A registration of a person, including
individuals, with the Commission.
1.160 "Rules" defined. "Rules" means Rules
adopted by the Commission.
1.162
"Rim credit" defined. "Rim credit" means all extensions of credit in exchange
for chips not evidenced by the immediate preparation of a credit
instrument.
1.172 "System based
game" and "system based gaming device" defined. "System based game" or "system
based gaming device" means a gaming device comprised of a server or system part
and client stations that, together, form a single integrated device where the
system portion of the game determines the outcomes of the individual games
conducted on the client stations and the client stations cannot operate
independently from the system.
1.174
"System supported game" and "system supported gaming device" defined. "System
supported game" or "system supported gaming device" means a gaming device
comprised of a collection of conventional gaming devices or client stations
connected to a system for the purpose of downloading control programs and other
software resources to the conventional gaming device or client station on an
intermittent basis. The client stations connected to the system are capable of
operating independently from the system once the downloading process has been
completed. This configuration encompasses cases where the system may take
control of peripheral devices or associated equipment typically considered part
of a conventional gaming device such as a bill validator or a printer. In a
system supported game, game outcome is determined by the conventional gaming
devices or client stations connected to the system and not by the system
itself.
1.180 "Table game bankroll"
defined. "Table game bankroll" means the inventory of:
1. Chips and coinage at a table game that is
used to make change, extend credit and pay winning wagers; and
2. Unpaid credit at a table game, including
credit instruments not yet transferred to the cage and outstanding rim
credit.
1.190 "Wagering
voucher" defined. "Wagering voucher" means a printed wagering instrument, or
digital representation thereof, used in a cashless wagering system that has a
fixed dollar wagering value and is redeemable for cash or cash
equivalents.
1.191
"Wholesaler" means any person who holds a permit under any
alcoholic beverage control law of the State of Arkansas to purchase controlled
beverages from a manufacturer, importer, or domestic wine or brandy producer
only and to sell such controlled beverages to retailers
only.
RULE 2
APPLICATION FOR CASINO GAMING LICENSE AND RENEWAL
AUTHORITY OF THE COMMISSION
2.01 These Rules Governing the Application
For, Issuance, and Renewal of Licenses to Conduct Casino Gaming at a Casino in
Arkansas are duly adopted and promulgated by the Arkansas Racing Commission
pursuant to Amendment No. 100 of the Constitution of the State of Arkansas of
1874, The Arkansas Casino Gaming Amendment of 2018.
SCOPE AND PURPOSE
2.02 These Rules govern the application
procedures for the issuance and renewal of licenses to conduct casino gaming at
a casino in Arkansas. These Rules also govern the selection methods to be used
and the criteria to be considered by the Arkansas Racing Commission in awarding
licenses to conduct casino gaming at a casino in Arkansas.
DEFINITIONS
2.03
"Amendment" means the Arkansas Casino Gaming Amendment of 2018.
2.04 "Casino" means a facility where casino
gaming is conducted as authorized by the Amendment.
2.05 "Casino applicant" means any individual,
corporation, partnership, association, trust, or other entity, other than a
franchise holder, applying for a license to conduct casino gaming at a casino.
Pursuant to the Amendment, a franchise holder is not a casino applicant and is
not required to submit an application for a casino license under these
Rules.
2.06 "Casino gaming" means
dealing, operating, carrying on, conducting, maintaining, or exposing for play
any game played with cards, dice, equipment, or any mechanical,
electromechanical, or electronic device or machine for money, property, checks,
credit, or any representative value. Casino gaming shall also be defined to
include accepting wagers on sporting events. "Casino gaming" does not include
lotteries conducted pursuant to Amendment 87 and/or The Arkansas Scholarship
Lottery Act, Ark. Code Ann. §
23-115-101
et seq.
2.07 "Casino license" means
a license issued by the Arkansas Racing Commission to conduct casino gaming at
a casino.
2.08 "Casino licensee"
means any individual, corporation, partnership, association, trust, or other
entity holding a license issued by the Arkansas Racing Commission to conduct
casino gaming at a casino.
2.09
"Commission" means the Arkansas Racing Commission.
2.10 "EGS Law" means the Local Option Horse
Racing and Greyhound Racing Electronic Games of Skill Act, Ark. Code Ann.
§
23-113-101
et seq., as amended.
2.11 "Franchise holder" means any individual,
corporation, partnership, association, trust, or other entity holding a
franchise to conduct horse racing under the Arkansas Horse Racing Law, Ark.
Code Ann. §
23-110-101 et
seq., or greyhound racing under the Arkansas Greyhound Racing Law, Ark. Code
Ann. §
23-111-101 et
seq. as of December 31, 2017.
2.12
"Disqualifying felony offense" means:
1. A
felony offense as determined by the applicable state or federal law where the
felony offense occurred, and a felony offense which the Commission has by Rule
or Order determined to be a disqualifying felony offense for the issuance of a
casino license, employee license, or for the owners, shareholders, board
members or officers of any casino applicant or casino license holder;
2. However, the following offenses shall not
be considered a disqualifying felony:
(a) An
offense that has been sealed by a court or for which a pardon has been granted,
or
(b) An offense whose sentence,
including any term of probation, incarceration or supervised released, was
completed ten (10) or more years earlier.
3. "Sealed" means expunge, remove, sequester,
and treat as confidential the record or records of a felony
offense.
CASINO GAMING APPLICATION, LICENSING, AND RENEWAL
2.13. License Required
1. No individual, corporation, partnership,
association, trust, or other entity shall conduct casino gaming at a casino or
at any other location within the State of Arkansas, unless the individual,
corporation, partnership, association, trust, or other entity has a casino
license issued by the Commission pursuant to these Rules.
2. Each license to conduct casino gaming at a
casino shall specify:
(a) The name of the
individual, corporation, partnership, association, trust, or other entity who
holds the license;
(b) The address
of the individual, corporation, partnership, association, trust, or other
entity who holds the license;
(c)
The effective dates of the license; and
(d) The address of the licensed
casino.
3. Licenses
Available
(a) The Commission shall issue four
licenses to conduct casino gaming at casinos, as follows:
i. The Commission shall issue a casino
license, as provided in the Amendment, to a franchise holder located in
Crittenden County, there being only one, to conduct casino gaming at a casino
to be located at or adjacent to the franchise holder's greyhound racing track
and gaming facility as of December 31, 2017 in Crittenden County.
ii. The Commission shall also issue a casino
license, as provided in the Amendment, to a franchise holder located in Garland
County, there being only one, to conduct casino gaming at a casino to be
located at or adjacent to the franchise holder's horse racing track and gaming
facility as of December 31, 2017 in Garland County.
(1) Casino licenses to be issued to franchise
holders shall be issued upon:
a. Adoption by
the Commission of rules necessary to carry out the purposes of the Amendment;
and
b. Initial laws and
appropriations required by the Amendment being in full force and effect.
Franchise holders at Oaklawn and Southland are not required to submit
applications for casino licenses, under these Rules. Each franchise holder
shall submit to the Commission a proposed date for the franchise holder to
convert from operating under the EGS Law to operating under the Amendment and
the Rules adopted by the Commission regulating casino gaming, and subject to
the provisions of the Amendment, such date shall be subject to approval by the
Commission. If Amendment 100 is amended or repealed in a manner that would
restrict or preclude a franchise holder from operating casino gaming
thereunder, the franchise holder may by written notice to the Commission elect,
subject to approval by the Commission, to convert all or part of its facility
and electronic games of skill back to operating under the EGS Law, and the
Rules of the Commission thereunder.
iii. The Commission shall award a casino
license to a casino applicant for a casino to be located in Pope County within
two miles of the city limits of the county seat.
iv. The Commission shall also award a casino
license to a casino applicant for a casino to be located in Jefferson County
within two miles of the city limits of the county seat.
v. No individual, corporation, partnership,
association, trust, or other entity may hold more than one casino license in
Arkansas.
4.
Non-Franchise Holder Application Process
(a)
An application for a casino license as set forth in these Rules shall be
submitted to the Commission on a form and in a manner prescribed by the
Commission. The provisions of this section apply to applications for
non-franchise holder casino licenses.
(b) Applications for a casino license will be
accepted by the Commission for a period of thirty (30) days, beginning on the
date established by the Commission and published as a legal notice by the
Commission. No applications will be accepted after the thirty (30) day period,
except for good cause shown.
(c)
Applications that have been received and verified by the Commission will be
considered based upon the selection processes set out in these Rules.
(d) If no application is received by the
Commission for the casino licenses in Pope County and/or Jefferson County, then
the Commission shall re-open the application process upon receipt of a written
request by a casino applicant.
5. Minimum Qualifications for Non-Franchisor
Applicant
(a) All casino applicants for a
casino license in Pope County and Jefferson County are required to demonstrate
experience conducting casino gaming.
(b) All casino applicants for a casino
license in Pope County and Jefferson County are required to submit either a
letter of support from the county judge or a resolution from the quorum court
in the county where the proposed casino is to be located and, if the proposed
casino is to be located within a city or town, are also required to submit a
letter of support from the mayor in the city or town where the casino applicant
is proposing the casino to be located. All letters of support or resolutions by
the Quorum Court, required by these Rules and the Amendment, shall be dated and
signed by the County Judge, Quorum Court members, or Mayor holding office at
the time of the submission of an application for a casino gaming
license.
(c) Prior to the submission
of an application for a casino license, the owners, shareholders, board
members, or officers of the casino applicant:
i. If an individual, shall not have been
convicted of a disqualifying felony offense;
ii. Shall not have previously had a casino
license in any state revoked;
iii.
If an individual, shall not be under twenty-one years of age; and
iv. If an individual, shall not be a county
judge or mayor that provides a letter of support, or a quorum court member that
votes in favor of a letter of support as identified in the
Amendment.
(d) Casino
applicants shall provide a complete application with responses for each
required item.
6.
Documentation and Information for Non-Franchisor Casino Applicant
(a) The application for non-franchisor casino
licenses shall include without limitation the following:
i. The application fee;
ii. The legal name of the casino
applicant;
iii. The physical address
of the casino applicant;
iv. The
physical address of the proposed casino;
v. The name, address, and date of birth of
each officer and owner of the casino applicant;
vi. If the city, town, or county in which the
casino would be located has enacted zoning restrictions, a sworn statement
certifying that the casino will operate in compliance with the
restrictions;
vii. To establish
proof of no felony convictions, all owners, shareholders, board members, or
officers of the casino applicant shall provide consent to a background check,
including fingerprinting;
viii. A
photocopy of a valid, unexpired driver's license or valid, unexpired U.S.
passport for each of the casino applicant's owners, board members, and officers
evidencing that they are over the age of twenty-one; and
ix. Consents for criminal background checks
for each owner, board member, and officer of the casino
applicant.
(b) The
information and documents shall be submitted in a method prescribed by the
Commission in the notice of open application.
(c) All information contained in applications
for casino licenses shall remain confidential until after the deadline for
submission of applications. After the closing date for submission of
applications for casino licenses, the Commission will release, upon request,
any information submitted by a casino applicant not otherwise protected as
confidential or proprietary under Arkansas law.
7. Background Checks
(a) The following are subject to background
checks conducted by the Commission or its designee in considering an
application for a casino license:
i. All
owners, officers, and board members of a casino applicant.
(b) A person subject to background checks as
provided in these Rules shall be disqualified from being an owner, officer or
board member of a casino and be prohibited from having any responsibility for
operating a casino if the person has been convicted of a disqualifying felony
offense.
(c) Each person undergoing
a background check shall provide written consent and all applicable processing
fees to the Commission or its designee to conduct the background check. Each
person shall use Arkansas State Police Form 122, which can be found at the
following link:
https://static.ark.org/asp/pdf/asp_122.pdf.
8. Application Fee
(a) Each application for a casino license
shall include an application fee of up to $250,000.00 by cash or certified
funds. Certified checks or cashier's checks shall be made payable to the state
of Arkansas, delivered or mailed by certified mail, return receipt requested,
to the address specified in the notice of open application.
(b) In the event a casino applicant is not
successful, one-half (50%) of the initial application fee shall be refunded to
the casino applicant.
(c) An
application is not complete and will not be considered unless all required
information, documentation, and the application fee are timely received by the
Commission.
9. Selection
Process and Criteria Based on Merit Selection
(a) In addition to documentation establishing
minimum qualifications, the casino applicant shall submit responses to the
Commission's merit criteria in a form and manner prescribed by the Commission.
Criterion shall be published with the initial notice of open application. In
addition, representatives of the casino applicant shall appear before the
Commission and the Commission's consultant for an interview regarding the
casino applicant's qualifications and proposal for operating a casino in
Arkansas.
(b) The Commission shall
consider the following criteria based on merit to evaluate applications.
i. Experience conducting casino
gaming;
ii. Timeline for opening a
casino;
iii. Proof of financial
stability and access to financial resources, including but not limited to legal
sources of finances immediately available to begin operating a casino;
and
iv. Detailed summary of proposed
casino including hotel, amenities, projected number of employees, and any other
information the casino applicant deems relevant.
(c) Each merit criterion will be worth a
number of points announced by the commission in the notice of open application
period.
(d) A review panel comprised
of members of the Commission shall evaluate the applications and award points
for each merit criterion. The points shall be totaled for each application and
the applications ranked from the highest total score to the lowest total score.
The Commission shall notify in writing each of the casino applicants of their
respective score and their respective ranking among all casino
applicants.
10. Issuance
of License
(a) The Commission shall award and
issue a casino license within 30 business days from the date the Commission
announces that the application process has concluded.
(b) Upon issuance of a casino license, the
casino licensee may begin operations.
(c) The casino licensee shall visibly post a
copy of its license at the casino covered under the
license.
11. Term
(a) A casino license shall expire ten years
after it is issued and is renewable at any time before expiration, unless the
license is:
i. Suspended or revoked by the
Commission; or
ii. Surrendered by
the casino licensee.
12. Denial of Application for or Renewal of a
License
(a) The Commission may deny an
application for or renewal of a license for any of the following reasons:
i. Failure to provide the information
required in these Rules;
ii. Failure
to meet the requirements set forth in these Rules;
iii. Providing misleading, incorrect, false,
or fraudulent information with the intent to deceive; and
iv. Receipt of an application evaluation
score lower than the successful casino applicants for a license in the
application period for which the casino applicant applied.
(b) If the Commission denies an application
for or renewal of a license, the Commission shall notify the casino applicant
in writing of the Commission's decision, including the reason for the
denial.
(c) A person or entity
aggrieved by a decision made pursuant to this section is entitled to a hearing
before the Commission and may appeal the Commission's decision pursuant to this
Rule.
13. License Renewal
Process and Fee
(a) A casino license may be
renewed if the casino licensee:
i. Submits to
the commission a renewal application on a form and in a manner prescribed by
the Commission at least six (6) months prior to the expiration date on the
license;
ii. Is in good standing
with the Arkansas Secretary of State's office;
iii. Continues to be in good standing with
the Arkansas Department of Finance and Administration; and
iv. Continues to meet all the requirements
set out in these Rules.
(b) Before renewing a license, the Commission
may require further information and documentation and may conduct additional
background checks to determine that the licensee continues to meet the
requirements of these Rules.
(c)
Within seven days of receiving written notice from the Commission that its
renewal application has been approved, the casino licensee shall pay the
ten-year renewal fee of $10,000.00 in certified funds. Any certified or
cashier's check shall be payable to the state of Arkansas.
(d) A casino licensee whose license is not
renewed shall cease all casino gaming immediately upon expiration of the
license and return the license to the Commission.
(e) Upon the determination that a casino
licensee has not met the requirements for renewal, the Commission shall provide
written notice by certified mail or personal delivery to the casino licensee.
The notice shall provide an explanation for the denial of the renewal
application. The casino licensee is entitled to a hearing before the Commission
pursuant to these Rules.
14. Surrender of License
(a) A casino licensee may voluntarily
surrender its license to the Commission at any time.
(b) If a casino licensee surrenders its
license, the casino licensee shall:
i. Return
the license to the Commission;
ii.
Submit a report to the Commission including the reason for surrendering the
license; contact information following the close of business; the person or
persons responsible for the close of the business; and where business records
will be retained.
15. Change in Information
(a) The casino licensee shall notify the
Commission of any changes in contact information.
(b) The casino licensee shall notify the
Commission in writing no less than fourteen days in advance of any change that
may affect the licensee's qualifications for licensure, and submit to the
commission supporting documentation to prove the casino licensee continues to
be qualified. In the event of a change for which a casino licensee does not
have prior notice, the licensee shall notify the Commission immediately upon
learning of the change.
(c) Pursuant
to section (b), the licensee shall notify the Commission of the following:
i. The arrest or conviction for any felony of
any individual listed in an application or subsequently identified as a casino
applicant, licensee, or individual with a financial interest;
ii. The temporary closure of the casino for
any reason for longer than fifteen days;
iii. The permanent closure of the business;
and
iv. Any other change that may
affect the licensee's qualification for licensure.
(d) If the Commission determines that the
change has the potential to disqualify a licensee, the Commission shall conduct
a hearing for adjudication.
16. Transfer of License
(a) Casino licenses shall only be effective
for the individual, corporation, partnership, association, trust, or other
entity identified in the original application.
(b) A casino licensee may not sell, transfer,
or otherwise dispose of its license to another person or entity without
approval from the Commission.
(c) A
casino licensee shall not make any modification to the board members, or
officers as designated in the initial application without approval from the
Commission.
(d) A casino licensee's
failure to obtain approval from the Commission before engaging in ownership
changes described in (b) and (c) above may result in Commission's revocation of
that license.
(e) In order to obtain
approval to transfer ownership of a casino license, the casino licensee shall
submit to the Commission an application for license transferal on a form and in
a manner prescribed by the Commission.
(f) If the Commission denies an application
for transfer of license, the Commission shall provide written notice by
certified mail or personal delivery to the licensee. The notice shall provide
an explanation for the denial of the application. The licensee may request a
hearing before the Commission pursuant to this Rule.
17. Transfer of Location
(a) A casino license shall only be valid at
the location for which it was originally issued by the Commission.
(b) A casino licensee shall not relocate a
casino without prior approval by the Commission.
(c) In order to obtain approval to transfer a
casino license to another location, a casino licensee shall submit to the
Commission an application for license transferal on a form and in a manner
prescribed by the Commission.
(d) If
the Commission denies an application for transfer of location, the Commission
shall provide written notice by certified mail or personal delivery to the
licensee. The notice shall provide an explanation for the denial of the
application. The casino licensee is entitled to a hearing before the Commission
pursuant to this Rule.
18.
Appellate Procedure following Denial of Application for License, Renewal,
Transfer of License, or Location.
(a) Denial
of Application for License
i. If the
Commission denies an application for a casino license, the casino applicant is
entitled to a hearing before the Commission by filing a written request no
later than fifteen (15) days from receipt of the notice of denial from the
Commission. The Commission's decision may be appealed to the Pulaski County
Circuit Court. Appeals shall be governed by the terms of the Arkansas
Administrative Procedure Act, §
25-15-201, et
seq.
(b) Denial of
Application for Renewal of License, Transfer of License or Transfer of Location
i. If the Commission denies an application
for the renewal of a casino license, the transfer of a casino license, or the
transfer of the location for a casino license, the casino licensee is entitled
to a hearing before the Commission by filing a written request no later than
fifteen (15) days from receipt of the notice of denial from the
Commission.
ii. The Commission shall
conduct a hearing no later than sixty (60) days from the receipt of the request
for hearing. The Commission shall provide notice of the hearing to all
interested parties, conduct the hearing, and issue a decision in accordance
with the Arkansas Administrative Procedure Act, §
25-15-201 et
seq.
iii. The Commission's decision
may be appealed to the circuit court of the county in which the casino is
situated or the Pulaski County Circuit Court. Appeals shall be governed by the
terms of the Arkansas Administrative Procedure Act, §
25-15-201, et
seq.
RULE 3
SERVICE INDUSTRY LICENSE & SERVICE INDUSTRY EMPLOYEE
LICENSE
3.01
Definitions
The following words and terms, when used in these Rules, shall have the
following meanings unless the context clearly indicates otherwise:
1. "Commission" means the Arkansas Racing
Commission or its successor having jurisdiction over Casino Gaming in this
state. The Arkansas Racing Commission is responsible for all Licensing,
adjudication of fines, Certification of Casino games, Appeals/Rulings and
approval of all Casino Gaming plans.
2 "Distributor" means any person that sells,
leases, or offers, or otherwise provides, distributes, or services any Casino
Gaming or associated equipment for use or play of Casino Gaming in a Casino
Licensee's facility. A Manufacturer may be a distributor.
3. "Casino Gaming Section" means the Office
of Field Audit within the Revenue Division of the Commission. The Casino Gaming
Section is assigned responsibility for auditing and review of internal controls
and the day-to-day operations of Casino Gaming. This would include full
administrative regulatory jurisdiction and exercise of the duties, powers and
responsibilities over Casino Gaming as authorized by Amendment 100.
4. "Casino Licensee" means any person holding
a license to conduct Casino Gaming pursuant to Amendment 100.
5. "Gaming Floor" means the designated area
where Casino Gaming activities occur.
6. "Gaming Operator" means a Casino Licensee
that is conducting the operation of Casino Gaming.
7. "Identification Credential" means a valid
driver license, passport or other document generally accepted in business as a
form of identification and which contains, at a minimum, the person's
signature. A personal reference does not constitute an Identification
Credential.
8. "Incompatible
function" means a function for accounting control purposes that places any
person, employed by or department established by the Casino Licensee, in a
position to both perpetrate and conceal errors or irregularities in the normal
course of their duties. Anyone recording Transactions and having access to
assets ordinarily is in a position to perpetrate errors or irregularities.
Persons may have Incompatible Functions if such persons are members of
departments which have supervisors not independent of each other.
9. "Intermediary company" means a
corporation, firm, association, partnership, trust or any other form of
business organization other than a natural person which is a holding company
with respect to a corporation which holds or applied for a Gaming License; and
is a subsidiary with respect to any holding company.
10. "Manufacturer" means any person who
manufactures, builds, rebuilds, fabricates, assembles, produces, programs,
designs, or otherwise makes modifications to any Casino Gaming or associated
equipment for Casino Gaming purposes. A Manufacturer may be a Distributor, as
approved by the Commission.
11.
"Surveillance System" means any facility, not controlled by the Commission
employees, that has been approved by the Commission to receive transmissions
from the surveillance department's security system including, without
limitation, system monitoring rooms, surveillance department offices, system
repair areas, and system emergency facilities.
12. "Transaction" a Transaction includes
deposit, withdrawal, transfer between accounts, exchange of currency, loan,
extension of credit, purchase or redemption of gaming instruments or any other
payment, transfer, or delivery to a Casino Licensee, by whatever means
affected.
13. "Wager" a sum of money
or thing of value bet on Casino Gaming.
3.02
Restriction of Doing
Business
(a) No entity shall
manufacture, sell or lease, distribute, repair or provide Casino Gaming
maintenance services of Casino Gaming equipment to a Casino Licensee for its
Casino Gaming operations in the State of Arkansas unless it holds a current
Service Industry License issued by the Commission in accordance with these
Rules.
(b) No entity shall provide
management or operational services to a Casino Licensee for its Casino Gaming
operations in the State of Arkansas unless it holds a current Service Industry
License issued by the Commission in accordance with these Rules.
(c) Service Industry Licenses issued pursuant
to Regulations for Franchise Holders Operating Electronic Games of Skill shall
also be valid Service Industry Licenses for Casino Gaming and shall be subject
to the requirements of these Rules. Such Service Industry Licenses shall expire
and be subject to renewal three years from the date of issuance of such license
for Electronic Games of Skill.
3.03
Determining the Need for a Service
Industry License
(a) Any entity which
satisfies one or more of the following criteria shall, unless it is otherwise
set forth in these Rules, obtain a Service Industry License to carry out
business with a Casino Licensee in the State of Arkansas.
i. The entity manufactures, sells or leases,
supplies or distributes devices, machines, equipment, accessories, objects or
articles which:
(1) Are designed specifically
for use in Casino Gaming operations of the Casino Licensee;
(2) Are needed to carry out the activities of
an authorized game;
(3) Have the
capacity to affect the result of the play of an authorized game; or
(4) Have the capacity to affect the
calculation, storage, collection or control of the gross
revenues.
ii. The entity
provides maintenance services or repairs gaming equipment for Casino Gaming of
the Casino Licensee;
iii. The entity
provides management or operational services to a Casino Licensee for its Casino
Gaming operations.
iv. All other
suppliers of materials, maintenance, supplies, management, or operational
services. This would include security systems, gaming devices and money
handling/storage devices; or
v. The
entity is conducting more than $150,000 in business with one Casino
Licensee.
3.04
General Parameters of Granting a Service Industry License
(a) An applicant for a Service Industry
License shall submit to the Commission the information, documentation and
guarantees necessary to establish through clear and convincing evidence:
i. The stability, integrity and economic
responsibility of the applicant;
ii.
The good character (if an individual), honesty and integrity of the
applicant;
iii. That the owners,
administrative and supervisory personnel, principal employees and sales
representatives of the applicant comply with the parameters provided in Section
13.10 Qualifying as a Person Related to a Service Industry of these
Rules;
iv. The integrity of the
investors, mortgage creditors, guarantors and holders of bonds, notes and other
evidences of debt which are in any way related to the entity; and
v. The integrity of all the officers,
directors and trustees of applicant.
3.05
Initial Application for a Service
Industry License
(a) The initial
application for a Service Industry License shall consist of an original and a
copy of the following documents:
i. Arkansas
Racing Commission Business Entity Disclosure Form for Service Industry
Licensee, to be completed by the applicant and by each company, individual or
entity holding an interest in applicant;
ii. Arkansas Racing Commission Personal
History Disclosure and Supplemental form of Persons Related with Service
Industries, to be completed by each natural person who must be qualified for a
license by the Commission in accordance with these Rules; and
iii. The fees to be paid to the Commission,
as provided in these Rules.
iv. The
Commission shall not evaluate an initial Service Industry License application
unless same is accompanied by all the information required in these Rules,
including all the documents requested in paragraph (a) above; provided that any
incomplete application filed with the Commission shall be deemed to be as if
same had not been filed.
(b) Burden of proof - It shall be the
responsibility of the Service Industry applicant and its principals to provide
information and or documentation and to demonstrate their qualifications by
clear and convincing evidence relative to the character, honesty and integrity
of its directors, officers, stockholders and principal employees, to the
Commission.
(c) No person may sell
or otherwise supply Casino Gaming related equipment or services to a Casino
Licensee for the conduct of Casino Gaming as authorized in this chapter unless
the person has demonstrated to the satisfaction of the Commission that the
person has the capability and qualifications necessary to reasonably furnish
the equipment and perform the services to be provided by the
supplier.
3.06
Duration of Service Industry License
(a) Every Service Industry License shall be
issued by the Commission for a period of 3 years.
(b) Notwithstanding the provisions of
paragraph (a) above, the Commission may, as it may deem necessary:
i. issue any Service Industry License for a
shorter period;
ii. at any time,
void the Service Industry License for reasonable
cause.
3.07
Service Industry License Renewal Application
(a) Every Service Industry License renewal
application shall be filed no later than ninety (90) days prior to the
expiration date of said license.
(b)
The Service Industry License renewal application shall include:
1. A duly completed original and a photocopy
of:
i. An Arkansas Racing Commission Business
Entity Disclosure form Service Industry Application, which shall contain all
the information that has changed from the date of the application for the
initial Service Industry License or of the last renewal, to be completed by the
applicant and by each holding company of applicant;
ii. An Arkansas Racing Commission Personal
History Disclosure and Supplemental form of Persons Related with Service
Industry Licensees to be completed by each natural person who must be licensed
in accordance with these Rules, and who has not been licensed by the
Commission; and Arkansas Racing Commission Personal History Disclosure form and
Supplemental Personal History Disclosure form of Persons Related with Service
Industry Licensee-Renewal to be completed by any natural person required to be
licensed in accordance with these Rules and who has already been licensed by
the Commission.
3.08
Service Industry License
Fees
(a) The fees to be paid for the
initial or renewal application for a Service Industry License shall be
determined by the Commission and published on the Commission website. This does
not include the actual cost of the investigation(s), which is to be billed to
and paid by the applicant to the Commission.
(b) The fees to be paid for the initial
application shall cover administrative costs related to the processing of the
application.
(c) The renewal
application fee in the amount determined by the Commission shall be made
payable to the Commission and submitted with the Service Industry License
Renewal Form.
(d) The license will
not be approved until the fees, including the investigative costs, have been
paid by the applicant.
3.09
Service Industry Disqualification
Criteria
(a) The Commission may deny a
Service Industry License to any applicant which, in the opinion of the
Commission:
i. Has not proved through clear
and convincing evidence that the applicant and any of the persons required to
be licensed in accordance with these Rules are in fact duly
qualified;
ii. Has violated any of
the provisions of these Rules;
iii.
The applicant has failed to provide information or documentation requested in
writing by the Commission in a timely manner, which shall not exceed (30)
business days from the date of request by the Commission without reasonable
justification and an extension granted by the Commission;
iii. The Commission shall deny a Service
Industry License to any applicant who does not satisfy the standards for entity
licensing in this document.
3.10
Qualification Requirements -
Service Industry License
(a) The
Commission shall not issue a Service Industry License to any entity unless the
applicant has established the individual qualifications of each one of the
following entities or persons if applicable:
i. The entity;
ii. The holding company(s) of the
entity;
iii. Every owner of the
entity who has, directly or indirectly, any interest in or is the owner of more
than five percent (5%) of the entity;
iv. Every owner of a holding company of the
entity which the Commission deems necessary to promote the purposes of these
Rules;
v. Any director of the
entity, except such director who, in the opinion of the Commission, is not
significantly involved in or related with the administration of the
entity;
vi. Every officer of the
entity who is significantly involved in or who has authority over the manner in
which the business dealing with the activities of Casino Licensee and any
officer who the Commission considers necessary to protect the good character,
honesty and integrity of the entity;
vii. Any officer of the holding company of
the entity who the Commission considers necessary to protect the good
character, honesty and integrity of the entity;
viii. Any employee who supervises the
regional or local office which employs the sales representatives who shall
solicit business from or negotiate directly with a Casino Licensee;
ix. Any employee who shall function as a
sales representative or who shall be regularly dedicated to soliciting business
from any Casino Licensee in the State of Arkansas;
x. Any other person connected to an entity
who the Commission considers should be licensed.
xi. This part does not apply to an
institutional investor (as defined by the Federal Securities and Exchange Act
of 1934, as amended) that acquires or will acquire 10% or less of the equity
securities of an applicant or licensee that is a publicly traded corporation if
those holdings were purchased for investment purposes only and the
institutional investor files with the Commission a certified statement that it
has no intention of influencing or affecting directly or indirectly, the
affairs of the licensee; the investor will be permitted to vote on matters put
to the vote of the outstanding security holders.
(b) In order to establish the individual
qualifications, the persons specified in subparagraphs (a)(i) and (a)(ii) of
this section shall complete an Arkansas Racing Commission Business Entity
Disclosure.
(c) In order to
establish the individual qualifications, the persons specified in subparagraphs
(a)(iii) through (a)(x) of this section shall complete an Arkansas Racing
Commission Personal History Disclosure form of Persons Related with Service
Industry Licensee.
3.11
Qualifying as a Person Related with a Service Industry License
(a) Any natural person who is required to be
licensed, because of his/her relationship with a Service Industry License
applicant, shall provide to the Commission the information, documentation and
assurances necessary to establish through clear and convincing evidence:
i. His/her relationship with the
entity;
ii. That he/she is 21 years
of age (this only applies to those employees who service gaming machines or
work on the Gaming Floor who have access to the machines or games);
iii. That he/she is of good character and
reputation, in addition to being honest and having integrity; and
iv. That he/she has not been convicted
including "nolo contendere" and "withheld adjudication" by any state or federal
court in the Country for:
(1) Committing,
intending to commit or conspiring to commit a crime of moral turpitude, illegal
appropriation of funds or robbery, or any violation of a law related to games
of chance or skill, or a crime which is contrary to the declared policy of the
Arkansas Racing Commission with respect to the gaming industry; or
(2) Committing, intending to commit or
conspiring to commit a crime which is a felony in the State of Arkansas or a
misdemeanor in another jurisdiction which would be a felony if committed in the
State of Arkansas.
(b) Not satisfying with any one of the
requirements established in paragraph (a) above shall be sufficient reason for
the Commission to deny a Service Industry License.
(c) The Commission shall deny any person
required to qualify in conjunction with a Service Industry License that does
not satisfy the standards set forth within these Rules.
3.12
Investigations; Supplementary
Approval of Change
(a) The Commission
or its representatives may, at its discretion, conduct any investigation with
respect to an applicant or any person related with an applicant who it deems
pertinent, either at the time of the initial application or at any subsequent
time.
(b) It shall be the continuous
duty of any applicant or holder of a Service Industry License to fully
cooperate with the Commission or its representatives during any investigation
and provide any supplementary information that the Commission or its
representatives requests.
(c) It
shall be the duty of any applicant or holder of a Service Industry License to
notify the Commission within 10 business days of any proposed changes in the
ownership of the applicant or licensee. If the applicant or holder of a Service
Industry License is publicly traded company, it does not have to report changes
in ownership unless the change represents five percent (5%) or more of the
total shares issued and outstanding or ten percent (10%) or more of the total
shares issued and outstanding if the change is the result of an institutional
investor. In such cases, the licensee shall provide the Commission with copies
of the most recent notice filed with the Securities and Exchange Commission.
All proposed new owners shall submit to the Commission or its representatives
an initial Service Industry License application, which must be approved by the
Commission. Any failure to comply with this Rule shall be grounds for
revocation of an existing license or denial of an application for a
license.
3.13
Suspension, Denial of Renewal or Revocation of a Service Industry
License
(a) Any of the following
reasons shall be considered sufficient cause for the suspension, denial of
renewal or revocation of a Service Industry License:
i. Violation of any provision of these
Rules;
ii. Conduct which would
disqualify the applicant or any other person required to be licensed by the
Commission;
iii. Failure to comply
with any applicable law, state or federal or regulation, or county or municipal
ordinance;
iv. The material
misstatement made in the application for the Service Industry
License.
(b)
Notwithstanding the provisions of subparagraph (a) above, any other cause that
the Commission deems reasonable shall be considered sufficient cause for the
suspension, denial of renewal or revocation of a Service Industry
License.
3.14
Commercial Transaction in the Absence of a Service Industry
License
(a) The Commission, at its
discretion, may permit any Service Industry License applicant to carry out a
commercial Transaction with a Casino Licensee before said Service Industry
entity has obtained the Service Industry License required as long as:
i. The applicant has filed with the
Commission a completed application for a Service Industry License;
ii. At least thirty (30) days has passed
since the filing of said completed application with the Commission;
and
iii. The Casino Licensee submits
to the Commission a petition for special authorization to carry out a
commercial Transaction in the absence of a Service Industry License which
contains:
(1) Sufficient reasons to convince
the Commission to grant the special authorization to the applicant;
and
(2) A description of the
commercial Transaction that it desires to carry
out.
(b) The
Commission shall evaluate said petition for special authorization to carry out
a commercial Transaction in the absence of a Service Industry License and shall
notify the Casino Licensee of its decision in writing within a reasonable
period.
3.15
Exemption to Service Industry License
(a) The Commission may exempt an entity from
the requirement of obtaining a Service Industry License if the Commission
determines that said entity is not operating its business in a regular and
continuous manner as defined in (d) below.
(b) Any entity which is interested in
obtaining an exemption from the requirement of obtaining a Service Industry
License in accordance with this section shall apply in writing to the
Commission for said exemption.
(c)
The exemption application shall contain the following information:
i. Name, address and detailed description of
the service offered by the entity;
ii. Name of the owners, directors, officers
and managerial employees of the entity;
iii. The Casino Licensee to whom they will
provide services and a description of the service to be provided, including the
quantity and cost of the services;
iv. Number and frequency of the
Transactions;
v. Dollar amount of
the Transactions; and
vi. Sufficient
reasons to convince the Commission as to why granting the entity a license is
not necessary to protect the public interest or advance the Commission's
policies relating to gaming.
(d) The Commission may determine that an
entity is not operating its business in a regular and continuous manner if the
applicant demonstrates, to the satisfaction of the Commission, that the goods
or services provided by the entity are in minimal or insignificant amounts, and
that granting the same a Service Industry License is not necessary to protect
the public interest or advance the policies established by the Commission
relating to gaming.
(e) In order to
determine if an entity operates or will operate in a regular or continuous
manner, the Commission may take the following factors into consideration, among
others:
i. Number of Transactions;
ii. Frequency of the Transactions;
iii. Dollar amount of Transactions;
iv. Nature of the equipment or services
rendered or business carried out;
v.
Maximum period of time necessary to provide the equipment, carry out the
services or complete in its entirety the business subject of the Transaction;
and
vi. The public interest and the
policy established by the Commission relating to casino
gaming.
(f) Any entity
which has been exempt by the Commission from the requirement of obtaining a
Service Industry License in accordance with this section shall notify the
Commission before carrying out any commercial contract or business transaction,
with a Casino Licensee.
3.16
Records Requirements for Service
Industry Licensee
(a) Any Service
Industry entity authorized by the Commission shall maintain in a place secure
against robbery, loss or destruction, the records corresponding to the business
operations, which shall be available to, and be produced for the Commission in
case the Commission requests them. Said records shall include:
i. Any correspondence with the Commission and
other governmental agencies at a local, state and federal level;
ii. Any correspondence related to the
business with a Casino Licensee, whether proposed or existing;
iii. Copies of any publicity and promotional
materials;
iv. The personnel files
for every employee of the authorized Service Industry entity, including those
for the sales representatives;
v.
The financial records for all the Transactions related to the business with a
Casino Licensee, whether proposed or existing;
(b) The records listed in Subparagraph (a)
above shall at least be kept for a period of five (5)
years.
3.17
Business Entity Disclosure for Service Applicant Forms
(a) Arkansas Racing Commission Business
Entity Disclosure form shall be completed in the format provided by the
Commission.
3.18
Personal History Disclosure Form
(a) The Commission may require an Arkansas
Racing Commission Personal History Disclosure form from all those natural
persons required under Section 13.9, to fill out the same.
3.19
Obligation for Payment of Fees; No
Refund of Fees Paid
(a) Any obligation
for payment of fees arising from these Rules shall be paid in full to the
Commission, even when the entity withdraws its application for a Service
Industry License or the license is denied.
(b) No amounts paid for Service Industry
License fees shall be refundable.
(c) Any failure to pay fees when due shall
result in a late fee penalty established by the Commission, denial or
revocation of a license.
3.20
Responsibility of the Casino
Licensee
(a) Any Casino Licensee that
will be receiving a service shall be responsible for confirming that the entity
with which it will carry out the business holds a Service Industry License or
has obtained a special authorization in accordance with these Rules, or an
exemption in accordance with these Rules.
(b) Any violation of subparagraph (a) above
shall be sufficient cause for sanctions by the Commission.
3.21
Transitory Provisions
(a) Any entity which manufactures, sells or
leases, distributes or repairs or provides maintenance services or any other
service to a Casino Licensee with respect to Casino Gaming shall comply with
the provisions of these Rules beginning on the effective date the
same.
3.22
Vendor's
List
(a) The Commission or its
representatives shall also maintain a Prohibited Vendor List, which shall
include all vendors who are prohibited from conducting business with a Casino
Licensee. The Commission shall provide this list to the Casino
Licensees.
(b) Engaging in business
with a vendor on the Prohibited Vendor List by the Casino Licensee may result
in monetary fines not to exceed $5,000.
3.23
Temporary Service Industry
Licensing
(a) If an applicant for a
manufacturer, distributor or entity providing services to a Casino Licensee
holds a similar license in another jurisdiction in the United States, the
applicant may submit a written request with its application for the Commission
to grant a temporary Service Industry license. The Commission may use the
temporary licensing process if:
i. The
Commission determines, after investigation, that the licensing standards in a
jurisdiction in which the applicant is licensed are similarly comprehensive,
thorough and provide equal, if not greater, safeguards as provided in Amendment
100 or these Rules and that granting the request is in the public
interest;
ii. A completed
application has been filed by the applicant;
iii. The applicant has provided current,
updated information to the Commission associated with the similar license in
the other jurisdiction related to its financial viability and
suitability.
iv. The applicant has
no administrative or enforcement actions pending in another jurisdiction or the
applicant has adequately disclosed and explained the action to the satisfaction
of the Commission;
v. There are no
pending or ongoing investigations of possible material violations by the
applicant in another jurisdiction or the applicant has adequately disclosed and
explained the investigation to the satisfaction of the Commission;
vi. This section shall not be construed to
waive fees associated with obtaining a license through the application process
in this State.
3.24
Independent Casino Gaming Testing
Laboratory License
(a) Testing Lab
License
i. All Casino Gaming and associated
equipment must be tested by a laboratory licensed by the Commission to ensure
that the games and equipment comply with Arkansas law and the Rules of the
Commission. No Casino Licensee shall operate or allow wagering on any Casino
Gaming equipment that has not been tested by a licensed laboratory, and the
Commission must approve the test results from the licensed laboratory prior to
the Casino Licensee allowing wagering on the Casino Gaming equipment.
ii. EGS Testing Laboratory Licenses issued
pursuant to Regulations for Franchise Holders Operating Electronic Games of
Skill shall also be valid Casino Gaming Testing Licenses for Casino Gaming and
shall be subject to the requirements of these Rules. Such Casino Gaming Testing
Laboratory Licenses shall expire and be subject to renewal three years from the
date of issuance of such license for Electronic Games of
Skill.
(b) Independent
Status of Laboratory
To qualify for a Casino Gaming Testing Laboratory license, the
applicant must:
i. Be independent from
any manufacturer, distributor, or operator of any game, gaming device,
associated equipment, cashless wagering system, inter-casino linked system,
mobile gaming system or interactive gaming system, or any component thereof or
modification thereto, regardless of whether or not such person or entity is
licensed, registered, or otherwise does business in
Arkansas;
(c) To be
considered independent from a manufacturer. distributor, or operator under
these Rules, the independent testing laboratory, including its employees,
management, directors, owners, compliance committee members and gaming
regulatory advisors, with the exception of the independent testing laboratory's
external accountants and attorneys:
i. Must
not have a financial or other interest, direct or otherwise, in a manufacturer,
distributor, or operator of any game, gaming device, associated equipment,
cashless wagering system, inter-casino linked system, mobile gaming system or
interactive gaming system, or any component thereof or modification thereto,
regardless of whether or not the person or entity is licensed, registered, or
otherwise does business in Arkansas;
(d) General Parameters of Granting a Casino
Gaming Testing Laboratory License
i. An
applicant for a Casino Gaming Testing Laboratory License shall submit to the
Commission the information, documentation and guarantees necessary to
establish, through clear and convincing evidence, the following:
(1) The stability, integrity and economic
responsibility of the applicant;
(2)
The good character (if an individual), honesty and integrity of the
applicant;
(3) That the owners,
administrative and supervisory personnel, principal employees and sales
representatives of the applicant comply with the parameters provided in these
Rules Qualifying as a Person Related to an Casino Gaming Testing
Laboratory;
(4) The integrity of all
the officers, directors and trustees of applicant.
ii. Be accredited in accordance with ISO/IEC
1 7025 by an accreditation body that is a signatory to the International
Laboratory Accreditation Cooperation Mutual Recognition Agreement, unless the
independent testing laboratory is only seeking registration for the inspection
and certification of games and game variations;
iii. Demonstrate it is technically competent
in testing the category of game, device, or system in which it is seeking
registration, and that the applicant has a minimum of five years of experience
in testing gaming devices;
iv.
Demonstrate it is technically competent to test compliance with the applicable
Arkansas statutes, regulations, standards and policies.
v. Detailed description of the testing
facilities;
vi. Detailed description
of available testing staff and staff qualifications, including education,
training, experience and skill levels;
vii. Detailed description of available
testing equipment;
viii. Copies of
documented policies, systems, programs, procedures and instructions to assure
the quality of test results;
ix.
Copies of all test scripts to be used for testing against the applicable
Arkansas statutes, regulations, standards, and policies.
(e) Initial Application for a Casino Gaming
Testing Laboratory License
i. The initial
application for a Casino Gaming Testing Laboratory License shall consist of an
original and a copy of the following documents:
(1) Arkansas Racing Commission Business
Entity Disclosure Form for Casino Gaming Testing Laboratory Licensee, to be
completed by the applicant and by each company, individual or entity holding an
interest in applicant;
(2) Arkansas
Racing Commission Personal History Disclosure and Supplemental form of Persons
Related with Casino Gaming Testing Laboratories, to be completed by each
natural person who must be qualified for a license by the Commission in
accordance with these Rules; and
(3)
The fees to be paid to the Commission, as provided in these
Rules.
ii. The Commission
shall not evaluate an initial Casino Gaming Testing Laboratory License
application unless same is accompanied by all the information required in these
Rules, including all the documents requested in paragraph (a) above; provided
that any incomplete application filed with the Commission shall be deemed to be
as if same had not been filed.
iii.
Burden of proof - It shall be the responsibility of the Casino Gaming Testing
Laboratory applicant and its principals to provide information and or
documentation and to demonstrate their qualifications by clear and convincing
evidence relative to the character, honesty and integrity of its directors,
officers, stockholders and principal employees, to the Commission.
iv. No person may test Casino Gaming
equipment for a manufacturer to be used by a Casino Licensee for the conduct of
wagering thereon as authorized in this chapter unless the person has
demonstrated to the satisfaction of the Commission that the person has the
capability and qualifications necessary to competently test the equipment to
ensure compliance with Arkansas law.
(f) Duration of Casino Gaming Testing
Laboratory License
i. Every Casino Gaming
Testing Laboratory License shall be issued by the Commission for a period of 3
years.
ii. Notwithstanding the
provisions of paragraph (a) above, the Commission may, as it may deem
necessary:
(1) issue an Casino Gaming Testing
Laboratory License for a shorter period;
(2) at any time, void the Casino Gaming
Testing Laboratory License for reasonable cause.
(g) Casino Gaming Testing Laboratory License
Renewal Application
i. Every Casino Gaming
Testing Laboratory License renewal application shall be filed no later than
ninety (90) days prior to the expiration date of said license.
ii. The Casino Gaming Testing Laboratory
License renewal application shall include:
(1)
A duly completed original and a photocopy of:
(A) An Arkansas Racing Commission Business
Entity Disclosure form Casino Gaming Testing Laboratory Application, which
shall contain all the information that has changed from the date of the
application for the initial Casino Gaming Testing Laboratory License or of the
last renewal, to be completed by the applicant and by each holding company of
applicant;
(B) An Arkansas Racing
Commission Personal History Disclosure and Supplemental form of Persons Related
with Casino Gaming Testing Laboratory Licensees to be completed by each natural
person who must be licensed in accordance with these Rules, and who has not
been licensed by the Commission; and Arkansas Racing Commission Personal
History Disclosure form and Supplemental Personal History Disclosure form of
Persons Related with Casino Gaming Testing Laboratory Licensee-Renewal to be
completed by any natural person required to be licensed in accordance with
these Rules and who has already been licensed by the
Commission.
(h) Casino Gaming Testing Laboratory License
Fees
i. The fees to be paid for the initial or
renewal application for a Casino Gaming Testing Laboratory License shall be
determined by the Commission; provided that the application fee shall not be
more than $1,000 a year. This does not include the actual cost of the
investigation(s), which is to be billed to and paid by the applicant to the
Commission.
ii. The fees to be paid
for the initial application shall cover administrative costs related to the
processing of the application.
iii.
The renewal application fee shall not be more than $1,000, payable to the
Commission and submitted with the Casino Gaming Testing Laboratory License
Renewal Form.
iv. The license will
not be approved until the fees, including the investigative costs, have been
paid by the applicant.
(i)
Casino Gaming Testing Laboratory Disqualification Criteria
i. The Commission may deny a Casino Gaming
Testing Laboratory License to any applicant which, in the opinion of the
Commission:
(1) Has not proved through clear
and convincing evidence that the applicant and any of the persons required to
be licensed in accordance with these Rules are in fact duly
qualified;
(2) Has violated any of
the provisions of these Rules;
(3)
The applicant has failed to provide information or documentation requested in
writing by the Commission in a timely manner, which shall not exceed (30)
business days from the date of request by the Commission without reasonable
justification and an extension granted by the Commission;
(4) The Commission shall deny a Casino Gaming
Testing Laboratory License to any applicant who does not satisfy the standards
for entity licensing in these Rules.
(j) Qualification Requirements - Casino
Gaming Testing Laboratory License
i. The
Commission shall not issue an Casino Gaming Testing Laboratory License to any
entity unless the applicant has established the individual qualifications of
each one of the following entities or persons if applicable:
(1) The entity;
(2) The holding company(s) of the
entity;
(3) Every owner of the
entity who has, directly or indirectly, any interest in or is the owner of more
than five percent (5%) of the entity;
(4) Every owner of a holding company of the
entity which the Commission deems necessary to promote the purposes of these
Rules;
(5) Any director of the
entity, except such director who, in the opinion of the Commission, is not
significantly involved in or related with the administration of the
entity;
(6) Every officer of the
entity who is significantly involved in or who has authority over the manner in
which the business dealing with the activities of Casino Licensee and any
officer who the Commission considers necessary to protect the good character,
honesty and integrity of the entity;
(7) Any officer of the holding company of the
entity who the Commission considers necessary to protect the good character,
honesty and integrity of the entity;
(8) Any employee who supervises the regional
or local office which employs the sales representatives who shall solicit
business from or negotiate directly with a Casino Gaming
manufacturer;
(9) Any employee who
shall function as a sales representative or who shall be regularly dedicated to
soliciting business from any Casino Gaming manufacturer in the State of
Arkansas;
(10) Any other person
connected to an entity who the Commission considers should be
licensed.
(11) This part does not
apply to an institutional investor (as defined by the Federal Securities and
Exchange Act of 1934, as amended) that acquires or will acquire 10% or less of
the equity securities of an applicant or licensee that is a publicly traded
corporation if those holdings were purchased for investment purposes only and
the institutional investor files with the Commission a certified statement that
it has no intention of influencing or affecting directly or indirectly, the
affairs of the licensee; the investor will be permitted to vote on matters put
to the vote of the outstanding security holders.
ii. In order to establish the individual
qualifications, the persons specified in subparagraphs (a)(i) and (a)(ii) of
this section shall complete an Arkansas Racing Commission Business Entity
Disclosure.
iii. In order to
establish the individual qualifications, the persons specified in subparagraphs
(a)(iii) through (a)(x) of this section shall complete an Arkansas Racing
Commission Personal History Disclosure form of Persons Related with Casino
Gaming Testing Laboratory Licensee.
(k) Qualifying as a Person Related with an
Casino Gaming Testing Laboratory License
i.
Any natural person who is required to be licensed, because of his/her
relationship with an Casino Gaming Testing Laboratory License applicant, shall
provide to the Commission the information, documentation and assurances
necessary to establish through clear and convincing evidence:
(1) His/her relationship with the
entity;
(2) That he/she is 21 years
of age (this only applies to those employees who service gaming machines or
work on the Gaming Floor who have access to the machines);
(3) That he/she is of good character and
reputation, in addition to being honest and having integrity; and
(4) That he/she has not been convicted
including "nolo contendere" and "withheld adjudication" by any state or federal
court in the Country for:
(A) Committing,
intending to commit or conspiring to commit a crime of moral turpitude, illegal
appropriation of funds or robbery, or any violation of a law related to games
of chance or skill, or a crime which is contrary to the declared policy of the
Arkansas Racing Commission with respect to the gaming industry; or
(B) Committing, intending to commit or
conspiring to commit a crime which is a felony in the State of Arkansas or a
misdemeanor in another jurisdiction which would be a felony if committed in the
State of Arkansas.
ii. Not satisfying any one of the
requirements established in paragraph (a) above shall be sufficient reason for
the Commission to deny a Casino Gaming Testing Laboratory License.
iii. The Commission shall deny any person
required to qualify in conjunction with a Casino Gaming Testing Laboratory
License that does not satisfy the standards set forth within these
Rules.
(l) Investigations;
Supplementary Approval of Change
i. The
Commission or its representatives may, at its discretion, conduct any
investigation with respect to an applicant or any person related with an
applicant who it deems pertinent, either at the time of the initial application
or at any subsequent time.
ii. It
shall be the continuous duty of any applicant or holder of a Casino Gaming
Testing Laboratory License to fully cooperate with the Commission or its
representatives during any investigation and provide any supplementary
information that the Commission or its representatives requests.
iii. It shall be the duty of any applicant or
holder of a Casino Gaming Testing Laboratory License to notify the Commission
within 10 business days of any proposed changes in the ownership of the
applicant or licensee. If the applicant or holder of an Casino Gaming Testing
Laboratory License is publicly traded company, it does not have to report
changes in ownership unless the change represents five percent (5%) or more of
the total shares issued and outstanding or ten percent (10%) or more of the
total shares issued and outstanding if the change is the result of an
institutional investor. In such cases, the licensee shall provide the
Commission with copies of the most recent notice filed with the Securities and
Exchange Commission. All proposed new owners shall submit to the Commission or
its representatives an initial Casino Gaming Testing Laboratory License
application, which must be approved by the Commission. Any failure to comply
with this Rule shall be grounds for revocation of an existing license or denial
of an application for a license.
(m) Suspension, Denial of Renewal or
Revocation of a Casino Gaming Testing Laboratory License
i. Any of the following reasons shall be
considered sufficient cause for the suspension, denial of renewal or revocation
of a Casino Gaming Testing Laboratory License:
(1) Violation of any provision of these
Rules;
(2) Conduct which would
disqualify the applicant or any other person required to be licensed by the
Commission;
(3) Failure to comply
with any applicable law, state or federal or regulation, or county or municipal
ordinance;
(4) A material
misstatement made in the application for the Casino Gaming Testing Laboratory
License.
ii.
Notwithstanding the provisions of subparagraph (a) above, any other cause that
the Commission deems reasonable shall be considered sufficient cause for the
suspension, denial of renewal or revocation of a Casino Gaming Testing
Laboratory License.
(n)
Business Entity Disclosure for Casino Gaming Testing Laboratory Applicant Forms
i. Arkansas Racing Commission Business
Entity Disclosure form shall be completed in the format provided by the
Commission.
(o) Personal
History Disclosure form
i. The Commission may
require an Arkansas Racing Commission Personal History Disclosure form from all
those natural persons required under Section 13.9, to fill out the
same.
(p) Obligation for
Payment of Fees; No Refund of Fees Paid
i. Any
obligation for payment of fees arising from these Rules shall be paid in full
to the Commission, even when the entity withdraws its application for a Casino
Gaming Testing Laboratory License or the license is denied.
ii. No amounts paid for Casino Gaming Testing
Laboratory License fees shall be refundable.
iii. Any failure to pay fees when due shall
result in a late fee penalty established by the Commission, denial or
revocation of a license.
(q) Subcontractors. A licensed Casino Gaming
Testing Laboratory shall not perform any testing services for a Casino Licensee
by using subcontractors and independent contractors. All testing must be
performed by employees of the licensed testing labs, unless specifically
approved by the Commission.
(r)
Testing Laboratory Fees. The manufacturer shall be solely responsible for the
payment of any fees imposed by the independent testing laboratory for its
services. The fees to be charged shall be determined solely between the
manufacturer and the independent testing laboratory.
(s) Additional Requirements for Independent
Testing Laboratories
i. All documents, data,
reports, and correspondence prepared, furnished, or completed by the
independent testing laboratory for or on behalf of the Commission shall be
retained until its disposal is approved in writing by the Commission.
ii. The independent testing laboratory shall
provide the Commission with step-by-step verification procedures for each tool,
device, or mechanism used to assign the unique identification codes or
signatures.
iii. The independent
testing laboratory shall provide to the Commission, at no charge, in quantities
determined by the Commission, any verification tool, device, or mechanism that
is required for Commission agents to verify the code or signature of any
approved critical program storage media. The independent testing laboratory may
charge the supplier for expenses associated with such verification
tools.
iv. The independent testing
laboratory shall develop and maintain a database, acceptable to the Commission,
of all gaming equipment certified by the independent testing laboratory for the
state of Arkansas.
v. The database
and report(s) must be current as of the end of the previous business day, and
in a Commission-approved format.
vi.
The independent testing laboratory shall provide, free of charge to the
Commission, technical and regulatory compliance support. The independent
testing laboratory shall provide responses and follow-up as directed by the
Commission. In instances where the independent testing laboratory providing the
support is also conducting the testing for the device, the time allocated for
support will be considered part of the testing process and the independent
testing laboratory may bill the manufacturer for the cost of the technical
support. In instances where the independent testing laboratory providing the
support is not conducting the testing for the device, the Commission may
require the manufacturer of the device to reimburse the independent testing
laboratory at the rate the independent testing laboratory charges manufacturers
for such support.
vii. The
independent testing laboratory shall provide, free of charge to the Commission,
additional consulting services for Commission personnel on an as-needed basis.
Such additional services at a minimum shall include, but not be limited to:
(1) Providing training to Commission
employees on gaming equipment testing, new technology, and auditing
procedures.
3.25
Employee Licenses
1.
Key Employee and General Employee
Licenses
(a) Except in cases of
emergency and/or unavoidable temporary incidental entry, no person may work or
provide services to the Casino Gaming Operations of a Casino Licensee in the
State of Arkansas unless the person has a current Key Employee License or a
General Employee License issued by the Commission, as provided in these Rules.
The Key or General Employee License requirements apply to persons who have
direct access to the Casino Gaming equipment, games, surveillance or computer
systems.
(b) Employees who perform
duties in the racing industry of a Casino Licensee must have a Racing License.
In the event the employee is assigned to work in both the Racing and Casino
Gaming areas, the employee must obtain both a General Employee License and a
Racing License.
(c) Key Employee and
General Employee Licenses are issued for three-year periods.
(d) Qualifications for a Key Employee or
General Employee license must meet the same qualifications as stated in Section
13.10 Qualifying as a Person Related with a Service Industry License.
(e) Key Employee Licenses or a General
Employee Licenses issued pursuant to Regulations for Franchise Holders
Operating Electronic Games of Skill shall also be valid Key Employee Licenses
or General Employee Licenses for Casino Gaming and shall be subject to the
requirements of these Rules. Such Key Employee Licenses or General Employee
Licenses shall expire and be subject to renewal three years from the date of
issuance of such license for Electronic Games of
Skill.
3.26
Initial Application for an Employee License
(a) Every initial application for an Employee
License shall include:
i. A duly completed
original and a photocopy of the Arkansas Racing Commission Personal History
Disclosure form in accordance with these Rules;
ii. The documents to identify applicant, as
provided in these Rules;
iii. A
photo identification card shall be submitted by the applicant to the Commission
with the filing of the license application, which will be stapled to the
Arkansas Racing Commission Personal History Disclosure form in addition to
submission of fingerprinting of the applicant by Commission staff or their
designees, which will be submitted for state and federal regulatory inquiry
purposes for criminal and financial background checks.
iv. The fees to be paid as provided in these
Rules including late fees for late filings.
(b) Each initial application shall be filed
at or mailed to the Commission at the address of the Commission as provided on
the application itself.
3.27
Persons or Entities Who Must
Obtain a Key Employee License
Except as otherwise approved by the Commission, any person or entity
who carries out or will carry out, or has or will have any of the functions
mentioned in Section 14.4 shall obtain a Key Employee License; or who carries
out functions specified in Section 14.5 shall obtain a General Employee License
before commencing work with a Casino Licensee. The lists contained in these
Rules are not all-inclusive but illustrative.
3.28
Key Employee Job Functions
Any person or entity who is going to be employed by the Casino Licensee
in a position which includes any of the following responsibilities or powers,
independently of the title, shall obtain a Key Employee License:
(a) Where they have authority to develop or
administer policy or long-range plans or to make discretionary decisions
related to the operation of the Casino Licensee, they shall be considered a Key
Employee Licensee and shall include, but not be limited to, any person or
entity who:
i. Functions as an officer of the
Casino Licensee;
ii. Functions as a
facility manager for a Casino Licensee;
iii. Functions as Casino Gaming department
manager;
iv. Functions as director
of surveillance;
v. Functions as
director of security;
vi. Functions
as controller;
vii. Functions as an
audit department executive;
viii.
Functions as the manager of the MIS ("Management Information Systems")
Department or of any information system of a similar nature;
ix. Manages a marketing department;
x. Functions as assistant manager;
xi. Manages the Casino Gaming administrative
operations;
xii. Functions as a
general manager;
xiii. Functions as
Chief Financial Officer of the Casino Licensee; and xiv. Any other person who
has the ability to direct, control or manage the operations or who has
discretionary authority over the Casino Licensee's decision-making.
Notwithstanding the above, individuals working exclusively for pari-mutuel
operations in horse or greyhound racing at a Casino Licensee's facility would
not be covered by these Rules.
3.29
General Employee Job
Functions
Any natural person who is going to be employed by the Casino Licensee
in a position which includes any of the following responsibilities related to
the operations of the Casino Licensee, or whose responsibilities predominantly
involve the maintenance or the operation of Casino Gaming activities or
equipment and assets associated with the same, or who is required to work
regularly in restricted Casino Gaming areas shall obtain a General Employee
License. Said persons shall include, but not be limited to, any person
who:
(a) Conducts surveillance
investigations and operations in a Casino Gaming area;
(b) Repairs and maintains Casino Gaming
equipment, including, but not limited to, Casino Gaming and bill
acceptors;
(c) Assists in the
operation of Casino Gaming and bill acceptors, including, but not limited to,
persons who participate in the payment of jackpots, or who supervise said
persons;
(d) Processes currency, and
patrons' checks or Cash Equivalents in the Casino Gaming area;
(e) Repairs or maintains the Surveillance
System equipment as an employee of the surveillance department of the Casino
Licensee;
(f) Provides physical
security in a Casino Gaming area;
(g) Controls or maintains the Casino Gaming
inventory, including replacement parts, equipment and tools used to maintain of
the same;
(h) Has responsibilities
associated with the installation, maintenance or operation of computer hardware
for the Casino Licensee's computer system; and
(i) Does not perform the job functions of a
Key Employee as outlined within these Rules.
3.30
Scope and Applicability of
Employee Licensing of Natural Persons
(a) In determining whether a natural person
who provides services to a Casino Licensees is an employee of the Casino
Licensee for purposes of these Rules, it shall be presumed that such person is
an employee if the services provided by that person are characterized by any of
the following factors, these being indicative that an employment relationship
exists:
i. The natural person will, for a
period of time unrelated to any specific project or for an indefinite period of
time, directly supervise one or more employees of the Casino
Licensee;
ii. The Casino Licensee
will withhold local and federal taxes or make regular deductions for social
security, or other deductions required by law from the payments made to the
natural person;
iii. The natural
person will be given the opportunity to participate in any benefit plan offered
by the Casino Licensee to its employees, including, but not limited to, health
insurance plans, life insurance plans or pension plans; or
iv. The natural person has an employee
license application pending with the Commission or will submit such an
application during the time the services are being rendered to the Casino
Licensee, and the cost of the license has been or will be paid for or
reimbursed by the Casino Licensee.
(b) The Commission may, after considering the
factors in paragraph (a) of this section and any other applicable information,
require that the natural person obtain an employee license before providing or
continuing to provide any service to Casino Licensee even if an agreement to
the contrary exists between the Casino Licensee and the natural
person.
3.31
General
Criteria for Granting of a Key Employee License
(a) Each applicant for an Employee License
shall provide the Commission with the necessary information, documentation and
guarantees which establish through clear and convincing evidence that the
applicant:
i. Is older than 21 years of
age;
ii. Is a citizen of the United
States of America or is authorized in accordance with the applicable federal
laws or regulations to work in the United States of America.
iii. Possesses good character and reputation,
in addition to being honest and having integrity; and
iv. Has no physical or mental condition that
prohibits the applicant from performing the essential functions of his job for
which there is no reasonable accommodation.
(b) Failure to comply with one of the
criteria established in paragraph (a) above may be sufficient cause for the
Commission to deny an application for an Employee License.
3.32
Personal Information Required for
a Key Employee License
(a) Every
applicant for a Key Employee License who will work in a managerial or
supervision position for a Casino Licensee of the type described in these Rules
shall submit:
i. Any affiliation of applicant
with a Casino Licensee or with companies controlling the Casino Licensee and
the position he/her occupies with the same or his interest in said
entity;
ii. Any affiliation of
applicant with a Service Industry entity or with companies controlling the
Service Industry entity and the position that he/her occupies with or his
interest in said entity.
3.33
Processing of the Initial
Application for a Key Employee License
(a) The Commission shall determine if the
initial application complies with all the requirements provided in these Rules
and if any deficiency is found, it shall notify the applicant of the
deficiency(ies) within 20 days following the filing of the initial application
with the Commission. The Commission shall not evaluate an incomplete initial
application.
(b) Once the Commission
has determined that the initial application filed is complete, the Commission
shall:
i. Accept the application and initiate
the procedure for considering the same;
ii. Notify in writing the applicant or
his/her representative, if any, that the application has been accepted for
consideration. Said notice shall also include:
(1) The date of said acceptance;
(2) The file number of the application;
and
(3) A caution to the applicant
that the fact that the application has been accepted for consideration does not
mean that the applicant has complied with the requirements of the Rules to
issue the license;
iii.
Analyze and evaluate the information offered in the application and any other
information necessary to determine if the requested license should be
granted;
iv. Make a decision with
respect to the requested license; and
v. Notify the applicant of its decision. If
the decision consists of a denial of the license, the Commission shall inform
the applicant the reason or reasons for the denial and of his/her right to
request a reconsideration of the decision of the Commission following the
adjudicative procedures provided in these Rules. For purposes of these Rules, a
denial of a license application shall be considered a final order of the
Commission, after the adjudication process.
(c) The Commission, at any time, may request
from an applicant for an Employee License any other information it may deem
necessary in order to make a decision with respect to the
application.
3.34
Duration of the Employee License
(a) Every Employee License shall be issued by
the Commission for a period of 3 years.
(b) Notwithstanding the provisions of
paragraph (a) above, the Commission may, as it deems necessary:
i. issue any license for a shorter period of
time;
ii. at any time, void an
Employee License for reasonable cause.
3.35
Date of Filing for Renewal of a
Key or General Employee License
Any holder of an Employee License shall renew his license by filing
with the Commission an application for renewal of his Employee License. The
completed renewal application shall be filed with the Commission no later than
60 days prior to expiration of the license.
3.36
Application for Renewal of a Key
or General Employee License
(a) The
application for renewal of an Employee License shall include:
i. A duly completed original and a photocopy
of the Arkansas Racing Commission Personal History Disclosure form which shall
contain all the information which has changed since the date of the initial
Employee License application or of the last renewal.
ii. The documents which identify the
applicant, as provided in these Rules;
iii. A photograph of the applicant furnished
by the applicant or casino gaming license holder shall be stapled to the
Arkansas Racing Commission Personal History Disclosure form; and the submission
of fingerprints of the applicant, which shall be taken by the Commission and
submitted to state and federal authorities for relevant checks.
iv. The fees to be paid as provided in these
Rules.
(b) Any renewal
application shall be filed with or mailed to the Commission to the address of
the Commission, as provided on the application.
(c) Any person who fails to submit a
completed renewal application in accordance with this section or in accordance
with the provisions of these Rules shall be considered as not having filed a
renewal application with the Commission and the license shall be cancelled on
the expiration date.
(d) Any person
whose current employee license is cancelled in accordance with this section
may, before the date of expiration of the current license, or at any time after
the expiration, apply for an Employee License; provided that the application,
for all purposes of these Rules, shall be considered an initial Employee
License application and shall comply with these Rules.
3.37
Processing of the Application for
Renewal of Key or General Employee License
(a) The Commission shall determine if the
renewal application filed complies with all the requirements provided in these
Rules and if any deficiency is found, it shall notify the applicant of the
deficiency(ies) within 20 days following the filing of the renewal application
with the Commission; provided that the Commission may, at its discretion and
depending on the magnitude of the deficiency(ies), grant an opportunity for the
applicant to cure any deficiency within the period and under the conditions
determined by the Commission at said time. Any application where a deficiency
has been cured in accordance with the above shall be deemed to have been filed
within the period required by these Rules.
(b) Upon receipt of an application for
renewal of an Employee License duly completed and filed within the period
required by these Rules, the Commission or its representatives shall carry out
the investigation it deems necessary.
(c) The Commission shall make a decision with
respect to each completed license renewal application which has been
submitted.
(d) The Commission shall
notify the applicant of the decision made. If the decision consists of a denial
of the renewal of the license, the Commission shall inform the applicant the
reason or reasons for the denial and of his right to request a reconsideration
of the decision of the Commission following the adjudicative procedures
provided in these Rules. For purposes of these Rules, a denial of a license
application shall be considered a final order of the Commission, after the
adjudication process.
3.38
Responsibility for Establishing Qualifications and to Disclose and
Cooperate
(a) Each applicant shall be
responsible for providing the information, documentation and assurances
required for establishing through clear and convincing evidence that his/her
qualifications meet the requirements of these Rules.
(b) It shall be the continuing responsibility
of every applicant or holder of an Employee License to provide all the
information, documentation and assurances that may be required by the
Commission pertaining to the qualifications, and to cooperate with the
Commission. Any refusal or failure of an applicant to comply with a formal
request for information, evidence or testimony from the Commission shall be
sufficient cause for a denial or revocation of the license.
3.39
Identification of the
Applicant
Every applicant for an Employee License shall establish his/her
identity with reasonable certainty by providing the necessary Identification
Credentials.
3.40
Fees
Payable
The fees payable for the initial or renewal application for Employee
Licenses shall be determined by the Commission. Applications for an initial
license and every third year after initial license will be required to pay to
the Commission a fee to cover the costs related to obtaining background
investigations and reports.
3.41
Employees Working Without an
Employee License
No employee with an expired license shall work in a position or shall
exercise functions for which such license is required, with the understanding
that if such employee is found working without a current and valid license, the
employee, as well as the Casino Licensee or person or entity employing the
employee shall be subject to sanctions as established by the
Commission.
3.42
Payment of Fees, Regulatory Sanctions; No Refunds of Payments
(a) No application shall be accepted for
filing or processed by the Commission except upon full payment of all required
fees, civil penalties or regulatory sanctions. Any portion of a fee which is
incurred or determined after the filing of the application or any civil penalty
imposed by the Commission shall be payable upon demand to the
Commission.
(b) Any payment of
monetary obligation arising from these Rules shall be paid in full even when
the person withdraws his Employee License application.
(c) No amounts required to be paid to the
Commission for licensure; civil penalties or regulatory sanctions shall be
refunded.
(d) Any fees, civil
penalties or regulatory sanctions not paid by the due date shall be subject to
penalty in an amount to be determined by the Commission.
3.43
Miscellaneous Administrative
Charges
(a) Any lost Key Employee
License shall be replaced by the Commission at a cost to be determined by the
Commission.
(b) Any change to the
Employee License requested by the employee which was not caused by an omission
or negligence of the Commission shall carry a charge to be determined by the
Commission.
3.44
Change of Position or Place of Work
(a) Any natural person who carries out any of
the functions described in these Rules, General Employee Job Functions of these
Rules or one which is similar in nature to said functions and for any reasons
the person's functions change to any of the functions which are described in
these Rules or one that is similar in nature to these shall file a new
application with the Commission in accordance with the provisions of these
Rules, Application for Renewal of Key Employee License of these Rules within
the 20 days following the change of the person's position.
(b) A license setting forth more than one
position may be issued to any licensed employee by the Commission upon
application by the licensed employee or the Casino Licensee. Said request would
be reviewed by the Commission to ensure that their dual license status would
not be deemed an Incompatible Function. The review will be conducted in a
timely manner and the Commission's decision shall be provided to the applicant
in writing.
3.45
Carrying of Licenses and Credentials
(a) All employee licenses must be worn and
displayed in a visible and conspicuous manner at all times when on the premises
of the casino license holder.
(b) No
Casino Licensee shall permit a person to work in its licensed premises without
said person carrying his/her Employee License as provided in paragraph (a)
above.
3.46
Authority of Commission - Licensing
(a) Nothing provided in this document shall
be interpreted as limiting authority and powers of the Commission to at any
time:
i. Investigate the qualifications of any
holder of an Employee License; and
ii. The Commission may suspend, revoke or
refuse to issue a license to any person who:
(1) Failed to disclose or misstated
information or otherwise attempted to mislead the Commission with respect to
any material fact contained in the application for license as a gaming
employee;
(2) Violated Commission
Rules, or has been suspended or had a license revoked by another gaming
jurisdiction;
(3) Has been convicted
of a felony in the last ten years. Persons with felony convictions that are
more than ten years ago may be licensed at the discretion of the
Commission.
(4) Has been identified
in the published reports of any federal or state legislative or executive body
as being a member or associate of organized crime, or as being of notorious and
unsavory reputation;
(5) Is on
probation, parole or remains in the constructive custody of any federal, state
or municipal law enforcement authority;
(6) Had license as a gaming employee revoked
or committed any act which is a ground for the revocation of license as a
gaming employee or would have been a ground for revoking license as a gaming
employee if the applicant had then been registered as a gaming
employee;
(7) Has been employed in
the last two years by the accounting firm that has conducted the annual
independent audit on behalf of a Casino Licensee or the Casino Gaming Section;
or
(8) Has been employed by the
Casino Gaming Section within the last two
years.
3.47
Transitory Provisions
(a) Any person who on the effective date of
these Rules who in accordance with the provisions of these Rules would need an
Employee License, shall file an initial application within the thirty (30) days
following the effective date of these Rules.
(b) All persons to whom these Rules would
apply shall comply with all the provisions of these Rules from the effective
date of these Rules.
3.48
Sanctions
(a) The Commission may
initiate regulatory enforcement actions against any person licensed under these
Rules.
(b) Any person who willfully
fails to report, pay or truthfully account for and pay any license application
fee, investigative fee or any other fees imposed by these Rules, or willfully
attempts in any manner to evade or defeat any such fee, or payment thereof
shall be subject to suspension or revocation of their license and shall be
liable for the imposition of a penalty, as determined by the Arkansas Racing
Commission.
(c) Any person who,
without obtaining the requisite license as provided for by these Rules works or
is employed in a position whose duties would require licensing under the
provision of these Rules shall be liable for the imposition of sanctions and
subject to a fine of not more than $1,000, suspension or revocation of license
or both.
(d) In addition to any
monetary sanction, the Commission shall, after appropriate hearing and factual
determinations, have the authority to impose the following sanctions upon any
person licensed pursuant to these Rules:
i.
Revoke the license of any person convicted of any criminal offense for which
disqualification as set forth in these Rules would result.
ii. Suspend the license of any person pending
a hearing and determination in any case in which license revocation could
result.
iii. Suspend or revoke the
license for violation of any provisions of these Rules relating to Casino
Licensees.
iv. Assess sanctions as
may be necessary to punish misconduct and to deter future violations, which
such penalties may not exceed $5,000 in the case of any individual licensee and
in the case of the Casino Licensee, the penalty may not exceed $10,000 for each
violation.
v. Issue warning letters,
letters of reprimand or censure, which letters shall be made a permanent part
of the file of each licensee so sanctioned.
(e) In considering appropriate sanctions in a
particular case the Commission shall consider:
i. The risk to the public and to the
integrity of Casino Licensees created by the conduct of the person facing
sanctions;
ii. The seriousness of
the conduct and whether the conduct was purposeful and with knowledge that it
was in contravention of these Rules;
iii. Any justification or excuse for such
conduct;
iv. The prior history of
the licensee with respect to compliance with these Rules;
v. The corrective action taken by the
licensee to prevent future misconduct of a like nature from occurring;
and
vi. In the case of a civil
penalty, the amount of the penalty in relation to the severity of the
misconduct. The Commission may impose any schedule or terms of payment of such
penalty, as it may deem appropriate.
vii. It shall be no defense to any regulatory
enforcement or disciplinary action before the Commission that the applicant or
licensee inadvertently, unintentionally, or unknowingly violated a provision of
these Rules. Such factors shall only go to the degree of the civil penalty to
be imposed by the Commission.
(f) A violation of any provision of these
Rules, which is an offense of a continuing nature, shall be deemed to be a
separate offense on each day during which it occurs. Nothing herein shall be
deemed to preclude the Commission from enforcing multiple violations within the
same day of those provisions of the Rules which establish offenses consisting
of separate and distinct acts.
RULE 4
OPERATION OF GAMING ESTABLISHMENTS
4.010
Methods of operation.
1. It is the policy of the Commission to
require that all establishments wherein gaming is conducted in this state be
operated in a manner suitable to protect the public health, safety, morals,
good order and general welfare of the inhabitants of the State of
Arkansas.
2. Responsibility for the
employment and maintenance of suitable methods of operation rests with the
licensee, and willful or persistent use or toleration of methods of operation
deemed unsuitable will constitute grounds for license revocation or other
disciplinary action.
3. In the case
of a franchise holder and other casino licensees with previous gaming
experience, the Commission shall be authorized to approve certain system,
network, operational, and other standards necessary to implement Casino gaming
on a temporary and immediate basis as long as a deadline for full-compliance
with permanent standards is provided at the time of approval. Extensions may be
approved by the Commission if justification is provided to show that such
additional time in the temporary environment is reasonably
necessary.
4.011
Grounds for disciplinary action. The Commission may deem any
activity on the part of any licensee, the licensee's agents or employees, that
is inimical to the public health, safety, morals, good order and general
welfare of the people of the State of Arkansas, or that would reflect or tend
to reflect discredit upon the State of Arkansas or the gaming industry, to be
an unsuitable method of operation and shall be grounds for disciplinary action
by the Commission in accordance with the Amendment and the Rules of the
Commission. Without limiting the generality of the foregoing, the following
acts or omissions may be determined to be unsuitable methods of operation:
1. Failure to exercise discretion and sound
judgment to prevent incidents which might reflect on the repute of the State of
Arkansas and act as a detriment to the development of the industry.
2. Permitting persons who are visibly
impaired by alcohol or any other drug to participate in gaming
activity.
3. Complimentary service
of intoxicating beverages in the casino area to persons who are visibly
impaired by alcohol or any other drug.
4. Failure to conduct advertising and public
relations activities in accordance with decency, dignity, good taste, honesty
and inoffensiveness, including, but not limited to, advertising that is false
or materially misleading.
5.
Catering to, assisting, employing or associating with, either socially or in
business affairs, persons of notorious or unsavory reputation or who have
extensive police records, or persons who have defied congressional
investigative committees, or other officially constituted bodies acting on
behalf of the United States, or any state, or persons who are associated with
or support subversive movements, or the employing either directly or through a
contract, or any other means, of any firm or individual in any capacity where
the repute of the State of Arkansas or the gaming industry is liable to be
damaged because of the unsuitability of the firm or individual or because of
the unethical methods of operation of the firm or individual.
6. Employing in a position for which the
individual could be required to be licensed as a key employee pursuant to the
provisions these Rules, any person who has been denied a state Casino license
on the grounds of unsuitability or who has failed or refused to apply for
licensing as a key employee when so requested by the Commission.
7. Employing in any gaming operation any
person whom the Commission or any court has found guilty of cheating or using
any improper device in connection with any game, whether as a licensee, dealer,
or player at a licensed game or device; as well as any person whose conduct of
a licensed game as a dealer or other employee of a licensee resulted in
revocation or suspension of the license of such licensee.
8. Failure to comply with or make provision
for compliance with all federal, state and local laws and Rules and with all
Commission approved conditions and limitations pertaining to the operations of
a licensed establishment including, without limiting the generality of the
foregoing, payment of all license fees, withholding any payroll taxes, liquor
and entertainment taxes and antitrust and monopoly statutes.
The Commission in the exercise of its sound discretion can make its own
determination of whether or not the licensee has failed to comply with the
aforementioned, but any such determination shall make use of the established
precedents in interpreting the language of the applicable statutes. Nothing in
this section shall be deemed to affect any right to judicial
review.
9.
(a) Possessing or permitting to remain in or
upon any licensed premises any cards, dice, mechanical device or any other
cheating device whatever, the use of which is prohibited by statute or
ordinance, or
(b) Conducting,
carrying on, operating or dealing any cheating or thieving game or device on
the premises, either knowingly or unknowingly, which may have in any manner
been marked, tampered with or otherwise placed in a condition, or operated in a
manner, which tends to deceive the public or which might make the game more
liable to win or lose, or which tends to alter the normal random selection of
criteria which determine the results of the game.
10. Failure to conduct gaming operations in
accordance with proper standards of custom, decorum and decency, or permit any
type of conduct in the gaming establishment which reflects or tends to reflect
on the repute of the State of Arkansas and act as a detriment to the gaming
industry.
11. Whenever a licensed
game or a slot machine, as defined in the Amendment, is available for play by
the public:
(a) At a Casino location, failure
to have an employee of the licensee present on the premises to supervise the
operation of the game or machine;
(b) At a restricted location, failure to have
a responsible person who is at least 21 years old present on the premises to
supervise the operation of the game or machine.
12. Except as provided in these Rules and
except as to transfers of interest under these Rules, the sale or assignment of
any gaming credit instrument by a licensee, unless the sale is to a publicly
traded or other bona fide financial institution pursuant to a written contract,
and the transaction and the terms of the contract, including but not limited to
the discount rate, are reported to the Commission for approval pursuant to
these Rules.
13. Issuing credit to a
patron to enable the patron to satisfy a debt owed to another licensee or
person, including an affiliate of the licensee. This subsection shall not
prohibit a licensee from collecting a debt owed to an affiliate of the
licensee.
14. Denying any Commission
member or agent, upon proper and lawful demand, access to, inspection or
disclosure of any portion or aspect of a gaming establishment as authorized by
applicable statutes and Rules.
4.014
Criminal convictions as grounds
for revocation or suspension. The Commission may revoke or suspend the
Casino license or finding of suitability of a person who is convicted of a
crime, even though the convicted person's post-conviction rights and remedies
have not been exhausted, if the crime or conviction discredits or tends to
discredit the State of Arkansas or the gaming industry.
4.025
Operation of keno games.
1. As used in this Rule, "Commission" means
the Arkansas Racing Commission or the Commission's designee.
2. A licensee authorized to operate a keno
game shall not increase the limits of winning tickets or the value of a keno
game or a progressive keno game to an amount exceeding the total maximum sum of
$250,000 on any one game unless the licensee installs and uses a computerized
keno system that satisfied the specification approved by the
Commission.
3. A licensee shall not
operate a keno game or progressive keno game with limits on winning tickets or
the value of the keno game exceeding the total maximum sum of $250,000 on any
one game without the prior written approval of the Commission.
4. The Commission may:
(a) Require that a limit be imposed on a
progressive keno game, or that the limits of winning tickets or the value of a
keno game or a progressive keno game be decreased, if such a limit or decrease
is deemed necessary for the licensee to maintain sufficient minimum bankroll
requirements pursuant to these Rules; or
(b) Require the licensee to at all times
maintain a reserve in the form of cash, cash equivalent, a bond, or a
combination thereof in an amount determined by the Commission. Subject to the
discretion of the Commission, the reserve provided for by this paragraph must
be created and maintained in the same manner as a reserve required by these
Rules.
5. Progressive keno
is further subject to the provisions of these Rules governing progressive
payoff schedules.
4.030
Violation of law or Rules. Violation of any provision of the
Amendment or of these Rules by a licensee, the licensee's agent or employee
shall be deemed contrary to the public health, safety, morals, good order and
general welfare of the inhabitants of the State of Arkansas and grounds for
suspension or revocation of a license and a fine in an amount of up to
$100,000. Acceptance of a state Casino license or renewal thereof by a licensee
constitutes an agreement on the part of the licensee to be bound by all of the
Rules of the Commission as the same now are or may hereafter be amended or
promulgated. It is the responsibility of the licensee to keep informed of the
content of all such Rules, and ignorance thereof will not excuse
violations.
4.040
Investigation of conduct of licensees, generally. A Casino license
is a revocable privilege, and no holder thereof shall be deemed to have
acquired any vested rights therein or thereunder. The burden of proving his or
her qualifications to hold any license rests at all times on the licensee. The
Commission is charged by law with the duty of observing the conduct of all
licensees to the end that licenses shall not be held by unqualified or
disqualified persons or unsuitable persons or persons whose operations are
conducted in an unsuitable manner.
4.045
Compliance review and reporting
system.
1. Whenever the Commission is
acting upon any application of a licensee, and if the Commission determines
that special circumstances exist which require additional management review by
a licensee, the Commission may impose a condition upon any license or order of
registration to require implementation of a compliance review and reporting
system by the licensee.
2. The terms
of the condition may include, but shall not be limited to:
(a) That the condition shall expire on a
certain date or after a designated period of time without Commission
action;
(b) That the condition may
be administratively removed by the Commission should a specified activity cease
or a specified event occur; or
(c)
That a periodic review shall be conducted by the Commission and upon such
review the Commission may remove or continue to require the
condition.
4. The
compliance review and reporting system shall be created for the purpose of
monitoring activities relating to the licensee's continuing qualifications
under the provisions of the Amendment and Rules of the Commission in accordance
with a written plan to be approved by the Commission administratively or as
otherwise ordered by the Commission.
5. The written plan must provide for the
operation of the compliance review and reporting system and must designate who
shall be responsible for said system. The plan must provide for involvement of
at least one person knowledgeable of the provisions of the Amendment and the
Rules of the Commission. The plan must require periodic reports to senior
management of the licensee. Such reports shall be advisory and the licensee
shall maintain responsibility for compliance with the Amendment and Rules of
the Commission. Copies of the reports must be provided to the
Commission.
6. The activities to be
monitored must be set forth in the written plan and must be determined by the
circumstances applicable to the licensee. Without limitation, the activities
that may be required to be monitored pursuant to the compliance review and
reporting system include the following:
(a)
Associations with persons denied licensing or other related approvals by the
Commission or who may be deemed to be unsuitable to be associated with a
licensee;
(b) Business practices or
procedures that may constitute grounds for denial of a Casino license or
registration;
(c) Compliance with
other special conditions that may be imposed by the Commission upon the
licensee;
(d) Review of reports
submitted pursuant to the Amendment and Rules of the Commission;
(e) Compliance with the laws, regulations, or
orders of duly constituted governmental agencies or entities having
jurisdiction over the gaming affairs, or such other business activities which
the Commission may deem necessary or proper, of the licensee, registrant, or
its affiliates; and
(f) Review of
such other activities determined by the Commission as being relevant to the
licensee's continuing qualifications under the provisions of Amendment 100 and
the Rules of the Commission.
4.050
Information to be furnished by
licensees. Every licensee shall report to the Commission annually the
full name and address of every person, including lending agencies, who has any
right to share in the profits of such licensed games, whether as an owner,
assignee, landlord or otherwise, or to whom any interest or share in the
profits of any licensed game has been pledged or hypothecated as security for a
debt or deposited as a security for the performance of any act or to secure the
performance of a contract of sale. Such report shall be submitted concurrently
with application for renewal of license.
4.055
Reports of violations and of
felony convictions.
1. Each licensee
shall immediately notify the on-site DF&A representatives by means
acceptable to the Commission of the discovery of any violation or suspected
violation of any gaming law regarding which the licensee has notified the local
police or sheriff.
2. Each licensee,
as relevant, shall immediately notify the on-site DF&A representatives by
means acceptable to the Commission or, for reports pursuant to these Rules, by
telephone or via email, of:
(a) The discovery
of any violation of any gaming law;
(b) The discovery of any suspected theft,
larceny, embezzlement or other crime involving property, if such crime has been
committed against a licensee or club venue operator or patron of a licensee or
while on the premises of a licensee, by a gaming employee, a person required to
be registered pursuant to these Rules, or any other person who has received an
approval from the Commission, and the person allegedly committing the crime has
been separated from employment or whose business relationship with the licensee
has been terminated, regardless of whether such crime is a misdemeanor, gross
misdemeanor or felony;
(c) The
discovery of any suspected unlawful possession, sale, or use of a controlled
substance on the premises of the licensee, if such possession, sale or use was
committed by a gaming employee, a person required to be registered pursuant to
these Rules, or any other person who has received an approval from the
Commission, and the person allegedly committing the crime has been separated
from employment or whose business relationship with the licensee has been
terminated; and
(d) Any suspected
violation of any gaming law regarding which the licensee has notified the local
police or sheriff.
3. Any
person holding a license, registration, or finding of suitability that is
convicted of a felony in this state or is convicted of an offense in another
state or jurisdiction which would be a felony if committed in this state shall
notify the on-site DF&A representatives in writing within 10 business days
of such conviction.
4.060
Access to premises and production of records.
1. No applicant, licensee or enrolled person
shall neglect or refuse to produce records or evidence or to give information
upon proper and lawful demand by the Commission, or shall otherwise interfere,
or attempt to interfere, with any proper and lawful efforts by the Commission
to produce such information.
2. Each
Casino licensee, licensed manufacturer, and licensed distributor or seller
shall immediately make available for inspection by the Commission all papers,
books and records produced by any gaming business and all portions of the
premises where gaming is conducted or where gambling devices or equipment are
manufactured, sold or distributed. The Commission shall be given immediate
access to any portion of the premises of any Casino licensee, licensed
manufacturer or licensed distributor or seller for the purpose of inspecting or
examining any records or documents required to be kept by such licensee under
the Rules of the Commission, and any gaming device or equipment or the conduct
of any gaming activity.
3. Access to
the areas and records may be inspected or examined by the Commission shall be
granted upon request by the Commission to any Commission member or agent who
the Commission designates.
4.070
Summoning of licensee. The
Commission may summon any licensee or the licensee's agents or employees to
appear to testify before it or its agents with regard to the conduct of any
licensee or the agents or employees of any licensee. All such testimony shall
be under oath and may embrace any matters which the Commission or its agents
may deem relevant to the discharge of its official duties. Any person so
summoned to appear shall have the right to be represented by counsel. Any
testimony so taken may be used by the Commission as evidence in any proceeding
or matter then before it or the Commission or which may later come before it or
the Commission. Failure to so appear and testify fully at the time and place
designated, unless excused, shall constitute grounds for the revocation or
suspension of any license held by the person summoned, his or her principal or
employer.
4.085
Unauthorized
games. No licensee shall permit any game other than those specifically
authorized by the Commission's Rules to be operated without first applying for
and receiving permission from the Commission to operate such game.
4.090
Unlicensed games or
devices.
1. No unlicensed gambling
games shall be operated upon the premises of a licensee.
2. Whenever a licensee desires to temporarily
remove or suspend a game from a licensed status, the licensee shall provide
advanced written notice to the Commission stating the type and number of games
sought to be suspended, the initial date and duration of the proposed
suspension, and in addition to such notice, the licensee shall thereafter
physically remove the gaming device from any area exposed to the public;
provided, however, a gaming device may remain in a public area while in an
unlicensed status if the licensee, in addition to the foregoing written
notification, removes from the gaming device all detachable fixtures such as
drop boxes, chip racks, wheelheads, cages, and other similar removable items,
and also covers any nondetachable chip rack and any chip rack space with a
device capable of being locked and sealed in place; thereafter, the gaming
device shall be inspected and sealed by the Commission and allowed to remain in
a public area.
3. Before any game or
gaming device suspended from a licensed status in accordance with the foregoing
procedure may be reactivated and placed into play, the licensee shall advise
the on-site DF&A representatives in writing of its intention and date to
reactivate such game, and pay all fees and taxes applicable to said game, and
upon the on-site DF&A representative's reinspection of any gaming device
previously sealed, the game may be exposed to play.
4.110
In-house progressive payoff
schedules.
1. As used in this section:
(a) "Base amount" means the amount of a
progressive payoff schedule initially offered before it increases.
(b) "Commission" means the Arkansas Racing
Commission or the Commission's designee.
(c) "Incremental amount" means the difference
between the amount of a progressive payoff schedule and its base
amount.
(d) "Progressive payoff
schedule" means a game or machine payoff schedule, including those associated
with contests, tournaments or promotions, that increases automatically over
time or as the game(s) or machine(s) are played.
2. The amount of a progressive payoff
schedule shall be conspicuously displayed at or near the games or machines to
which the payoff schedule applies. Each licensee shall record the base amount
of each progressive payoff schedule when first exposed for play and subsequent
to each payoff. At least once a month each licensee shall log the amount of
each progressive payoff schedule at the licensee's establishment except for
those that can be paid directly from a slot machine's hopper or those offered
in conjunction with an inter-casino linked system. Explanations for reading
decreases shall be maintained with the progressive logs. When the reduction is
attributable to a payoff, the licensee shall record the payoff form number on
the log or have the number reasonably available.
3. A licensee may change the rate of
progression of any progressive payoff schedule provided that records of such
changes are created.
4. A licensee
may limit a progressive payoff schedule to an amount that is equal to or
greater than the amount of the payoff schedule when the limit is imposed. The
licensee shall post a conspicuous notice of the limit at or near the games(s)
or machine(s) to which the limit applies.
5. A licensee shall not reduce the amount of
a progressive payoff schedule or otherwise eliminate a progressive payoff
schedule unless:
(a) A player wins the
progressive payoff schedule;
(b) The
licensee adjusts the progressive payoff schedule to correct a malfunction or to
prevent the display of an amount greater than a limit imposed pursuant to
subsection 4, and the licensee documents the adjustment and the reasons for
it;
(c) The licensee distributes the
entire incremental amount to another progressive payoff schedule on similar
game(s) or machine(s) at the licensee's establishment or any other contest,
tournament or promotion and:
(1) The licensee
documents the distribution;
(2) Any
game or slot machine offering the payoff schedule to which the licensee
distributes the incremental amount does not require that more money be played
on a single play to win the payoff schedule than the game or slot machine from
which the incremental amount is distributed unless the incremental amount
distributed is increased in proportion to the increase in the amount of the
wager required to win the payoff schedule;
(3) If from a slot machine, any slot machine
offering the payoff schedule to which the incremental amount is distributed
complies with the minimum theoretical payout requirement of these Rules;
and
(4) The distribution is
completed within 180 days after the progressive payoff schedule is removed from
play or within such longer period as the Commission may for good cause
approve;
(d) For games
other than slot machines, the incremental amount may be distributed within 180
days of removal through a concluding contest, tournament or promotion and the
contest, tournament or promotion is conducted with a game(s) similar to the
game(s) from which the amounts are distributed; or
(e) The Commission, upon a showing of
exceptional circumstances, approves a reduction, elimination, distribution, or
procedure not otherwise described in this subsection, which approval is
confirmed in writing.
6. A
progressive payoff schedule may be temporarily removed for a period of up to 30
days to allow for the remodeling of the licensed gaming establishment, or for
such longer period or other good cause as the Commission may approve.
7. Except as otherwise provided by this
section, the incremental amount of a progressive payoff schedule is an
obligation to the licensee's patrons, and it shall be the responsibility of the
licensee if the licensee ceases operation of the progressive game or slot
machine for any reason, including a transfer of ownership of the licensed
gaming establishment, to arrange for satisfaction of that obligation in a
manner approved by the Commission.
8. Licensees shall maintain the records
required by this section for at least five years after they are made unless the
Commission approves otherwise in writing.
4.112
Inter-casino linked payoff
schedules.
1. As used in this section:
(a) "Base amount" means the amount of a
progressive payoff schedule initially offered before it increases.
(b) "Commission" means the Arkansas Racing
Commission or the Commission's designee.
(c) "Fixed payoff schedule" means a payoff
schedule determined prior to the time the intercasino linked system is offered
to the public for play that does not increase automatically over time or as the
inter-casino linked system is played.
(d) "Incremental amount" means the difference
between the amount of a progressive payoff schedule and its base
amount.
(e) "Operator" means any
person or entity holding a license to operate a Casino that operates an
inter-casino linked system for affiliates.
(f) "Progressive payoff schedule" means a
payoff schedule that increases automatically over time or as the inter-casino
linked system is played.
(g) "Reset
fund" means monies collected pursuant to a contribution schedule set by an
operator that are intended to be used for the funding of future progressive
payoff schedules.
2.
Inter-casino linked systems shall have signs or award cards which conspicuously
display:
(a) The fixed payoff schedules at or
near each game and on each machine;
(b) The current progressive payoff schedules
at or near all games or machines; and
(c) Rules and, if applicable, the specific
qualifying and final round date(s) for tournaments or contests at or near all
games or machines.
3. Each
operator shall record the base amount of each progressive payoff schedule when
first exposed for play and subsequent to each payoff. At least once each day,
the operator must record on a log the amount of the progressive payoff
schedule. Explanations for decreases in the payoff schedule shall be maintained
with the progressive logs.
4.
Subject to compliance with the minimum rate of progression requirements set
forth in these Rules, an operator may change the rate of progression, including
those between multiple progressive payoff schedules and reset funds, provided
that records of such changes are created and maintained. The operator, upon
request, shall provide such information to the Commission and participating
locations.
5. An operator may limit
the amount of progressive payoff schedule to an amount that is equal to or
greater than the amount of the progressive payoff schedule when the limit is
imposed. The operator shall post a conspicuous notice of the limit at or near
each game or machine to which the limit applies. An operator shall notify the
Commission and the participating locations of such limitation, in writing,
contemporaneously with the imposition of such limitation.
6. An operator, including an operator that
ceases operations, shall not reduce the amount of a progressive payoff schedule
or otherwise eliminate a progressive payoff schedule unless:
(a) A player wins the progressive payoff
schedule and any reset fund;
(b) For
games other than slot machines, the incremental amount of the progressive
payoff schedule(s) and any reset fund may be distributed within 180 days of
removal through a concluding contest, tournament or promotion and the contest,
tournament or promotion is conducted with a game(s) similar to the game(s) from
which the amounts are distributed;
(c) The progressive payoff schedule is
adjusted to correct a malfunction or to prevent the display of an amount
greater than a limit imposed by these Rules, and the operator documents the
adjustment and the reasons for it;
(d) The operator distributes the entire
incremental amount and any reset fund to another single inter-casino linked
payoff schedule and reset fund, whether progressive or not, on similar games or
machines at substantially the same locations, and:
(1) The operator documents the
distribution;
(2) Any game or slot
machine offering the payoff schedule to which the operator distributes the
incremental amount or reset fund does not require that more money be played on
a single play to win the payoff schedule than the game or slot machine from
which the incremental amount or reset fund is distributed unless the
incremental amount distributed is increased in proportion to the increase in
the amount of the wager required to win the payoff schedule;
(3) If from a slot machine, any slot machine
offering the payoff schedule to which the incremental amount or reset fund is
distributed complies with the minimum theoretical payout requirement of these
Rules; and
(4) The distribution is
completed within 30 days after the progressive payoff schedule or reset fund is
removed from play or within such longer period as the Commission may for good
cause approve; or
(e) The
Commission, upon a showing of exceptional circumstances, approves a reduction,
elimination, distribution, or procedure not otherwise described in this
subsection, which approval is confirmed in writing.
7. An operator may remove from a licensee's
premises games or machines with progressive payoff schedules which are part of
an inter-casino linked system if the payoff schedule is otherwise available for
play in the same city, or such other geographic area as may be determined by
the Commission.
8. Operators shall
maintain the records required by this section for at least five years after the
records are made unless the Commission approves otherwise in
writing.
4.115
Periodic payments.
1. Except as
provided in this Rule, a licensee shall remit the total prizes awarded to a
patron as the result of conducting any game, including a race book or sports
pool, tournament, contest, or promotional activity (hereinafter collectively
referred to as "gaming or promotional activity") conducted in Arkansas or
arising from the operation of a multi-jurisdictional progressive prize system
upon validation of the prize payout.
2. As used in this section of the Rule:
(a) "Approved funding sources" means cash or
U.S. Treasury securities that are used for the funding of a trust pursuant to
these Rules or the reserve method of funding periodic payments pursuant to
these Rules.
(b) "Brokerage firm"
means an entity that:
(1) Is both a
broker-dealer and an investment adviser;
(2) Has one or more classes of its equity
securities listed on the New York Stock Exchange or American Stock Exchange, or
is a wholly-owned subsidiary of such an entity; and
(3) Has assets under management in an amount
of $10 billion or more as reported in its most recent report on Form 10-K or
Form 10-Q filed with the United States Securities and Exchange Commission, or
is a wholly-owned subsidiary of such an entity.
(c) "Broker-dealer" means any person engaged
in the business of effecting transactions in securities for the account of
others or for the person's own account; and:
(1) Is licensed as a broker-dealer with the
Arkansas Securities Department; or
(2) Is exempt from licensing and is
registered as a broker-dealer with the United States Securities and Exchange
Commission and the National Association of Securities Dealers pursuant to Title
15 USC
780 as amended.
(d) "Commission" means the Arkansas Racing
Commission or the Commission's designee.
(e) "Date of calculation" means the last day
for which a discount rate was obtained prior to the conclusion of the
validation period.
(f) "Discount
rate" means the current prime rate as published in the Wall Street Journal. For
those licensees using the reserve method of funding pursuant to these Rules,
"discount rate" means either:
(i) the
aforementioned current prime rate, or
(ii) a blended rate computed from the various
U.S. Treasury securities selected by the licensee for which quotes are obtained
at least three times a month.
(g) "Independent financial institution" means
an institution that is not affiliated through common ownership with the
licensee and is either:
(1) A bank or national
banking association that is authorized to do business in this state, a banking
corporation formed or regulated under the laws of this state or a wholly-owned
subsidiary of such a banking association or corporation that is formed or
regulated under the laws of this state or a national bank with an office in
Arkansas; or
(2) An insurance
company admitted to transact insurance in the State of Arkansas with an A.M.
Best Insurance rating of at least "A+" or such other equivalent
rating.
(h) "Investment
adviser" means any person who, for compensation, engages in the business of
advising others as to the value of securities or as to the advisability of
investing in, purchasing or selling securities, or who, for compensation and as
a part of a regular business issues or promulgates analyses or reports
concerning securities and:
(1) Is registered
as an investment adviser with the Arkansas Securities Department; or
(2) Is registered as an investment adviser
with the United States Securities and Exchange Commission pursuant to Title
15 USC
80b-3a, as amended.
(i) "Periodic payments," for purposes of this
Rule only, means a series of payments that are paid at least annually for
prizes awarded through gaming or promotional activity.
(j) "Present value" means the current value
of a future payment or series of payments, discounted using the discount
rate.
(k) "Qualified prize" means
the sum of periodic payments, awarded to a patron as a result of any gaming or
promotional activity, payable over a period of at least 10 years.
(l) "Qualified prize option" means an option
that entitles a patron to receive from a licensee a single cash payment in lieu
of receiving a qualified prize, or any remaining portion thereof, which shall
be exercised no later than 60 days after validation of the qualified
prize.
(m) "Reserve" means a
restricted account consisting of approved funding sources used exclusively to
satisfy periodic payments of prizes arising from all gaming or promotional
activity conducted in Arkansas, including such prizes arising from the
operation of a multi-jurisdictional progressive prize system, and includes any
existing funding methods previously approved by the Commission. The reserve
shall not be less than the sum of the following:
(1) The present value of the aggregate
remaining balances owed on all prizes awarded to patrons who are receiving
periodic payments. For balances previously funded using U.S. Treasury
securities, the discount rate on the date of funding shall be used for
calculating the present value of the reserve.
(2) An amount sufficient to pay the single
cash payments offered in conjunction with qualified prize options for prizes
previously awarded for which elections have not been made by the
patrons;
(3) An amount sufficient to
fully fund the present value of all prizes currently on public display for
which periodic payments are offered;
(4) If cash is used as the approved funding
source, an amount equal to satisfy the current liabilities to all patrons
receiving periodic payments due and payable within 12 months; and
(5) Any additional amounts administratively
required by the Commission.
As used in this paragraph, the term "multi-jurisdictional progressive
prize system" shall have the meaning ascribed by these
Rules.
(n)
"Restricted account" means an account with an independent financial institution
described in these Rules, or a brokerage firm, which is to be exclusively used
for the reserve method of funding of gaming or promotional activity as provided
in this Rule.
(o) "Single cash
payment" means a single discounted, lump-sum cash payment in the amount of the
present value of the total periodic payments otherwise due and owing for a
qualified prize, less the amount of any partial payment of such qualified prize
previously made by the licensee to a patron.
(p) "Trust" means an irrevocable fiduciary
relationship in which one person is the holder of the title to the property
subject to an equitable obligation to keep or use the property for the benefit
of another.
(q) "U.S. Treasury
securities" means a negotiable debt obligation issued and guaranteed by the
U.S. government.
(r) "Validation
period" means the period of time between when a patron has met the conditions
required to receive a prize, and when the prize payout is validated. The
validation period shall not exceed 72 hours, unless otherwise extended by the
Commission.
3. Periodic
payments of prizes awarded to a patron as a result of conducting any gaming or
promotional activity may be made if the method of funding the periodic payments
provides such payments to a patron through the establishment of any one of the
following funding methods:
(a) An irrevocable
surety bond or an irrevocable letter of credit with an independent financial
institution which will provide for either the periodic payments or a single
cash payment for the remaining periodic payments should the licensee default on
paying the scheduled periodic payments for any reason. The form of the written
agreement establishing an irrevocable surety bond or the irrevocable letter of
credit, and a written commitment to execute such bond or letter from the
financial institution, shall be submitted to the Commission for approval no
less than 45 days prior to the commencement of the gaming or promotional
activity.
(b) An irrevocable trust
with an independent financial institution in accordance with a written trust
agreement, the form of which shall be submitted to the Commission for approval
at least 45 days prior to the commencement of any new gaming or promotional
activity, and which provides periodic payments from an unallocated pool of
assets to a group of patrons and which shall expressly prohibit the patron from
encumbering, assigning or otherwise transferring in any way the patron's right
to receive the deferred portion of the prizes except to the patron's estate.
The assets of the trust shall consist of approved funding sources in an amount
sufficient to meet the periodic payments as required.
(c) A reserve maintained at all times by a
licensee, together with the continuing satisfaction of and compliance with
certain financial ratios and tests, and monitoring and reporting procedures
related thereto. The conditions under which a reserve method may be used shall
be prescribed by the Commission in a written notice distributed to licensees
and all interested persons. Licensees shall notify the Commission in writing at
least 45 days prior to the commencement of any new gaming or promotional
activity for which periodic payments may be used. Unless otherwise informed
within such time period in writing by the Commission and assuming a stop order
has not been issued during such period, the use of a reserve method for funding
periodic payments shall be deemed approved.
(d) Another method of providing the periodic
payments to a patron consistent with the purpose of this Rule and which is
approved by the Commission prior to the commencement of the gaming or
promotional activity. Proposed modifications to a periodic payment plan
previously approved by the Commission shall be submitted to the Commission for
review at least 45 days prior to the effective date of the change. The
Commission, after whatever investigation or review the Commission deems
necessary, may administratively approve the modification or require the
licensee to submit the requested modification to the Commission for review and
approval.
4. The funding
of periodic payment plans shall be completed within 30 days of the conclusion
of the validation period, or where a qualified prize option is offered for such
prize payout, within 30 days of the date the patron makes an election
thereunder. Where a single cash payment is elected, the licensee shall pay to
the patron in cash, certified check or wire transfer the full amount less any
prior payment(s) within 15 days after receiving the patron's written
notification of such election.
5.
Periodic payments shall not be used for prize payouts of $100,000 or less.
Periodic payments for total amounts won greater than $100,000 shall be paid as
follows:
(a) For amounts won greater than
$100,000, but less than $200,000, payments shall be at least $10,000
annually;
(b) For amounts won
greater than $200,000 or more, payments shall be no less than 1/20th of the
total amount annually;
(c) For
amounts won equal to or in excess of $5,000,000, payments shall be made in the
manner set forth in (b), above, or in such manner as approved by the Commission
upon application by the licensee; and
(d) The first installment payment shall be
made upon the conclusion of the validation period, notwithstanding that a
qualified prize option may be offered to the patron. In the event that a
qualified prize option is offered to a patron, it shall not be construed as a
requirement that the patron shall receive a single cash payment instead of
periodic payments.
Waivers of subsections (a), (b) and (c) of this section that have been
previously granted by the Commission shall remain in full force and effect
pursuant to the current terms and provisions of such
waivers.
6. The
licensee shall provide the Commission with an appropriate, signed legal
document, prior to the commencement of any gaming or promotional activity for
which periodic payments are to be offered, that shall irrevocably and
unconditionally remise, release, indemnify and forever discharge the State of
Arkansas, the Commission, and their members, employees, agents and
representatives, including those of the Attorney General's Office, of and from
any and all claims, actions, causes of actions, losses, damages, liabilities,
costs, expenses and suits of any nature whatsoever, in law or equity, including
reasonable attorney's fees, arising from any act or omission of the Commission,
and their members, employees, agents and representatives.
7. For any gaming or promotional activity for
which periodic payments are used, the licensee shall provide a notice on each
gaming device or, if no gaming device is used, then in each gaming or
promotional area specifically setting forth the terms of the periodic payment
plan, and include in all radio, television, other electronic media, or print
advertising that such prizes will be awarded using periodic payments.
8. Notwithstanding any other Rule to the
contrary, if a licensee offers a qualified prize option to a patron who is
awarded a qualified prize, the licensee shall provide the option to the patron
in writing within five days after the conclusion of the validation period. Such
written option shall explain the method used to compute the single cash
payment, including the discount rate as of the date of calculation, and shall
state that the patron is under no obligation to accept the offer of a single
cash payment and may nevertheless elect to receive periodic payments for the
qualified prize.
9. The licensee
shall maintain the following amounts, as applicable, related to each gaming or
promotional activity that uses periodic payments in calculating its minimum
bankroll requirement for the purpose of complying with these Rules:
(a) For periodic payment plans approved in
accordance with these Rules, the installment payments due within the next
12-month period for all amounts won or on public display for which the licensee
will be making periodic payments.
(b) For periodic payment plans approved in
accordance with these Rules, the first installment payment, if not yet paid,
and the present value of all future payments:
(1) For amounts won or awarded but for which
the funding has not been completed; and
(2) For all prizes which have not been won or
awarded but are on public display, including a progressive
meter.
(c) An alternative
amount and/or method required by the Commission to satisfy the minimum bankroll
requirement for other approved funding plans used for periodic
payments.
10. At all times
the licensee is responsible for the payment of all prizes resulting from any
gaming or promotional activity upon conclusion of the validation period,
regardless of the method used to fund the periodic payments allowed under this
Rule. In the event of a default by any financial institution with which the
licensee has contracted to guarantee or make periodic payments, the licensee
will be liable for the periodic payments owed to patrons.
11. At least annually, the licensee shall
verify that the independent financial institution and brokerage firm being used
to guarantee or remit periodic payments to patrons or to hold approved funding
sources related thereto continues to meet the applicable qualifications
required by these Rules. In the event that such entities are found to no longer
meet the defined requirements, the licensee shall immediately notify the
Commission of the change in status and within 30 days provide a written plan to
comply with these requirements.
12.
At least 60 days prior to the cessation of operations, a licensee responsible
for remitting periodic payments to patrons shall submit a plan to satisfy the
liability for approval. The Commission, after whatever investigation or review
the Commission deems necessary, may approve the plan.
13. Copies of the related contracts and
agreements executed pursuant to these Rules shall be submitted to the
Commission within 30 days after execution. For all methods of funding periodic
payments, the licensee must maintain documents, executed contracts and
agreements for a period no less than the duration of the periodic payments plus
five years thereafter.
14. Where a
licensee is found to be in noncompliance with the funding requirements provided
in this Rule, the Commission may require the licensee to immediately cease
offering any gaming or promotional activity for which periodic payments are
used or the Commission may require other corrective action.
15. Any failure of the licensee to maintain
full compliance with each and every provision set forth in this Rule, including
the Commission's requirements established pursuant to these Rules, or any
failure of the licensee to immediately notify the Commission of any
noncompliance thereof, shall constitute an unsuitable method of operation. Such
noncompliance may subject the licensee to disciplinary
action.
4.120
Finder's fees.
1. Except as
limited by subsection 2, the term "finder's fee" means any compensation in
money in excess of the sum of $10,000, or real or personal property valued in
excess of the sum of $10,000 which is paid or transferred or agreed to be paid
or transferred to any person in consideration for the arranging or negotiation
of an extension of credit to a licensee, a registered company, or applicant for
licensing if the proceeds of such extension of credit are intended to be used
for any of the following purposes:
(a) The
acquisition of an interest in a gaming establishment or registered
company.
(b) To finance the gaming
operations of a licensed gaming establishment.
2. The term "finder's fee" shall not include:
(a) Compensation to the person who extends
the credit.
(b) Normal and customary
payments to employees of the person to whom the credit is extended if the
arranging or negotiation of credit is part of their normal duties.
(c) Normal and customary payments for bona
fide professional services rendered by lawyers, accountants, engineers and
appraisers.
(d) Underwriting
discounts paid to a member of the National Association of Securities Dealers,
Inc.
3. It is an
unsuitable method of operation for any licensee, registered company or
applicant for licensing or registration to pay any finder's fee without the
prior approval of the Commission, acting upon a recommendation of the
Commission. An application for approval of payment of a finder's fee shall make
a full disclosure of all material facts. The Commission may disapprove any such
application if the person to whom the finder's fee is proposed to be paid does
not demonstrate that he or she is suitable to hold a state Casino
license.
4.140
Collection of gaming credit.
1.
Only bonded, duly licensed collection agencies, or a licensee's employees,
junket representatives, attorneys, or affiliated or wholly-owned corporation
and their employees, may collect, on the licensee's behalf and for any
consideration, gaming credit extended by the licensee.
2. Notwithstanding the provisions of
subsection 1, no licensee shall permit any person who has been found
unsuitable, or who has been denied a Casino license or work permit, or who has
had a work permit revoked, to collect, on the licensee's behalf and for any
consideration, gaming credit extended by the licensee.
3. Each licensee shall maintain for the
Commission's inspection records that describe credit collection arrangements
and that include any written contracts entered into with the persons described
in subsection 1, unless such persons are the licensee's key employees or junket
representatives.
4.150
Devices prohibited under 5.104(4)(a)(ii); exceptions.
1. It shall not be a violation of these Rules
for a person to:
(a) Make and refer to
handwritten records of the cards played at baccarat;
(b) Make and refer to handwritten records of
roulette results; or
(c) Refer to
records of the cards played at faro, where the records are made by the licensee
in the manner traditional to that game.
2. The Commission, in the Commission's sole
and absolute discretion, may approve the use of devices not described in
subsection 1 upon the written request of a licensee, subject to such conditions
as the Commission may impose. No approval shall be effective unless it is in
writing. It shall not be a violation of these Rules for a person to possess or
use, in accordance with the terms of the approval, a device approved pursuant
to this subsection. As used in this subsection, "Commission" means the Arkansas
Racing Commission or the Commission's designee.
4.160
Surveillance systems.
1. As used in this section:
(a) "Applicant" means a person or entity
having a pending application to become a licensee.
(b) "Commission" means the Arkansas Racing
Commission or the Commission's designee.
(c) "Licensed establishment" means the
establishment of a licensee.
(d)
"Licensee" means a person or entity licensed to conduct a Casino operation. The
term does not include a person or entity licensed as a holder of a security or
other ownership interest in the operation, or as an officer, director or key
employee of the operation, or due to any other relationship or involvement with
the operation.
2. The
Commission shall adopt standards for the installation, maintenance and
operation of casino surveillance systems at all licensed establishments. The
purposes of a casino surveillance system are to assist the licensee and the
state in safeguarding the licensee's assets, in deterring, detecting and
prosecuting criminal acts, and in maintaining public confidence and trust that
licensed gaming is conducted honestly and free of criminal elements and
activity.
3. At least 30 days before
adopting any casino surveillance standards or revisions, the Commission shall:
(a) Publish notice of the proposed adoption
or revision, together with the effective date thereof, by posting the proposed
change or revision on the Commission's website;
(b) Provide notice of the posting of the
proposed casino surveillance standards or revisions on the Commission's
website, together with the effective date thereof, to each licensee and every
other person who has filed a request therefor with the Commission;
and
(c) Provide a copy of the
proposed casino surveillance standards or revisions and the effective date to
the Commission.
4. Any
licensee may object to the proposed casino surveillance standards or revisions,
by filing a request for a review of the Commission's administrative decision.
If, any licensee files a request for review, then the effective date of the
proposed casino surveillance standards or revisions will be stayed pending
action by the Commission. If no requests for review are filed with the
Commission, then the casino surveillance standards or revisions shall become
effective on the date set by the Commission.
5. Any licensee may propose the repeal or
revision of any existing casino surveillance standard or the adoption and
approval of any new casino surveillance standard by submitting a request to the
Commission, who shall consider the request at the Commission's discretion. If
such a request is approved by the Commission, then the proposed repeal,
revision or adoption must be processed in accordance with subsections 3 and 4.
If such a request is denied by the Commission, then the licensee may file the
request for a review as an administrative approval decision with the
Commission.
6. Except as otherwise
provided in subsections 8 and 9, each licensee shall install, maintain and
operate a casino surveillance system in accordance with the casino surveillance
standards adopted by the Commission. The failure of a licensee to comply with
this section and the casino surveillance standards adopted by the Commission or
any variation to the casino surveillance standards approved pursuant to
subsection 8 is an unsuitable method of operation.
7. Neither this section or any casino
surveillance standard adopted pursuant to it, alters, amends, supersedes or
removes any condition of any licensee or approval imposed on any licensee by
the Commission. However, a licensee shall be deemed to have complied with a
condition requiring the Commission's approval of a surveillance system if the
licensee complies with subsection 6.
8. Upon request and at the Commission's
discretion, the Commission may exempt a licensee from compliance with any
casino surveillance standard. All requests for exemption must be in writing and
state the reasons for the request and the alternative measures, if any, the
licensee will undertake to accomplish the objectives of the casino surveillance
standard. The licensee must comply with the casino surveillance standard while
the request for exemption is pending. Any request for exemption that is not
granted, in writing, within 90 days after it is received by the Commission will
be deemed denied.
9. If, after
reviewing the licensee's written casino surveillance system plan, the
Commission determines the plan does not comply with subsection 9, the
Commission shall notify the licensee in writing, and the licensee shall revise
the plan to comply with subsection 9 and submit the revised plan within 30 days
after receipt of the Commission's written notice.
4.170
Programs to address problem
gambling.
4.180
Operation of an inter-casino linked system.
1. Definitions. As used in this section:
(a) "Commission" means the Arkansas Racing
Commission or the Commission's designee.
(b) "Licensed establishment" means the gaming
establishment of a licensee.
(c)
"Licensee" means a person or entity licensed to conduct a Casino gaming
operation. The term does not include a person or entity licensed as a holder of
a security or other ownership interest in the operation, or as an officer,
director or key employee of the operation, or due to any other relationship or
involvement with the operation.
(d)
"Operator" means any Casino gaming operation that operates an inter-casino
linked system for affiliates.
(e)
"System" means an inter-casino linked system.
2. In addition to any other requirements set
forth in these Rules, all operators of systems and licensed establishments
shall comply with the following requirements:
(a) All systems shall be connected only to
gaming devices or games that have been approved by the Commission, that comply
with these Rules, and that are operated in licensed gaming establishments. The
exposure for play of games or devices that are part of a system shall be
limited as follows:
(1) In the case of systems
with fixed payoff schedules that exceed $250,000 or in the case of systems with
progressive payoff schedules that are expected to exceed $250,000,
installations are limited to Casino gaming operations having gross revenue of
$1,000,000 or more for the 12 months ended June 30 each year; or
(2) In the case of systems with fixed payoff
schedules of $250,000 or less, systems with progressive payoff schedules that
are expected to be $250,000 or less, or systems without payoff schedules,
installations are permitted at any Casino gaming operation.
Notwithstanding the foregoing, any games or machines connected to an
inter-casino linked system at the time this Rule is adopted may continue to be
operated as part of the inter-casino linked system. Additionally, upon a
showing of adequate surveillance and internal control procedures by a licensee,
the Commission may waive the provisions of this subsection, provided that such
waiver is not inconsistent with any license conditions placed on the operator
or licensee and that such waiver is confirmed in
writing.
(b) The
operator or licensee, whichever may be liable for payment of the amount in
dispute, shall be responsible for any patron dispute arising at the licensed
establishment with respect to any system and the gaming devices or games
connected thereto. This fact shall be disclosed to the patron at the time of
the dispute. Licensees and operators shall cooperate in the resolution of
patron disputes arising at the licensee's establishment.
(c) Operators of systems featuring
progressive payoff schedules shall, upon request, disclose to the Commission
and all licensees who have contracted to use their systems, on a confidential
basis, the rate of progression of all progressive payoff schedules and, if
applicable, any reset funds, of their systems.
(d) Operators shall provide the Commission
prior to commencing operations of the system with a list of all persons who may
access the main computer or data communications components of their systems and
any changes to that list shall be provided within ten (10) days to the
Commission.
(e) At the request of
the Commission, an operator shall provide and maintain, at its sole expense and
at such location as the Commission may designate, a terminal and printer for
the purpose of monitoring information regarding the system including, but not
limited to, the current progressive payoff schedules, reset funds, the
real-time date and time, the number and location of gaming devices and games
connected to the system, the names of persons accessing the main computer or
data communication components of the system, the identification of functions
being performed by such persons, the audible notification of any progressive
payoff schedule won, and the identification of the location, machine number,
and amount of any progressive payoff schedule won.
(f) The operator shall provide in writing to
each participating licensed establishment its method for determining the pro
rata share of a system payout for purposes of gross revenue
deductibility.
(g) Operators shall
retain and provide Commission agents, upon request, all records pertaining to
their inter-casino linked systems including, without limitation, all
progressive payoff schedule payout verification documents, exception reports,
end-of-day reports, progressive payoff schedule reports, computer room visitors
logs, machine performance reports, weekly reconciliation reports, contribution
to progressive payoff schedule reports, and tax sharing
methodology.
3. Failure to
comply with any of the requirements set forth in subsection 2 shall be an
unsuitable method of operation.
4.
The Commission may, upon request of an operator or an applicant for licensing
as an operator, and for good cause, waive any of the requirements set forth in
this Rule.
5. Operators shall
maintain the records required by this section for at least five years after
they are made unless the Commission approves otherwise in
writing.
4.190
Aggregate payout limits for gambling games.
1. As used within this Rule, "aggregate
payout limit" means a maximum payoff amount that will be paid by a licensee to
two or more patrons as the result of winning wagers resulting from any single
call of the game or hand of play.
2.
Except as otherwise provided herein, a licensee may establish an aggregate
payout limit on any game, as well as on a separate bonus feature requiring a
separate wager made in conjunction with or in association with the game.
Aggregate payout limits may not be combined for different types of
wagers.
3. Each separate aggregate
payout limit established for the game or bonus feature may not be an amount
which is less than the highest award with the minimum wager required to play
the game or bonus feature.
4. All
aggregate payout limits must be prominently displayed on the table layout or on
a sign placed on the table, which is unobstructed and clearly visible from all
player positions, using language approved by the Commission.
5. Aggregate payout limits may not be imposed
upon payouts from slot machines, race books, sports pools or any game where the
highest payoff odds on a winning wager are less than 50 to 1, unless otherwise
allowed by Rules of the Commission. This section does not apply to bingo or
keno.
6. The Commission may, in the
Commission's sole and absolute discretion, waive one or more of the provisions
of this section, subject to such conditions as the Commission may
impose.
4.215
Operation of a system supported or system based gaming device.
1. Definitions. As used in this section:
(a) "Commission" means the Arkansas Racing
Commission or the Commission's designee.
(b) "Licensee" means a person or entity
licensed to conduct a Casino gaming operation. The term does not include a
person or entity licensed as a holder of a security or other ownership interest
in the operation, or as an officer, director or key employee of the operation,
or due to any other relationship or involvement with the operation.
(c) "Operator" means any licensee that
operates a system supported or system based gaming device on the premises where
its gaming operation is located.
(d)
"System" means system supported or system based gaming
device.
2. In addition to
any other requirements set forth in the Amendment or these Rules, all operators
of a system shall comply with the following requirements:
(a) Prior to commencing operations of its
system, an operator shall provide the Commission with a list of all persons who
may access the main computer or data communications components of its system.
The list shall describe the role or roles assigned to each person on the list.
Any changes to the list in a particular month shall be provided to the
Commission on or before the fifteenth (15th) day of the following
month.
(b) At the request of the
Commission, an operator shall provide and maintain, at its sole expense and at
such location as the Commission may designate, networked equipment for the
purpose of monitoring information regarding the system including, but not
limited to, the names of persons accessing the main computer or data
communications components of the system, the identification of functions being
performed by such persons, gaming application authentication information, and
any other information required to be logged by the system in accordance with
these Rules.
(c) An operator shall
retain and provide Commission agents, upon request, all records pertaining to
its system, including, without limitation, computer room visitor logs and
system transaction logs.
3. Failure to comply with any of the
requirements set forth in subsection 2 shall be an unsuitable method of
operation.
4. The Commission may,
upon request of an operator or an applicant for licensing as an operator, and
for good cause, waive any of the requirements set forth in this
Rule.
4.220
Operation of a mobile gaming system.
1. Definitions. As used in this section:
(a) "Director" means the Director of the
Arkansas Racing Commission or the Commission's designee.
(b) "Communications technology" means the
methods used and the components employed to facilitate the transmission of
information including, but not limited to, transmission and reception systems
based on wire, cable, radio, microwave, light, optics, cellular data, or
computer data networks and the Internet. "Equipment associated with mobile
gaming" means associated equipment, which will be approved as associated
equipment.
(c) "Licensed gaming
establishment" means the establishment of a licensee, which includes all land,
together with all buildings and improvements located thereon.
(d) "Licensee" means a person or entity
licensed to conduct Casino gaming operations, who at all times exposes to the
public for play, 100 or more slot machines and at least one table game, within
its licensed gaming establishment. The term does not include a person or entity
licensed as a holder of a security or other ownership interest in the licensee,
or as an officer, director or key employee of the licensee, or due to any other
relationship or involvement with the licensee or gaming operation.
(e) "Mobile communications device" means a
device which displays information relating to the game to a participant in the
game as part of a system.
(f)
"Mobile gaming system" or "system" means a system that allows for the conduct
of sports wagering through mobile communications devices operated by the use of
communications technology that allows a patron to bet or wager, and
corresponding information related to the display of the game, gaming outcomes
or other similar information.
(g)
"Operator of a mobile gaming system" or "operator" means a person or entity,
who, under any agreement whereby consideration is paid or payable for the right
to place a mobile gaming system, engages in the business of placing and
operating a mobile gaming system and who is authorized to share in the revenue
from the mobile gaming system without having been individually licensed to
conduct gaming at the establishment.
(h) All mobile gaming systems must be
approved by the Commission.
2. Mobile gaming systems may be exposed for
play as follows:
(a) A system may only be
exposed for play to the public by an operator licensed by the Commission and
approved by the Commission.
(b) A
licensee or an operator may submit a request to the Commission for approval to
expose a system for play at a licensed gaming establishment.
(1) Such a request must specify at a minimum:
(A) How the operator intends to:
(i) Adequately monitor play of the system
and
(ii) Reasonably assure only
players of lawful age will operate the mobile communications devices;
and
(B) Such additional
information as the Commission may require.
(2) A licensee or an operator aggrieved by a
decision of the Commission may request a hearing before the Commission and may
appeal any decision by the Commission under the Arkansas Administrative
Procedures Act.
3. In addition to any other requirements set
forth in these Rules, the operator and licensee where a system is operated
shall comply with the following requirements:
(a) Only a system that has been approved by
the Commission may be exposed for play within a licensed gaming
establishment.
(b) The licensee
shall be responsible for all payouts from each system operated within its
licensed gaming establishment.
(c)
Systems that expose games with fixed payoff schedules that exceed $250,000 or
in the case of systems that expose games with progressive payoff schedules that
are expected to exceed $250,000, are limited to Casino gaming
operations.
(d) At the request of
the Commission, an operator shall deposit with the Commission and thereafter
maintain a revolving fund in an amount of $20,000 unless a lower amount is
approved by the Commission, which shall be used to ensure compliance of the
system with applicable laws and regulations. Upon surrendering its operator's
license, the Commission may refund the balance remaining in the revolving
fund.
(e) All revenue received from
the system, regardless of whether any portion of the revenue is shared with the
operator, must be attributed to the licensee of the licensed gaming
establishment and counted as part of the gross revenue of the licensee. The
operator, if receiving a share of the revenue from a system, is liable to the
licensee for the operator's proportionate share of the license fees paid by the
licensee.
(f) Each separate mobile
communications device is subject to the same fees and taxes made applicable to
all other Casino gaming receipts.
(g) Operators shall retain and provide
Commission agents, upon request, all records pertaining to their mobile gaming
systems including, without limitation, all revenue and cash records, end-of-day
reports, computer room visitors logs, details of any patron disputes, device or
game performance reports, weekly reports, and any other financial or
non-financial records or reports required to be provided by the
Commission.
4. Failure to
comply with any of the requirements set forth in subsection 3 shall be an
unsuitable method of operation.
5.
Except for subsections 3(f) and 3(g), the Commission may, for good cause shown,
waive any of the requirements set forth in this Rule.
6. Operators shall maintain the records
required by this section for at least five years after the records are made
unless the Commission approves otherwise in writing.
7. Before a wager may be made on a system, a
wagering account must be established in accordance with these
Rules.
4.225
Wagering accounts.
1.
Definitions. As used in this section:
(a)
"Director" means the Director of the Arkansas Racing Commission or the
Commission's designee.
(b)
"Licensee" means any person to whom a valid Casino license has been
issued.
(c) "Secure personal
identification" means a method of uniquely identifying a patron through which
the licensee may verify access to, or use of, a wagering account.
(d) "Wagering account" means an electronic
ledger operated and maintained by a licensee for a patron in connection with
the patron's use and play of any or all authorized games and gaming devices,
including, but not limited to, race books and sports pools, wherein information
relative to such use and play is recorded on behalf of the patron including,
but not limited to, the following types of transactions:
(1) Deposits;
(2) Withdrawals;
(3) Debits;
(4) Credits;
(5) Service or other transaction-related
charges authorized by the patron; and
(6) Adjustments to the wagering
account.
2.
Except as otherwise specified in these Rules, as applicable, a licensee shall
comply with the provisions of this section for the creation and use of wagering
accounts for all forms of wagering.
3. Scope of use of wagering accounts.
(a) Subject to paragraph (b) of this
subsection, a licensee may establish and allow the use of wagering accounts for
patrons' sports wagering activity with any licensed gaming establishment of the
licensee.
(b) Before a licensee
allows its wagering accounts to be used by patrons in connection with placing
any wagers on sports events, the licensee must:
(1) Submit to the Commission a written
proposal for implementation of such wagering accounts that addresses the
following:
(I) The proper reporting of
revenue;
(II) How minimum bankroll
requirements will be satisfied;
(III) How the reserve requirements of this
section will be satisfied;
(IV)
Compliance with the Commission's minimum internal control procedures adopted
pursuant to these Rules; and
(V) Any
additional items or information as the Commission may
require.
(2) Obtain the
written administrative approval from the Commission subject to such conditions
or limitations that the Commission may impose.
4. Operation and maintenance of wagering
accounts by third-parties.
(a) A licensee may
use a licensed cash access and wagering instrument service provider or a
licensed manufacturer to operate and maintain wagering accounts on behalf of
the licensee, provided such wagering accounts are used only for purposes of
accepting wagers under these Rules from patrons physically present within the
State of Arkansas when initiating the wager.
(b) A licensed cash access and wagering
instrument service provider or a licensed manufacturer that acts on behalf of a
licensee to operate and maintain wagering accounts shall be subject to the
provisions of this section applicable to such services to the same extent as
the licensee.
(c) A licensee
continues to have an obligation to ensure, and remains responsible for
compliance with, this Rule, the Amendment and all other Rules of the Commission
regardless of its use of a licensed cash access and wagering instrument service
provider or a licensed manufacturer to operate and maintain wagering accounts
on its behalf.
(d) A licensed cash
access and wagering instrument service provider or a licensed manufacturer
acting on behalf of a licensee, and with the consent of the licensee and the
patron, may use a patron's personal identification information to administer
all other wagering accounts created for that patron on behalf of additional
licensees.
5. A licensee
may create a wagering account for a patron only after it has registered the
patron, either remotely or in person, as follows:
(a) Obtained, recorded, and verified:
(1) The identity of the patron;
(2) The patron's date of birth;
(3) The patron's physical address;
and
(4) The patron's social security
number, ITIN or equivalent means of identification acceptable to the
Commission.
(b) Have the
patron affirm:
(1) That the information
provided by the patron to the licensee to open the wagering account is
accurate;
(2) That the patron has
reviewed and acknowledged the rules and procedures established by the licensee
for use of the wagering account;
(3)
That the patron has been informed of and acknowledged that they are prohibited
from allowing any other person not assigned to the wagering account access to
or use of their wagering account; and
(4) That the patron consents to the
monitoring and recording by the licensee and the Commission of the use of the
wagering account.
(c)
Determined that the patron is not on the list of excluded
persons.
6. Once a
wagering account is created, a secure personal identification for the patron
authorized to use the wagering account shall be implemented by the licensee
that is reasonably designed to prevent the unauthorized access to, or use of,
the wagering account by any person other than the patron for whom the wagering
account is established.
7. A
licensee shall not allow a wagering account to be created anonymously or in a
fictitious name. Patrons may, while using or playing a game or gaming device,
represent themselves using a name other than their actual name or may remain
anonymous.
8. Funds may be deposited
by a patron into the patron's wagering account as follows:
(a) Cash deposits made directly with the
licensee;
(b) Personal checks,
cashier's checks, wire transfer and money order deposits made directly or
mailed to the licensee;
(c)
Transfers from a patron's safekeeping or front money accounts otherwise held by
the licensee;
(d) Debits from the
patron's debit instrument, prepaid access instrument, or credit card;
(e) Transfers from another account verified
to be controlled by the patron through the automated clearing house or another
mechanism designed to facilitate electronic commerce transactions;
(f) Funds derived from the extension of
credit to the patron by the licensee; or
(g) Any other means approved by the
Commission.
9. Funds may
be withdrawn by a patron from their wagering account as follows:
(a) Issuance of cash directly to the patron
by the licensee;
(b) Issuance of a
personal check, cashier's check, money order, or wire transfer by the licensee
made payable to the patron and issued directly or mailed to the
patron;
(c) Transfers to the
patron's safekeeping or front money accounts held by the licensee;
(d) Credits to the patron's debit instrument,
prepaid access instrument, or credit card;
(e) Transfers to another account verified to
be controlled by the patron through the automated clearing house or another
mechanism designed to facilitate electronic commerce transactions;
(f) As repayment of outstanding credit owed
by the patron to the licensee; or
(g) Any other means approved by the
Commission.
10. Credits to
a wagering account may be made by the following means:
(a) Deposits;
(b) Amounts won by the patron;
(c) Transfers from a game or gaming
device;
(d) Promotional credits, or
bonus credits provided by the licensee and subject to the terms of use
established by the licensee and as long as such credits are clearly identified
as such;
(e) Adjustments made by the
licensee following the resolution of a dispute; or
(f) Any other means approved by the
Commission.
11. Debits to
a wagering account may be made by the following means:
(a) Withdrawals;
(b) Amounts wagered by the patron;
(c) Transfers to a game or gaming
device;
(d) Adjustments made by the
licensee following the resolution of a dispute;
(e) Service or other transaction-related
charges authorized by the patron; or
(f) Any other means approved by the
Commission.
12. Unless
there is a pending unresolved player dispute or investigation, a licensee shall
comply with a request for a withdrawal of funds by a patron from the patron's
wagering account in accordance with the terms of the wagering account agreement
between the licensee and its patron.
13. A licensee shall not allow a patron to
electronically transfer funds from their wagering account to any other patron's
wagering account.
14. A licensee
shall not allow a wagering account to be overdrawn unless caused by payment
processing issues outside the control of the licensee.
15. A licensee shall suspend a wagering
account if the wagering account has not been used to make any wagers for a
consecutive 16-month period. The licensee may re-activate a suspended wagering
account only after re-verifying the information required by this Rule and upon
the patron presenting a current government issued picture identification
credential.
16. A licensee shall
record and maintain, for a period of at least 5 years after creation, the
following in relation to a wagering account:
(a) All information used by the licensee to
register a patron and create the wagering account pursuant to this
Rule;
(b) The method used to verify
the information provided by a patron to establish the wagering account,
including a description of the identification credential provided by a patron
to confirm their identity and its date of expiration;
(c) The date and time the wagering account is
opened and terminated;
(d) The date
and time the wagering account is accessed by any person, including the patron
or the licensee;
(e) All deposits,
withdrawals, credits and debits; and
(f) The patron's account
number.
17. Responsible
Gambling.
(a) Licensees shall ensure that its
patrons have the ability to select responsible gambling options associated with
their wagering account that include deposit limits establishing the amount of
total deposits a patron can make to their wagering account within a specified
period of time.
(b) Licensees shall
conspicuously display and make available to patrons, upon access to their
wagering account, the following responsible gambling message:
[Licensee's name] encourages you to gamble responsibly. If you or
someone you know has a gambling problem, assistance is available by calling or
texting 1-800-522 -4700, chatting online via
http://www.ncpgambling.org/help-treatment/chat/
or visiting the National Council on Problem Gambling Services website at
http://www.ncpgambling.
The Licensee may modify the foregoing message by inserting any other
problem gambling hotline number and/or website approved for such purpose by the
Commission.
If either the helpline number or website address changes, the
Commission may administratively approve the use of an alternative helpline
number or website address.
18. Each licensee that offers wagering
accounts shall adopt, conspicuously display, make available, and adhere to
written, comprehensive rules governing wagering account transactions. Such
rules must include, at a minimum, the following:
(a) That the licensee's house rules apply to
wagering accounts, as applicable.
(b) That the licensee shall provide each
patron, upon reasonable request and consistent with its internal control
policies, with a statement of account showing each wagering account deposit,
withdrawal, credit, and debit made during the time period reported by the
account statement. The patron may dispute any transaction in accordance with
these Rules.
(c) That for all
wagers, the licensee is required to make a voice, print, electronic or other
approved record of the entire transaction and shall not accept any such wager
if the recording system is inoperable. The licensee's record of a patron's
confirmation of all wagers shall be deemed to be the transaction of record.
Such records are made available to the Commission upon request.
(d) That the licensee has the right to;
(1) Refuse to establish a wagering account
for what it deems good and sufficient reason;
(2) Refuse deposits to wagering accounts for
what it deems good and sufficient reason;
(3) Refuse to accept all or part of any wager
for what it deems good and sufficient reason;
(4) Declare that any or all wagers will no
longer be received; and
(5) Unless
there is a pending Commission investigation or patron dispute, suspend or close
any wagering account at any time pursuant to the terms of the agreement between
the licensee and the patron, provided, however, when a wagering account is
closed, the licensee shall immediately return the balance of the wagering
account at the time of said action, subject to compliance with these Rules, the
licensee's house rules, and federal and state laws and regulations, by sending
a check to the patron's address of record or as otherwise provided pursuant to
the terms of the wagering account agreement; and
(e) That the licensee shall keep
confidential, except from the Commission, except from financial institutions
participating in a program established in accordance with Section 314(b) of the
USA Patriot Act, except as required by state or federal law, except from the
licensee's service providers, or except as otherwise authorized by the patron,
the following:
(1) The amount of money
credited to, debited from, or present in any particular patron's wagering
account;
(2) The amount of money
wagered by a particular patron on any game or gaming device;
(3) The account number and secure personal
identification method that identifies the patron;
(4) The identities of particular entries on
which a patron is wagering or has wagered; and
(5) The name, address, and other information
in the possession of the licensee that would identify the patron to anyone
other than the Commission or the licensee.
(f) That the licensee shall disclose its
policy regarding the acceptance of personal checks, cashier's checks, wire
transfers, money orders, debit instruments, credit cards and electronic
transfers of money to the patron.
Prior to adopting or amending such wagering account rules, a licensee
shall submit them to the Commission for approval.
19. Reserve requirements for licensees.
(a) A licensee shall maintain a reserve in
the form of cash, cash equivalents, an irrevocable letter of credit, a bond, or
a combination thereof for the benefit and protection of patrons' funds held in
wagering accounts. The reserve may be maintained by a licensee's holding
company and may be combined as a single amount for all patrons' funds held in
wagering accounts maintained by the licensee and its affiliate
licensees.
(b) The amount of the
reserve shall be not less than the greater of $25,000 or the sum of all
patrons' funds held in the wagering accounts. Amounts available to patrons for
play that is not redeemable for cash may be excluded from the reserve
requirement. In calculating the sum of all patrons' funds held in wagering
accounts when such wagering accounts are used for multiple types of wagering,
these Rules, as applicable, shall not be construed to require the tallying of
such patrons' funds more than once.
(c) If a reserve is maintained in the form of
cash, cash equivalent, or an irrevocable letter of credit, it must be held or
issued, as applicable, by a federally-insured financial institution. If the
reserve is maintained in the form of a bond, it must be written by a bona fide
insurance carrier. The reserve must be established pursuant to a written
agreement between the licensee and the financial institution or insurance
carrier, but the licensee may engage an intermediary company or agent
acceptable to the Commission to deal with the financial institution or
insurance carrier, in which event the reserve may be established pursuant to
written agreements between the licensee and the intermediary and between the
intermediary and the financial institution or insurance carrier.
(d) The agreements described in paragraph (c)
of this subsection must reasonably protect the reserve against claims of the
licensee's creditors other than the patrons for whose benefit and protection
the reserve is established, and must provide that:
(1) The reserve is established and held in
trust for the benefit and protection of patrons to the extent the licensee
holds money in wagering accounts for such patrons;
(2) The reserve must not be released, in
whole or in part, except to the Commission on the written demand of the
Commission or to the licensee on the written instruction of the Commission. The
reserve must be available within 60 days of the written demand or written
notice. The licensee may receive income accruing on the reserve unless the
Commission instructs otherwise pursuant to paragraph (k) of this
subsection;
(3) The licensee has no
interest in or title to the reserve or income accruing on the reserve except to
the extent expressly allowed in this subsection;
(4) Arkansas law and this subsection govern
the agreements and the licensee's interest in the reserve and income accruing
on the reserve;
(5) The agreements
are not effective until the Commission's approval has been obtained pursuant to
paragraph (e) of this subsection; and
(6) The agreements may be amended only with
the prior, written approval of the Commission.
(e) Each licensee shall submit to the
Commission all information and copies of all documents relating to its proposed
reserve arrangement, including copies of the agreements described in paragraphs
(c) and (d) of this subsection, and must obtain the Commission's approval of
the agreements and of the reserve arrangements generally. The Commission shall
determine whether the agreements and arrangements satisfy the purposes and
requirements of this subsection, may require appropriate changes or withhold
approval if they do not, and shall notify the licensee of the determination.
Amendments to reserve agreements or arrangements must be approved in the same
manner.
(f) A licensee must
calculate its reserve requirements each day. In the event a licensee determines
that its reserve is not sufficient to cover the calculated requirement, the
licensee must, within 24 hours, notify the Commission of this fact in writing
and must also indicate the steps the licensee has taken to remedy the
deficiency.
(g) Each licensee must
engage an independent certified public accountant to examine the pertinent
records relating to the reserve each month and determine the reserve amounts
required by this subsection for each day of the previous month and the reserve
amounts actually maintained by the licensee on the corresponding days. The
licensee shall make available to the accountant whatever records are necessary
to make this determination. The accountant shall report the findings with
respect to each day of the month under review in writing to the Commission and
the licensee no later than the fifteenth day of the next month. The report
shall include the licensee's statement addressing each day of noncompliance and
the corrective measures taken.
(h)
The report described in paragraph (g) of this subsection may be prepared by an
employee of the licensee that is independent of the gaming operations if
written approval has been received from the Commission.
The report must contain the signature of an employee attesting to the
accuracy of the submitted information.
(i) If the Commission is notified pursuant to
paragraph (f) of this subsection, or the report described in paragraph (g) of
this subsection indicates that at any time during the month under review the
amount of the reserve did not meet the requirements of this section, the
Commission may instruct the book to either increase the reserve accordingly or
cease accepting wagers and money for the account of patrons until such time as
the reserve meets the requirements of this subsection and is confirmed to the
Commission's satisfaction. The Commission may demand that this reserve be
increased to correct any deficiency or for good cause to protect
patrons.
(j) If the reserve exceeds
the requirements of this subsection, the Commission shall, upon the licensee's
written request, authorize the release of the excess.
(k) When a licensee ceases operating and its
license lapses, is surrendered, or is revoked, the Commission may demand
payment of the reserve, any income accruing on the reserve after operations
cease, and, if instructions from the Commission that income accruing on the
reserve not be paid to the licensee are in effect when operations cease, any
income accruing since the instructions took effect. The Commission may
interplead the funds in state district court for distribution to the patrons
for whose protection and benefit the reserve was established and to such other
persons as the court determines are entitled thereto, or shall take such other
steps as are necessary to effect the proper distribution of the funds, or may
do both.
(l) As used in this
subsection, "month" means a calendar month unless the Commission requires or
approves a different monthly period to be used for purposes of this subsection,
in which case "month" means the monthly period so required or
approved.
20. Upon written
request and good cause shown, the Commission may waive one or more of the
requirements of this Rule. If a waiver is granted, the Commission may impose
alternative requirements.
4.230
Hosting center; registration
required.
1. Before certain parts of
any game, gaming device, cashless wagering system or race book or sports pool
operation can be operated at a hosting center, the hosting center, along with
all owners and operators of the hosting center, and persons having significant
involvement with the hosting center as determined by the Commission, including
but not limited to key employees, must register with the Commission pursuant to
this Rule. Such registration does not become effective until the registration
is approved by the Commission in writing. Any person or entity whose request
for registration is not approved by the Commission may appeal the decision
using the administrative appeal process found under these Rules.
2. Registration required by subsection 1,
shall be made, processed, and determined using such forms as the Commission may
require or approve and must be accompanied and supplemented by such documents
and information as may be specified or required. The information requested
shall include, but not be limited to, the following:
(a) For the registration of natural persons:
(1) Full name, including aliases, past and
present;
(2) Residential address or
addresses for the last five years;
(3) Contact information, including phone
numbers and email addresses;
(4)
Employment history, both current and for the past ten years;
(5) Date and place of birth;
(6) Social Security Number;
(7) Full legal name of the hosting center to
which the person's registration relates;
(8) Description of the person's relationship
with the relevant hosting center, and the person's duties or responsibilities
under that relationship;
(9) List
and description of any professional licenses that the person has held, past and
present, and any past or current disciplinary action against those
licenses;
(10) List and description
of any arrests or convictions of the person by law enforcement involving a
felony or crime of moral turpitude;
(11) List and description of any incidents in
which the person has, either individually or part of a group, been refused a
gaming license or otherwise been found unsuitable by a regulatory
body;
(b) For the
registration of business organizations or associations:
(1) Legal name, address, and contact
information of every business organization or association under which the
entity does business;
(2) Date and
jurisdiction under which each business organization or association provided
under subsection (2)(b)(1) is registered as a legal entity;
(3) Tax identification number of each
business organization or association provided under subsection
(2)(b)(1);
(4) List of all
affiliates of the business organization or association;
(5) Organization chart depicting the business
organization's or association's management structure;
(6) Organization chart depicting the business
organization's or association's ownership structure, including, but not limited
to any parent and affiliated entities;
(7) List of the names of all officers,
directors, managers, and key employees of the business organization or
association;
(8) Where the business
organization or association is not the hosting center itself, a description of
the business organization's or association's relationship to the relevant
hosting center, and of what duties or responsibilities it will have under that
relationship;
(9) List and
description of any professional licenses that the business organization or
association has held, past and present, and any past or current disciplinary
action against those licenses;
(10)
List and description of any criminal charges brought against the business
organization or association involving a felony or crime of moral turpitude;
and
(11) List and description of
any incidents where the business organization or association has, either
individually or as part of a group, been refused a gaming license or otherwise
been found unsuitable by a regulatory body;
(c) For each hosting center provide a
description of the facility and services available. The following descriptions
must be provided:
(1) Location description
including:
(a) Floor plan;
(b) Reliability of power and
telecommunications;
(c) Bandwidth
availability;
(d) Compliance of
server room to international standards;
(e) Redundancy of power and
telecommunications feeds;
(f)
Offline power capabilities (e.g. UPS and generator power);
(g) Refueling requirements of generators and
fuel acquisition arrangements;
(h)
Fire suppression system(s);
(i)
Temperature and humidity control system(s);
(j) Procedures for switching to offline
power; and
(2) Security
description including:
(a) Perimeter boundary
fences;
(b) Use of security guards
(employees or contracted);
(c)
Access controls;
(d) Alarm
systems;
(e) Video surveillance
coverage and storage;
(f)
Monitoring of personnel access to sensitive areas;
(g) Anti-surveillance measures;
(h) Tenants; and
(i) Contractors in use for services such as
cleaning and maintenance.
(3) Disaster recovery capabilities, testing,
and auditing.
(4) Internal Control
Procedures including:
(a) Visitor access
procedures and controls;
(b)
Maintenance and audit of access logs;
(c) Alarm procedures for technical and
security response;
(d) Due
diligence performed on contractors, tenants, and staff;
(e) Emergency access procedures;
and
(f) Any other relevant
procedures.
3. Any request for registration pursuant to
subsection 1 shall contain a statement subscribed by the applicant for
registration that:
(a) The information being
provided to the Commission is accurate and complete;
(b) That the applicant for registration
agrees to cooperate with requests, inquiries, or investigations of the
Commission; and
(c) The applicant
for registration acknowledges that the Commission may demand the person or
entity to submit an application for finding of suitability, and that a failure
to submit such an application within 30 days of the demand may constitute
grounds for a finding of unsuitability by the Commission.
4. Any applications for registration required
under this section shall be prepared and submitted by the relevant hosting
center.
5. By the 15th day of each
January, each registered hosting center shall inform the Commission in writing
of any changes in the information provided in its application for registration,
and the applications for registration of any owner, operator, or person having
significant involvement with the hosting center, or provide the Commission with
an affirmative statement indicating that there have been no changes to that
information. If such information or statement is not provided to the Commission
within ninety days of January 15th of each year, the hosting center's
registration, and the registrations of each owner, operator, and person having
significant involvement with the hosting center will lapse. If any
registrations lapse pursuant to this subsection, the applicable registrants
must reapply for registration with the Commission in order to reinstate the
person's or entity's registered status.
6. The Commission, in its sole and absolute
discretion may, upon receipt of a written request:
(a) Waive the registration requirements of
subsections 2(a) and 2(b) for an individual or entity that currently holds a
nonrestricted gaming license, or an affiliate thereof that has been registered
or found suitable by the Commission; or
(b) Waive the registration requirements of
subsection 2(c) if the hosting center can demonstrate, to the Commission's
satisfaction, that the disclosure to the Commission of certain information
required under that subsection would hinder operations or pose a hardship due
to contractual obligations.
4.231
Hosting center; access to
premises.
1. The premises on which a
registered hosting center is located is subject to the power and authority of
the Commission, as though the premises is where gaming is conducted and as if
the hosting center is a gaming licensee. The Commission may waive this
requirement for portions of the hosting center premises if the hosting center
can demonstrate to the Commission's satisfaction that:
(a) Such portions do not host certain parts
of any game, gaming device, cashless wagering system or race book or sports
pool operation; and
(b) Access to
such portions of the premises causes undue hardship on the hosting center or
its tenants.
4.232
Hosting center; determination of
suitability.
1. The Commission may,
upon recommendation of the Commission, require a person or entity owning,
operating or having a significant involvement with a hosting center to file an
application for finding of suitability to be associated with licensed gaming,
including race book or sports book operations.
2. The Commission shall give written notice
to a person or entity of its decision to require the filing of an application
for a finding of suitability under subsection 1. Unless otherwise stated by the
Commission in its written notice, a person or entity that has been ordered to
file an application for a finding of suitability may continue to own, operate,
or otherwise be involved with a hosting center unless and until the Commission
finds the person unsuitable.
3. If
the Commission finds any person or entity to be unsuitable under this section:
(a) The registration of such person or entity
is thereupon cancelled; and
(b) All
registered hosting centers and gaming licensees shall, upon written
notification from the Commission, terminate any existing relationship, direct
or indirect, with such person.
4. Failure of a gaming licensee to terminate
any association or agreement, direct or indirect, with a person or entity found
unsuitable under this section upon receiving written notice of the
determination of unsuitability constitutes an unsuitable method of
operation.
5. Failure of a
registered hosting center to terminate any association or agreement with a
person or entity found unsuitable under this section upon receiving written
notice of the determination of unsuitability shall constitute grounds for the
revocation of the hosting center's registration.
6. The Commission retains jurisdiction to
determine the suitability of a person or entity described in paragraph 1
regardless of whether or not that person or entity has severed any relationship
with a registered hosting center or gaming licensee.
7. Failure on the part of a person or entity
described in paragraph 1 to submit an application for a finding of suitability
within 30 days of being demanded to do so by the Commission shall constitute
grounds for a finding of unsuitability of that person or entity.
4.235
Hosting center;
requirements on licensees utilizing hosting centers; limitations on operations
at hosting centers.
1. Gaming licensees
may only operate parts of any game, gaming device, cashless wagering system or
race book or sports pool operation at hosting centers that have an active
registration with the Commission pursuant to these Rules.
2. A gaming licensee must report in writing
to the Commission the name of any registered hosting center it intends to
utilize along with a description of what operations will take place at the
hosting center. A gaming licensee must inform the Commission in writing should
any operations at the hosting center change or if the gaming licensee ceases
operations at the hosting center altogether.
3. The parts of the operation of any game,
gaming device, cashless wagering system or race book or sports pool operation
that involve the physical acceptance of a wager from a patron or payout of
winnings to a patron cannot occur at the hosting center, but rather must only
occur in such manner and location as allowed under the Amendment or the Rules
adopted thereunder.
4.240
Service Providers.
1. Findings.
The Commission hereby finds that service providers are secure and reliable,
that service providers do not pose a threat to the integrity of gaming, and
that service providers are consistent with the public policy of this
State.
2. Definitions.
(a) "Commission" means the Arkansas Racing
Commission or the Commission's designee.
(b) "Assumes responsibility" means to acquire
control over, or ownership of, a person, or to acquire the authority, by
contract or otherwise, to direct a person to make corrections, modifications,
or changes to any aspect of the service or services provided by the person,
including corrections, modifications or changes to software or
hardware.
(c) "Geolocation service
provider" means a person who identifies, or provides information for the
identification of, the geographic location of individuals to a licensed
operator of interactive gaming, licensed interactive gaming service provider,
or licensed manufacturer of interactive gaming systems for purposes of
interactive gaming. This definition does not include:
(i) A person who otherwise generally provides
such information for purposes other than interactive gaming;
(ii) A licensed operator of interactive
gaming who obtains such information for its own use;
(iii) A licensed interactive gaming service
provider, or licensed manufacturer of interactive gaming systems who provides
such information; or
(iv) A person
who provides such information to a licensed operator of interactive gaming,
licensed interactive gaming service provider, or licensed manufacturer of
interactive gaming systems so long as the licensed operator of interactive
gaming, licensed interactive gaming service provider, or licensed manufacturer
of interactive gaming systems assumes responsibility for the information
provided.
(d)
"Information technology service provider" means a person who, on behalf of
another licensee, provides management, support, security, or disaster recovery
services for Commission regulated hardware or software.
(e) "Patron identification service provider"
means a person who verifies, or provides information for the verification of,
the identification of individuals to a licensed operator of interactive gaming,
licensed interactive gaming service provider, or licensed manufacturer of
interactive gaming systems for purposes of interactive gaming. This definition
does not include:
(i) A person who otherwise
generally provides such information for purposes other than interactive
gaming;
(ii) A licensed operator of
interactive gaming who obtains such information for its own use;
(iii) A licensed interactive gaming service
provider, or licensed manufacturer of interactive gaming systems who provides
such information; or
(iv) A person
who provides such information to a licensed operator of interactive gaming,
licensed interactive gaming service provider, or licensed manufacturer of
interactive gaming systems so long as the licensed operator of interactive
gaming, licensed interactive gaming service provider, or licensed manufacturer
of interactive gaming systems assumes responsibility for the information
provided.
(f) "Payment
processing service provider" means a person who directly facilitates the
depositing of funds into or withdrawing of funds from interactive gaming
accounts for a licensed operator of interactive gaming or licensed interactive
gaming service provider. This definition does not include:
(i) A licensed operator of interactive gaming
who provides such services for its patrons;
(ii) A licensed interactive gaming service
provider who provides such services; or
(iii) A person who provides such services to
a licensed operator of interactive gaming or licensed interactive gaming
service provider, so long as the licensed operator of interactive gaming or
licensed interactive gaming service provider assumes responsibility for the
service provided.
(g)
"Service provider" means a person who:
(i)
Acts on behalf of another licensed person who conducts Casino gaming
operations, and who assists, manages, administers or controls wagers or games,
or maintains or operates the software or hardware of games on behalf of such a
licensed person, and is authorized to share in the revenue from games without
being licensed to conduct gaming at an establishment;
(ii) Is an interactive gaming service
provider as defined pursuant to these Rules;
(iii) Is a cash access and wagering
instrument service provider;
(iv)
Is an information technology service provider;
(v) Acts on behalf of another licensed person
who conducts Casino gaming operations where the services provided include those
functions that fall within the definition of "gaming employee";
(vi) Is a geolocation service
provider;
(vii) Is a patron
identification service provider; or
(viii) Is a payment processing service
provider.
3.
Service provider investigation classifications. The level of investigation
conducted by the Commission of a service provider applicant is classified based
on the significance of the activities to be provided on behalf of a licensee
and regulatory risk of the service provider. The investigation classifications
are as follows:
(a) The following service
providers are subject to a class 1 investigation:
(i) Any interactive gaming service
provider;
(ii) Any service provider
who receives payments based on earnings or profits from any gambling game;
or
(iii) Any other applicant for a
service provider license who, upon a determination of the Commission, should be
subject to a class 1 investigation. Such determination shall be based on the
policy set forth in this subsection.
(b) Any service provider other than those
identified in subsection 3(a) of this section is subject to a class 2
investigation.
4. A
licensee may only use a service provider that is licensed as such by the
Commission.
5. A licensee continues
to have an obligation to ensure, and remains responsible for, compliance with
this Rule, the Amendment and all other Rules of the Commission regardless of
its use of a service provider.
6. A
person may act as a service provider only if that person holds a license
authorizing the person to act as a service provider and subject to any further
conditions, limitations and restrictions imposed by the Commission. Once
licensed, a service provider may act on behalf of one or more Casino
licensees.
7. Licensing
(a) Applications for a service provider
license that is subject to a class 1 investigation shall be made, processed,
and determined in the same manner as applications for Casino licenses, using
such forms as the Commission may require or approve.
(b) Applications for a service provider
license that is subject to a class 2 investigation shall be made, processed,
and determined using such forms as the Commission may require or approve and
must be accompanied and supplemented by such documents and information as may
be specified or required. Such service providers shall be subject to an
investigation and review by the Commission as deemed necessary by the
Commission based on the regulatory risk and the intended activities of the
service provider but that is at a level less than a class 1
investigation.
(c) Before receiving
a license, a service provider must meet the qualifications for
licensing.
(d) Nothing in this Rule
shall be construed to limit or prevent the Commission from conducting such
supplementary or expanded investigations of any applicant for a service
provider license as determined necessary by the Commission. The Commission may
require an applicant for a service provider license to pay any supplementary
investigative fees and costs in accordance with these Rules.
8. An applicant for a service
provider's license shall have the burden of showing that its operations are
secure and reliable.
9.
Applications for a service provider license shall be subject to the application
and investigative fees established pursuant to these Rules.
10. The premises on which a service provider
conducts its operations is subject to the power and authority of the
Commission. It shall be an unsuitable method of operation for a service
provider holding a license issued by the Commission to deny any Commission
member or agent, upon proper and lawful demand, access to, inspection or
disclosure of any portion or aspect of their operations.
11. A service provider shall be liable to the
licensee on whose behalf the service provider acts for the service provider's
proportionate share of the fees and taxes paid by the licensee.
12. Employees of Service Provider. Any
employee of a service provider who is connected directly with the operations of
the service provider or who, on behalf of a licensee or on behalf of the
service provider, performs the duties of a gaming employee is a gaming employee
subject to the provisions of these Rules.
13. License fees.
(a) Before the Commission issues an initial
license or renews a license for a service provider, the service provider shall
pay a license fee of $1,000.
(b)
All service provider licenses shall be issued for the calendar year beginning
on January 1 and expiring on December 31. If the operation as a service
provider is continuing, the fee prescribed by subsection (a) shall be due on or
before December 31 of the ensuing calendar year. Regardless of the date of
application or issuance of the license, the fee charged and collected under
this section is the full annual fee.
14. Any provisions of Rule 5 specifically
applicable to interactive gaming service providers shall control over this
Rule.
15. Grounds for Disciplinary
Action.
(a) Failure to comply with the
provisions of this Rule shall be an unsuitable method of operation and grounds
for disciplinary action.
(b) The
Commission may limit, condition, suspend, revoke or fine any license,
registration, finding of suitability or approval given or granted under this
Rule on the same grounds as it may take such action with respect to any other
license, registration, finding of suitability or approval.
RULE 5
OPERATION OF INTERACTIVE GAMING
5.010
Scope. Rule 5 shall govern
the operation of interactive gaming.
5.020
Definitions. As used in
this Rule:
1. "Authorized player" means a
person who has registered with the operator of interactive gaming to engage in
interactive gaming.
2. "Commission"
means the Arkansas Racing Commission or the Commission's designee.
3. "Interactive gaming account" means a
wagering account as that term is defined in these Rules.
4. "Interactive gaming service provider"
means a person who acts on behalf of an operator of interactive gaming and:
(a) Manages, administers or controls wagers
that are initiated, received or made on an interactive gaming system;
(b) Manages, administers or controls the
games with which wagers that are initiated, received or made on an interactive
gaming system are associated;
(c)
Maintains or operates the software or hardware of an interactive gaming system;
or
(d) Provides products, services,
information or assets to an operator of interactive gaming and receives
therefor a percentage of gaming revenue from the establishment's interactive
gaming system.
5.
"Interactive gaming system" shall have the same meaning as provided in these
Rules.
6. "Inter-operator poker
network" means a pool of authorized players from two or more operators
collected together to play the game of poker on one interactive gaming
system.
7. "Operate interactive
gaming" means to operate, carry on, conduct, maintain or expose for play in or
from the State of Arkansas interactive gaming on an interactive gaming
system.
8. "Operator of interactive
gaming" or "operator" means a person who operates interactive gaming. An
operator of interactive gaming who is granted a license by the Commission is a
licensee.
9. "Poker" means the
traditional game of poker, and any derivative of the game of poker as approved
by the Commission, wherein two or more players play against each other and
wager on the value of their hands. For purposes of interactive gaming, poker is
not a banking game.
10. "Wagering
communication" means the transmission of a wager between a point of origin and
a point of reception through communications technologies.
5.030
License Required;
Applications.
1. A person may act as an
operator of interactive gaming only if that person holds a license specifically
permitting the person to act as an operator of interactive gaming.
2. Applications for an operator of
interactive Casino license shall be made, processed, and determined in the same
manner as applications for Casino licenses, using such forms as the Commission
may require or approve.
5.040
Initial and Renewal License
Fees. Before the Commission issues an initial license or renews a
license for an operator of interactive gaming the operator of interactive
gaming shall pay the license fees.
5.050
Investigative Fees.
Applications for an operator of interactive Casino license shall be subject to
the application and investigative fees established pursuant to these
Rules.
5.060
Interactive
Gaming Systems.
1. An operator shall
not operate a new interactive gaming system in this state unless the
interactive gaming system has been approved by the Commission.
2. Operators shall provide the Commission,
prior to commencing operations of their interactive gaming system, with a list
of all persons who may access the main computer or data communications
components of their interactive gaming system and any changes to that list
shall be provided to the Commission within ten (10) days.
5.070
Internal Controls for Operators
of Interactive Gaming. Each operator shall establish, maintain,
implement and comply with standards that the Commission shall adopt and publish
pursuant to the provisions of these Rules. Such minimum standards shall include
internal controls for:
1. As specified under
these Rules, administrative, accounting and audit procedures for the purpose of
determining the licensee's liability for taxes and fees under the Amendment and
for the purpose of exercising effective control over the licensee's internal
affairs;
2. Maintenance of all
aspects of security of the interactive gaming system;
3. Registering authorized players to engage
in interactive gaming;
4.
Identification and verification of authorized players to prevent those who are
not authorized players from engaging in interactive gaming. The procedures and
controls must incorporate robust and redundant identification methods and
measures in order to manage and mitigate the risks of non face-to-face
transactions inherent in interactive gaming;
5. Protecting and ensuring confidentiality of
authorized players' interactive gaming accounts;
6. Reasonably ensuring that interactive
gaming is engaged in between human individuals only;
7. Reasonably ensuring that interactive
gaming is conducted fairly and honestly, including the prevention of collusion
between authorized players.
8.
Testing the integrity of the interactive gaming system on an ongoing
basis;
9. Promoting responsible
interactive gaming and preventing individuals who have selfexcluded from
engaging in interactive gaming. Such internal controls shall include provisions
for substantial compliance with these Rules; and
10. Protecting an authorized player's
personally identifiable information, including, but not limited to:
(a) The designation and identification of one
or more senior company officials having primary responsibility for the design,
implementation and ongoing evaluation of such procedures and
controls;
(b) The procedures to be
used to determine the nature and scope of all personally identifiable
information collected, the locations in which such information is stored, and
the devices or media on which such information may be recorded for purposes of
storage or transfer;
(c) The
policies to be utilized to protect personally identifiable information from
unauthorized access by employees, business partners, and persons unaffiliated
with the company;
(d) Notification
to authorized player of privacy policies;
(e) Procedures to be used in the event the
operator determines that a breach of data security has occurred, including
required notification to the on-site DF&A representatives; and
(f) Provision for compliance with all local,
state and federal laws concerning privacy and security of personally
identifiable information.
"Personally identifiable information" means any information about an
individual maintained by an operator including (1) any information that can be
used to distinguish or trace an individual's identity, such as name, social
security number, date and place of birth, mother's maiden name, or biometric
records; and (2) any other information that is linked or linkable to an
individual, such as medical, educational, financial, and employment
information.
The Commission may determine additional areas that require internal
controls having minimum standards. The Commission shall adopt and publish any
such additional internal controls and the minimum standards pursuant to the
provisions of the Arkansas Administrative Procedures Act and these
Rules.
5.080
Detection and Prevention of
Criminal Activities. Each operator shall implement procedures that are
designed to detect and prevent transactions that may be associated with money
laundering, fraud and other criminal activities and to ensure compliance with
all federal laws related to money laundering.
5.090
Access to Premises and Production
of Records.
1. Operators holding a
license issued by the Commission are subject to the inspection provisions of
these Rules. It shall be an unsuitable method of operation for an operator
holding a license issued by the Commission to deny any Commission member or
agent, upon proper and lawful demand, access to, inspection or disclosure of
any portion or aspect of their operations.
5.100
House Rules. Each operator
shall adopt, and adhere to written, comprehensive house rules governing
wagering transactions by and between authorized players that are available for
review at all times by authorized players through a conspicuously displayed
link. Such house rules shall include, but not be limited to, specifying the
following:
1. Clear and concise explanation of
all fees;
2. The rules of play of a
game;
3. Any monetary wagering
limits; and
4. Any time limits
pertaining to the play of a game.
Prior to adopting or amending such house rules, an operator shall
submit such rules to the Commission for the Commission's approval.
5.110
Registration
of Authorized Player.
1. Before
allowing or accepting any wagering communication from an individual to engage
in interactive gaming, an operator must register the individual as an
authorized player and create an interactive gaming account for the individual
in accordance with this section.
2.
An operator may register an individual as an authorized player only if the
individual provides the operator with the following information:
(a) The identity of the individual;
(b) The individual's date of birth showing
that the individual is 21 years of age or older;
(c) The physical address where the individual
resides;
(d) The social security
number for the individual, if a United States resident,
(e) That the individual had not previously
self-excluded with the operator and otherwise remains on the operator's
self-exclusion list; and
(f) That
the individual is not on the list of excluded persons established pursuant to
these Rules.
3. Before
registering an individual as an authorized player, the operator must have the
individual affirm the following:
(a) That the
information provided to the operator by the individual to register is
accurate;
(b) That the individual
has reviewed and acknowledged access to the house rules for interactive
gaming;
(c) That the individual has
been informed and has acknowledged that, as an authorized player, the
individual is prohibited from allowing any other person access to or use of his
or her interactive gaming account;
(d) That the individual has been informed and
has acknowledged that, as an authorized player, the individual is prohibited
from engaging in interactive gaming from a state or foreign jurisdiction in
which interactive gaming is illegal and that the operator is prohibited from
allowing such interactive gaming;
(e) That the individual has been informed and
has acknowledged that, if the operator is unable to verify the information
provided by the individual pursuant to subsection 2 within 30 days of
registration, any winnings attributable to the individual will be retained by
the operator and the individual shall have no right to such winnings;
(f) Consents to the monitoring and recording
by the operator and the Commission of any wagering communications;
and
(g) Consents to the
jurisdiction of the State of Arkansas to resolve disputes arising out of
interactive gaming.
4. An
operator may allow an individual to register as an authorized player either
remotely or in person.
5. Within 30
days of the registration of the authorized player, the operator shall verify
the information provided by the individual pursuant to subsection 2. Until such
verification has occurred:
(a) The authorized
player may not deposit more than $5,000 in his or her interactive gaming
account; and
(b) The authorized
player may not withdraw any funds from his or her interactive gaming
account.
6. If
verification of the information provided pursuant to subsection 2 has not
occurred within 30 days, the operator shall:
(a) Immediately suspend the interactive
gaming account and not allow any further interactive gaming;
(b) Retain any winnings attributable to the
authorized player; and
(c) Refund
the balance of deposits made to the interactive gaming account to the source of
such deposit or by issuance of a check and then permanently close the
account.
7. Any winnings
due to an authorized player prior to completion of the verification process
shall be credited to the authorized player's interactive gaming account
immediately upon successful verification.
5.120
Interactive Gaming
Accounts. In addition to the requirements established pursuant to these
Rules, an operator shall comply with the following for interactive gaming
accounts:
1. An operator shall record and
maintain the physical location, by state or foreign jurisdiction, of the
authorized player while logged in to the interactive gaming account.
2. An operator shall ensure the following:
(a) That an individual registered as an
authorized player holds only one interactive gaming account with the operator;
and
(b) That no authorized player
shall occupy more than one position at a game at any given time.
3. Notwithstanding subsection 9 of
Rule 4.225, an operator shall neither extend credit to an authorized player for
use in interactive gaming nor allow the deposit of funds into an interactive
gaming account for use in interactive gaming that are derived from the
extension of credit by affiliates or agents of the operator. For purposes of
this subsection, credit shall not be deemed to have been extended where,
although funds have been deposited into an interactive gaming account, the
operator is awaiting actual receipt of such funds in the ordinary course of
business.
4. An operator shall
ensure that an authorized player has the ability, through the authorized
player's interactive gaming account, to select responsible gambling options
that include without limitation:
(a) Loss
limits establishing the net loss that can occur within a specified period of
time;
(b) Deposit limits
establishing the amount of total deposits an authorized player can make to his
or her interactive gaming account within a specified period of time;
(c) Tournament limits establishing the total
dollar amount of tournament entries a patron can purchase within a specified
period of time;
(d) Buy in limit
establishing the total amount of funds an authorized player can allocate for
the play of poker within a specified period of time, exclusive of tournament
entries purchased;
(e) Play time
limits establishing the total amount of time available for play during a
specified period of time; and
(f)
Time based exclusion from gambling settings.
5. An operator shall not allow the use of an
interactive gaming account established pursuant to this Rule for forms of
wagering other than interactive gaming unless:
(a) The establishment and use of the wagering
account otherwise meets all of the requirements of these Rules; and
(b) Administrative approval has been granted
by the Commission.
5.125
Reserve Requirements. In
addition to the reserve required by these Rules, and other requirements that
may be imposed by these Rules, the operator shall maintain cash in the sum of
the following:
1. 25% of the total amount of
authorized players' funds held in interactive gaming accounts, excluding those
funds that are not redeemable for cash; and
2. The full amount of any progressive
jackpots related to interactive gaming.
5.130
Self-Exclusion.
1. Operators must have and put into effect
policies and procedures for self-exclusion and take all reasonable steps to
immediately refuse service or to otherwise prevent an individual who has
self-excluded from participating in interactive gaming. These policies and
procedures include without limitation the following:
(a) The maintenance of a register of those
individuals who have self-excluded that includes the name, address and account
details of self-excluded individuals;
(b) The closing of the interactive gaming
account held by the individual who has selfexcluded;
(c) Employee training to ensure enforcement
of these policies and procedures; and
(d) Provisions precluding an individual who
has self- excluded from being allowed to again engage in interactive gaming
until a reasonable amount of time of not less than 30 days has passed since the
individual self-excluded.
2. Operators must take all reasonable steps
to prevent any marketing material from being sent to an individual who has
self-excluded.
5.135
Compensation. Any compensation received by an operator for
conducting any game in which the operator is not party to a wager shall be no
more than 10% of all sums wagered in each hand.
5.140
Acceptance of Wagers.
1. Operators shall not accept or facilitate a
wager:
(a) On any game other than the game of
poker and its derivatives as approved by the Commission and published on the
Commission's website;
(b) On any
game which the operator knows or reasonably should know is not between
individuals;
(c) On any game which
the operator knows or reasonably should know is made by a person on the
self-exclusion list;
(d) From a
person who the operator knows or reasonably should know is placing the wager in
violation of state or federal law;
(e) Using an inter-operator poker network
except as otherwise allowed by the Commission; or
(f) From any officer, director, owner or key
employee of such an operator or its affiliates; or
(g) Except as provided in subsection 2, from
stakes players, proposition players or shills.
2. Operators may use a celebrity player for
marketing purposes to attract authorized players if the operator clearly
identifies the celebrity player to the authorized players and does not profit
beyond the rake. For purposes of this subsection, a "celebrity player" is an
authorized player under agreement with the operator whereby the celebrity
player is paid a fixed sum by the operator to engage in interactive gaming and
whom may or may not use their own funds to engage in interactive
gaming.
5.145
Progressive payoff schedules.
1.
As used in this section:
(a) "Base amount"
means the amount of a progressive payoff schedule initially offered before it
increases.
(b) "Incremental amount"
means the difference between the amount of a progressive payoff schedule and
its base amount.
(c) "Progressive
payoff schedule" means any payoff schedule associated with a game played on an
interactive gaming system, including those associated with contests,
tournaments or promotions, that increases automatically over time or as the
game(s) or machine(s) are played.
2. To the extent an operator offers any
progressive payoff schedule, the operator shall comply with this
section.
3. The amount of a
progressive payoff schedule shall be conspicuously displayed during an
authorized player's play of a game to which the payoff schedule applies. Each
operator shall record the base amount of each progressive payoff schedule when
first exposed for play and subsequent to each payoff. Explanations for reading
decreases shall be maintained with the progressive logs. When the reduction is
attributable to a payoff, the operator shall record the payoff form number on
the log or have the number reasonably available.
4. An operator may change the rate of
progression of any progressive payoff schedule provided that records of such
changes are created.
5. An operator
may limit a progressive payoff schedule to an amount that is equal to or
greater than the amount of the payoff schedule when the limit is imposed. The
operator shall conspicuously provide notice of the limit during an authorized
player's play of a game to which the limit applies.
6. An operator shall not reduce the amount of
a progressive payoff schedule or otherwise eliminate a progressive payoff
schedule unless:
(a) An authorized player wins
the progressive payoff schedule;
(b) The operator adjusts the progressive
payoff schedule to correct a malfunction or to prevent the display of an amount
greater than a limit imposed pursuant to subsection 5, and the operator
documents the adjustment and the reasons for it; or
(c) The Commission, upon a showing of
exceptional circumstances, approves a reduction, elimination, distribution, or
procedure not otherwise described in this subsection, which approval is
confirmed in writing.
7.
Except as otherwise provided by this section, the incremental amount of a
progressive payoff schedule is an obligation to the operator's authorized
players, and it shall be the responsibility of the operator, if the operator
ceases operation of the progressive game, to arrange satisfaction of that
obligation to the satisfaction of the Commission.
8. Distribution of progressive payoffs shall
only be made to authorized players.
5.150
Information Displayed on
Website. Operators must provide for the prominent display of the
following information on a page which, by virtue of the construction of the
website, authorized players must access before beginning a gambling session:
1. The full name of the operator and address
from which it carries on business;
2. A statement that the operator is licensed
and regulated by the Commission;
3.
The operator's license number;
4. A
statement that persons under the age of 21 are not permitted to engage in
interactive gaming;
5. A statement
that persons located in a jurisdiction where interactive gaming is not legal
are not permitted to engage in interactive gaming; and
6. Active links to the following:
(a) Information explaining how disputes are
resolved;
(b) A problem gambling
website that is designed to offer information pertaining to responsible
gaming;
(c) The Commission's
website;
(d) A website that allows
for an authorized player to choose to be excluded from engaging in interactive
gaming; and
(e) A link to the house
rules adopted by the operator.
5.155
Advertising and
Promotions. An operator, including its employees or agents, shall be
truthful and non-deceptive in all aspects of its interactive gaming advertising
and promotions. An operator which engages in any promotion related to
interactive gaming shall clearly and concisely explain the terms of the
promotion and adhere to such terms.
5.160
Suspicious Wagering
Report.
1. As used in this section,
"suspicious wagering activity" means a wager which an operator licensee knows
or in the judgment of it or its directors, officers, employees and agents has
reason to suspect is being attempted or was placed:
(a) In violation of or as part of a plan to
violate or evade any federal, state or local law or regulation;
(b) Has no business or apparent lawful
purpose or is not the sort of wager which the particular authorized player
would normally be expected to place, and the licensee knows of no reasonable
explanation for the wager after examining the available facts, including the
background of the wager.
2. An operator shall file a report of any
suspicious wagering activity, regardless of the amount, if the operator
believes it is relevant to the possible violation of any law or
regulation.
3. The report in
subsection 2 shall be filed no later than 7 calendar days after the initial
detection by the licensee of facts that may constitute a basis for filing such
a report. If no suspect was identified on the date of the detection of the
incident requiring the filing of the report, an operator may delay filing a
report for an additional 7 calendar days to identify a suspect. In no case
shall reporting be delayed more than 14 calendar days after the date of initial
detection of a reportable transaction. In situations involving violations that
require immediate attention, the operator shall immediately notify, by
telephone, the Commission in addition to timely filing a report.
4. An operator shall maintain a copy of any
report filed and the original or business record equivalent of any supporting
documentation for a period of five years from the date of filing the report.
Supporting documentation shall be identified, and maintained by the operator as
such, and shall be deemed to have been filed with the report. An operator shall
make all supporting documentation available to the Commission and any
appropriate law enforcement agencies upon request.
5. An operator and its directors, officers,
employees, or agents who file a report pursuant to this Rule shall not notify
any person involved in the transaction that the transaction has been
reported.
5.170
Gross Revenue License Fees, Attribution, Liability and Computations for
Interactive Gaming.
1. Gross revenue
received by an establishment from the operation of interactive gaming is
subject to the same license fee provisions as the games and gaming devices of
the establishment, unless federal law otherwise provides for a similar fee or
tax.
2. For a Casino licensee
granted an operator of interactive Casino license pursuant to these Rules,
gross revenue received from the operation of interactive gaming shall be
attributed to the Casino licensee and counted as part of the gross revenue of
the Casino licensee for the purpose of computing the license fee.
3. For an affiliate of a Casino licensee
granted an operator of interactive gaming license in compliance with any
qualifications established by federal law regulating the licensure of
interactive gaming, gross revenue received from the operation of interactive
gaming by the affiliate is subject to the same licensee fee provisions as the
games and gaming devices of the affiliated Casino licensee and shall be
attributed to the affiliated Casino licensee and counted as part of the gross
revenue of the affiliated Casino licensee for the purpose of computing the
license fee, unless federal law otherwise provides for a similar fee or tax.
The operator, if receiving all or a share of the revenue from interactive
gaming, is liable to the affiliated Casino licensee for the operator's
proportionate share of the license fees paid by the affiliated Casino
licensee.
4. For each game in which
the operator is not a party to the wager, gross revenue equals all money
received by the operator as compensation for conducting the game, or for
conducting any contest or tournament in conjunction with interactive
gaming.
5. The Casino licensee
holding an operator of interactive Casino license or the Casino licensee
affiliated with an operator of interactive Casino licensee is responsible for
reporting all gross revenue derived through interactive gaming.
5.190
Records. In
addition to any other record required to be maintained pursuant to these Rules,
each operator shall maintain complete and accurate records of all matters
related to their interactive gaming activity, including without limitation the
following:
1. The identity of all current and
prior authorized players;
2. All
information used to register an authorized player;
3. A record of any changes made to an
interactive gaming account;
4. A
record and summary of all person-to-person contact, by telephone or otherwise,
with an authorized player;
5. All
deposits and withdrawals to an interactive gaming account;
6. A complete game history for every game
played including the identification of all authorized players who participate
in a game, the date and time a game begins and ends, the outcome of every game,
the amounts wagered, and the amounts won or lost by each authorized player;
and
7. Disputes arising between
authorized players.
Operators shall preserve the records required by this Rule for at least
5 years after they are made. Such records may be stored by electronic means,
but must be maintained on the premises of the operator or must otherwise be
immediately available for inspection.
5.200
Grounds for Disciplinary
Action.
1. Failure to comply with the
provisions of this Rule shall be an unsuitable method of operation and grounds
for disciplinary action.
2. The
Commission may limit, condition, suspend, revoke or fine any license,
registration, finding of suitability or approval given or granted under this
Rule on the same grounds as it may take such action with respect to any other
license, registration, finding of suitability or approval.
5.210
Power of Commission and
Commission.
1. The Commission shall
have the power to issue an interlocutory stop order to an operator suspending
the operation of its interactive gaming system to allow for examination and
inspection of the interactive gaming system by Commission agents.
2. An operator that is the subject of an
interlocutory stop order issued by the Commission shall immediately cease the
operation of its interactive gaming system until the interlocutory stop order
is lifted.
5.220
Interactive Gaming Service Providers.
1. An interactive gaming service provider
that acts on behalf of an operator to perform the services of an interactive
gaming service provider shall be subject to the provisions of this Rule
applicable to such services to the same extent as the operator. An operator
continues to have an obligation to ensure, and remains responsible for
compliance with this Rule regardless of its use of an interactive gaming
service provider.
2. A person may
act as an interactive gaming service provider only if that person holds a
license specifically permitting the person to act as an interactive gaming
service provider. Once licensed, an interactive gaming service provider may act
on behalf of one or more operators.
3. An operator may only use the services of a
service provider that is licensed by the Commission as an interactive gaming
service provider.
4. License fees.
(a) Before the Commission issues an initial
license or renews a license for an interactive gaming service provider, the
interactive gaming service provider shall pay a license fee of
$1,000.
(b) All interactive gaming
service provider licenses shall be issued for the calendar year beginning on
January 1 and expiring on December 31. If the operation is continuing, the fee
prescribed by subsection (a) shall be due on or before December 31 of the
ensuing calendar year. Regardless of the date of application or issuance of the
license, the fee charged and collected under this section is the full annual
fee.
5. Any employee of
an interactive gaming service provider whose duties include the operational or
supervisory control of the interactive gaming system or the games that are part
of the interactive gaming system are subject to the provisions of these Rules
to the same extent as gaming employees.
6. It shall be an unsuitable method of
operation for an interactive gaming service provider holding a license issued
by the Commission to deny any Commission member or agent, upon proper and
lawful demand, access to, inspection or disclosure of any portion or aspect of
their operations.
7. An interactive
gaming service provider shall be liable to the licensee on whose behalf the
services are provided for the interactive gaming service provider's
proportionate share of the fees and taxes paid by the licensee.
5.230
Waiver of Requirements
of Rules. Upon written request and good cause shown, the Commission may
waive one or more of the requirements of the Rules in this Section. If a waiver
is granted, the Commission may impose alternative
requirements.
RULE 6
ACCOUNTING REGULATIONS
6.010
Definitions. As used in
this Rule:
1. Affiliate" business companies,
organizations, or individuals are Affiliates of each other if, directly or
indirectly, either one has the power to control the other, or a third party
controls or has the power to control both.
2. Unless otherwise specified, "Commission"
means the Arkansas Racing Commission or the Commission's designee.
3. "Business year" means the annual period
used by a licensee for internal accounting purposes.
4. "CGS" means the Casino Gaming Section,
also referred to as the Gaming Audit Division, of the Department of Finance and
Administration.
5. "DF&A" means
the Department of Finance and Administration.
6. "Electronic transfer" means the
transmission of money, or data via an electronic terminal, a telephone, a
magnetic tape or a computer and a modem to the Commission.
7. "Fiscal year" means a period beginning on
July 1st and ending June 30th of the following year.
8. "Gaming device" means any mechanical,
electromechanical or electronic device or machine for money, property, checks,
credit or any representative of value, including, without limiting the
generality of the foregoing, faro, monte, roulette, keno, bingo, fan-tan,
twenty-one, blackjack, seven-and-a-half, big injun, klondike, craps, poker,
chuck-a-luck, Chinese chuck-a-luck (dai shu), wheel of fortune, chemin de fer,
baccarat, pai gow, beat the banker, panguingui, slot machine, any banking or
percentage game or any other game or device approved by the
Commission.
9. "Gross wagering
revenue" means the total value of currency, coupons, gaming tickets, and
electronic credits invested by a patron in casino gaming. However, "gross
wagering revenues" shall not include promotional coupons or promotional
electronic credits provided by a Licensee to a patron at no cost to the patron,
which are used by the patron to make a wager.
10. "Net casino gaming receipts" is defined
as gross receipts from casino gaming less amounts paid out or reserved as
winnings to casino patrons. However, gross receipts from casino gaming shall
not include promotional coupons or promotional electronic credits provided by a
Licensee to a patron at no cost to the patron, which are used by the patron to
make a wager.
11. "Net casino
gaming receipts tax" is defined as a tax on net casino gaming
receipts.
12. "Operator" means any
person or entity holding a license to operate an inter-casino linked system in
Arkansas, or a person or entity holding a license to operate a Casino gaming
operation that operates an inter-casino linked system for affiliates.
13. "Statements on auditing standards" means
the auditing standards and procedures published by the American Institute of
Certified Public Accountants.
14.
"Statements on standards for accounting and review services" means the
standards and procedures published by the American Institute of Certified
Public Accountants.
15.
"Statistical drop" means the dollar amount of cash wagered by a patron that is
placed in the drop box plus the dollar amount of chips issued at a table to a
patron for currency, credit instruments or rim credit.
16. "Statistical win" means the dollar amount
won by the licensee through table play.
6.020
Commission audit
procedures.
(a) The CGS Section of the
Office of Field Audit shall act at the direction of the Commission pursuant to
the authority granted to the Commission under the Amendment. It is also
recognized that duties regarding the collection and administration of other
state tax laws are likewise delegated to the Director of DF& A. In the
course of fulfilling its duties under this rule, the CGS shall exercise the
following powers, duties and responsibilities:
(i) Audit income received by a Licensee from
casino gaming.
(ii) Review the
operation, financial data and program information relating to casino gaming
through a central computer that will allow the CGS to:
(1) Audit the gaming operation of a
Licensee.
(2) Monitor wagering
patterns, payouts, privilege fee payments and other matters related to the
payment of net gaming receipts tax or any other state tax administered by the
Arkansas Department of Finance and Administration.
(iii) Require a Licensee to maintain specific
records and submit any information, records, or reports required for the
administration of net gaming receipts tax or other state taxes. The CGS may
also make recommendations to the Commission that a Licensee be required to
maintain specified records and submit information, records or reports required
under the Amendment, and these regulations as determined by the Commission to
be necessary for the proper implementation and enforcement of those provisions
of the Amendment unrelated to the collection of net gaming receipts tax or
other state taxes.
(iv) The CGS
shall investigate, audit, or review other operations of the Licensee unrelated
to the collection of net gaming receipts tax or other state taxes, as directed
by the Commission to fulfill the Commission's responsibilities under the
Amendment. The Commission shall direct and supervise the CGS in exercising the
statutory duties of the Commission as authorized under the Amendment and these
rules, except with regard to activities of the CGS related to the collection
and administration of net gaming receipts tax or other state taxes.
(v) In addition to the duties related to
collection of net gaming receipts tax, all day to day operational duties
related to enforcement of the casino gaming rules adopted by the Commission
shall be conducted by the CGS under authority of a resolution duly adopted by
the Arkansas Racing Commission as recorded in the minutes of the ARC delegating
such authority. Any and all subsequent limitations of such regulation shall be
made in the form of a Commission Resolution.
(b) Additional Responsibilities
(i) The CGS shall have unrestricted access to
the gaming floor and facility at all times and shall require that each Licensee
strictly comply with the Amendment and the Commission's rules relating to the
operation of casino gaming. The CGS shall:
(1)
Inspect and examine facilities where casino gaming is offered for
play.
(2) Inspect casino gaming and
any other equipment or supplies used in conjunction with or in any way related
to casino gaming.
(3) Collect any
assessments, fees, penalties or other charges arising from the operation of
casino gaming for which a Licensee is liable to the State of
Arkansas.
(4) Receive and
investigate complaints concerning the operation of casino gaming by Licensees.
Complaints that cannot be resolved shall be forwarded by the CGS to the
Commission for review and adjudication by the Commission.
6.030
Procedure
for reporting, using, and paying gaming taxes and fees.
(a) Licensees conducting casino gambling
under the Amendment shall pay the net gaming receipts tax:
(i) 13% on the first $150,000,000 of net
casino gaming receipts or any part thereof;
(ii) 20% on net casino gaming receipts
exceeding $150,000,001 or any part thereof;
(b) The net gaming receipts tax shall be
reported under oath and paid on a monthly basis on or before the twentieth day
of each month to the Director of the Department of Finance and Administration.
Reporting forms will be prescribed and furnished by the Director and shall show
the total net gaming receipts from casino gaming during the preceding calendar
month.
(c) The net gaming receipts
tax levied by this section is in lieu of any state or local gross receipts,
sales, or other similar taxes, and to this end the Arkansas Gross Receipts Tax
Act of 1941, § 2652-101 et seq., shall not be applicable to gross receipts
derived by Licensees from casino gaming.
(d) The net gaming casino receipts tax
payable to the Director of the Department of Finance and Administration under
subdivision (a)(i) of this section shall be administered by the Director
pursuant to the Arkansas Tax Procedure Act, §
26-18-101 et
seq. However, regulatory authority over licensing and other matters under these
regulations not relating to the administration, payment, and collection of the
net gaming receipts tax shall remain with the Arkansas Racing
Commission.
(e) In accordance with
Arkansas law, all net gaming receipts tax received by the Director of the
DF&A required by these rules and the Amendment shall be deposited with the
State Treasurer.
(f) Effective for
licensure years beginning on or after January 1, 2022, the Commission shall
deposit all license fees and license renewal fees of any type imposed under the
Casino Gaming Rules in the Arkansas Racing Commission Cash Fund, except the
following, which shall be deposited into the State Treasury as general revenue:
(i) The initial application fee imposed by
Casino Gaming Rule 2.13(8);
(ii)
The ten-year renewal fee imposed by Casino Gaming Rule 2.13(13); and
(iii) Any fines or penalties imposed by the
Commission.
(g) Effective
for licensure years beginning on or after January 1, 2022, if the Commission
collects investigative fees and costs, those fees and costs shall be deposited
in the fund that incurred the cost of the investigation.
(h) All fees and costs deposited in the
Arkansas Racing Commission Cash Fund shall be used by the Commission in its
discretion for the regulation of casino gaming or racing in the State of
Arkansas or any other activity over which it has authority.
6.040
Accounting
records.
(a) Each Licensee shall
maintain complete, accurate, and legible records of all transactions pertaining
to the revenues and costs for each establishment.
(b) General accounting records shall be
maintained on a double entry system of accounting with transactions recorded on
the accrual basis. Detailed, supporting, subsidiary records sufficient to meet
the requirements of (c) below shall also be maintained in accordance with the
requirements of this section.
(i) The Licensee
will submit to the Commission for its approval a chart of accounts and
accounting classification in order to insure consistency, comparability, and
effective disclosure of financial information.
(ii) The chart of accounts shall provide the
classifications necessary to prepare the standard financial statements required
by Section 6.80.
(iii) The
prescribed chart of accounts shall be the minimum level of detail to be
maintained for each accounting classification by the Licensee.
(iv) The Licensee shall use the prescribed
chart of accounts but may, with the permission of the Commission, expand the
level of detail for some or all accounting classifications and/or alter the
account numbering system. In such instances, the Licensee shall provide to the
Commission, upon request, a cross-reference from the prescribed chart of
accounts.
(c) The
detailed, supporting, and subsidiary records shall include, but not necessarily
be limited to:
(i) Records supporting the
accumulation of the costs and number of persons, by category of service, for
regulated complimentary services.
(ii) Records of all investments, advances,
loans and receivable balances, due to the establishment.
(iii) Records related to investments in
property and equipment.
(iv)
Records which identify the Gross Wagering Revenue, payout, win amounts and
percentages will be reported daily, and theoretical win amounts and
percentages, and differences between theoretical and actual win amounts and
percentages, for each casino gaming periodically, monthly or as requested by
the Commission.
(v) Records of all
loans and other amounts payable by the establishment.
(vi) Records provided for in the system of
internal accounting controls submitted to the Commission.
(d) Each Licensee, unless specifically
exempted by the Commission, shall, at its own expense, cause its annual
financial statements to be audited in accordance with generally accepted
auditing standards by an independent certified public accountant licensed to
practice in the State of Arkansas.
(e) The annual financial statements shall be
prepared for the current year and shall present financial position and results
of operations in conformity with generally accepted accounting
principles.
(f) The financial
statements required by this section shall include a footnote reconciling and
explaining any differences between the financial statements included in the
Licensee's annual report, filed in conformity with these Rules, and the audited
financial statements. Such footnote shall, at a minimum, disclose the effect of
such adjustments on:
(i) Revenues from casino
gaming;
(ii) Revenues net of
complimentary services;
(iii) Total
costs and expenses;
(iv) Income
before extraordinary items; and
(v)
Net income.
(g) Two
copies of the annual audited financial statements, together with the report
thereon of the Licensee's independent certified public accountant, shall be
filed with the Commission, not later than June 1 following the end of the
calendar year.
(h) Each Licensee
shall require its independent certified public accountant to render the
following additional reports:
(i) Report on
material weaknesses in internal accounting control. Whenever in the opinion of
the independent certified public accountant there exists no material weaknesses
in internal accounting control, the report shall so state.
(ii) Whenever, in the opinion of the
independent certified public accountant, the Licensee has materially deviated
from the system of internal accounting control approved by the Commission or
the accounts, records, and control procedures examined are not maintained by
the Licensee in accordance with the this document, the report shall enumerate
such deviations and such areas of the system no longer considered effective,
and shall make recommendations regarding improvements in the system of internal
accounting control.
(iii) The
Licensee shall prepare a written response to the independent certified public
accountant's reports required by (h)(i) and (ii) above. The response shall
indicate, in detail, the corrective actions taken. Such response shall be
submitted to the Commission within 90 days from receipt of the independent
certified public accountant's reports.
(i) Two copies of the reports required by (h)
above, and two copies of any other reports on internal accounting control,
administrative controls, or other matters relative to the Licensee's accounting
or operating procedures rendered by the Licensee's independent certified public
accountant, shall be filed with the Commission by the Licensee by June 1
following the end of the calendar year or upon receipt, whichever is
earlier.
(j) If the Licensee or any
of its Affiliates is publicly held, the Commission may require the Affiliate to
submit five copies to the Commission of any report, including but not limited
to forms S-1, 8-K, 10- Q and 10-K, proxy or information statements and all
registration statements, required to be filed by such Licensee or Affiliates
with the Securities and Exchange Commission or other domestic or foreign
securities regulatory agency, at the time of filing with such agency.
(k) If an independent certified public
accountant who was previously engaged as the principal accountant to audit the
Licensee's financial statements resigns or is dismissed as the Licensee's
principal accountant, or another independent certified public accountant is
engaged as principal accountant, the Licensee shall file a report with the
Commission within ten days following the end of the month in which such event
occurs, setting forth the following:
(i) The
date of such resignation, dismissal, or engagement.
(ii) Whether in connection with the audits of
the two most recent years preceding such resignation, dismissal, or engagement
there were any disagreements with the former accountant on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
the former accountant would have caused him to make reference in connection
with his report to the subject matter of the disagreement, including a
description of each such disagreement. The disagreements to be reported include
those resolved and those not resolved.
(iii) Whether the principal accountant's
report on the financial statements for any of the past two years contained an
adverse opinion or a disclaimer of opinion or was qualified. The nature of such
adverse opinion, disclaimer of opinion, or qualification shall be
described.
(iv) The Licensee shall
request the former accountant to furnish to the Licensee a letter addressed to
the Commission, stating whether he/she agrees with the statements made by the
Licensee in response to (i) of this section. Such letter shall be filed with
the Commission as an exhibit to the report required by (i) of this
section.
6.045
On-line slot metering systems.
Casino gaming must at a minimum utilize an On-Line Monitoring System
that maintains all financial and security data. The rules outlined within this
section apply to all Critical Systems (systems that have an effect on the
integrity of casino gaming)
(a) Phases
of System Testing. All Critical Systems must endure the following phases of
tests:
(i) Phase I - Within the laboratory
setting; and
(ii) Phase II -
On-site following the initial install of the system to ensure proper
configuration of the equipment and installation of the security
applications.
(b)
Interface Elements. An Interface Element, where applicable, is any component
within a system that is external to the operations of the casino gaming that
assists in the collection and processing of data that is sent to a system. All
critical Interface Elements shall:
(i) Be
installed in a secure area (which may be inside the gaming devices).
(ii) The Interface Element
setup/Configuration menu(s) must not be available unless using an authorized
access method.
(iii) When not
directly communicating with gaming device meters, the Interface Element must
maintain separate electronic meters, of sufficient length, to preclude the loss
of information from meter rollovers, or a means to identify multiple rollovers,
as provided for in the connected gaming device. These electronic meters should
be capable of being reviewed on demand at the Interface Element level via an
authorized access method.
(iv) The
Interface Element must retain the required information after a power loss for a
minimum of 30 days. If this data is stored in volatile RAM, a Battery Backup
must be installed within the Interface Element.
(v) If unable to communicate the required
information to the On-Line Monitoring System, the Interface Element must
provide a means to preserve all mandatory meter and Significant Event
information until at such time as it can be communicated to the On-Line
Monitoring System. Gaming device operation may continue until critical data is
overwritten and lost. There must be a method to check for corruption of the
above data storage locations.
(vi)
The Interface Element must allow for the association of a unique identification
number to be used in conjunction with a gaming device file on the On-Line
Monitoring System. This identification number will be used by the On-Line
Monitoring System to track all mandatory information of the associated gaming
device. Additionally, the On-Line Monitoring System should not allow for a
duplicate gaming device file entry of this identification number.
(viii) An On-Line Monitoring System may
possess a Front End Processor (FEP) that gathers and relays all data from the
connected Data Collectors to the associated database(s). The Data Collectors,
in turn, collect all data from, connected gaming devices. Communication between
components must be a defined Communication Protocol(s) and function as
indicated by the Communication Protocol(s). An On-Line Monitoring System must
provide for the following:
(1) All critical
data Communication shall be Protocol based and/or incorporate an error
detection and correction scheme to ensure an accuracy of ninety-nine percent
(99%) or better of messages received; and
(2) All critical data Communication that may
affect revenue and is unsecured either in transmission or implementation shall
employ encryption. The encryption Algorithm shall employ variable keys or
similar methodology to preserve secure Communication.
(c) System Server(s), networked
system(s) or distributed system(s) that directs the overall operation and an
associated Database(s) that stores all entered and collected system
information, is considered the 'Server'. In addition, the Server shall:
(i) Maintain an internal clock that reflects
the current time in 24-hr format and data that shall be used to provide for the
following:
(1) Time stamping of Significant
Events;
(2) Reference clock for
reporting; and
(3) Time stamping of
Configuration changes.
(4) If
multiple clocks are supported, the On-Line Monitoring System shall have a
facility whereby it is able to update those clocks in On-Line Monitoring System
components where conflicting information could occur.
(d) Remote Access Requirements. If
supported, System(s) may utilize password controlled remote access, provided
the following requirements are met:
(i) A
'Remote Access User Activity' log is maintained depicting logon name,
time/date, duration, activity while logged in;
(ii) No unauthorized remote user
administration functionality (adding users, changing permissions,
etc.);
(iii) No unauthorized access
to Database other than information retrieval using existing
functions;
(iv) No unauthorized
access to operating system; and
(v)
If remote access is to be continuous basis then a Network filter (firewall)
should be installed to protect access.
(e) Security Access Control. The On-Line
Monitoring System must support either a hierarchical role structure whereby
user and password define program or individual menu item access or logon
program/device security based strictly on user and password or PIN. In
addition, the On-Line Monitoring System shall not permit the alteration of any
significant log information communicated from the gaming device. Additionally,
there should be a provision for system administrator notification and user
lockout or audit trail entry, after a set number of unsuccessful login
attempts.
(f) Data Alteration. The
On-Line Monitoring System shall not permit the alteration of any accounting or
significant event log information that was properly communicated from the
gaming device without supervised access controls. In the event financial data
is changed, an audit log must be capable of being produced to document:
(i) Data element altered;
(ii) Data element value prior to
alteration;
(iii) Data element
value after alteration;
(iv) Time
and Date of alteration; and
(v)
Personnel that performed alteration (user login).
(g) System Back-Up. The System(s) shall have
sufficient redundancy and modularity so that if any single component or part of
a component fails, gaming can continue. There shall be redundant copies of each
log file or system Database or both, with open support for Backups and
restoration.
(h) Recovery
Requirements. In the event of a catastrophic failure when the System(s) cannot
be restarted in any other way, it shall be possible to reload the system from
the last viable Backup point and fully recover the contents of that Backup,
recommended to consist of at least the following information:
(i) Significant Events;
(ii) Accounting information;
(iii) Auditing information; and
(iv) Specific site information such as device
file, employee file, progressive set-up, etc.
(i) Downloading of Interface Element Control
Programs. If supported, a System may utilize writable program storage
technology to update Interface Element software if all of the following
requirements are met:
(i) Writable program
storage functionality must be, at a minimum, password-protected, and should be
at a supervisor level. The System can continue to locate and verify versions
currently running but it cannot load code that is not currently running on the
system without user intervention;
(ii) A non-alterable audit log must record
the time/date of a writable program storage download and some provision must be
made to associate this log with which version(s) of code was downloaded, and
the user who initiated the download. A separate Download Audit Log Report would
be ideal; and
(iii) All
modifications to the download executable or other file(s) must be submitted to
the Test Laboratory for approval. The laboratory will assign signatures to any
relevant executable code and file(s) that should be verified by a regulator in
the field. Additionally, all downloadable files must be available to a
regulator to verify the signature.
(iv) The system must have the ability to
verify the program on demand for regulatory audit purposes. The above refers to
loading of new system executable code only. Other program parameters may be
updated as long as the process is securely controlled and subject to audit. The
parameters will have to be reviewed on an individual basis.
(j) Self Monitoring of Gaming
System Servers. The Systems must implement self monitoring of all critical
Interface Elements (e.g. Central hosts, network devices, firewalls, links to
third parties, etc.) and shall have the ability to effectively notify the
system administrator of the condition, provided the condition is not
catastrophic.
(k) On-Line
Monitoring System Requirements. The On-Line Monitoring System shall communicate
to all gaming devices for the purpose of gathering all financial data and
security events. The On-Line Monitoring System may perform this sole function
or may also incorporate other system functions that are addressed within this
document. For systems that serve multiple purposes, each of the relevant
sections herein shall apply.
(i) Required
On-Line Monitoring System Functionality. At a minimum, an On-Line Monitoring
System shall provide for the following Security and Audit ability requirements:
(1) An interrogation program that enables
on-line comprehensive searching of the Significant Event Log for the present
and for the previous 14 days through archived data or restoration from backup
where maintaining such data on a live database is deemed inappropriate. The
interrogation program shall have the ability to perform a search based at least
on the following:
(A) Date and Time
range;
(B) Unique Interface
Element/gaming device identification number; and
(C) Significant event
number/identifier.
(2) An
On-Line Monitoring System must have a master "Gaming Device File" which is a
Database of every gaming device in operation, including at minimum the
following information for each entry. If the On-Line Monitoring System
retrieves any of these parameters directly from the gaming device, sufficient
controls must be in place to ensure accuracy of the information.
(A) Unique Interface Element/location
identification number;
(B) Gaming
device identification number as assigned by the Licensee;
(C) Denomination of the gaming device (please
note that the Denomination may reflect an alternative value, in the case of a
multi-Denomination game);
(D)
Theoretical hold of the gaming device; and
(E) Control Program(s) Identification Number
within the gaming device.
(3) Significant Events are generated by a
gaming device and sent via the Interface Element to the On-Line Monitoring
System utilizing an approved Communication Protocol. Each event must be stored
in a database(s), which includes the following:
(A) Date and time which the event
occurred;
(B) Identity of the
gaming device that generated the event;
(C) A unique number/code that defines the
event; or
(D) A brief text that
describes the event in the local language.
(ii) Stored Accounting Meters. Metering
information is generated on a gaming device and collected by the Interface
Element and sent to the On-Line Monitoring System via a Communication Protocol.
This information may be either read directly from the gaming device or relayed
using a delta function. The On-Line Monitoring System must collect and store
the following meter information from each gaming device:
(1) Total In (credits-in);
(2) Total Out (credits-out);
(3) Total Dropped (total value of all, bills,
tickets and other approved notes in the cash box or 'drop');
(4) Hand Paid (handpays);
(5) Cancelled Credits (if supported on the
gaming device);
(6) Bills In (total
monetary value of all bills accepted);
(7) Individual Bill Meters (total number of
each bill accepted per denomination);
(8) Games-Played;
(9) Cabinet Door (instance meter which may be
based on On-Line Monitoring System count of this event);
(10) Drop Door(s) (instance meter which may
be based on On-Line Monitoring System count of this event);
(11) Tickets In (total monetary value of all
tickets accepted); and
(12) Tickets
Out (total monetary value of all tickets produced).
(13) Please refer to Section 6.200 for more
detailed descriptions of the above meters.
(iii) Required Reports. Reports will be
generated on a schedule determined by the Commission which typically consists
of daily, monthly, yearly period, and life to date reports generated from
stored Database information. These reports at minimum will consist of the
following:
(1) Net Win/Revenue Report for each
gaming device;
(2) Drop Comparison
Reports for each medium dropped (examples = tickets, bills) with dollar and
percent variances for each medium and aggregate for each type;
(3) Metered vs. Actual Jackpot Comparison
Report with the dollar and percent variances for each and aggregate;
(4) Theoretical Hold vs. Actual Hold
comparison with variances;
(5)
Significant Event Log for each gaming device; and
(6) Other Reports, as required by individual
Jurisdictions. It is acceptable to combine reporting data where appropriate
(e.g., revenue, theoretical/actual comparison).
(iv) Jackpot Functionality. An On-Line
Monitoring System must have an application or facility that captures and
processes every Hand pay message from each gaming device and meet the following
rules:
(1) Handpay messages must be created
for single wins (jackpots), progressive jackpots and accumulated credit cash
outs (canceled credits), which result in Hand pays.
(2) For every single win event that is equal
to or greater than the applicable IRS tax reporting threshold, as established
from time to time by the US Internal Revenue Service, the OnLine Monitoring
System user must be advised of the need for a W2G or 1042-S Form, as required
by the US Internal Revenue Service, which is to be processed, either via the
On-Line Monitoring System or manually. This option must not be capable of being
overridden. The keyed reset ability to return winnings from a taxable event to
a gaming device should require user intervention to void the original jackpot
slip that is generated.
(3) The
following information is required for all jackpot slips generated with some/all
fields to be completed by the On-Line Monitoring System:
(A) Numeric Slip identifier (which increments
per event);
(B) Date and Time
(Shift if required);
(C) Gaming
device number;
(D)
Denomination;
(E) Amounts of
Jackpot, Accumulated Credit, and Additional Pay;
(F) W2G indication, if applicable;
(G) Additional Payout, if
applicable;
(H) Total before taxes
and taxes withheld, if applicable;
(I) Amount to Patron; and
(J) Total credits played and game outcome of
award.
6.050
Records of ownership.
(a) In addition to other records and
information required by this regulation, each Licensee shall maintain the
following records regarding the equity structure and owners:
(i) If a corporation:
(1) A certified copy of articles of
incorporation and any amendments thereto;
(2) A copy of by-laws and amendments
thereto;
(3) A current list of
officers and directors;
(4) Minutes
of all meetings of stockholders and directors;
(5) A current list of all stockholders and
stockholders of affiliates, including their names and the names of beneficial
owners of shares held in street or other name where any beneficial owner has a
beneficial interest in two percent or more of the outstanding shares of any
class, addresses and the number of shares held by each and the date
acquired;
(6) A complete record of
all transfers of stock;
(b) All records regarding ownership shall be
located on the premises of the establishment, unless a specific exemption is
allowed to the Licensee by the Racing Commission.
(c) Each Licensee or applicant shall, upon
request by the Racing Commission, provide a list of all record holders of any
or all classes of publicly traded securities issued by any holding company or
by any other affiliated entity which is required to qualify as a financial
source.
6.060
Record retention; noncompliance.
(a) All original books, records and documents
pertaining to the Licensee's operations shall be:
(i) Prepared and maintained in a complete,
accurate and legible form;
(ii)
Retained on site or at another secure location approved for the time period
specified in (c) below;
(iii) Held
immediately available for inspection by agents of the Commission during all
hours of operation;
(iv) Organized
and indexed in such a manner so as to provide immediate accessibility to agents
of the Commission; and
(v)
Destroyed only after:
(1) Expiration of the
minimum retention period specified in (c) below, except that the Commission
may, upon the written petition of any Licensee and for good cause shown, permit
such destruction at an earlier date;
(2) Written notice has been received by the
Commission;
(3) In conformance with
Arkansas Code Annotated
19-4-1108,
the records, as outlined within (b) below, of the Licensees must be kept a
minimum of three years after the review and filing of audits by the Legislative
Joint Auditing committee of the records of the Racing Division and the Gaming
section, however, they may not be destroyed without concurrence from the
Commission's Gaming Section.
(b) For the purposes of this section, "books,
records and documents" shall be defined as any book, record or document
pertaining to, prepared in or generated by the operation of the Licensee
including, but not limited to, all forms, reports, accounting records, ledgers,
subsidiary records, computer generated data, internal audit records,
correspondence and personnel records. This definition shall apply without
regard to the medium through which the record is generated or maintained, for
example, paper, magnetic media or encoded disk.
(c) All original books, records and documents
shall be retained by a Licensee in accordance with the following schedules. For
purposes of this subsection, "original books, records or documents" shall not
include copies of originals, except for copies which contain original comments
or notations or parts of multi-part forms.
(i)
The following original books, records and documents shall be retained
indefinitely unless destruction is requested by the Licensee and approved by
the Commission:
(1) Corporate records required
by these Rules;
(2) Records of
corporate investigations and due diligence procedures;
(3) Current employee personnel files;
and
(4) A record of any original
book, record or document destroyed, identifying the particular book, record or
document, the period of retention and the date of destruction.
(ii) All other original books,
records and documents shall be retained by a Licensee for a minimum of five (5)
years unless destruction is requested by the Licensee and approved by the
Commission.
6.070
Standard financial
statements.
(a) Each Licensee, unless
specifically exempted by the Commission, shall file annual reports of financial
and statistical data as required by the Commission. The data may be used by the
Commission to evaluate the financial position and operating performance of
individual Licensees and compile information regarding the performance and
trends of the industry in the State of Arkansas.
(b) The Commission shall periodically
prescribe a set of standard reporting forms and instructions to be used by each
Licensee in filing the reports.
(c)
Each report to the CGS shall be received or postmarked not later than the
required filing date unless specific approval for an extension is granted to
the Licensee. Requests for a filing extension must be submitted to the CGS in
writing prior to the required filing date.
(i)
Annual reports shall be due not later than June 1 of the following year.
Licensee shall report to the Commission essential details of any loans,
borrowings, significant installment contracts with a value of over $25,000 per
year, guarantees, leases, or capital contributions at least annually.
6.080
Audited
financial statements.
(a) Each
Licensee, unless specifically exempted by the Commission, shall, at its own
expense, cause its annual financial statements to be audited in accordance with
generally accepted auditing standards by an independent certified public
accountant licensed to practice in the State of Arkansas.
(b) The annual financial statements shall be
prepared for the current year and shall present financial position and results
of operations in conformity with generally accepted accounting
principles.
(c) The financial
statements required by this section shall include a footnote reconciling and
explaining any differences between the financial statements included in the
Licensee's annual report, filed in conformity with Section 6.040 of this
regulation, and the audited financial statements. Such footnote shall, at a
minimum, disclose the effect of such adjustments on:
(i) Revenues from the casino
gaming;
(ii) Revenues net of
complimentary services;
(iii) Total
costs and expenses;
(iv) Income
before extraordinary items; and
(v)
Net income.
(d) Two
copies of the annual audited financial statements, together with the report
thereon of the Licensee's independent certified public accountant, shall be
filed with the Commission, not later than June 1 following the end of the
calendar year.
(e) Each Licensee
shall require its independent certified public accountant to render the
following additional reports:
(i) Report on
material weaknesses in internal accounting control. Whenever in the opinion of
the independent certified public accountant there exists no material weaknesses
in internal accounting control, the report shall so state.
(ii) Whenever, in the opinion of the
independent certified public accountant, the Licensee has materially deviated
from the system of internal accounting control approved by the Commission or
the accounts, records, and control procedures examined are not maintained by
the Licensee in accordance with the this document, the report shall enumerate
such deviations and such areas of the system no longer considered effective,
and shall make recommendations regarding improvements in the system of internal
accounting control.
(iii) The
Licensee shall prepare a written response to the independent certified public
accountant's reports required by (e)(i) and (ii) above. The response shall
indicate, in detail, the corrective actions taken. Such response shall be
submitted to the Commission within 90 days from receipt of the independent
certified public accountant's reports.
(f) Two copies of the reports required by (e)
above, and two copies of any other reports on internal accounting control,
administrative controls, or other matters relative to the Licensee's accounting
or operating procedures rendered by the Licensee's independent certified public
accountant, shall be filed with the Commission by the Licensee by June 1
following the end of the calendar year or upon receipt, whichever is
earlier.
(g) If the Licensee or any
of its affiliates is publicly held, the Commission may require the Affiliate to
submit five copies to the Commission of any report, including but not limited
to forms S-1, 8-K, 10-Q and 10-K, proxy or information statements and all
registration statements, required to be filed by such Licensee or affiliates
with the Securities and Exchange Commission or other domestic or foreign
securities regulatory agency, at the time of filing with such agency.
(h) If an independent certified public
accountant who was previously engaged as the principal accountant to audit the
Licensee's financial statements resigns or is dismissed as the Licensee's
principal accountant, or another independent certified public accountant is
engaged as principal accountant, the Licensee shall file a report with the
Commission within ten days following the end of the month in which such event
occurs, setting forth the following:
(i) The
date of such resignation, dismissal, or engagement.
(ii) Whether in connection with the audits of
the two most recent years preceding such resignation, dismissal, or engagement
there were any disagreements with the former accountant on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
the former accountant would have caused him to make reference in connection
with his report to the subject matter of the disagreement, including a
description of each such disagreement. The disagreements to be reported include
those resolved and those not resolved.
(iii) Whether the principal accountant's
report on the financial statements for any of the past two years contained an
adverse opinion or a disclaimer of opinion or was qualified. The nature of such
adverse opinion, disclaimer of opinion, or qualification shall be
described.
(iv) The Licensee shall
request the former accountant to furnish to the Licensee a letter addressed to
the Commission, stating whether he/she agrees with the statements made by the
Licensee in response to (i) of this section. Such letter shall be filed with
the Commission as an exhibit to the report required by (i) of this
section.
6.090
Internal control for licensees.
(a) Each Licensee shall submit to the
Commission and to the CGS a narrative description of its system of internal
procedures and administrative and accounting controls ("internal controls"), or
modifications to previously approved internal controls, at least 30 days before
the Licensee's casino gaming operations are to commence, unless otherwise
directed by the Commission. Each submission shall be accompanied by a
certification by the Licensee's Chief Financial Officer or equivalent that the
submitted internal controls are adequate, effective and establish a consistent
overall system of internal controls and conform to generally accepted
accounting principles. The initial submission shall be accompanied by a report
of an independent certified public accountant licensed to practice in Arkansas
or other state acceptable by the Commission, stating that the submitted system
conforms in all respects to the standards of internal control set forth in the
Commission's rules or in what respects the system does not conform. Except as
otherwise provided in this section, a Licensee may, upon submission to the
Commission of a narrative description of a change in its system of internal
controls and the two original signed certifications described above, implement
the change on the 16
th calendar day following the
completed submission. Any submission received by the Commission after 3:00 P.M.
shall be considered to have been submitted on the next business day. Each
submission by a licensee or applicant shall include, as applicable and without
limitation, the following:
(i) Administrative
controls which include, without limitation, the procedures and records that are
concerned with the decision-making processes leading to management's
authorization of transactions;
(ii)
Accounting controls which have as their primary objectives the safeguarding of
assets and the reliability of financial records and are consequently designed
to provide reasonable assurance that:
(1)
Transactions are executed in accordance with management's general and specific
authorization;
(2) Transactions are
recorded to permit preparation of financial statements in conformity with
generally accepted accounting principles and Section 6.040, and to maintain
accountability for assets;
(3)
Access to assets is permitted only in accordance with management authorization;
and
(iii) The recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences;
(iv) A list of persons
assigned to the repairing and maintenance of gaming machines and bill
acceptors, participating in the filling of payout reserve containers and
payment of jackpots or any other job duty involving the operation of the casino
gaming. This information does not have to be submitted to the Commission
however, must be available for auditing by the CGS. Nothing in this section
shall be construed to limit a Licensee from utilizing personnel in addition to
those described herein nor shall anything in this section be construed to limit
the discretion of the Commission to order the utilization of additional
personnel by the Licensee necessary for the proper conduct and effective
supervision of gaming in an establishment;
(v) Records regarding Licensee
ownership;
(vi) Procedures for
patron signature files used for identifying a person or validity of a
signature, if applicable;
(vii)
Maintain internal controls for the authorization and issuance of complimentary
services and items, including cash and non-cash gifts. Such internal controls
shall include, without limitation, the procedures by which the Licensee
delegates to its employees the authority to approve the issuance of
complimentary services and items for casino gaming patrons and the procedures
by which conditions or limits, if any, which may apply to such authority are
established and modified, including limits based on relationships between the
authorizer and recipient, and shall further include effective provisions for
audit purposes.
(viii) Procedures
on overall reconciliation of all documents including jackpot payout slips,
ticket redemption terminal fills, receipts generated by cashiers, change
persons and attendants along with the conforming soft count room
receipt;
(ix) Develop a plan that
defines handling of the receipt of chips from the manufacturer, inventory of
chips at the Licensee and the destruction of the chips by the Licensee, where
applicable.
(x) Develop a written
procedure for determining the "gross receipts from casino gaming" and "gross
wagering revenue" for each type of casino gaming offered.
(b) The Commission shall review a submission
made pursuant to (a) above and information made available to the Commission
pursuant to (a) and determine whether the internal controls conform to the
requirements of the Commission and provides adequate and effective controls for
the operations of the Licensee. No applicant for a license shall commence
wagering on casino gaming until the Licensee's system of internal controls is
approved by the Commission.
(c) If,
during its review of a Licensee's internal controls the Commission determines
that a procedure in the internal controls contains a substantial and material
insufficiency likely to have a direct and materially adverse impact on the
integrity of gaming or the control of gross revenue, the Commission, by written
notice to the Licensee, shall:
(i) Specify the
precise nature of the insufficiency and when possible, an acceptable
alternative procedure;
(ii)
Schedule a hearing before the Commission no later than 15 calendar days after
the date of such written notice to determine whether the internal controls are
insufficient; and
(iii) Direct that
any internal controls in issue not be implemented until approved by the
Commission.
(d) Examples
of procedures that the Commission may, under appropriate circumstances,
determine to contain a substantial and material insufficiency likely to have a
direct and materially adverse impact on the integrity of gaming or the control
of gross revenue shall include, without limitation, the following:
(i) Procedures that fail to provide an
adequate audit trail that would permit the review of the Licensee's casino
gaming operations or the reconstruction of gross revenue of
transactions;
(ii) Procedures that
fail to provide for the segregation of Incompatible Functions so that no
employee is in a position both to commit an error or to perpetrate a fraud and
to conceal the error or fraud in the normal course of his or her
duties;
(iii) Procedures that do
not include forms or other materials referenced in the submission or required
by the regulations that are essential elements of the internal controls and
prevent a meaningful review of the submission;
(iv) Procedures that would implement
accounting procedures not yet authorized by the regulations of the Commission;
and
(v) Procedures that are
dependent upon the use of equipment or related devices or software not yet
approved by the Commission, unless such procedures are required as part of an
authorized test of the equipment or related device or software.
(e) If a Licensee is notified
pursuant to (c) above that a particular internal control procedure contains a
substantial and material insufficiency and that a hearing on the procedure has
been scheduled before the Commission on a specific date, the 20-day review
period for any revision to those internal control procedures after receipt of
the Commission's notice shall not commence unless the revision is accompanied
by the two certifications required (a) above.
(f) A current version of the internal
controls of a Licensee shall be maintained in, or made available through secure
computer access to, the accounting department and surveillance department of
the Licensee. The Licensee shall also maintain a copy of any superseded changes
to its internal control procedures and the two certifications required for each
change for a minimum of five years in a location approved by the Commission.
Each page of the internal controls shall indicate, as applicable, the date on
which it was submitted to the Commission and the date on which it was either
approved by the Commission or implemented pursuant to (a) above or immediate
changes to internal controls which shall include the date on which it was filed
internally and implemented by the Licensee.
(i) Notwithstanding any other provision of
this section to the contrary, the two certifications otherwise required by (a)
above shall not be required for changes to the jobs compendium of a Licensee
other than the licensed categories, job codes, job functions, reporting lines
(including but not limited to new positions and deleted positions) or job
titles as provided within the organizational structure.
(g) Nothing contained herein would preclude
any Licensee from implementing procedures which constitute an acceptable
alternative to the specific standards set forth herein. Any such alternative
procedure would have to be submitted to the Commission in accordance with the
procedures set forth in this section and would have to be reviewed and approved
by the Commission.
(h) Licensee's
System of Internal Controls Not Required To Be Submitted To the Commission
(i) Each Licensee offering gaming operations
shall make available to the Commission and to the CGS for inspection and
approval, which are not required to be submitted to the commission, as
applicable and without limitation, the following:
(1) An organizational structure which is
designed to preserve the integrity of the Licensee. This information does not
have to be submitted to the Commission however, must be available for auditing
by the CGS;
(2) The design,
construction, location and security of the count room, currency vault, Cashier
Booths and Cashier Cages. This information does not have to be submitted to the
Commission however, must be available for auditing by the CGS;
(3) The names of persons possessing access to
the currency bank, security keys and those that are authorized to access the
alarm system. This information does not have to be submitted to the Commission
however, must be available for auditing by the CGS;
(4) Removal, transportation and count of cash
storage boxes including the signature procedures. This information does not
have to be submitted to the Commission however, must be available for auditing
by the CGS;
(5) The Licensee's
Surveillance System plan, including the Surveillance System location(s). This
information does not have to be submitted to the Commission however, must be
available for auditing by the CGS;
(6) Policies and procedures that allows and
tracks those individuals who request to be "excluded" from the facility that
are voluntarily agreeing to be excluded from all casino gaming activities and
to be prohibited from collecting any winnings or recovering any losses at all
eligible facilities. This information does not have to be submitted to the
Commission however, must be available for auditing by the CGS;
(ii) This information will be
assessed by the Commission in conjunction with the submitted system of internal
controls, as outlined in these Rules to ensure the Licensee is operating with
adequate and effective controls.
6.100
Internal control for operators of
inter-casino linked systems and mobile gaming systems.
1. Each operator shall prepare and submit a
written internal control system describing the operation of the inter-casino
linked system or mobile gaming system, in accordance with this regulation. Each
operator shall, if required by the Commission, amend the written system to
comply with any requirements consistent with this regulation that the
Commission deems appropriate.
2.
Each operator and each licensee participating in each operator's inter-casino
linked system or mobile gaming system shall comply with the internal control
system and all amendments to such internal control system as have been approved
by the Commission.
3. Unless the
Commission approves otherwise in writing, each operator shall direct an
independent accountant engaged by the operator to perform observations,
document examinations and inquiries of employees to determine compliance with
the operator's internal control system using procedures approved by the
Commission. The independent accountant engaged by the operator will submit to
the operator two copies of a written report of its compliance with the internal
control system approved by the Commission. Not later than 150 days after the
end of the operator's business year, the operator shall submit two copies of
the independent accountant's report summarizing all instances of noncompliance
or any other correspondence directly relating to the operator's system of
internal control to the Commission, accompanied by the operator's statement
addressing each item of noncompliance noted by the independent accountant and
describing the corrective measures taken.
6.110
Gross revenue
computations.
1. If the Licensee
provides periodic payments to satisfy a payout resulting from a wager, the
initial installment payment when paid and the actual cost of a payment plan
approved pursuant to these Rules and funded by the licensee may be deducted
from winnings. For any funding method which merely guarantees the licensee's
performance and under which the licensee makes payments directly out of cash
flow (e.g., irrevocable letters of credits, surety bonds, or other similar
methods), the licensee may only deduct such payments when paid to the
patron.
2. For payouts by
inter-casino linked system operators a licensee may deduct from winnings its
pro rata share of an inter-casino linked system payout, except for a payout
made in conjunction with a card game, under the provisions of its contract with
the operator of the system and in accordance with the requirements stated
herein.
3. A licensee shall not
exclude money paid out on wagers that are knowingly accepted by the licensee in
violation of the regulations of the Commission from gross revenue.
4. If in any month the amount of gross
revenue is less than zero, the licensee may deduct the excess in the succeeding
months, until the loss is fully offset against gross revenue.
5.
(a)
Beginning January 1, 2019 and continuing on each January 1 annually thereafter
all casino gaming tickets/vouchers that (i) are more than one year old as of
such January 1 and (ii) have not been presented for payment or otherwise
redeemed prior to such January 1 shall become void at 12:01 a.m. on such
January 1 of each year. All tickets/vouchers declared void under this rule
shall become part of the net win and thus "net wagering revenues from casino
gaming" and "net gaming receipts" for the purposes of net gaming receipts tax
on such January 1.
(b) Licensee
each quarter shall report and remit to DF&A all winnings withheld from
patrons who are determined to be less than 21 years of age or excluded persons.
Any excluded person who has engaged in gaming activity at a Licensee's premises
prior to detection and whose gaming has resulted in a win by the excluded
patron, shall forfeit all winnings immediately upon detection of the excluded
person by the Licensee or Commission. A Licensee shall not reimburse the
excluded person for any losses incurred while the excluded person engaged in
gaming activity. All winnings remitted to DF&A under this subsection shall
be paid to General Revenue.
(c)
Licensee each quarter shall report and remit to DF&A all jackpots that have
not been claimed within one (1) year. All winnings remitted to DF&A under
this subsection shall be paid to General Revenue.
(d) While under no legal obligation to do so,
a licensee may allow a patron to redeem a payout receipt or wagering voucher
that has been deemed expired pursuant to this section. In such cases:
(1) If any portion of the redemption value of
the expired payout receipt or wagering voucher had been included in reported
gross revenue, the licensee shall deduct that amount from reported gross
revenue for the month the receipt or voucher was redeemed.
(2) If redeemed in the same quarter it
expired, no portion of the redemption value of the payout receipt or wagering
voucher is to be remitted to the Commission, nor is any portion of the
redemption value to be included in the quarterly report to the
Commission.
(3) If any portion of
the redemption value of the expired payout receipt or wagering voucher was
previously remitted to the Commission, the licensee shall deduct that amount
from the next quarterly payment due the Commission up to the total amount due
for that quarter. Any remaining amount shall be deducted in the same manner
from amounts due in subsequent quarters until the amount has been fully
deducted.
(e) A record of
all expired payout receipts and wagering vouchers shall be created and
maintained in accordance with the record keeping requirements set forth in
these Rules.
(f) For purposes of
this section, the term "slot machine" means a gaming device for which gross
revenue is calculated pursuant to the method described herein.
6.120
Uncollected
baccarat commissions.
1. If a licensee
does not collect baccarat commissions due from a patron at the conclusion of
play and elects to waive payment, such action must be authorized and documented
in accordance with these Rules.
2.
Concurrently with the decision to not collect the baccarat commission, the
licensee must record, in such manner and using such preprinted, prenumbered
forms as the Commission has approved:
(a)
Date, shift and time the licensee determined to not collect the baccarat
commission;
(b) The amount of the
baccarat commission not collected;
(c) The baccarat table number;
(d) Patron name, if known;
(e) The dealer's signature; and
(f) A baccarat supervisor's
signature.
3. Such forms
shall be sent to the accounting department at least every 24 hours and
reconciled numerically to account for all forms. A form may be used to record
more than one transaction; however each transaction must indicate all of the
above required signatures. Descriptions of the forms and procedures utilized
must be included in the licensee's submitted system of internal
control.
4. An uncollected baccarat
commission that is not waived in accordance with this regulation shall be
documented by a credit instrument that clearly indicates it represents an
uncollected baccarat commission, and that conforms to all documentation and
procedural requirements of the licensee's submitted system of internal
control.
5. Failure to comply with
these regulations is an unsuitable method of operation, but shall not subject
the licensee to any payment of taxes or fees on any baccarat commission not
collected.
6.130
Mandatory disclosure provisions for credit applications and credit
instruments.
1. Each credit application
must contain a statement approved by the Commission, separately signed by the
patron, and in a font size of not less than 9 points, acknowledging the
patron's understanding, that under Arkansas law a credit instrument is the same
as a personal check, and knowingly writing a credit instrument with
insufficient funds in the account upon which it is drawn, or with intent to
defraud, is a criminal act in the State of Arkansas which may result in
criminal prosecution. The following language, if used on a credit application,
is deemed approved:
"Warning: For the purposes of Arkansas law, a credit instrument is
identical to a personal check and may be deposited in or presented for payment
to a bank or other financial institution on which the credit instrument is
drawn. Willfully drawing or passing a credit instrument with the intent to
defraud, including knowing that there are insufficient funds in an account upon
which it may be drawn, is a crime in the State of Arkansas which may result in
criminal prosecution in addition to civil proceedings to collect the
outstanding debt."
2. Each
credit instrument must contain a notification, approved by the Commission,
permanently and legibly printed on the face of the original credit instrument,
in a font size of not less than 6 points, that notifies the patron of the
requirements of Arkansas law regarding personal checks. The following language,
if used on a credit instrument, is deemed approved:
"A credit instrument is identical to a personal check. Willfully
drawing or passing a credit instrument knowing there are insufficient funds in
an account upon which it may be drawn, or with the intent to defraud, is a
crime in the State of Arkansas which may result in criminal
prosecution."
3. All
documents created pursuant to this section must be retained in accordance with
the requirements of these Rules.
4.
Credit applications and credit instruments issued by licensees to patrons after
the effective date of this section must contain the required wording. Such
documentation issued by licensees to patrons before the effective date need not
include the required disclosures.
6.140
Treatment of credit for purposes
of computing gross revenue.
1. Gross
revenue does not include credit extended or collected by the Licensee for
purposes other than gaming. Gross revenue includes the amount of gaming credit
extended to a patron that is not documented in a credit instrument.
2. Each licensee shall:
(a) Document, prior to extending credit, that
it:
(1) Has received information from a bona
fide credit reporting agency that the patron has an established credit history
that is not entirely derogatory; or
(2) Has received information from a legal
business that has extended credit to the patron that the patron has an
established credit history that is not entirely derogatory; or
(3) Has received information from a financial
institution at which the patron maintains an account that the patron has an
established credit history that is not entirely derogatory; or
(4) Has examined records of its previous
credit transactions with the patron showing that the patron has paid
substantially all of the patron's credit instruments and otherwise documents
that it has a reasonable basis for placing the amount or sum placed at the
patron's disposal; or
(5) Was
informed by another licensee that extended gaming credit to the patron that the
patron has previously paid substantially all of the debt to the other licensee
and the licensee otherwise documents that it has a reasonable basis for placing
the amount or sum placed at the patron's disposal; or
(6) If no credit information was available
from any of the sources listed in subparagraphs (1) through (5) for a patron
who is not a resident of the United States, the licensee has received, in
writing, information from an agent or employee of the licensee who has personal
knowledge of the patron's credit reputation or financial resources that there
is a reasonable basis for extending credit in the amount or sum placed at the
patron's disposal;
(7) In the case
of personal checks, has examined and has recorded the patron's valid driver's
license or, if a driver's license cannot be obtained, some other document
normally acceptable as a means of identification when cashing checks, and has
recorded a bank check guarantee card number or credit card number or has
documented one of the credit checks set forth in subparagraphs (1) through
(6);
(8) In the case of third party
checks for which cash, or chips have been issued to the patron or which were
accepted in payment of another credit instrument, has examined and has recorded
the patron's valid driver's license, or if a driver's license cannot be
obtained, some other document normally acceptable as a means of identification
when cashing checks and has, for the check's maker or drawer, performed and
documented one of the credit checks set forth in subparagraphs (1) through
(6);
(9) In the case of guaranteed
drafts, has complied with the issuance and acceptance procedures prescribed by
the issuer.
(b) Ensure
that the patron to whom the credit is extended either signs the credit
instrument when credit is extended or, unless the requirements of these Rules
have been met, acknowledges the debt and the instrument's validity in a signed,
written statement within 30 days of the audit division's request;
(c) Obtain and record the patron's address
before extending the credit, or, unless the requirements of these Rules have
been met, furnish the patron's current address within 30 days of the audit
division's request.
3. A
licensee, after extending credit, shall:
(a)
Document that it has:
(1) Attempted to collect
payment from the patron once every ninety (90) days from the date:
(i) The credit is extended; or
(ii) Upon which the licensee and patron agree
that the debt will become due and payable. An agreement by the licensee and the
patron to extend the date the debt becomes due and payable beyond ninety (90)
days from the date the credit was extended must be documented. If the agreement
is not documented, collection attempts must be made as provided in this
subsection, until the agreement is documented. Notwithstanding the forgoing,
the licensee must commence collection efforts within ninety (90) days after the
date which is eighteen (18) months after the date on which the credit is
extended regardless of any agreement to extend the due date.
(2) Attempted to collect payment
from the patron by requesting payment in letters sent to the patron's
last-known address, or via facsimile transmission or electronic mail, or in
personal or telephone conversations with the patron, or by presenting the
credit instrument to the patron's bank for collection, or by a collection
method or methods which the Commission determines to constitute good faith
efforts to collect the full amount of the debt.
(b) Furnish the credit instrument to the
Commission within 30 days after the audit division's request, unless the
licensee has independent, written, and reliable verification that the credit
instrument is in the possession of a court, governmental agency, or financial
institution; has been returned to the patron upon partial payment of the
instrument; has been returned to the patron upon the licensee's good faith
belief that it had entered into a valid settlement and the licensee provides a
copy of the original credit instrument and a document created contemporaneously
with the settlement that contains the information required by these Rules; has
been stolen and the licensee has made a written report of the theft to an
appropriate law enforcement agency, other than the Commission, having
jurisdiction to investigate the theft; or the Commission waives the
requirements of the subsection because the credit instrument cannot be produced
because of any other circumstances beyond the licensee's control.
(1) Theft reports made pursuant to this
paragraph must be made within 30 days of the licensee's discovery of the theft
and must include general information about the alleged crime, the amount of
financial loss sustained, the date of the alleged theft, and the names of
employees or agents of the licensee who may be contacted for further
information. Each licensee shall furnish to the audit division a copy of theft
reports made pursuant to this paragraph within 30 days of its
request.
(2) If the licensee has
returned a credit instrument upon partial payment, consolidation, or redemption
of the debt, it shall issue a new "substituted" credit instrument in place of
the original and shall furnish the substituted credit instrument to the audit
division within 30 days of its request, unless the licensee has independent,
written, and reliable verification that the substituted credit instrument
cannot be produced because it is in the possession of a court, governmental
agency, or financial institution; has been stolen and the licensee has made a
written report of the theft to an appropriate law enforcement agency, other
than the Commission, having jurisdiction to investigate the theft; or the
Commission waives the requirements of this subparagraph because the substituted
credit instrument cannot be produced because of any other circumstances beyond
the licensee's control.
(c) Submit a written report of a forgery, if
any, of the patron's signature on the instrument to an appropriate law
enforcement agency, other than the Commission, having jurisdiction to
investigate the forgery. The report must include general information about the
alleged crime, the amount of financial loss sustained, the date of the alleged
forgery, and identification of employees or agents of the licensee who may be
contacted for further information. Each licensee shall furnish a copy of
forgery reports made pursuant to this paragraph to the audit division within 30
days of its request.
(d) Permit the
audit division within 30 days of its request to confirm in writing with the
patron the existence of the debt, the amount of the original credit instrument,
and the unpaid balance, if any.
(e)
Retain all documents showing, and otherwise make detailed records of,
compliance with this subsection, and furnish them to the audit division within
30 days after its request.]
4. Each licensee shall include in gross
revenue all or any portion of an unpaid balance on any credit instrument if the
Commission determines that, with respect to that credit instrument, the
licensee has failed to comply with the requirements of these Rules.
5. A licensee need not include in gross
revenue the unpaid balance of a credit instrument even if the Commission
determines that a licensee has failed to comply with these Rules if the
requirements of these Rules and one or more of the following paragraphs are
satisfied, and the licensee documents or otherwise keeps detailed records of
compliance with this subsection and furnishes them to the audit division within
30 days after its request. In the case in which the debts of several patrons
are consolidated for purposes of settlement, the licensee shall document that
the consolidation of the accounts of several patrons is not for the purpose of
avoiding an adverse determination under these Rules.
(a) The licensee settles the debt for less
than its full amount to induce the patron to make a partial payment. This
paragraph is satisfied only if the licensee first requests payment of the debt
in full from the patron, the patron fails to respond to the request or refuses
to pay the debt in full, and the patron then makes a partial payment in
consideration for settlement of the debt for less than the full
amount.
(b) The licensee settles
the debt for less than its full amount to compromise a genuine dispute between
the patron and the licensee regarding the existence or amount of the
debt.
(c) The licensee settles the
debt for less than its full amount because the licensee in good faith believes,
and records the basis for its belief, that the patron's business will be
retained in the future, or the patron's business is in fact retained.
(d) The licensee settles the debt for less
than its full amount to obtain a patron's business and to induce timely payment
of the credit instrument. This paragraph is only satisfied if the percentage of
the discount off the face value of the credit instrument is reasonable as
compared to the prevailing practice in the industry at the time the credit
instrument was issued.
6.
Each licensee shall ensure:
(a) That a debt
settled pursuant to these Rules is settled either with the patron to whom the
credit was initially extended or the patron's personal representative. For
purposes of this section, a personal representative is an individual who has
been authorized by the patron to make a settlement on the patron's behalf. The
licensee shall document its reasonable basis for its belief that the patron has
authorized the individual to settle the patron's debt.
(b) That the settlement is authorized by
persons designated to do so in the licensee's system of internal control, and
the settlement agreement is reflected in a single document prepared within 30
days of the agreement and the document includes:
(1) The patron's name;
(2) The original amount of the credit
instrument;
(3) The amount of the
settlement stated in words;
(4) The
date of the agreement;
(5) The
reason for the settlement;
(6) The
signatures of the licensee's employees who authorized the settlement;
(7) The patron's signature or in cases in
which the patron's signature is not on the settlement document, confirmation
from the patron acknowledging the debt, the settlement and its terms and
circumstances in a signed, written statement received by the audit division
within 30 days of its request. If confirmation from the patron is not available
because of circumstances beyond the licensee's control, the licensee shall
provide such other information regarding the settlement as the Commission
determines is necessary to confirm the debt and settlement.
7. If the Commission
determines that it is necessary to independently verify the existence or the
amount of a settlement made pursuant to these Rules, the licensee shall allow
the audit division to confirm the settlement and its terms and circumstances
with the patron to whom the credit was initially extended.
8. A licensee shall include in gross revenue
all money, and the net fair market value of property or services received by
the licensee, its agent or employee, or a person controlling, controlled by, or
under common control with the licensee in payment of credit
instruments.
9. A licensee may
exclude money received in payment of credit instruments from gross revenue if
the licensee notifies the Commission in writing within 30 days of the
licensee's discovery of the alleged criminal misappropriation of the money by
an agent or employee of the licensee or by a person controlling, controlled by,
or under common control with the licensee where the agent, employee, or person
was involved in the collection process, and if the licensee:
(a) Files a written report with an
appropriate law enforcement agency, other than the Commission, alleging
criminal misappropriation of the money and furnishes a copy of such report to
the Commission within 30 days of the audit division's request;
(b) Files and prosecutes a civil action
against the agent, employee, or person for recovery of the misappropriated
money and furnishes copies of legal pleadings to the Commission within 30 days
of the audit division's request; or
(c) Otherwise demonstrates to the
Commission's satisfaction, within the time limits set by the Commission, that
the money was in fact criminally misappropriated and not merely retained by the
agent, employee, or person as payment for services or costs.
10. If the licensee recovers any
money, previously excluded from gross revenue pursuant to these Rules, the
licensee shall include the money in gross revenue for the month in which the
money is recovered.
6.150
Mandatory count procedure.
(a)
The cash storage box shall be removed at a time designated by the Licensee and
accepted by the Commission and CGS. However, a Licensee may, with prior CGS
approval, establish a less frequent schedule for the removal of cash storage
boxes from those gaming devices connected to an approved gaming device ticket
system. No cash storage box shall be emptied or removed from its compartment at
other than the times specified on such schedule except with the express
notification to the Commission. Prior to emptying or removing any cash storage
box, a Licensee shall notify security and the surveillance department of the
transportation route that will be utilized.
6.160
Handling of cash. Each
gaming employee, owner, or licensee who receives currency of the United States
(other than tips or gratuities) from a patron in the gaming area of a gaming
establishment shall promptly place the currency in the locked box in the table
or, in the case of a cashier, in the appropriate place in the cashier's cage,
or on those games which do not have a locked box or on card game tables, in an
appropriate place on the table, in the cash register, or other repository
approved by the Commission.
6.170
Net gaming receipts tax
The net gaming receipts tax shall be governed by the Arkansas Tax
Procedure Act, § 26-18101, et seq.
6.170
On-site CGS offices
(a) There shall be, for the exclusive use of
the CGS agents, office space at each Licensee's licensed premises for
monitoring and recording purposes. The designation of the CGS office shall be
approved by the Commission.
6.180
Significant events
The following are the events that gaming devices must immediately
report to the Central Monitoring System, in real-time. All Accounting and
Occurrence meters and Error Conditions as defined within these regulations that
are not listed below must also be communicated to the Central Monitoring System
although, not in real-time unless requested by the system itself:
(a) Power Resets or power failure;
(b) Handpay Conditions (amount needs to be
sent to the system):
(i) Gaming Device Jackpot
(An award in excess of the single win limit of the gaming device);
(ii) Cancelled Credit Handpay; and
(iii) Progressive Jackpot (As per Gaming
Device Jackpot, above.)
(c) Door Openings (any external door that
accesses a critical area, on the gaming device). Door switches (discrete inputs
to the Interface Element) are acceptable if their operation does not result in
redundant or confusing messaging.
(d) Bill Acceptor Errors ('i' and 'ii' should
each be sent as a unique message, if supported by the Communication Protocol):
(i) Stacker Full (if supported);
and
(ii) Bill (Item) jam.
(e) Gaming Device Low RAM Battery
Error;
(f) Reel Spin Errors (if
applicable with individual reel number identified);
(g) Printer Errors (if printer supported):
(i) Printer Empty/Paper Low; and
(ii) Printer Disconnect/Failure.
(h) The following priority events
must be conveyed to the On-Line Monitoring System where a mechanism must exist
for timely notification:
(i) Loss of
Communication with Interface Element;
(ii) Loss of Communication with a gaming
device;
(iii) Memory corruption of
the Interface Element, if storing critical information; and
(iv) RAM corruption of the gaming
device.
6.200
Electronic Accounting and Occurrence Meters
Electronic accounting meters shall be at least seven (7) digits in
length. If the meter is being used in dollars and cents, at least nine (9)
digits must be used for the dollar amount. The meter must roll over to zero
upon the next occurrence any time the meter is seven (7) digits or higher and
after 9,999,999 has been reached (or any other value that is logical).
Occurrence meters shall be at least three (3) digits in length and roll over to
zero upon the next occurrence any time the meter is higher than the maximum
number of digits for that meter. The required electronic meters are as follows
(accounting meters are designated with an asterisk '*'):
(a) The Amounts Wagered* (OR cash in) meter
shall cumulatively count the total amounts Wagered during game play, except
credits that are won during the game that are subsequently risked in a
double-up mode.
(b) The Amounts
Won* (OR credit out) meter shall cumulatively count all amounts won by the
player at the end of the game that were not paid by an Attendant, including
amounts paid by a ticket printer. This meter must not increment for bills
inserted and cashed out (used as a change machine).
(c) The drop* meter shall maintain a
cumulative credit value of all bills and tickets/coupons inserted into the Bill
Acceptor for play.
(d) The
handpays* meter shall reflect the cumulative amounts paid by an Attendant for
progressive and non-progressive wins.
(e) The games-played meter shall display the
cumulative number of games played since the last RAM clear.
(f) A cabinet door meter shall display the
number of times the front cabinet door was opened since the last RAM
clear.
(g) The drop door meter
shall display the number of times the drop door and the Bill Acceptor door was
opened since the last RAM clear.
(h) The cancelled credit* meter shall reflect
the cumulative amounts paid by an Attendant that are in excess of the credit
limit and residual credits that are collected.
(i) NOTE: printer games do not require a
cancelled credit meter unless a 'printer limit' option exists on the
game.
(j) The progressive
occurrence meter shall count the number of times each progressive meter is
activated.
RULE
7
TRANSFERS OF OWNERSHIP; LOANS
7.010
General.
1. No person shall sell, purchase, assign,
lease, grant or foreclose a security interest, hypothecate or otherwise
transfer, convey or acquire in any manner whatsoever any interest of any sort
whatever in or to any licensed gaming operation or any portions thereof, or
enter into or create a voting trust agreement or any other agreement of any
sort in connection with any licensed gaming operation or any portion thereof,
except in accordance with law and these Rules.
2. No licensee shall permit any person to
make any investment whatever in, or in any manner whatever participate in the
profits of, any licensed gaming operations, or any portion thereof, except in
accordance with law and these Rules.
3. No person shall transfer or convey in any
manner whatsoever any interest of any sort whatever in or to any licensed
gaming operation, or any portion thereof, to, or permit any investment therein
or participation in the profits thereof by, any person acting as agent, trustee
or in any other representative capacity whatever for or on behalf of another
person without first having fully disclosed all facts pertaining to such
representation to the Commission. No person acting in any such representative
capacity shall hold or acquire any such interest or so invest or participate
without first having fully disclosed all facts pertaining to such
representation to the Commission and obtained written permission of the
Commission to so act.
7.020
Transfer of interest among
licensees. If a person who is the owner of an interest in a licensed
gaming operation proposes to transfer any portion of his or her interest to a
person who is then the owner of an interest in such licensed gaming operation,
both parties shall give written notice of such proposed transfer to the
Commission, including the names and addresses of the parties, the extent of the
interest proposed to be transferred and the consideration therefore. In
addition, the proposed transferee shall furnish to the Commission a sworn
statement setting forth the source of funds to be used by the proposed
transferee in acquiring such interest; and the proposed transferee also shall
furnish to the Commission such further information as it or the Commission may
require. The Commission shall conduct such investigation pertaining to the
transaction as it or the Commission may deem appropriate and shall report the
results thereof to the Commission. If the Commission does not give notice of
disapproval of the proposed transfer of interest within 30 days after the
receipt by it of the report of the Commission, the proposed transfer of
interest will be deemed approved and the transfer of interest may then be
effected in accordance with the terms of transfer as submitted to the
Commission. The parties shall immediately notify the Commission when the
transfer of interest is actually affected.
7.030
Transfer of interest to stranger
to license.
1. Except as and to the
extent provided in these Rules pertaining to emergency situations, no
individual who is the owner of any interest in a licensed gaming operation
shall in any manner whatsoever transfer any interest therein to any person,
firm or corporation not then an owner of an interest therein, and no such
transfer shall become effective for any purpose until the proposed transferee
or transferees shall have made application for and obtained all licenses
required by the Amendment and these Rules, or have been found to be
individually qualified to be licensed, as appropriate.
2. Applications for a transfer of interest to
a stranger to the license, except the granting of a possessory security
interest in equity securities of a licensee or of a holding company subject to
these Rules, shall be made by the transferee applying for licensing or
registration under the regulations thereunder as appropriate, as provided in
these Rules.
3. Evidence of the
transferor's agreement to transfer the interest applied for must accompany the
application. Licensing or registration of the transferee shall be deemed to
constitute approval of the transfer by the Commission.
4. Applications for approval of the granting
of a possessory security interest shall be made in writing to the Commission.
The application shall set forth all material facts relating to the transaction
and be accompanied by copies of the documents evidencing the transaction. An
application will not ordinarily be granted unless such documents include the
following:
(a) The physical location of the
certificates evidencing the transaction shall at all times remain within the
territorial boundaries of the State of Arkansas.
(b) The holder of said certificates shall not
surrender possession of the securities without the prior approval of the
Commission.
An approval of the granting of a possessory security interest shall be
deemed to constitute approval of the transfer by the Commission. No such
approval, however, shall constitute permission to foreclose without a further
order of the Commission.
7.040
Duties of corporations and
agents. No licensee or holding company, or officer, director or transfer
agent thereof, shall cause or permit any stock certificate or other evidence of
beneficial interest therein to be registered in its books or records in the
name of any nominee, agent, trustee or any other person other than the true and
lawful owner of the beneficial interest therein without written permission of
the Commission to do so.
7.050
Escrow required. Except as and to the extent provided in these
Rules pertaining to emergency situations, no money or other thing of value
constituting any part of the consideration for the transfer or acquisition of
any interest in a licensed gaming operation, in a licensee or in a holding
company shall be paid over, received or used until complete compliance has been
had with all prerequisites set forth in the law and these Rules for the
consummation of such transaction; but such funds may be placed in escrow
pending completion of the transaction. Any loan, pledge or other transaction
between the parties or with other parties may be deemed an attempt to evade the
requirements of this Rule and, as such, in violation of this Rule.
7.060
Participation in
operations.
1. Except as provided in
these Rules pertaining to emergency situations or on approval of the
Commission, no person who proposes to acquire an interest in any licensed
gaming operation; in a licensee; or in a holding company shall take any part
whatsoever, as an employee or otherwise, in the conduct of such gaming
operations or in the operation of the establishment at which such gaming
operations are conducted while the person's application for a license or for
approval to acquire such interest is pending.
2. An employee subject to these Rules may be
employed at the licensed gaming operation, licensee, or holding company pending
the Commission's decision on the employee's application for a license or for
approval to acquire an interest in the licensed gaming operation, licensee, or
holding company if, when the employee files his or her application or becomes
so employed, the employee requests permission from the Commission to continue
to be so employed pending Commission action on the employee's
application.
3. The Commission may
grant, deny, limit, restrict or condition a request for administrative approval
pursuant to this section for any cause the Commission deems reasonable, or
refer the request for administrative approval to the full Commission for
consideration. If the Commission, acting in the Commission's sole and absolute
discretion, does not within thirty (30) days deny the request to continue
employment, or provide written notification to the employee that the request is
being referred to the full Commission for consideration, the employee's request
to participate shall be deemed approved.
4. An employee's employment by a licensed
gaming operation, licensee, or holding company, pursuant to these Rules, is
limited to observing and learning the operations of the licensed location,
licensee, or holding company, unless otherwise specified by the Commission, and
the employee is prohibited from exerting or taking control of a licensed gaming
operation, licensee, or holding company until approved by the Commission unless
the employee has otherwise been licensed or found suitable to do so.
7.070
Emergency
situations. If a transfer of an interest in a licensed gaming operation,
in a licensee or in a holding company, is contemplated and, in the opinion of
the Commission, the exigencies of the situation require that the proposed
transferee or transferees be permitted to take part in the conduct of gaming
operations or in the operation of the establishment wherein such gaming
operations are conducted, or to make available funds or credit for use in
connection with such licensed gaming operation or establishment during the
pendency of an application for license or to be permitted to acquire such
interest, the Commission or any three members thereof may waive the
requirements of Rules 7.050 and 7.060, or either of them, in accordance with
the procedures hereinafter set forth.
7.080
Application for permission to
participate.
1. A proposed transferee
of an interest who desires to participate in any manner, whether financially or
otherwise, in the operation of the licensed establishment or games prior to
actual completion of the transfer of interest in accordance with the foregoing
Rules shall make written application to the Commission for permission to so
participate, setting forth, under oath, facts showing the necessity of such
participation, together with the following information to be given under oath:
(a) The extent to which and the manner in
which the proposed transferee desires to participate pending completion of the
proposed transfer.
(b) A complete
financial statement and a statement showing sources of all funds to be used in
connection with the proposed transfer of interest and in the participation
prior to transfer.
(c) A full and
complete statement of the proposed plan for affecting the proposed transfer of
interest, including:
(1) The extent of the
interest to be transferred;
(2) The
date on which it is desired to complete the transfer;
(3) The total consideration to be paid and
the time and manner of payment thereof;
(4) Details of any other financial
arrangements between all parties involved; as well as
(5) Details of all other pertinent
arrangements between the parties.
(d) Full, true and correct copies of all
documents pertaining to the proposed transaction or transactions, including all
agreements between the parties, leases, notes, mortgages or deeds of trusts,
and pertinent agreements or other documents with or involving third
parties.
(e) The names and
addresses of all persons with whom the proposed transferee expects to be
associated in connection with the operation of the licensed games or
establishment, or both, both as to the period pending completion of the
transfer and thereafter.
(f) A full
and complete statement of any proposed changes in manner or method of operation
of the licensed establishment and any proposed changes of or additions to
supervisory personnel, both as to the period pending completion of the transfer
and thereafter.
2. If two
or more individuals desire to participate in the operation of a licensed
establishment or games as a group, whether as individuals or as stockholders,
officers or directors of a corporation or other business entity, joint
application may be made in accordance with these Rules.
3. If the emergency requiring immediate
participation consists of the actual or threatened insolvency of a licensee or
holding company, and the interest to be transferred or issued is a financial
participation, the application will not be granted unless the applicant
demonstrates the immediate and unqualified availability of sufficient funds and
credit to cure such emergency to the same extent that such funds and credit
would be required in connection with an application for licensing or
registration not involving actual or threatened insolvency.
4. The Commission may require an applicant
for permission to participate to furnish such additional information as it may
desire before acting on the application.
7.090
Permission to participate.
After receipt of a proper application for permission to participate and such
additional information as the Commission may require, and after such
investigation as the Commission deems necessary, the Commission or any three
members thereof may grant emergency permission for a proposed transferee to
participate in the operation of the licensed games or establishment, licensee
or holding company, subject to joint management with the existing licensee or
licensees or managing officers of a corporate licensee or holding
company.
7.100
Extent of
participation permitted.
1. Pending
final action on the application of a proposed transferee, the existing licensee
or licensees will be held responsible for the conduct of the licensed games or
establishment, for all license fees payable, and for all acts or omissions of
proposed transferees participating in the operation.
2. Except as hereinafter provided, no
proposed transferee who has been granted such emergency permission to
participate shall be permitted to withdraw or receive any portion of the
profits of such establishment or licensee or holding company derived for gaming
until final approval of the proposed transfer of interest has been granted by
the Commission. If granted, such approval shall be retroactive to the date of
emergency permission to participate.
3. A proposed transferee who has been granted
emergency permission to participate and who actually renders services may be
paid a salary or otherwise be compensated for such actual services, but such
salary or other compensation shall not exceed the usual and customary
compensation in the industry for similar services.
7.110
Application for license.
Any proposed transferee to whom emergency permission to participate has been
granted shall, within 10 days thereafter if the transferee has not already done
so, make formal application for licensing, registration, or approval as
required by law and these Rules.
7.120
Effect of permission to
participate; withdrawal.
1. The
granting of emergency permission to participate is a revocable privilege, and
is not to be a finding on the part of the Commission that the proposed
transferee is qualified or suitable to hold a state Casino license or to be
registered or to be approved. Such permission will be without prejudice to any
action that the Commission may take with respect to any application for final
approval of the proposed transfer of interest.
2. Emergency permission to participate may be
withdrawn summarily at any time in the uncontrolled discretion of the
Commission, without notice or hearing or other proceedings of any
kind.
3. Upon receipt of notice
that emergency permission to participate has been withdrawn the proposed
transferee shall be immediately disassociated from any participation whatever
in the operation of the licensed establishment, licensee or holding company.
Any money or other thing of value which may have been invested or made use of
in the operation of the licensed establishment, licensee or holding company
shall be forthwith returned to the proposed transferee or deposited in escrow
in compliance with these Rules. Any participation whatever on the part of a
proposed transferee after notice of withdrawal of emergency permission to
participate may be deemed to be in violation of law and these Rules and, as
such, grounds for denial of the application of the proposed transferee and also
grounds for revocation or suspension of the existing license, registration or
approval.
7.130
Transaction reports. As used in this section, "licensee" means any
person to whom a valid Casino license, mobile gaming system, or an inter-casino
linked system, manufacturer's, distributor's, or disseminator's license, or a
service provider license has been issued. The term does not include a person
licensed solely as a holder of a security or other ownership interest in, as an
officer, director or key employee of, or due to any other relationship with, a
licensed operation.
1. Any licensee that
receives, accepts, or makes use of any cash, property, credit, guaranty,
benefit or any form of security loaned to, leased to, or provided for or on
behalf of the licensee or an officer, director, agent, employee or stockholder
of the licensee, in a transaction required to be reported under these Rules,
must report the transaction to the Commission in the manner required by these
Rules within 30 days after the end of the calendar quarter in which the
transaction is consummated. A transaction is considered consummated the earlier
of the contract date or the date the cash, property, credit, guaranty, benefit
or security is received.
2. Except
as provided in these Rules, each of the following transactions must be reported
to the Commission, if the dollar amount of the transaction or the fair market
value of the assets involved exceeds $300,000 or the average monthly payment
exceeds $30,000:
(a) Leases, including
leaseback transactions and capital leases.
(b) Deposits received by the licensee
pursuant to an arrangement for use of space at the licensee's
establishment.
(c) Installment
purchase contracts.
(d) Property
donated to the licensee.
3. Except as provided in these Rules, each of
the following transactions must be reported to the Commission, if the dollar
amount of the transaction exceeds $30,000:
(a)
Loans, mortgages and trust deeds.
(b) Capital contributions and loans by a
person who is a stockholder, partner or proprietor of the licensee.
(c) Safekeeping deposits which:
(1) Are made by an individual beneficially
owning, directly or indirectly, a 10 percent or greater interest in the
licensee;
(2) Are commingled with
the licensee's funds;
(3) Are left
for more than 10 days; and
(4) At
any time during that period, aggregate to an amount greater than 25 percent of
cash in the cage.
(d)
Lines of credit.
(e) Accounts
payable and accrued expenses due to unaffiliated persons where the payment
terms or actual length of payments exceed 12 months.
(f) Conversions of accounts payable, accrued
expenses or other liabilities to notes payable.
(g) Debts forgiven by a lender.
(h) Guaranties received by the
licensee.
(i) Accruals of salary
due to an individual directly or indirectly owning an interest in the licensee
where the accrual period exceeds 90 days.
4. Those transactions specified in these
Rules which occur no more than 7 days apart from a single source shall be
considered a single transaction if they exceed the dollar amounts specified in
these Rules.
5. The following
transactions need not be reported to the Commission regardless of the dollar
amount of the transaction, fair market value of the assets involved, or average
monthly payment:
(a) Draws against a
previously reported extension of credit.
(b) Except for items specifically described
in these Rules goods or services which are exchanged for other goods or
services of an affiliate of the licensee.
(c) Short-term cash loans which have a
payback period of less than 7 days and are provided to the licensee on a
regularly recurring basis, provided the terms and conditions of the arrangement
have not changed, and provided the initial loan or financing arrangement has
been reported.
(d) Loans and other
financing activities that were reviewed during an investigation which resulted
in Commission action, provided the terms and conditions of the arrangements
have not changed.
(e) Financing of
gaming devices or associated equipment installed and used during a trial period
authorized pursuant to these Rules.
(f) Funds received by the licensee in
satisfaction of accounts or notes receivable.
(g) Purchases or leases of gaming devices and
associated equipment where the seller or lessor is a licensed manufacturer or
distributor, and the financing is not provided by a third party.
(h) Cash, property, credit, services,
guaranty, benefit or any form of security loaned to or provided for or on
behalf of the licensee by a licensed affiliate, licensed subsidiary or
registered parent of the licensee. However, such financing from a stockholder,
partner, unlicensed affiliate or proprietor of the licensed operation must be
reported.
(i) Assessments for
property taxes or other improvements by, or accruals for taxes due to, a
government entity.
(j) Payments of
gaming winnings over time to patrons.
(k) Deposits or payments received by the
licensee in conjunction with a convention or similar event.
(l) Leases, including leaseback transactions
and capital leases, where the lease term, including any extensions or renewals,
does not exceed 90 days.
(m)
Financing activity that has been filed and administratively approved by the
Commission pursuant to these Rules.
6. All renewals, changes or modifications to
the terms or conditions of transactions previously reported under this section
must be reported.
7. The report to
the Commission required by this section must include the names and addresses of
all parties to the transaction, the amount and source of the funds, property or
credit received or applied, the nature and amount of security provided by or on
behalf of the licensee, the purpose of the transaction, and any additional
information the Commission may require. For transactions reported pursuant to
requirements of these Rules, the report must also identify the dates of each
loan or contribution. The report must be made on a form provided or approved by
the Commission, accompanied by a fully executed copy of the financing
agreement, and signed by an owner or key employee as defined in these
Rules.
8. In the event a party to
any transaction reportable pursuant to this Rule is a person other than the
reporting licensee or a financial institution or related subsidiary, or a
publicly traded company, the report must be accompanied by a supplemental
filing which must include that person's federal tax identification number or
social security number and date of birth, banking references, and source of
funds, and any additional information the Commission may require.
9. If, after such investigation as the
Commission deems appropriate, the Commission finds that a reported transaction
is inimical to the public health, safety, morals, good order or general welfare
of the people of the State of Arkansas, or would reflect, or tend to reflect,
discredit upon the State of Arkansas or the gaming industry, it may order the
transaction rescinded within such time and upon such terms and conditions as it
deems appropriate.
10. A bankruptcy
filing by a licensee does not relieve that licensee of the reporting
requirements of this Rule.
11. The
Commission or the Commission's designee may waive one or more of the provisions
of this section or require a report of a transaction not otherwise addressed in
this section or a supplemental filing, upon a finding that the waiver,
reporting requirement or supplemental filing is consistent with the public
policy of the State of Arkansas.
7.135
Finding of suitability of a
person holding an option to acquire an interest in a general partnership
licensee.
1. No person shall acquire or
be granted an option to purchase an interest in a general partnership licensee
without first notifying the Commission, on such forms as may be required by the
Commission, of the terms and conditions upon which the option was granted or
acquired.
2. The Commission may,
upon a recommendation by the Commission, require the application of any person
for a determination of suitability to hold an option to purchase or otherwise
obtain an interest in a general partnership licensee.
RULE 8
ENFORCEMENT OF SECURITY INTERESTS
8.010
Definitions. As used in
this Rule:
1. "Commission" means the Arkansas
Racing Commission or the Commission's designee.
2. "Enforce a security interest" means the
transfer of possession ownership or title pursuant to a security
interest.
3. "Operating license"
means the Casino license issued to a person for the conduct of gaming. The term
does not include licenses issued to officers, directors, holders of securities
or other ownership interest, key employees, or others who have been licensed
due to their relationship to or involvement with the gaming
operation.
4. "Personal property
gaming collateral" means property subject to a security interest that is
composed of:
(a) A security issued by a
corporation which is a holder of a Casino license in this state;
(b) A security issued by a holding company
that is not a publicly traded corporation;
(c) A security issued by a holding company
that is a publicly traded corporation, if the enforcement of the security
interest will result in the creditor acquiring control as set forth in these
Rules; or
(d) A security issued by
a partnership which is a holder of a Casino license in this state.
5. "Secured party" means a person
who is a lender, seller, or other person in whose favor there is a security
interest or judgment.
6. "Security"
means security as that term is defined in Rules 13 and 14.
7. "Security agreement" means an agreement
that creates or provides for a security interest.
8. "Security interest" means an interest in
property that secures the payment or performance of an obligation or a
judgment.
8.020
Approvals required; applicability; scope of approval.
1. A person may not enforce a security
interest in personal property gaming collateral except as provided by this
Rule. The purported enforcement of such security interest without the secured
party having complied with the requirements of this Rule is void.
2. The provisions of this Rule do not apply
to the enforcement of a security interest in real property.
3. Notwithstanding any other provision of
this Rule, approval is not required under this Rule to enforce a security
interest in a security issued by a holding company, or by a corporation,
general partnership, or limited partnership licensee, if the gaming operation
has ceased and the operating license has been surrendered to the Commission
prior to the enforcement of such security interest.
4. The granting of an approval pursuant to
this Rule does not constitute a determination by the Commission as to the
validity or enforceability of the security interest.
5. The granting of an approval pursuant to
this Rule does not constitute licensing, registration, or finding of
suitability of the secured party, nor approval for further sale, transfer, or
other disposition of the gaming collateral subsequent to the enforcement of the
security interest.
8.030
Application for approval to enforce security interest; investigation;
recommendation of the Commission.
1.
Except as otherwise specifically provided herein, a secured party shall apply
for approval to enforce a security interest in personal property gaming
collateral using such forms as the Commission may prescribe. The application
shall include a complete schedule and description of the gaming collateral that
is the subject of the security interest, copies of the security agreement and
documents evidencing the obligation secured, a statement by the secured party
identifying the act of default by the debtor that is the basis for seeking to
enforce the security interest, including a copy of any notice of default sent
to the debtor, and any other information requested by the Commission.
2. The Commission shall investigate the facts
and circumstances related to the application for approval to enforce a security
interest. The investigation by the Commission may include:
(a) A review of all pertinent
documents;
(b) An analysis of the
impact upon the debtor of approving the enforcement of the security interest,
including an evaluation of the effect of enforcement of the security interest
upon the continued operation of the licensed gaming establishment;
(c) A review of the transaction to determine
whether the security interest was given in violation of these Rules, or in an
attempt to evade the requirements of the Rules adopted by the Commission
regarding the sale, assignment, transfer or other disposition of an interest in
a gaming operation or in the type of property subject to this Rule;
and
(d) Any other data or
information the Commission deems relevant to the application.
8.040
Enforcement
of a security interest in personal property gaming collateral.
1. The enforcement of a security interest in
personal property gaming collateral requires the affirmative approval of the
Commission. The Commission shall not approve the enforcement of such security
interest if such enforcement will result in any person becoming subject to
mandatory licensing, registration, or finding of suitability, unless all
persons have been licensed, registered, or found suitable by the Commission, as
applicable. The Commission may grant a temporary or permanent waiver of the
requirement of prior licensing, registration, or finding of suitability, or may
grant delayed licensing, registration, or finding of suitability, upon written
request by the secured party.
2.
Where an operating license is surrendered, the Commission may, upon its own
initiative or upon a request by the secured party, petition a court of
competent jurisdiction for the appointment of a supervisor pursuant these Rules
to ensure the continuation of the gaming operation upon lapse of the
license.
3. The Commission may
permit the licensee or holding company to register or record the securities in
its books or records in the name of the secured party pursuant to these Rule.
The Commission may grant such permission only if the secured party has filed an
application for approval to enforce a security interest in such securities.
Such permission shall be conditioned upon and require that the secured party
not exercise any voting rights or other control over the licensee or holding
company, and that all dividends payable or other beneficial interest in the
securities be held in escrow, pending final action on the application to
enforce the security interest.
RULE 9
CLOSING OF BUSINESS; DEATH OR DISABILITY;
INSOLVENCY
9.010
Surrender
of license on closing of business; closing due to natural disasters.
1. If a gaming establishment is conveyed to a
secured party who does not possess the licenses necessary to operate the
establishment, and the licensee ceases gaming operations as a result, the
licensee must immediately surrender the licensee's Casino license and, upon
written notification from the Commission that the surrender is accepted, the
license shall be deemed to have lapsed. The Commission may, upon its own
initiative or upon a request by the former secured party of the establishment,
petition a court of competent jurisdiction for the appointment of a supervisor
pursuant to these Rules to ensure the continuation of the gaming operation upon
lapse of the license.
2. Except as
provided in subsection 1, any licensee who surrenders, abandons or quits his or
her licensed establishment, or who closes all of his or her licensed games for
a period exceeding 1 month, shall within 10 days after surrendering, quitting
or abandoning his or her licensed establishment or so closing his or her games,
surrender his or her license to the Commission. The Commission may, upon
request, authorize closing for longer periods; however, such extension will not
permit closing for an entire calendar quarter.
3. Subsection 2 shall not apply if the
Commission authorizes closure of any licensed gaming establishment that
temporarily ceases the operation of all licensed games because of natural
disaster, fire or other physical destruction of the licensed gaming
establishment. In such circumstances, the licensee shall notify the Commission
of the circumstances requiring closure of the licensed games pending rebuilding
or repair of the premises; the anticipated duration of the closure; and the
intent of the licensee to commence operation as soon as rebuilding or repairs
have been completed. Upon receipt of such notice, the Commission, if satisfied
that the premises are in fact unusable for continuing gaming, may authorize
closure for such time as is necessary.
4. Any licensee granted temporary closure by
the Commission under subsection 4 is a continuing state Casino licensee subject
to the provisions of the Amendment and Rules adopted thereunder, and shall also
be subject to such conditions, by way of placement of a bond, reporting, or
otherwise, as may be deemed necessary by the Commission. Prior to resumption or
partial resumption of gaming operations, licensees shall pay in advance any
license fees and taxes due.
9.020
Death or disability of
licensee.
1. In the event of the death
or judicially established disability of a licensee or a stockholder of a
corporate licensee, the spouse, next of kin, personal representative or
guardian of such deceased or disabled person or the person in charge of the
licensed establishment, or, in the case of a corporate licensee, a managing
officer of such corporation, shall notify the Commission immediately of the
fact of such death or disability.
2. In case such deceased or disabled person
is the sole licensee for an establishment, the Commission may in the
Commission's sole and absolute discretion, authorize the spouse, next of kin,
personal representative or guardian of such person to continue the operation of
such establishment pending action on an application by such spouse, next of
kin, personal representative or guardian for a license to operate such
establishment.
3. In any case in
which the interest held by such deceased or disabled person in any licensed
establishment would pass by operation of law or otherwise to the person's
estate or to any person other than a co-licensee, such person or the personal
representative or guardian of the deceased or disabled person shall, within 30
days after the date of death or disability, make application to the Commission
for a temporary license as successor in interest, representative or guardian,
whichever is appropriate.
4. The
Commission may, in its discretion and if satisfied of the necessity of such
action, recommend to the Commission that a temporary license be issued to the
applicant for such period of time as it may deem necessary. Such temporary
license will entitle the person named therein to take part in the operation of
such establishment and to receive profits therefrom as successor in interest,
representative or guardian of the deceased or disabled person. Such temporary
license may not be assigned in whole or in part.
5. No licensee shall permit any spouse, heir,
next of kin, personal representative or guardian to take part in the operation
of the licensed establishment, nor pay over to such person any part of the
profits of such operation which accrue after the date of death or disability,
unless such person is either a co-licensee or the holder of a temporary license
as successor in interest, representative or guardian.
6. In any case in which the interest held by
a deceased or disabled trustee in any licensed establishment would pass to a
successor trustee other than a co-licensee, such successor trustee shall,
within 30 days after the date of death or disability, make application to the
Commission for a temporary license as successor in interest.
9.030
Insolvency of a
licensee.
1. In the event that a
licensee files any petition with the bankruptcy court for relief as a debtor or
has such a petition filed against it, or a receiver is appointed for such
licensed business or an assignment of such business is made for the benefit of
creditors, the licensee, trustee, receiver or assignee, as the case may be,
shall immediately notify the Commission of such fact in writing. Such written
notice shall have attached a copy of the petition filed with the court, and any
relevant court orders such as orders appointing trustees, receivers, or
assignees.
2. No licensed
establishment shall be operated by any trustee, receiver or assignee for the
benefit of creditors until such operation has been authorized by the
Commission. In an emergency situation, any three members of the Commission may
authorize the continuation of such operation pending action by the
Commission.
3. Any such trustee,
receiver, or assignee desiring to continue operation of the licensed
establishment shall immediately make application for permission to do so.
Application shall be made in the same manner as an application for an initial
license; but the operation, if approved, shall be deemed to continue under the
existing license of the establishment.
4. Permission for such trustee, receiver, or
assignee to continue the operation of the licensed establishment may be
summarily withdrawn at any time in the discretion of the Commission without the
necessity of any hearing or proceedings for revocation or suspension.
RULE 10
MISCELLANEOUS
10.010
Officials not to hold Casino
licenses or related approvals.
1.
Prohibition. No state Casino license, finding of suitability,
or approval, the granting of which requires an application to be made to the
Commission, shall be held by nor granted to any person holding office in, or
employed by, any agency of the State of Arkansas or any of its political
subdivisions when the duties of such office or agency pertain to the
enforcement of the provisions of the Amendment or these Rules.
2.
Inclusions. This Rule
applies specifically, but without limitation, to the following categories of
persons in gaming enforcement:
(a) Persons
affiliated with the attorney general's office of the State of
Arkansas;
(b) Persons affiliated
with any prosecuting attorney's office within the State of Arkansas;
(c) Persons affiliated with any sheriff's
office or police department within the State of Arkansas;
(d) Members, agents, or employees of the
Commission;
(e) Any member of the
judiciary.
3.
Waivers. The Commission may waive the prohibition contained
within subsection 1 of this Rule if it makes a written finding that such waiver
is not inconsistent with the functions, duties, or responsibilities of the
person otherwise restricted from holding the license, finding of suitability,
or approval do not involve matters relating to the enforcement of the
provisions of the Amendment or these Rules.
4.
Non-transferability of
waivers. A waiver granted pursuant to this section is applicable only
to the specific matter for which it is granted and shall not be transferable to
any other license, finding of suitability, or approval applied for or held by
the person otherwise prohibited from holding or being issued the same.
RULE 11
CHIPS
11.010
Definitions. As used in this Rule:
1. "Book" means a race book or sports pool
licensed and approved pursuant to these Rules.
2. Except as otherwise provided, "Commission"
means the Arkansas Racing Commission or the Commission's designee.
3. "Chip" means a non-metal or partly metal
representative of value issued by a licensee for use at table games or counter
games at the licensee's gaming establishment.
11.020
Approval of chips; applications
and procedures.
1. A licensee shall
not issue any chips for use in its gaming establishment, or redeem any such
chips, unless the chips have been approved in writing by the Commission. A
licensee shall not issue any chips for use in its gaming establishment, or
redeem any such chips, that are modifications of chips previously approved by
the Commission, unless the modifications have been approved in writing by the
Commission.
2. Applications for
approval of chips and modifications to previously-approved chips must be made,
processed, and determined in such manner and using such forms as the Commission
may prescribe. Only Casino licensees, or the manufacturer authorized by these
licensees to produce the chips, may apply for such approval. Each application
must include, in addition to such other items or information as the Commission
may require:
(a) An exact drawing, in color
or in black-and-white, of each side and the edge of the proposed chip, drawn to
actual size or drawn to larger than actual size and in scale, and showing the
measurements of the proposed chip in each dimension;
(b) Written specifications for the proposed
chips;
(c) The name and address of
the manufacturer;
(d) The
licensee's intended use for the proposed chips; and
(e) A verification upon oath or notarized
affirmation, executed by the chief operating officer of the chip manufacturer,
or a person with equivalent responsibilities, that it has a written system of
internal control, approved by the Commission, which describes in detail the
current administrative, accounting and security procedures which are utilized
in the manufacture, storage and shipment of the chips and related material. The
written system must include at a minimum, a detailed, narrative description of
the procedures and controls implemented to ensure the integrity and security of
the manufacturing process, from design through shipment, including but not
limited to those procedures and controls designed specifically to:
(1) Provide for the secure storage or
destruction of all pre-production prototypes, samples, production rejects and
other nonsalable product.
(2)
Provide security over the finished art work, hubs, plates, dies, molds, stamps
and other related items which are used in the manufacturing process.
(3) Prevent the unauthorized removal of
product from the production facility through the utilization of security
devices such as metal detectors, and surveillance cameras.
(4) Restrict access to raw materials,
work-in-process, and finished goods inventories to authorized
personnel.
(5) Establish procedures
for documenting approval of production runs.
(6) Establish and maintain a perpetual
inventory system which adequately documents the flow of materials through the
manufacturing process.
(7)
Establish procedures which reconcile the raw material used to the finished
product on a job-by-job basis. Significant variances are to be documented,
investigated by management personnel, and immediately reported to the
Commission and to the licensee who authorized the manufacturer to produce the
chips.
(8) Provide for quarterly
physical inventory counts to be performed by individual(s) independent of the
manufacturing process which are reconciled to the perpetual inventory records.
Significant variances are to be documented, investigated by management
personnel, and immediately reported to the Commission.
(9) Establish a framework of procedures which
provide for the security and accountability of products and materials sent to
or received from subcontractors or satellite production facilities.
(10) Document controls over the shipment of
finished product, and
(11) Provide
such other or additional information as the Commission may require.
The Commission may in writing approve variations from the specific
requirements of this Rule if in the opinion of the Commission the alternative
controls and procedures meet the objectives of this Rule.
3. If, after
receiving and reviewing the items and information described by this Rule, the
Commission is satisfied that the proposed chips and related information conform
to the requirements of this Rule, the Commission shall notify the licensee or
the manufacturer authorized by the licensee to produce the chips in writing and
shall request, and the licensee or the manufacturer shall provide a sample of
the proposed chips in final, manufactured form. If the Commission is satisfied
that the sample conforms with the requirements of this Rule and with the
information submitted with the licensee's application, the Commission shall
approve the proposed chips and notify the licensee in writing. As a condition
of approval of chips issued for use at the licensee's race book, sports pool,
or specific table or counter game, the Commission may prohibit the licensee
from using the chips other than at the book, pool, or specific game. The
Commission may retain the sample chips submitted pursuant to this
subsection.
11.030
Specifications for chips.
1.
Chips must be designed, manufactured, and constructed in compliance with all
applicable statutes, regulations, and policies of the United States, Arkansas,
and other states, and so as to prevent counterfeiting of the chips to the
extent reasonably possible. Chips must not deceptively resemble any current or
past coinage of the United States or any other nation.
2. In addition to such other specifications
as the Commission may approve:
(a) The name of
the issuing gaming establishment must be inscribed on each side of each chip,
and the city or other locality and the state where the establishment is located
must be inscribed on at least one side of each chip;
(b) The value of the chip must be inscribed
on each side of each chip, other than chips used exclusively at
roulette;
(c) The manufacturer's
name or a distinctive logo or other mark identifying the manufacturer must be
inscribed on at least one side of each chip; and
(d) Each chip must be designed so that when
stacked with chips of other denominations and viewed on closed-circuit,
black-and-white television, the denomination of the chip can be distinguished
from that of the other chips in the stack.
3. The names of the city or other locality
and the state where the establishment is located must be inscribed on at least
one side of each chip unless the Commission finds, after application by a
licensee, that such an inscription is not necessary because:
(a) The name of the issuing establishment is
unique to one readily identifiable establishment in all gaming jurisdictions;
or
(b) The inclusion of the city or
other locality and the state is not necessary or beneficial for any regulatory
purpose relating to the applicant.
4. Any application submitted pursuant to
subsection 3 must be signed by the chief executive officer of the applicant and
be on a form prescribed by the Commission.
5. Any approval by the Commission for the
deletion of such an inscription shall be in writing and be limited to that
period of time in which the name of the licensee is limited to one
establishment and conditioned so that it may be withdrawn in the future if the
Commission determines that the deletion results in confusion with the chips of
another establishment or if such inclusion is deemed necessary or beneficial
for any regulatory purpose.
6. A
copy of any approval or disapproval or other decision by the Commission
pursuant to the authority delegated in subsection 3 must be submitted to the
members of the Commission within 5 working days thereafter and may be relied on
by the applicant if within 20 working days after such submission:
(a) A member of the Commission does not
request a review by the entire Commission; or
(b) The Commission does not include the
matter on the next available Commission agenda.
7. In the event of such a request by a
Commission member, or such action by the Commission, the application or other
related issue(s) shall be considered and decided by the Commission upon the
recommendation of the Commission.
11.040
Specifications for chips.
1. Unless the Commission approves otherwise,
chips must be disk-shaped, must be .130 inch thick, and must have a diameter
of:
(a) 1.55 inches, for chips used at games
other than baccarat;
(b) 1.55
inches or 1.6875 inches, for chips used at baccarat; and
(c) 1.6875 inches, for chips used exclusively
at race books and sports pools or other counter games.
2. Each side of each chip issued for use
exclusively at a race book, sports pool, or particular game must bear an
inscription clearly indicating that use of the chip is so restricted.
11.060
Use of chips
1. Chips are solely representatives of value
which evidence a debt owed to their custodian by the licensee that issued them
and are not the property of anyone other than that licensee.
2. A licensee that uses chips at its gaming
establishment shall:
(a) Comply with all
applicable statutes, regulations, and policies of Arkansas and of the United
States pertaining to chips;
(b)
Issue chips only to patrons of its gaming establishment and only at their
request;
(c) Promptly redeem its
own chip from its patrons by cash or check drawn on an account of the
licensee;
(d) Post conspicuous
signs at its establishment notifying patrons that state law prohibits the use
of the licensee's chips, outside the establishment for any monetary purpose
whatever, and that the chips issued by the licensee are the property of the
licensee, only; and
(e) Take
reasonable steps, including examining chips and segregating those issued by
other licensees to prevent the issuance to its patrons of chips issued by
another licensee.
3. A
licensee shall not accept chips as payment for any goods or services offered at
the licensee's gaming establishment with the exception of the specific use for
which the chips were issued or purchase of beverages on the Casino floor, and
shall not give chips as change in any other transaction.
4. A licensee shall not redeem its chips if
presented by a person who the licensee knows or reasonably should know is not a
patron of its gaming establishment, except that a licensee shall promptly
redeem its chips if presented by:
(a) Another
licensee who represents that it redeemed the chips from its patrons or received
them unknowingly, inadvertently, or unavoidably;
(b) An employee of the licensee who presents
the chips in the normal course of employment; or
(c) A person engaged in the business of
collecting from licensees chips issued by other licensees and presenting them
to the issuing licensees for redemption.
5. A licensee may redeem its chips if
presented by an agent of the Commission in the performance of the agent's
official duties or on behalf of another governmental agency.
6. A licensee shall not knowingly issue, use,
permit the use of, or redeem chips issued by another licensee, except as
follows:
(b) A licensee may redeem chips
issued by another licensee if:
(1) The chips
are presented by a patron for redemption at the cashier's cage of the
licensee's gaming establishment;
(2) The chips are presented by a patron at a
table game, and the licensee redeems the chips with chips of its own, places
the redeemed chips in the table's drop box, and separates and properly accounts
for the redeemed chips during the count performed pursuant to the licensee's
system of internal control submitted pursuant to Rules 6.050 or 6.060;
or
(3) The chips are presented by a
patron as payment on a race, pari-mutuel, or sports wager to a book located on
the premises of the licensee which issued the chips.
7. Chips whose use is restricted
to uses other than at table games or other than at specified table games may be
redeemed by the issuing licensee at table games or non-specified table games if
the chips are presented by a patron, and the licensee redeems the chips with
chips issued for use at the game, places the redeemed chips in the table's drop
box, and separates and properly accounts for the redeemed chips during the
count performed pursuant to the licensee's system of internal control required
by these Rules.
11.070
Redemption and disposal of discontinued chips.
1. A licensee that permanently removes from
use or replaces approved chips at its gaming establishment, or that ceases
operating its gaming establishment whether because of closure or sale of the
establishment or any other reason, must prepare a plan for redeeming
discontinued chips that remain outstanding at the time of discontinuance. The
licensee must submit the plan in writing to the Commission not later than 30
days before the proposed removal, replacement, sale, or closure, unless the
closure or other cause for discontinuance of the chips cannot reasonably be
anticipated, in which event the licensee must submit the plan as soon as
reasonably practicable. The Commission may approve the plan or require
reasonable modifications as a condition of approval. Upon approval of the plan,
the licensee shall implement the plan as approved.
2. In addition to such other reasonable
provisions as the Commission may approve or require, the plan must provide for:
(a) Redemption of outstanding, discontinued
chips in accordance with this Rule for at least 120 days after the removal or
replacement of the chips or for at least 120 days after operations cease, as
the case may be, or for such longer or shorter period as the Commission may for
good cause approve or require;
(b)
Redemption of the chips at the premises of the gaming establishment or at such
other location as the Commission may approve;
(c) The casino licensee shall publish in at
least one newspaper of general circulation and on the website of the licensee
any notice of the discontinuance of the chips and how the chips may be
redeemed;
(d) Conspicuous posting
of the notice described in paragraph (c) at the gaming establishment or other
redemption location; and
(e)
Destruction or such other disposition of the discontinued chips as the
Commission may approve or require.
11.080
Destruction of counterfeit
chips
1. As used in this section,
"counterfeit chips " means any chip -like objects that have not been approved
pursuant to this Rule, including objects commonly referred to as "slugs," but
not including coins of the United States or any other nation.
2. Unless a peace officer instructs or a
court of competent jurisdiction orders otherwise in a particular case,
licensees shall destroy or otherwise dispose of counterfeit chips discovered at
their establishments in such manner as the Commission may approve or
require.
3. Unless a peace officer
instructs or a court of competent jurisdiction orders otherwise in a particular
case, licensees may dispose of coins of the United States or any other nation
discovered to have been unlawfully used at their establishments by including
them in their coin inventories or, in the case of foreign coins, by exchanging
them for United States currency or coins and including same in their currency
or coin inventories, or by disposing of them in any other lawful
manner.
4. Each licensee shall
record, in addition to such other information as the Commission may require:
(a) The number and denominations, actual and
purported, of the coins and counterfeit chips destroyed or otherwise disposed
of pursuant to this section;
(b)
The month during which they were discovered;
(c) The date, place, and method of
destruction or other disposition, including, in the case of foreign coin
exchanges, the exchange rate and the identity of the bank, exchange company, or
other business or person at which or with whom the coins are exchanged;
and
(d) The names of the persons
carrying out the destruction or other disposition on behalf of the
licensee.
5. Each
licensee shall maintain each record required by this subsection for at least 5
years, unless the Commission approves or requires otherwise.
11.090
Promotional and
tournament chips
1. As used in this
section, "promotional chip" means a chip- -like object issued by a licensee for
use in promotions or tournaments at the licensee's gaming
establishment.
2. Promotional chips
must be designed, manufactured, approved, and used in accordance with the
provisions of this Rule applicable to chips, except as follows:
(a) Promotional chips must be of such shape
and size and have such other specifications as the Commission may approve or
require;
(b) Each side of each
promotional chip must conspicuously bear the inscription "No Cash
Value";
(c) Promotional chips must
not be used, and licensees shall not permit their use, in transactions other
than the promotions or tournaments for which they are issued; and
(d) The provisions of this Rule shall not
apply to promotional chips.
11.100
Other instrumentalities.
Other instrumentalities with which gaming is conducted must be
designed, manufactured, approved, used, discontinued, destroyed, or otherwise
disposed of in accordance with the provisions of this Rule applicable to chips,
except as follows:
1. Such other
instrumentalities must be of such shape, size, and design and have such other
specifications as the Commission may approve or require; and
2. The Commission, in the Commission's sole
and absolute discretion, may deny approval of instrumentalities other than
chips or may grant approval subject to such conditions as the Commission
considers appropriate.
RULE
12
MANUFACTURERS, DISTRIBUTORS, OPERATORS OF INTER-CASINO LINKED
SYSTEMS, GAMING DEVICES, NEW GAMES, INTER-CASINO LINKED SYSTEMS, ON-LINE SLOT
METERING SYSTEMS, CASHLESS WAGERING SYSTEMS, MOBILE GAMING SYSTEMS, INTERACTIVE
GAMING SYSTEMS AND ASSOCIATED EQUIPMENT
12.010
Definitions. As used in
this Rule, unless the context otherwise requires:
1. "Assume responsibility" means to acquire
complete control over, or ownership of, a gaming device, cashless wagering
system, mobile gaming system or interactive gaming system.
2. "Cashless wagering system" means the
collective hardware, software, communications technology, and other associated
equipment used to facilitate wagering on any game or gaming device including
mobile gaming systems and interactive gaming systems with other than chips or
legal tender of the United States. The term does not include any race and
sports computerized bookmaking system that accepts pari-mutuel wagers, or any
other race and sports book systems that do not accept wagering instruments,
wagering credits or process electronic money transfers. Associated equipment
such as redemption kiosks may also be used to act as promotion kiosks and
automated teller machines.
3.
"Commission" means the Arkansas Racing Commission or the Commission's
designee.
4. "Control program"
means any software, source language or executable code which affects the result
of a wager by determining win or loss. The term includes, but is not limited
to, software, source language or executable code associated with the:
(a) Random number generation
process;
(b) Mapping of random
numbers to game elements to determine game outcome;
(c) Evaluation of the randomly selected game
elements to determine win or loss;
(d) Payment of winning wagers;
(e) Game recall;
(f) Game accounting including the reporting
of meter and log information to on-line slot metering system;
(g) Monetary transactions conducted with
associated equipment;
(h) Software
verification and authentication functions which are specifically designed and
intended for use in a gaming device;
(i) Monitoring and generation of game tilts
or error conditions; and
(j) Game
operating systems which are specifically designed and intended for use in a
gaming device.
The term does not include software used for artistic attributes of a
game including graphics, sound and animation providing entertainment unless
such elements are material to game play because they are necessary for the
player to understand the game or game outcome.
5. "Distribution" or "distribute" means the
sale, offering for sale, lease, offering for lease, licensing or other offer of
any gaming device, cashless wagering system, mobile gaming system or
interactive gaming system for use or play in Arkansas.
6. "Distributor" means a person who operates,
carries on, conducts or maintains any form of distribution.
7. "Distributor of associated equipment" is
any person that sells, offers to sell, leases, offers to lease, licenses,
markets, offers, or otherwise offers associated equipment in Arkansas for use
by licensees.
8. "Equipment
associated with interactive gaming" means any equipment or mechanical,
electromechanical or electronic contrivance, component or machine used remotely
or directly in connection with gaming or mobile gaming, any game, race book or
sports pool that would not otherwise be classified as a gaming device,
including dice, playing cards, links which connect to progressive slot
machines, equipment which affects the proper reporting of gross revenue,
computerized systems of betting at a race book or sports pool, computerized
systems for monitoring slot machines and devices for weighing or counting
money; or a computerized system for recordation of sales for use in an area
subject to tax.
9. "Game of chance"
means a game in which randomness determines all outcomes of the game as
determined over a period of continuous play.
10. "Electronic games of skill" means games
played through any electronic device or machine that afford an opportunity for
the exercise of skill or judgment when the outcome is not completely controlled
by chance alone. "Electronic games of skill" does not include pari-mutuel
wagering on horse racing and greyhound racing governed by the Arkansas Horse
Racing Law, Ark. Code Ann. §
23-110-101, et
seq., or the Arkansas Greyhound Racing Law, Ark. Code Ann. §
23-111-101, et
seq., whether pari-mutuel wagering on live racing, simulcast racing, or races
conducted in the past and rebroadcast by electronic means.
11. "Game outcome" is the final result of the
wager.
12. "Game variation" means a
change or alteration in a game or gambling game that affects the manner or mode
of play of an approved game. This includes, but is not limited to, the addition
or removal of wagering opportunities or a change in the theoretical hold
percentage of the game.
13. "Gaming
session" means the period of time commencing when a player initiates a game or
series of games on a gaming device by committing a wager and ending at the time
of a final game outcome for that game or series of games.
14. "Hybrid game" means a game in which a
combination of the skill of the player and chance affects the outcome of the
game as determined over a period of continuous play.
15. "Identifier" means any specific and
verifiable fact concerning a player or group of players which is based upon
objective criteria relating to the player or group of players, including,
without limitation:
(a) The frequency, value
or extent of predefined commercial activity;
(b) The subscription to or enrollment in
particular services;
(c) The use of
a particular technology concurrent with the play of a gaming device;
(d) The skill of the player;
(e) The skill of the player relative to the
skill of any other player participating in the same game;
(f) The degree of skill required by the game;
or
(g) Any combination of (a) to
(f), inclusive.
16.
"Independent contractor" means any person who:
(a) Is not an employee of a licensed
manufacturer; and
(b) Pursuant to
an agreement with a licensed manufacturer:
(1)
Designs, develops, programs, produces or composes a control program on behalf
of the licensed manufacturer; or
(2) Designs, develops, produces or composes
software, source language or executable code intended to be compiled into a
control program by the licensed manufacturer.
As used in this Rule "licensed manufacturer" includes any affiliate
that is owned or controlled by or under common control with the
licensee.
17. "Independent testing laboratory" means a
private laboratory that is registered by the Commission to inspect and certify
games, gaming devices, associated equipment, cashless wagering systems,
inter-casino linked systems, mobile gaming systems or interactive gaming
systems, and any components thereof and modifications thereto, and to perform
such other services as the Commission may request.
18. "Inter-casino linked system" means:
(a) A network of electronically interfaced
similar games which are located at two or more licensed gaming establishments
that are linked to:
(1) Conduct gaming
activities, contests or tournaments; or
(2) Facilitate participation in a common
progressive prize system, and the collective hardware, software, communications
technology and other associated equipment used in such system to link and
monitor games or devices located at two or more licensed gaming establishments,
including any associated equipment used to operate a multi-jurisdictional
progressive prize system.
(b) Systems that solely record a patron's
wagering activity among affiliated properties are not inter-casino linked
systems.
(c) The term
"multi-jurisdictional progressive prize system" means the collection of
hardware, software, communications technology and other associated equipment
used to link and monitor progressive slot machines or other games among
licensed gaming establishments in this state participating in an inter-casino
linked system and one or more lawfully operated gaming locations in other
jurisdictions that participate in a similar system for the purpose of
participation in a common progressive prize system.
19. "Inter-casino linked system modification"
means a change or alteration to an inter-casino linked system made by an
operator who has been previously approved by the Commission to operate that
system. With regard to inter-casino linked systems that link progressive payout
schedules, the term includes, but is not limited to:
(a) A change in a system name or theme;
or
(b) A change in gaming device
denomination.
20.
"Interactive gaming system" is a gaming device and means the collective
hardware, software, communications technology, and proprietary hardware and
software specifically designed or modified for, and intended for use in, the
conduct of interactive gaming. The core components of an interactive gaming
system, including servers and databases running the games on the interactive
gaming system and storing game and interactive gaming account information, must
be located in the State of Arkansas except as otherwise permitted by the
Commission.
21. "Manufacture"
means:
(a) To manufacture, produce, program,
design, control the design of or make modifications to a gaming device,
associated equipment, cashless wagering system, mobile gaming system or
interactive gaming system for use or play in Arkansas;
(b) To direct, control or assume
responsibility for the methods and processes used to design, develop, program,
assemble, produce, fabricate, compose and combine the components and other
tangible objects of any gaming device, associated equipment, cashless wagering
system, mobile gaming system or interactive gaming system for use or play in
Arkansas; or
(c) To assemble, or
control the assembly of, a gaming device, associated equipment, cashless
wagering system, mobile gaming system or interactive gaming system for use or
play in Arkansas.
22.
"Manufacturer" means a person who operates, carries on, conducts or maintains
any form of manufacture.
23.
"Manufacturer of associated equipment" is any person that manufactures,
assembles, or produces any associated equipment, including inter-casino linked
systems, for use in Arkansas by licensees.
24. "Manufacturer of equipment associated
with interactive gaming" means any person that manufactures, assembles, or
produces any equipment associated with interactive gaming.
25. "Mobile gaming system" or "system" means
a system that allows for the conduct of games through mobile communications
devices operated solely within a licensed gaming establishment by the use of
communications technology that allows a patron to bet or wager, and
corresponding information related to the display of the game, gaming outcomes
or other similar
26. "Mobile gaming
system modification" means any change or alteration to a mobile gaming system
made by a manufacturer from its approved configuration.
27. "Modification" means a change or
alteration in a gaming device previously approved by the Commission for use or
play in Arkansas that affects the manner or mode of play of the device. The
term includes a change to control programs and, except as provided in
paragraphs (c) and (d) of this subsection, in the theoretical hold percentage.
The term does not include:
(a) Replacement of
one component with another, pre-approved component;
(b) The rebuilding of a previously approved
device with pre-approved components;
(c) A change in the theoretical hold
percentage of a mechanical or electro-mechanical device, provided that the
device as changed meets the standards of these Rules;
(d) A change in the theoretical hold
percentage of an electronic device which is the result of a top award jackpot
or bonus jackpot payment which is paid directly by an attendant and which is
not accounted for by the device; or
(e) A change to software used for artistic
attributes of a game, including graphics, sound and animation providing
entertainment unless such elements are material to game play because they are
necessary for the player to understand the game or game outcome.
28. "On-line slot metering system"
means the collective hardware, software and other associated equipment used to
monitor, accumulate, and record meter information from gaming devices within a
licensed establishment.
29.
"Operator" means, except as otherwise provided, any person or entity holding a
license to operate:
(a) An inter-casino linked
system or mobile gaming system in Arkansas;
(b) A Casino gaming operation that operates
an inter-casino linked system of affiliates; or
(c) An inter-casino linked system under the
preceding paragraphs (a) or (b) of this section which system also is linked to
or otherwise incorporates a multi-jurisdictional progressive prize
system.
30. "Private
residence" means a noncommercial structure used by a natural person as a place
of abode and which is not used for a commercial purpose.
31. "Proprietary hardware and software" means
hardware or software specifically designed for use in a gaming device including
a mobile gaming system and interactive gaming system.
32. "Randomness" is the observed
unpredictability and absence of pattern in a set of elements or events that
have definite probabilities of occurrence.
33. "Rules of play" means those features of a
game necessary for a reasonable person to understand how a game is played
including, but not limited to, the following:
(a) Help screens;
(b) Award cards; and
(c) Pay-line information.
The term does not include those inherent features of a game that a
reasonable person should know or understand prior to initiating the
game.
34. "Skill"
means the knowledge, dexterity or any other ability or expertise of a natural
person.
35. "Theme" means a
concept, subject matter and methodology of design.
12.015
Policy. Gaming devices
and associated equipment that incorporate innovative, alternative and advanced
technology are beneficial to and in the best interests of the State of Arkansas
and it is the policy of the Commission to encourage the development and
deployment of such technologies by manufacturers, distributors and gaming
establishments Arkansas.
12.0215
Determination of suitability.
1.
A person is not subject to licensing in connection with activities performed as
an independent contractor provided that a person who is licensed under the
provisions of this section assumes responsibility for the design, development,
programming, production or composition of the control program
Arkansas.
2. An independent
contractor may be required by the Commission, upon recommendation of the
Commission, to file an application for a finding of suitability to be an
independent contractor for a licensed manufacturer.
3. The Commission shall give written notice
to the independent contractor of its decision to require the filing of an
application for a finding of suitability. Unless otherwise stated by the
Commission in its written notice, an independent contractor who has been
ordered to file an application for a finding of suitability to be an
independent contractor may continue to perform under a contract with a
manufacturer unless and until the Commission finds the independent contractor
unsuitable.
4. If the Commission
finds an independent contractor to be unsuitable:
(a) All licensed manufacturers shall, upon
written notification, immediately terminate any existing relationships, direct
or indirect, with such independent contractor;
(b) No new gaming device with a control
program that contains software, source language, or executable code created in
whole or in part by the unsuitable independent contractor shall be approved;
and
(c) Any previously approved
gaming device with a control program that contains software, source language,
or executable code created in whole or in part by the independent contractor is
subject to revocation of its approval if the reasons for the finding of
unsuitability also apply to that gaming device.
5. Failure of a licensed manufacturer to
terminate any association or agreement with an independent contractor after
receiving notice of the determination of unsuitability constitutes an
unsuitable method of operation.
6.
The Commission retains jurisdiction to determine the suitability of an
independent contractor regardless of whether or not the independent contractor
has any active agreements with licensed manufacturers or is otherwise no longer
functioning as an independent contractor.
7. A failure on the part of an independent
contractor to submit an application for a finding of suitability within 30 days
after being demanded to do so by the Commission shall constitute grounds for a
finding of unsuitability of the independent contractor.
8. An independent contractor, or employee
thereof, is not considered a gaming employee in relation to any work conducted
designing, programming, producing or composing a control program within the
scope of an agreement entered into with a licensed manufacturer. An independent
contractor or employee thereof, is in no way exempt from being classified as a
gaming employee for such work performed outside the scope of an agreement with
a licensed manufacturer or for other work performed related to
gaming.
12.023
Manufacturer's agreements with independent contractors. Any
agreement between a licensed manufacturer and an independent contractor shall
provide for termination without continuing obligation of the licensed
manufacturer in the event the independent contractor:
1. Refuses to respond to information requests
from the Commission;
2. Fails to
file an application for a finding of suitability as required by the Commission;
or
3. Is found unsuitable by the
Commission.
12.024
Manufacturer's responsibilities for independent contractors. Each
licensed manufacturer must:
1. Complete a
review of any software, source language or executable code designed, developed,
produced or composed by an independent contractor for compliance with all
applicable regulations and technical standards of the Commission and Commission
prior to submission to the Commission; and
2. As to such submission, maintain a record
of the general subject matter description of the software, source language or
executable code that was designed, developed, produced or composed by an
independent contractor, by contractor name.
Unless the Commission approves or requires otherwise in writing, such
records shall be maintained for a minimum of five years from the date of the
relevant submission and must be made available to the Commission upon request.
Failure to keep and provide such records is an unsuitable method of
operation.
12.025
Certain themes prohibited in association with gaming devices or slot
machines.
1. A gaming device or gaming
device modification submitted for approval by a manufacturer or made available
for play by a licensee must not use a theme that:
(a) Is derived from or based on a product
that is currently and primarily intended or marketed for use by persons under
21 years of age, or
(b) Depicts a
subject or material that:
(1) Is
obscene;
(2) Offensively portrays
persons based on race, religion, national origin, gender, or sexual preference;
or
(3) Is otherwise contrary to
public policy of this state.
2. A manufacturer, licensee or other person
holding the intellectual property rights to a theme may, concurrent with or
independent of an application for approval of or modification to a gaming
device, file a request with the Commission, in such manner and using such forms
as the Commission may prescribe, for a determination as to whether subsection 1
prohibits use of the theme in connection with a gaming device.
(a) The request for determination must be
accompanied by a nonrefundable fee of [$500] for each separate theme.
(b) The requesting party shall articulate the
reasons that the theme is not prohibited by subsection 1 along with any
additional information it deems relevant to the determination. Information
submitted pursuant to this section is confidential;
3. Within 30 days of the submission of the
request for determination pursuant to subsection 2, the Commission shall
administratively approve, approve with modification or condition, or deny the
request for determination.
4. A
written request for withdrawal of the request for determination may be made by
the requesting party at any time prior to the Commission's final action on such
request. A request for withdrawal is effective upon delivery to the Commission
and is without prejudice.
12.030
Approval of gaming devices and
the operation of new inter-casino linked systems; applications and
procedures.
1. A manufacturer or
distributor shall not distribute a gaming device in Arkansas and a licensee
shall not offer a gaming device for play unless it has been approved by the
Commission or is offered for play pursuant to a field test ordered by the
Commission.
2. An operator of an
inter-casino linked system shall not install and operate a new intercasino
linked system in Arkansas and a licensee shall not offer any gaming device or
game for play that is part of such a system unless operation of the
inter-casino linked system and all gaming devices or games that are part of or
connected to the inter-casino linked system have been approved by the
Commission or are offered for play pursuant to a field test ordered by the
Commission.
3. Applications for
approval of a new gaming device or to operate a new inter-casino linked system
shall be made and processed in such manner and using such forms as the
Commission may prescribe. Only licensed manufacturers may apply for approval of
a new gaming device. Only operators may apply for approval to operate a new
inter-casino linked system.
4. At
the Commission's request an applicant for a manufacturer's or inter-casino
linked system operator's license shall, or upon the Commission's prior approval
an applicant for a manufacturer's or operator's license may, apply for a
preliminary determination that a new gaming device or new inter-casino linked
system meets the standards required by this Rule.
5. Each application shall include, in
addition to other items or information as the Commission may require:
(a) A complete, comprehensive, and
technically accurate description and explanation in both technical and lay
language of the manner in which the device or inter-casino linked system
operates and complies will all applicable statutes, regulations and technical
standards, signed under penalty of perjury;
(b) A statement under penalty of perjury
that, to the best of the manufacturer's knowledge, the gaming device meets the
standards of section 14.040 or, in the case of an inter-casino linked system,
that to the best of the operator's knowledge the system meets the standards of
section 14.045;
(c) In the case of
a gaming device, a copy of all executable software, including data and graphic
information, and a copy of all source code for programs that cannot be
reasonably demonstrated to have any use other than in a gaming device,
submitted on electronically readable, unalterable media;
(d) In the case of a gaming device, a copy of
all graphical images displayed on the gaming device including, but not limited
to, reel strips, rules, instructions and pay tables;
(e) In the case of an inter-casino linked
system:
(1) An operator's manual;
(2) A network topology diagram;
(3) An internal control system;
(4) A hold harmless agreement;
(5) A graphical representation of the system
theme and all related signage;
(6)
Information sufficient to calculate a theoretical payoff schedule amount
including, but not limited to, the base and reset amounts, the total
contribution percentage and a breakdown of that percentage including
contribution rates to all progressive payoff schedules and all reset funds, the
odds of winning the progressive payoff schedule and the amount of the wager
required to win the progressive payoff schedule; and
(7) The form of any agreement or written
specifications permitted or required of an operator by any other state or
tribal government and affecting a multi-jurisdictional progressive prize
system.
(f) In the case
of a mobile gaming system:
(1) An operator's
manual;
(2) A network topology
diagram;
(3) An internal control
system; and
(4) A description of
the method used to isolate game function to the areas listed in these Rules;
and
(g) All materials
relating to the results of the registered independent testing laboratory's
inspection and certification process that are required under section
14.400.
12.040
Minimum standards for gaming devices.
1. All gaming devices must:
(a) Theoretically pay out a mathematically
demonstrable percentage of all amounts wagered over the life of the game, which
must not be less than 83 percent for each wager available for play on the
device.
(b) Determine game outcome
solely by the application of:
(1)
Chance;
(2) The skill of the
player; or
(3) A combination of the
skill of the player and chance.
(c) Display in an accurate and non-misleading
manner:
(1) The rules of play;
(2) The amount required to wager on the game
or series of games in a gaming session;
(3) The amount to be paid on winning
wagers;
(4) Any rake-off percentage
or any fee charged to play the game or series of games in a gaming
session;
(5) Any monetary wagering
limits for games representative of live gambling games;
(6) The total amount wagered by the
player;
(7) The game outcome;
and
(8) Such additional information
sufficient for the player to reasonably understand the game outcome.
(d) Satisfy the technical
standards adopted pursuant to these Rules.
2. Once a game is initiated by a player on a
gaming device, the rules of play for that game, including the probability and
award of a game outcome, cannot be changed. In the event the game or rules of
play for the game, including probability and award of a game outcome, change
between games during a gaming session, notice of the change must be prominently
displayed to the player.
3. Gaming
devices connected to a common payoff schedule shall:
(a) All be of the same denomination and have
equivalent odds of winning the common payoff schedule/common award based as
applicable on either or both of the combined influence of the attributes of
chance and skill; or
(b) If of
different denominations, equalize the expected value of winning the payoff
schedule/common award on the various denominations by setting the odds of
winning the payoff schedule in proportion to the amount wagered based as
applicable on either or both the combined influence of the attributes of chance
and skill, or by requiring the same wager to win the payoff schedule/award
regardless of the device's denomination. The method of equalizing the expected
value of winning the payoff schedule/award shall be conspicuously displayed on
each device connected to the common payoff schedule/common award. For the
purposes of this requirement, equivalent is defined as within a 5 percent
tolerance for expected value and no more than a 1 percent tolerance on return
to player or payback.
4.
All possible game outcomes must be available upon the initiation of each play
of a game upon which a player commits a wager on a gaming device.
5. For gaming devices that are representative
of live gambling games, the mathematical probability of a symbol or other
element appearing in a game outcome must be equal to the mathematical
probability of that symbol or element occurring in the live gambling
game.
6. Gaming devices that offer
games of skill or hybrid games must indicate prominently on the gaming device
that the outcome of the game is affected by player skill.
7. Gaming devices must not alter any function
of the device based on the actual hold percentage.
8. Gaming devices may use an identifier to
determine which games are presented to or available for selection by a
player.
9. For gaming devices
manufactured and distributed before September 28, 1989, the Commission may
waive the requirements of these Rules for a licensee exposing a gaming device
to the public for play, if the licensee can demonstrate to the Commission's
satisfaction that:
(a) After the waiver the
aggregate theoretical payout for all amounts wagered on all gaming devices
exposed for play by the licensee at a single establishment meets the 83 percent
standard of subsection 1(a) of section 14.040, and
(b) The licensee is unable to bring the
device into compliance with the requirements of subsection 1(a) of section
14.040 because of excessive cost or the unavailability of parts.
10. The Commission may waive for
good cause shown the requirements of a technical standard for a game. The
Commission has full and absolute authority to condition or limit a waiver
granted under this section for any cause deemed reasonable.
12.045
Minimum standards for
inter-casino linked systems. All inter-casino linked systems submitted
for approval:
1. Shall, in the case of an
inter-casino linked system featuring a progressive payoff schedule that
increases as the inter-casino linked system is played, have a minimum rate of
progression for the primary jackpot meter of not less than .4 of one percent of
amounts wagered. In the case of an inter-casino linked system featuring a
progressive payoff schedule that increases over time, have a minimum rate of
progression for the primary jackpot meter of not less than one hundred dollars
per day. The provisions of this subsection do not prevent an operator from
limiting a progressive payoff schedule as allowed by these Rules.
2. Shall have a method to secure data
transmissions between the games and devices and the main computer of the
operator, as approved by the Commission.
3. Shall display the rules of play and the
payoff schedule.
4. Shall meet the
applicable minimum standards for internal control that have been adopted
pursuant to these Rules.
12.050
Technical standards.
1. The Commission shall publish technical
standards for approval of gaming devices, on-line slot metering systems,
cashless wagering systems, and associated equipment.
2. The Commission shall:
(a) Publish notice of proposed technical
standards or revisions by posting the proposed changes or revisions on the
Commission's website;
(b) Mail
notice of the posting of the proposed technical standards or revisions on the
Commission's website and a copy of this section to every Casino licensee,
licensed manufacturer and every person who has filed a request with the
Commission; and
(c) Provide a copy
of the proposed technical standards or revisions to the Commission.
3. The Commission shall consider
all written statements, arguments, or contentions submitted by interested
parties within 30 days of service of the notice provided for in subsection
2.
4. Not later than 45 days after
service of written notice that the Commission has proposed the technical
standards or revisions, any Casino licensee or licensed manufacturer may object
to the technical standards or revisions by filing a written objection with the
Commission.
5. The Commission shall
consider any objections filed to the technical standards or revisions proposed
by the Commission. If the Commission does not concur with any of the technical
standards, the Commission shall revise the technical standards to reflect the
order of the Commission.
6. The
Commission shall send written notice of the effective date of the standards or
revisions to all Casino licensees, licensed manufacturers and every person who
has filed a request with the Commission.
7. Casino licensees or licensed manufacturers
may propose the adoption, revision, or deletion of technical standards by
submitting a written request to the Commission who will consider the request at
the Commission's discretion. If the Commission does not propose the technical
standard, the Casino licensee or licensed manufacturers may file a request with
the Commission to adopt, revise, or delete a technical standard. The Commission
may consider the request at its discretion.
12.060
Employment of individual to
respond to inquiries from the Commission.
1. Each manufacturer and operator shall
employ or retain an individual who understands the design and function of each
of its gaming devices, cashless wagering systems, inter-casino linked systems,
mobile gaming systems, or interactive gaming systems who shall respond within
the time specified by the Commission to any inquiries from the Commission
concerning the gaming device, cashless wagering system, inter-casino linked
system, mobile gaming system, or interactive gaming system or any modifications
to the gaming device, cashless wagering system, inter-casino linked system,
mobile gaming system, or interactive gaming system. Each manufacturer or
operator shall on or before December 31st of each year report in writing the
name of the individual designated pursuant to this section and shall report in
writing any change in the designation within 15 days of the change.
2. Each registered independent testing
laboratory shall employ an individual who understands the inspection and
certification methodology, procedures, and operation of the registered
independent testing laboratory. Such person shall be available during regular
Arkansas business hours to respond to requests from the Commission. Each
registered independent testing laboratory shall provide the Commission with the
name of the employee performing this function as part of their initial
registration application materials, and shall report in writing any subsequent
change in the employee designated to perform this function within 15 days of
the change.
12.070
Commission evaluation of new gaming devices. The Commission may
require transportation of not more than two working models of a new gaming
device to the new game lab of the Commission or some other location for review
and inspection. The manufacturer seeking approval of the device must pay the
cost of the inspection and investigation. The lab may dismantle the models and
may destroy electronic components in order to fully evaluate the device. The
Commission may require that the manufacturer provide specialized equipment or
the services of an independent technical expert to evaluate the
device.
12.075
Commission
evaluation of inter-casino linked systems. The Commission may require
transportation of not more than one working model of an inter-casino linked
system to the Commission's offices or some other location for review and
inspection pursuant to these Rules. The associated equipment manufacturer
seeking approval of the system shall pay the cost of the inspection and
investigation. The Commission may dismantle the model and may destroy
electronic components in order to fully evaluate the inter-casino linked
system. The Commission may require that the operator of an inter-casino linked
system provide specialized equipment or the services of an independent
technical expert to evaluate the inter-casino linked system.
12.080
Field test of new gaming devices
and new inter-casino linked systems.
1. The Commission, in accordance with these
Rules, may allow or require that one or more models of a new gaming device or
inter-casino linked system be tested at a licensed gaming establishment(s) for
not more than 180 days under terms and conditions that the Commission may
approve or require. Upon written request of the manufacturer, distributor or
operator, the Commission may, by written agreement, allow the test period to be
continued an additional 90 days beyond the 180-day maximum field test period,
for the purpose of allowing the application for approval of the new gaming
device or application to operate a new inter-casino linked system to be acted
upon by the Commission. The Commission shall report all field tests on the
agenda of the next regularly scheduled meeting of the Commission.
2. In the interests of expediting the
introduction of innovative, alternative and advanced technology for gaming
devices and inter-casino linked systems for use or play in Arkansas, a
manufacturer may request its new gaming device or inter-casino linked system be
considered for evaluation under New Innovation Beta as an alternative to the
field testing process set forth under subsection 1.
(a) For purposes of this section only, the
term "New Innovation Beta" means a process of evaluating a new gaming device or
inter-casino linked system utilizing a field testing period under conditions
and limitations described in this subsection.
(b) The terms and conditions imposed under
the New Innovation Beta will be set forth by the Commission, and may include
the requirement that a licensee notify patrons that the new gaming device is
part of such a field test and is being exposed for play prior to finalization
of the product in order to allow the evaluation of the gaming device or
inter-casino linked system at an earlier stage of the regulatory approval
process.
(c) The decision whether
to permit a new gaming device or inter-casino linked system to be evaluated
utilizing New Innovation Beta is at the sole and absolute discretion of the
Commission.
(d) When considering
the request to evaluate a new gaming device or inter-casino linked system
utilizing New Innovation Beta, the Commission will consider factors including,
without limitation, the ability of the gaming device to accurately determine,
evaluate, and display the game outcome, the ability of the gaming device to
accurately process the acceptance and award of all payments, and the extent to
which an inter-casino linked system complies with the requirements of these
Rules.
(e) The Commission may also
consider the approval status of the gaming device or intercasino linked system
in another state or foreign jurisdiction in which gaming is legal and regulated
by a government agency with standards for gaming devices and inter-casino
linked systems materially the same as those in Arkansas, the determination of
which is within the sole discretion of the Commission.
3. A manufacturer shall not modify a gaming
device and an operator shall not modify a new inter-casino linked system during
the test period without the prior written approval of the Commission.
4. The Commission may order termination of
the test period, if the Commission determines, in the Commission's sole and
absolute discretion, that the manufacturer, operator, or licensed gaming
establishment has not complied with the terms and conditions of the order
allowing or requiring a test period or for any cause deemed reasonable.
(a) If the test period is terminated due to
the licensed gaming establishment's failure to comply with the terms and
conditions of the order allowing or requiring a test period, the Commission may
order that the test be conducted at another licensed gaming
establishment.
(b) A manufacturer
or operator may object to the termination of the test period by filing a
written objection with the Commission. The filing of an objection shall not
stay the order terminating the test. If the Commission fails to order
resumption of the test within 60 days of the written objection, the objection
will be deemed denied. If the Commission sustains the objection, the testing
may be resumed under terms that may be approved or required by the
Commission.
5. A licensee
or manufacturer, or their agent shall not play a new gaming device during a
test period. A licensee or operator, or their agent, shall not play a gaming
device or game connected to a new inter-casino linked system during a test
period.
6. If the Commission has
made a determination that a new gaming device or new inter-casino linked system
is not eligible for testing at a licensed gaming establishment, the Commission
shall notify the manufacturer or operator in writing. Not later than 10 days
after receipt of such notification, the manufacturer or operator may object to
such a determination by filing written objection with the Commission. If the
Commission fails to order a test period within 60 days of the written
objection, the objection will be deemed denied. If the Commission sustains the
objection, the new gaming device or new inter-casino linked system may be
tested at a licensed gaming establishment under terms and conditions that may
be approved or required by the Commission.
12.090
Certification by
manufacturer.
1. After completing its
evaluation of a new gaming device, the Commission's new games lab shall send a
report of its evaluation to the manufacturer seeking approval of the device.
The report must include an explanation of the manner in which the device
operates. The report must not include a position as to whether the device
should be approved. The manufacturer shall return the report within 15 working
days and shall either:
(a) Certify under
penalty of perjury that to the best of its knowledge the explanation is
correct; or
(b) Make appropriate
corrections, clarifications, or additions to the report and certify under
penalty of perjury that to the best of its knowledge the explanation of the
gaming device is correct as amended.
2. The Commission may order additional
evaluation and a field test of the new gaming device of up to 60 days in
addition to the test period provided for in these Rules if the Commission
determines, based upon the manufacturer's certification, that such additional
evaluation is necessary.
12.100
Final approval of new gaming
devices and new inter-casino linked systems.
1. After completing its evaluation of the new
gaming device or the operation of a new intercasino linked system, the
Commission shall recommend whether the application for approval of the new
gaming device or operation of a new inter-casino linked system should be
granted.
2. In considering whether
a new gaming device or operation of a new inter-casino linked system will be
given final approval, the Commission shall consider whether:
(a) Approval of the new gaming device or
operation of a new inter-casino linked system is consistent with the public
policy of this state.
(b) The terms
of any agreement or written specifications permitted or required of an operator
by any other state or tribal government and affecting a multi-jurisdictional
progressive prize system:
(1) Comply with the
provisions of these Rules; and
(2)
Include procedures satisfactory to the Commission for:
(A) Ensuring compliance with the requirements
of these Rules;
(B) Resolution of
patron disputes under procedural and substantive requirements equal to or
greater than the standards applied by the Commission;
(C) Surveillance and security of gaming
devices connected to such system;
(D) Record-keeping and
record-retention;
(E) Control of
access to any internal mechanism of gaming devices connected to such
system;
(F) Prior administrative
approval of the Commission for any adjustments to progressive meters;
(G) Access by the Commission to audit
compliance with the requirements of this subparagraph; and
(H) Any special procedures necessary for a
multi-jurisdictional progressive prize system with lawfully operated gaming
locations participating outside the United States, including without limitation
matters of currency conversion and the availability of English translations of
all relevant and material documentation and information.
(c) For an inter-casino linked
system of games of skill or hybrid games:
(1)
The types of games that will be connected to such a system are
compatible;
(2) The communications
technology used to connect participating gaming devices is adequate for the
operating environment for such a system; and
(3) The progressive payoff schedules used for
such systems are accurately described for players and comply with these Rules.
Notwithstanding the provisions of these Rules, such schedules may broaden and
encourage participation in games with skill attributes, by providing, without
limitation, for partial prize awards, and prize awards for games with different
themes or based on the use of identifiers.
3. Commission approval of a gaming device or
inter-casino linked system does not constitute certification of the devices or
inter-casino linked system's safety. Commission approval of a
multi-jurisdictional progressive prize system shall include approval of any
agreement or written specifications permitted or required by any other state or
tribal government and affecting such system. The Commission will complete any
written acknowledgement necessary to document the Commission's approval of any
such agreement or written specifications. The prior administrative approval of
the Commission is required of any modification to such agreement or written
specifications.
4. A manufacturer
or distributor who becomes aware that a gaming device or associated equipment
approved by the Commission or the Commission no longer complies with the Rules
of the Commission or the technical standards adopted pursuant to these Rules
shall notify the Commission in writing within 3 business days.
12.105
Installation of a
system based game or a system supported game. A licensee shall not
install or use a system based game or system supported game without prior
written approval of the system network implementation from the Commission.
Additionally, any modifications to the approved network implementation must be
approved by the Commission. Applications for approval to install or modify a
system based game or system supported game shall be made and processed in such
manner and using such forms as the Commission may prescribe. The applicant
seeking approval of the installation shall pay the cost of the
investigation.
12.110
Approval to modify gaming devices or inter-casino linked systems;
applications and procedures.
1.
Modifications to gaming devices may only be made by licensed manufacturers who
have received prior written approval of the Commission. Inter-casino linked
system modifications may only be made by operators of such systems who have
received prior written approval of the Commission.
The Commission, in the Commission's sole and absolute discretion, may
refer an inter-casino linked system modification to the full Commission for
consideration of approval. In an emergency when a modification is necessary to
prevent cheating or malfunction, the Commission may, in the Commission's sole
and absolute discretion, orally approve a modification to be made by a
manufacturer or operator. Within 15 days of the emergency modification, the
manufacturer or operator making such modification shall submit a written
request for approval of the modification that shall contain the information
required by subsection 3 and such other information as required by the
Commission.
2. A
manufacturer shall not modify a gaming device unless the device, as modified,
meets the standards in these Rules. An operator shall not modify an
inter-casino linked system unless the system, as modified, meets the standards
in these Rules. The Commission may, in the Commission's sole and absolute
discretion, waive all or some of the standards in these Rules, if the
modification is necessary to prevent cheating or malfunction. A waiver shall be
effective when the manufacturer or operator receives a written notification
from the Commission that all or some of the standards will be waived pursuant
to this subsection. A waiver of all or some of the standards pursuant to this
subsection is not an approval of the modification.
3. Applications for approval to modify a
gaming device or an inter-casino linked system shall be made by a manufacturer
and processed in such manner and using such forms as the Commission may
prescribe. Each application shall include, in addition to such other items or
information as the Commission may require:
(a)
A complete, comprehensive, and technically accurate description and explanation
of the modification in both technical and lay language signed under penalty of
perjury;
(b) Unless the standards
of these Rules have been waived pursuant to subsection 2, a statement under
penalty of perjury that to the best of the manufacturer's knowledge, the gaming
device, as modified, meets the standards of these Rules or, in the case of an
inter-casino linked system, a statement under penalty of perjury that to the
best of the operator's knowledge the inter-casino linked system, as modified,
meets the standards of these Rules;
(c) In the case of a gaming device:
(1) A copy of all executable software,
including data and graphic information, and a copy of all source code for
programs that cannot be reasonably demonstrated to have any use other than in a
gaming device, submitted on electronically readable, unalterable
media;
(2) A copy of all graphical
images displayed on the gaming device including, but not limited to, reel
strips, rules, instructions and pay tables;
(d) In the case of a modification to the
control program of a gaming device that includes software, source language or
executable code designed or developed by an independent contractor:
(1) The name of the independent contractor;
and
(2) A general subject matter
description of such software, source language or executable code compiled into
the control program as part of the submission to the Commission;
(e) In the case of an inter-casino
linked system:
(1) An operator's
manual;
(2) An internal control
system;
(3) A hold harmless
agreement;
(4) A graphical
representation of the system theme and all related signage; and
(5) Information sufficient to calculate a
theoretical payoff schedule amount.
(f) All materials relating to the results of
the registered independent testing laboratory's inspection and certification
process that are required under these Rules.
12.120
Commission evaluation of
modifications.
1. The Commission may
require transportation of not more than two working models of a modified gaming
device or not more than one working model of a modified inter-casino linked
system, or any component thereof, to the Commission's offices or some other
location for review and inspection. The manufacturer or operator seeking
approval of the modification shall pay the cost of the inspection and
investigation. The Commission may dismantle the models and may destroy
electronic components in order to fully evaluate the modified gaming device or
intercasino linked system, or component. The Commission may require that the
manufacturer or operator provide specialized equipment or the services of an
independent technical expert to evaluate the modification.
2. The Commission has sole and absolute
discretion to determine whether the requested modification of a gaming device
renders the device sufficiently different so that the modified device should be
treated as a new gaming device. If the Commission makes such a determination,
the Commission shall notify the manufacturer in writing. The manufacturer may
file an application for approval of a new gaming device.
3. The manufacturer or operator shall submit
materials relating to the results of the registered independent testing
laboratory's inspection and certification process that are required under these
Rules.
12.130
Field
test of modified gaming devices and modified inter-casino linked
systems.
1. The Commission may allow or
require that one or more models of a modified gaming device or modified
inter-casino linked system be tested at a licensed gaming establishment for not
more than 180 days under terms and conditions that the Commission may approve
or require.
2. In the interests of
expediting innovative, alternative and advanced technology in the modification
of gaming devices and inter-casino linked systems approved for use or play in
Arkansas, a manufacturer may request a modification to its gaming device or
inter-casino linked system be considered for evaluation under New Innovation
Beta as an alternative to the field testing process set forth in these Rules.
(a) For purposes of this section only, the
term "New Innovation Beta" means a process of evaluating a modification to a
gaming device or inter-casino linked system utilizing a field testing period
under conditions and limitations described in this subsection.
(b) The terms and conditions imposed under
New Innovation Beta will be set forth by the Commission, and may include the
requirement that a licensee notify patrons that the modification to an approved
gaming device or inter-casino linked system is part of such a field evaluation
and is being exposed for play prior to finalization of the product in order to
allow the evaluation of the modification to the gaming device or inter-casino
linked system at an earlier stage of the regulatory approval process.
(c) The decision whether to permit a
modification to an approved gaming device or intercasino linked system to be
evaluated utilizing New Innovation Beta is at the sole and absolute discretion
of the Commission.
(d) When
considering the request to evaluate a modification to an approved gaming device
or inter-casino linked system utilizing New Innovation Beta, the Commission
will consider factors including, without limitation, the ability of the gaming
device to accurately determine, evaluate, and display the game outcome, the
ability of the gaming device to accurately process the acceptance and award of
all payments, and the extent to which an inter-casino linked system complies
with the requirements of these Rules.
(e) The Commission may also consider the
approval status of the modification to an approved gaming device or
inter-casino linked system in another state or foreign jurisdiction in which
gaming is legal and regulated by a government agency with standards for
modifications of gaming devices and inter-casino linked systems materially the
same as those in Arkansas, the determination of which is within the sole
discretion of the Commission.
3. A manufacturer shall not further modify a
gaming device and an operator shall not further modify an inter-casino linked
system during the test period without the prior written approval of the
Commission.
4. The Commission may
order termination of the test period if the Commission determines, in the
Commission's sole and absolute discretion, that the manufacturer, operator, or
licensed gaming establishment has not complied with the terms and conditions of
the order allowing or requiring a test period or for any cause deemed
reasonable.
5. A licensee or
manufacturer, or their agent shall not play a modified gaming device during a
test period. A licensee or operator, or their agent shall not play a gaming
device or game connected to a modified inter-casino linked system during a test
period.
6. If the Commission has
made a determination that the modified gaming device or modified inter-casino
linked system is not eligible for testing at a licensed gaming establishment,
the Commission shall notify the manufacturer or operator in writing.
12.140
Final approval of
modifications. The Commission shall notify the manufacturer or operator
in writing of the Commission's decision to approve or disapprove a
modification.
12.160
Duplication of program storage media. A licensee other than a
manufacturer shall not duplicate the contents of gaming device program storage
media unless its duplication process has received written approval of the
Commission.
12.170
Marking,
registration, and distribution of gaming devices.
1. Except as otherwise provided in subsection
2, a manufacturer or distributor shall not distribute a gaming device unless
the gaming device has:
(a) A permanent serial
number which must be affixed as required by the provisions of the Gaming Device
Act of 1962,
15 U.S.C.
1173; and
(b) For devices distributed in this state:
(1) A permanent serial number which must be
the same number as given the device pursuant to the provisions of the Gaming
Device Act of 1962,
15 U.S.C.
1173, permanently stamped or engraved in
lettering no smaller than 5 millimeters on the metal frame or other permanent
component of the device and on a removable metal plate attached to the cabinet
of the device; and
(2) The
Commission approval number or, if the device has been modified since initial
approval of the device, the modification approval number affixed on all program
storage media placed in the device.
2. The Commission may, in the Commission's
sole and absolute discretion, waive the requirements of subsection 1 if:
(a) The device was manufactured prior to
January 1, 1962, and the manufacturer or distributor permanently stamps or
engraves in lettering no smaller than 5 millimeters a distributor's
identification code assigned by the Commission and a seriatim number on the
metal frame or other permanent component of each device covered by this
subsection.
(b) The program storage
media in 1(b) can be altered through a means that does not require removal from
the device or if the size of such media does not permit it.
3. Each manufacturer or
distributor shall keep records of the date of each distribution, the serial
numbers of the devices, the Commission approval number, or if the device has
been modified since initial approval of the device, the modification approval
number, and the name, addresses and telephone numbers of the person to whom the
gaming devices have been distributed for use or play in Arkansas and shall
provide such records to the Commission immediately upon the Commission's
request.
4. For all gaming devices
distributed from a location within Arkansas that are not for use or play in
Arkansas, a manufacturer or distributor shall provide any and all records
documenting such distributions to the Commission upon request. Such records
shall include the information required under the Gambling Device Act of 1962,
15 U.S.C.
1173, and shall be retained for a period of
five years.
12.180
Approval for category I licensees to distribute gaming devices out of
Arkansas; applications and procedure; recordkeeping requirements for category
II licensees; extraterritorial distribution compliance; inspection of
facilities and devices.
1. Subject to
the exemption set forth in subsection 4, category I manufacturers and
distributors shall not distribute gaming devices out of this state without
applying for and receiving the prior written approval of the Commission.
Applications for such approval to distribute gaming devices out of this state
must be made, processed, and determined in such manner and using such forms as
the Commission may prescribe. Each application must include, in addition to
such other items or information as the Commission may require:
(a) The full name, state of residence,
address, telephone number, social security number, and driver's license number
of both the purchaser and the person to whom the shipment is being made, if
neither is currently licensed by the Commission. If the purchaser or person to
whom the shipment is being made does not have a social security number or
driver's license number, the birth date of the purchaser or person to whom the
shipment is being made may be substituted;
(b) The name and permanent address of the
purchaser or person to whom the shipment is being made if either is currently
licensed by the Commission;
(c) The
destination, including the port of exit if the destination is outside the
continental United States;
(d) The
number of devices to be shipped;
(e) The serial number of each
device;
(f) The model number of
each device and year each device was manufactured, if known;
(g) The denomination of each
device;
(h) The expected date and
time of shipment; and
(i) The
method of shipment and name and address of carrier.
2. Except as provided in paragraph (c) of
this subsection, category II manufacturers and distributors are exempt from
subsection 1, and shall:
(a) Prepare and
maintain records of the information required by the Gaming Devices Act of 1962,
15 U.S.C.
1173. The records and documentation required
by this paragraph (a) will be retained for a period of five years and must be
produced for inspection upon request by the Commission. The failure to prepare
and maintain such records and documentation will be an unsuitable method of
operation.
(b) Submit to the
Commission on or before the 15th day of January and July of each calendar year
an electronic record of the name and address of all current customers which
shall be in a searchable format. The record required by this paragraph (b) will
be received and retained by the Commission as confidential.
(c) A category II manufacturer and
distributor may by written notice to the Commission elect to be treated as and
comply with the requirements of this Rule applicable to a category I
manufacturer and distributor.
3. Manufacturers and distributors shall not
ship gaming devices to a destination where possession of a gaming device is
unlawful.
4. Category I
manufacturers and distributors are exempt from the requirements of this Rule
for shipments of gaming devices provided:
(a)
The gaming devices are only distributed to:
(1) Persons licensed to expose such devices
for play or for further distribution, in the jurisdiction of destination or by
a tribal gaming authority in the jurisdiction of destination;
(2) A federal, state or tribal gaming
regulatory authority or law enforcement agency; or
(3) A testing laboratory authorized by an
entity identified within subparagraph (2) of this paragraph.
(b) The category I manufacturer
and distributor files the information required by subsection 1 on or before the
15th of the month following the month of distribution.
The Commission may publish a list of jurisdictions or licensees to
which this exemption does not apply and where category I manufacturers and
distributors may not ship gaming devices without prior approval as required by
subsection 1 of this Rule.
5. Category I manufacturers and distributors
shall obtain and thereafter maintain, a statement by the purchaser under
penalty of perjury that each device will be used only for lawful purposes,
unless the purchaser is currently licensed by the Commission or comparable
agency of another state or tribal gaming agency or the destination is outside
the United States.
6. Manufacturers
and distributors shall, on or before the 15th day of January of each calendar
year, give the Commission a copy of the documentation evidencing registration
with the United States Attorney General pursuant to the provisions of the
Gaming Devices Act of 1962,
15 U.S.C.
1173, for the ensuing year.
7. An agent of the Commission may inspect:
(a) The premises of manufacturers and
distributors and all gaming devices located therein.
(b) All gaming devices for which an
application has been filed by a category I manufacturer or distributor pursuant
to subsection 1 of this Rule prior to distribution out of this state. Category
I manufacturers and distributors shall make the gaming devices subject to such
applications available for such inspection.
8. If the Commission does not deny an
application filed by a category I manufacturer or distributor for approval to
distribute gaming devices out of this state pursuant to subsection 1 within 5
working days of receipt of a complete application, the application will be
deemed to be approved.
9. A
category I manufacturer or distributor shall keep a record of all shipments
made out of state of parts specifically designed for use in a gaming device.
The record must include the information set forth in subsection 1, if
applicable. A manufacturer or distributor shall not ship parts specifically
designed for use in a gaming device to a destination where possession of a
gaming device is unlawful.
10. The
Commission may, in the Commission's discretion, waive one or more of the
requirements of this section upon good cause shown.
11. As used in this section:
(a) "Category I manufacturer or distributor"
means any manufacturer or distributor licensed by the Commission that does not
qualify as a category II manufacturer or distributor.
(b) "Category II manufacturer or distributor"
means any manufacturer or distributor that:
(1) Is and has been licensed in good standing
by the Commission for the preceding five years;
(2) Is and has been licensed, registered,
approved or qualified in at least ten other domestic United States or tribal
jurisdictions for the preceding three years
(3) Maintains pursuant to or consistent with
the requirements of these Rules a compliance review and reporting
system;
(4) Has annual gross sales
exceeding $5 Million Dollars for such licensee's preceding fiscal
year;
(5) Maintains an office or
other facility in the state of Arkansas at which the records required by this
Rule are stored and may be inspected and copied by the Commission.
(6) Did not during the preceding year
exclusively distribute used gaming devices. As used in this subparagraph, "used
gaming devices" means gaming devices previously used or played in a gaming
operation in Arkansas, including such devices that have been in any way
modified or refurbished since original manufacture.
(c) "Current customer" means a person to whom
the applicable manufacturer or distributor has shipped or delivered a gaming
device within the preceding six months pursuant to a contract, agreement or
other arrangement with such manufacturer or distributor, or its affiliate, for
the purchase, lease, license or other right to use such gaming
device.
12.190
Approval for certain licensees to sell or dispose of gaming
devices.
1. A licensee, other than a
manufacturer and distributor, shall not dispose of gaming devices without the
prior written approval of the DF&A, unless the devices are sold or
delivered to its affiliated companies or a licensed manufacturer or
distributor, in which case approval is deemed granted.
2. A licensee, other than a manufacturer and
distributor, shall not request approval to sell or deliver gaming devices to a
person other than its affiliated companies or a licensed manufacturer or
distributor unless the devices have been marked pursuant to these
Rules.
3. Applications for approval
to sell gaming devices under this Rule must be made, processed, and determined
in such manner and using such forms as the DF&A may prescribe. Each
application must include the information required by these Rules, in addition
to such other items or information as the DF&A may require.
4. Applications for approval to dispose of
gaming devices under this Rule must be made, processed, and determined in such
manner and using such forms as the DF&A may prescribe.
12.200
Maintenance of gaming
devices. A licensee shall not alter the operation of approved gaming
devices and shall maintain the gaming devices in a suitable condition. Each
licensee shall keep a written list of repairs made to gaming devices offered
for play to the public that require a replacement of parts that affect the game
outcome and shall make the list available for inspection by the Commission upon
the Commission's request.
12.210
Approval of promotional devices; applications and procedures.
1. As used in this section, "promotional
device" means a contrivance that resembles a gaming device or slot machine
that:
(a) Is playable without a wager being
made; or
(b) Always pays out an
amount in either cash or prizes that is equal to or greater than the wager
made.
2. A manufacturer
or distributor shall not distribute a promotional device for use in this state
and a Casino licensee shall not offer a promotional device for play to the
public unless the promotional device has been approved by the Commission. A
restricted licensee shall not offer a promotional device for play to the public
unless the promotional device and the use of the promotional device have both
been approved by the Commission.
3.
Applications for approval of promotional devices must be made, processed, and
determined in such manner and using such forms as the Commission may prescribe.
Each application must include, in addition to such other items or information
as the Commission may require:
(a) A complete,
comprehensive, and technically accurate description and explanation of the
manner in which the device operates and complies with all applicable statutes,
regulations and technical standards, signed under penalty of perjury;
(b) The name and permanent address of the
purchaser if the purchaser is currently licensed by the Commission;
(c) The name, permanent address, social
security number, and driver's license number of the purchaser if the purchaser
is not currently licensed by the Commission. If the purchaser does not have a
social security number or driver's license number, the purchaser's birth date
may be substituted;
(d) The
quantity and the serial numbers of the promotional devices being sold or
distributed; and
(e) A statement by
the purchaser under penalty of perjury that the device will be used only for
lawful purposes.
12.220
Summary suspension of approval
of gaming devices and inter-casino linked systems.
1. The Commission may issue a summary order,
with or without notice to the manufacturer, distributor, operator, or licensee,
suspending approval of a gaming device or inter-casino linked system if it
determines that the device or inter-casino linked system does not operate:
(a) In the manner certified by the
manufacturer pursuant to section 14.090;
(b) As approved by the Commission;
or
(c) As approved by the
Commission, if the device has been modified since initial approval of the
device or inter-casino linked system.
2. After issuing an order pursuant to
subsection 1, the Commission may seal or seize all models of that gaming device
or inter-casino linked system Arkansas.
12.230
Approval of new games and game
variations; applications and procedures.
1. A licensee shall not offer a new game for
play unless the new game has been approved by the Commission. A licensee shall
not offer a game variation for play unless the game variation has been approved
in writing by the Commission.
2.
Applications for approval of a new game or game variation must be made and
processed in such manner and using such forms as the Commission may prescribe.
The applicant seeking approval of the new game or game variation shall pay the
cost of the investigation. Each application must include, in addition to such
other items or information as the Commission may require:
(a) The name, permanent address, social
security number, and driver's license number of the person developing the new
game or game variation. If the person developing the new game or game variation
does not have a social security number or a driver's license number, the
person's birth date may be substituted;
(b) The name of the game which must be
different than the name of a game currently approved by the
Commission;
(c) A description of
the new game or game variation, including the rules of play, the proposed
schedule of payouts, and a statistical evaluation of the theoretical
percentages of the game; and
(d)
All materials relating to the results of the registered independent testing
laboratory's inspection and certification process that are required under these
Rules.
12.240
Field trials of new games and game variations.
1. The Commission may allow or require that a
new game or game variation to be tested at a licensed gaming establishment for
not more than 180 days under terms and conditions that the Commission may
approve or require.
2. The
Commission may order termination of the test period, if the Commission
determines, in the Commission's sole and absolute discretion, that the
developer of the new game or the licensed gaming establishment has not complied
with the terms and conditions of the order allowing or requiring a test
period.
12.250
Final approval of new games. The Commission shall recommend to the
Commission whether the application for approval of the new game should be
granted. In considering whether a new game will be given final approval, the
Commission shall consider whether approval is consistent with the public policy
of this state.
12.260
Approval of associated equipment; applications and procedures.
1. Unless otherwise waived pursuant to
subsection 2, a manufacturer or distributor of associated equipment shall not
distribute associated equipment unless it has been approved by the Commission.
Applications for approval of associated equipment shall be made and processed
in such manner and using such forms as the Commission may prescribe. Each
application must include, in addition to such other items or information as the
Commission may require:
(a) The name,
permanent address, social security number, and driver's license number of the
manufacturer or distributor of associated equipment unless the manufacturer or
distributor is currently licensed by the Commission. If the manufacturer or
distributor of associated equipment is a corporation, the names, permanent
addresses, social security numbers, and driver's license numbers of the
directors and officers must be included. If the manufacturer or distributor of
associated equipment is a partnership, the names, permanent addresses, social
security numbers, and driver's license numbers of the partners and their
partnership interest must be included. If social security numbers or driver's
license numbers are not available, the manufacturer's or distributor's birth
date may be substituted;
(b) A
complete, comprehensive and technically accurate description and explanation in
both technical and lay language of the associated equipment or a modification
to previously approved associated equipment and its intended usage, signed
under penalty of perjury;
(c)
Detailed operating procedures for the associated equipment;
(d) The standards under which such tests were
performed, including Technical Standards 2 and 3 if applicable, and the results
of such testing that confirms the associated equipment is functioning as
represented, signed under penalty of perjury; and
(e) All materials relating to the results of
the registered independent testing laboratory's inspection and certification
process that are required under these Rules.
2. Except as provided in subsection 3, upon
written request from the manufacturer or distributor of associated equipment,
or as the Commission otherwise deems reasonable, the Commission may, in the
Commission's sole and absolute discretion, waive the approval requirement for
associated equipment upon such terms and conditions that the Commission may
approve or require or refer the associated equipment to the full Commission for
consideration of approval.
3.
Except as otherwise provided in subsection 4, the Commission shall not grant an
approval pursuant to these Rules or waive such approval requirement pursuant to
these Rules with respect to any associated equipment that, when installed, will
allow a patron to use a debit instrument for purposes of making electronic
funds transfers from an independent financial institution to a game or gaming
device through a cashless wagering system until such time as the appropriate
Rules for such transfers are adopted.
4. The Commission may grant approvals
pursuant to subsection 1 or waive such approval requirements pursuant to
subsection 2 with respect to the use of a prepaid access instrument in
conjunction with an approved cashless wagering system.
5. A manufacturer or distributor of
associated equipment who becomes aware that associated equipment approved by
the Commission no longer complies with the Rules of the Commission or the
technical standards adopted pursuant to these Rules shall notify the Commission
in writing within 3 business days.
12.270
Commission evaluation of
associated equipment. The Commission may require transportation of not
more than 2 working models of associated equipment to the new game lab of the
Commission or some other location for review and inspection. The manufacturer
seeking approval of the equipment must pay the cost of the inspection and
investigation. The lab may dismantle the associated equipment and may destroy
electronic components in order to fully evaluate the equipment. The Commission
may require the manufacturer or distributor seeking approval to provide
specialized equipment or the services of an independent technical expert to
evaluate the associated equipment.
12.280
Field trial of associated
equipment.
1. The Commission may allow
or require that the associated equipment be tested at licensed gaming
establishments for not more than 180 days under terms and conditions that the
Commission may approve or require. The Commission may allow an additional test
period upon written request of the manufacturer or distributor of associated
equipment.
2. A manufacturer of
associated equipment shall not modify associated equipment during the test
period without the prior oral approval of the Commission.
3. The Commission may order termination of
the test period, if the Commission determines, in the Commission's sole and
absolute discretion, that the manufacturer or the distributor of the associated
equipment or licensed gaming establishment has not complied with the terms and
conditions of the order allowing or requiring a test period. If the test period
is terminated due to the licensed gaming establishment's failure to comply with
the terms and conditions of the order allowing or requiring a test period, the
Commission may order that the test be conducted at another licensed gaming
establishment.
12.290
Installation of associated equipment.
1. Except as otherwise provided in these
Rules, a licensee shall not install or use associated equipment without prior
written approval of the Commission, unless the Commission has waived the
approval requirement pursuant to these Rules. Applications for approval to
install or use associated equipment shall be made and processed in such manner
and using such forms as the Commission may prescribe. The Commission shall not
approve any use or installation(s) of associated equipment that allow a patron
to use a debit instrument for purposes of making electronic funds transfers
from an independent financial institution to a game or gaming device through a
cashless wagering system until such time as the appropriate Rules for such
transfers are adopted.
2. The
Commission may grant approvals for the use of or installation of equipment used
in conjunction with prepaid access instruments.
12.300
Maintenance of associated
equipment. The manner in which previously approved associated equipment
operates may be altered only with the prior written approval of the
Commission.
12.302
Manufacturer or distributor of associated equipment; registration of a
manufacturer or distributor of associated equipment; application and
procedures.
1. The initial application
for registration and the application for renewal of registration shall be made,
processed, and determined using such forms as the Commission may require or
approve and must be accompanied and supplemented by such documents and
information as may be specified or required.
2. Any applications for registration or
renewal required under this section shall be prepared and submitted by the
relevant manufacturer or distributor of associated equipment.
3. Fee Structure and Registration Period.
(a) Upon submission of an application for
registration as a manufacturer or distributor of associated equipment or
renewal application, the applicant shall pay an application fee of
$1,000.
(b) Before the Commission
issues an initial registration or renewal of any registration for a
manufacturer or distributor of associated equipment, the manufacturer or
distributor of associated equipment shall pay an issuance fee of
$1,000.
4. Each
registered associated equipment manufacturer or distributor shall inform the
Commission in writing of any changes in the ownership, officers, or directors
of the manufacturer or distributor of associated equipment. Reports required
under this subsection shall be made to the Commission within 30 days of
occurrence.
12.305
Manufacturer or distributor of associated equipment; determination of
suitability.
1. In addition to the
requirements of this Rule requiring a manufacturer or distributor of associated
equipment to be registered, the Commission may require a manufacturer or
distributor of associated equipment who sells, transfers or offers the
associated equipment for use or play in Arkansas to file an application for a
finding of suitability to be a manufacturer or distributor of associated
equipment.
2. The Commission may
require any person who directly or indirectly involves himself or herself in
the sale, transfer or offering for use or play in Arkansas of such associated
equipment who is not otherwise required to be licensed as a manufacturer or
distributor to file an application for a finding of suitability to be a
manufacturer or distributor of associated equipment.
3. The Commission shall give written notice
of its decision to require the filing of an application for a finding of
suitability under subsection 1 and/or 2.
4. All investigative costs and fees
associated with applications for a finding of suitability are owed by the party
required to file the application for a finding of suitability. Failure to remit
such costs and fees within such periods set by the Commission, upon the advice
of the Commission, will result in a lapse of the registrations of the
applicable manufacturer or distributor of associated equipment and will
constitute an unsuitable method of operation. Where the party required to file
an application to manufacture or distribute associated equipment is not
registered, failure to pay such investigative costs and fees is grounds for
denial of any application associated with such manufacture or distribution of
associated equipment.
5. Failure of
any party described in subsections 1 or 2 to submit an application for a
finding of suitability within 30 days of being demanded to do so by the
Commission shall constitute grounds for a finding of unsuitability of that
party.
6. If the Commission finds
any manufacturer or distributor of associated equipment, as described in
subsection 1, or any person, as described in subsection 2, to be unsuitable
under this section:
(a) The registration of
such manufacturer or distributor is thereupon revoked as a matter of
law;
(b) Any applications for
registration as a manufacturer or distributor of associated equipment
associated with a party which is found unsuitable are deemed denied as a matter
of law; and
(c) All Casino
licensees shall, upon written notification from the Commission, terminate any
existing relationships, direct or indirect, with such unsuitable
parties.
7. Failure of a
Casino licensee to terminate any association or agreement, direct or indirect,
with any party found unsuitable upon receiving written notice of the
determination of unsuitability constitutes an unsuitable method of
operation.
8. Failure of a
registered manufacturer or distributor of associated equipment to terminate any
association or agreement with any party found unsuitable upon receiving written
notice of the determination of unsuitability shall constitute grounds for the
revocation of the registration of the manufacturer or distributor of associated
equipment.
9. The Commission
retains jurisdiction to determine the suitability of any party described in
subsections 1 or 2 regardless of whether or not that party has severed any
relationship with a Casino licensee or registered manufacturer or distributor
of associated equipment.
12.310
Retention of records.
Unless otherwise specified, all records required by this Rule must be
maintained for 5 years.
RULE
13
CORPORATE LICENSEES
13.1594-1
Powers of Commission.
The Commission shall have full and absolute power and authority, to
the extent permitted by law, to recommend the granting, denial, limitation,
conditioning, restriction, revocation, or suspension of any license,
registration, approval, or finding of suitability required or permitted under
Rule 13, or any application therefor, or to recommend other disciplinary
action, for any cause deemed reasonable by the Commission. The Commission shall
have full and absolute power and authority, to the extent permitted by law, to
grant, deny, limit, condition, restrict, revoke or suspend any license,
registration, approval, or finding of suitability required or permitted under
Rule 13, or any application therefor, or to take other disciplinary action for
any cause deemed reasonable by the Commission.
13.1594-2
Certain
investigations.
The Commission may, in its discretion, make such investigations
concerning an applicant under Rule 13, or a licensee, or a registered company,
or any person involved with a licensee or a registered company as it may deem
appropriate, either at the time of initial licensing or registration or at any
time thereafter.
13.1594-3
Certain investigative fees.
In addition to all other fees payable under the Act and regulations,
the Commission may require payment of the costs of any investigation conducted
subsequent to licensing or registration to the extent of any reasonable fees
charged by expert consultants employed by the Commission and actual expenses
incurred by the staff for investigations conducted outside the State of
Arkansas.
13.1594-4
Burden of proof.
The burden of proof with respect to the granting of any license,
approval, registration, or finding of suitability required or permitted by Rule
13 shall at all times be upon the person applying for or holding such license,
approval, registration, or finding of suitability. Each applicant shall satisfy
the Commission that the granting of an application for action required or
permitted by Rule 13 is consistent with the state policies concerning
gaming.
13.1594-5
Disclosure of family agreements/information.
With respect to any requirement in these Rules, or other provisions of
Rules of the Commission, for filing or disclosure of any family shareholders
agreement, family limited partnership agreement, family limited liability
company operating agreement, or family trust; unless otherwise required by the
Commission, such requirement may be satisfied by the stockholder(s), general
partner(s), managing member(s) or trustee(s), as the case may be, providing
reasonable access to a copy of the family shareholders agreement, family
limited partnership agreement, family limited liability company operating
agreement, or trust instrument, as the case may be, (including any and all
amendments thereto), certified as true, correct and complete by said
stockholder(s), general partner(s), managing member(s) or trustee(s), as the
case may be, for review by any member of the Commission and the Commission
attorney upon any request by the member of the Commission and/or the Commission
attorney to review said document.
13.1594-6
Prohibition with respect to
ownership of corporate licensees. No person shall acquire any equity
security issued by a corporate licensee or a holding company, nor become a
controlling affiliate of a corporate licensee or a holding company, nor become
a holding company of a corporate licensee or a holding company without first
obtaining the prior approval of the Commission in accordance with these
Rules.
13.1594-7
Prohibitions
with respect to the distribution or transfer of securities. It shall be
grounds for disciplinary action under the Amendment and Rules if any person
shall, in connection with the purchase or sale of any security issued by a
corporate licensee or a holding company, or in connection with any document
required to be filed pursuant to these Rules or the Amendment:
(a) Employ any device, scheme or artifice to
defraud; or
(b) Make any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in the light of the circumstances under
which they were made, not misleading; or
(c) Engage in any act, practice, or course of
business which operates or would operate as a fraud or deceit upon any person;
where such device, scheme, artifice, statement, act, practice or course
of business relates to gaming or the revenues from gaming or gaming operations;
or
(d) Cause any document,
correspondence, filing or statement containing materially untrue, incorrect or
misleading information to be made or filed with the Commission, regardless of
whether said information has been made or filed with another regulatory
agency.
13.430
Institutional investor.
1. An
institutional investor that intends to become subject to these Rules as a
result of its ownership of an equity security issued by a corporate licensee or
a holding company, or any security issued by a corporate licensee or a holding
company which gives the holder voting rights in the corporation, may apply to
the Commission for a waiver of the requirements of these Rules with respect to
the ownership of the voting or equity securities if such institutional investor
intends to and does hold the securities for investment purposes only. An
institutional investor shall not be eligible to receive or hold a waiver if the
institutional investor will own, directly or indirectly, more than 15 percent
of the voting or equity securities of the corporate licensee or a holding
company on a fully diluted basis where any such securities are to be acquired
other than through a debt restructuring. Securities acquired before a debt
restructuring and retained after a debt restructuring or as a result of an
exchange, exercise or conversion, after a debt restructuring, of any securities
issued to an institutional investor through a debt restructuring, shall be
deemed to have been acquired through a debt restructuring. A waiver granted
under this section shall be effective only as long as the institutional
investor's direct or indirect ownership interest in such voting or equity
securities meets the limitations set forth above.
2. An institutional investor shall not be
deemed to hold an equity security issued by a corporate licensee or a holding
company, or any security issued by a corporate licensee or a holding company
which give the holder voting rights in the corporation, for investment purposes
only unless the voting or equity securities will be acquired and held in the
ordinary course of business as an institutional investor and do not, directly
or indirectly, allow the institutional investor to vote for the election of
members of the Commission, cause any change in the corporate charter, bylaws,
other organic document, management, policies or operations of the corporate
licensee or the holding company, or cause any other action which the Commission
finds to be inconsistent with investment purposes only. The following
activities shall not be deemed to be inconsistent with holding voting or equity
securities for investment purposes only:
(a)
Serving as a member of any committee of creditors or security holders in
connection with debt restructuring;
(b) Nominating any candidate for election or
appointment to a Commission or the equivalent in connection with a debt
restructuring;
(c) Making financial
and other inquiries of management of the type normally made by securities
analysts for informational purposes and not to cause a change in management,
policies or operations; and
(d)
Such other activities as the Commission may determine to be consistent with
such investment intent.
3. An application for a waiver must include:
(a) A description of the institutional
investor's business and a statement as to why the institutional investor is
within the definition of "institutional investor" set forth in section 11 of
this Rule.
(b) A certification made
under oath and the penalty of perjury, that:
(1) The voting or equity securities will be
acquired and held for investment purposes only as defined in subsection 2 and a
statement by the signatory explaining the basis of the signatory's authority to
sign the certification and to bind the institutional investor to its
terms.
(2) The applicant agrees to
be bound by and comply with the Amendment and the Rules adopted thereunder, to
be subject to the jurisdiction of the courts of Arkansas, and to consent to
Arkansas as the choice of forum in the event any dispute, question, or
controversy arises regarding the application or any waiver granted under this
section.
(3) The applicant agrees
that it shall not grant an option to purchase, or sell, assign, transfer,
pledge or make any other disposition of any voting or equity security issued by
the corporate licensee or the holding company without the prior approval of the
Commission.
(c) A
description of all actions, if any, taken or expected to be taken by the
institutional investor relating to the activities described in subsection
2.
(d) The name, address, telephone
number and social security number of the officers and directors, or their
equivalent, of the institutional investor as well as those persons that have
direct control over the institutional investor's holdings of voting and equity
securities of the corporate licensee or the holding company.
(e) The name, address, telephone number and
social security or federal tax identification number of each person who has the
power to direct or control the institutional investor's exercise of its rights
as a holder of voting or equity securities of the corporate licensee or the
holding company.
(f) The name of
each person that beneficially owns more than 5 percent of the institutional
investor's voting securities or other equivalent.
(g) A list of the institutional investor's
affiliates.
(h) A list of all
regulatory agencies with which the institutional investor or any affiliate that
owns any voting or equity securities or any other interest in a company which
is licensed or registered with the Arkansas Racing Commission files periodic
reports, and the name, address, and telephone number of the person, if known,
to contact at each agency regarding the institutional investor.
(i) A disclosure of all criminal or
regulatory sanctions imposed during the preceding 10 years and of any
administrative or court proceedings filed by any regulatory agency during the
preceding 5 years against the institutional investor, its affiliates, and
current officer or director, or any former officer or director whose tenure
ended within the preceding 12 months. As to a former officer or director, such
information need be provided only to the extent that it relates to actions
arising out of or during such person's tenure with the institutional investor
or its affiliates.
(j) Any
additional information the Commission may request.
4. The Commission shall consider all relevant
information in determining whether to grant a waiver requested pursuant to
subsection 1, including but not limited to:
(a) Whether the waiver is consistent with the
policy set forth in these Rules; and
(b) Any views expressed to the Commission by
the corporate licensee or any affiliate thereof.
5. Any waiver granted pursuant to this
section may be limited or conditioned in any respect by the Commission,
including, but not limited to, requiring a certification, made under oath and
the penalty of perjury, which contains the following:
(a) A statement attesting that the
institutional investor holds and/or has held the voting or equity securities of
the corporate licensee or the holding company for (1) investment purposes only,
and (2) in the ordinary course of business as an institutional investor and not
for the purpose of (A) causing, directly or indirectly, the election of the
members of the Commission, or (B) effecting any change in the corporate
charter, bylaws, other organic document, management, policies or operations of
the corporate licensee or any of its affiliates.
(b) A statement that the institutional
investor has not engaged in any activities inconsistent with the holding of
voting or equity securities for investment purposes only in accordance with the
provisions of section 2 hereof.
(c)
The name, title and telephone number of the persons having direct control over
the institutional investor's holdings of voting or equity securities in the
corporate licensee or the holding company.
(d) A statement of all complaints, arrest,
indictments or convictions of any officer or director of the institutional
investor regarding the rules and regulations of the Securities and Exchange
Commission and any regulatory agency of any State where it conducts business,
or any offense which would constitute a gross misdemeanor or felony if
committed in the State of Arkansas. The name, position, charge, arresting
agency, and a brief description of the event must also be included in the
statement.
(e) A statement
indicating any change to the structure and/or operation of the institutional
investor which could affect its classification as an institutional investor as
defined in these Rules.
6. An institutional investor that has been
granted a waiver of licensing, registration or finding of suitability as
required by these Rules and that subsequently intends not to hold its voting or
equity securities of the corporate licensee or the holding company for
investment purposes only, or that intends to take any action inconsistent with
its prior intent shall, within 2 business days after its decision, deliver
notice to the Commission in writing of the change in its investment intent. The
Commission may then take such action under these Rules or any other provision
of the Amendment or Rules of the Commission as the Commission deems
appropriate.
7. A waiver that has
been granted pursuant to this section shall subject the institutional investor
to the requirements of these Rules, as applicable, in that any purported sale,
assignment, transfer, pledge or other disposition of any voting or equity
security issued by the corporate licensee or the holding company, or the
granting of an option to purchase such a voting or equity security, shall be
void unless approved in advance by the Commission.
8. The institutional investor shall be
entitled to whatever economic advantage, including, but not limited to,
dividends, that may flow from ownership of the voting or equity securities as
though it has been licensed, registered or found suitable.
9. If the Commission finds that as
institutional investor has failed to comply with the provisions of this
section, or should be subject to licensing, registration, finding of
suitability or any approval to protect the public interest, the Commission may,
in accordance with these Rules or any other provision of the Amendment or Rules
of the Commission the Commission deems appropriate, require the institutional
investor to apply for licensing, registration or a finding of suitability. The
institutional investor affected by the action taken by the Commission may
request a hearing on the merits of such action. The hearing shall be included
on the agenda of the next regularly scheduled Commission meeting occurring more
than 10 working days after the request for hearing. Upon good cause shown by
the institutional investor, the Commission may waive the 10-day requirement and
place such hearing on an earlier Commission agenda. The Commission, for any
cause deemed reasonable, may by a majority vote, sustain, modify or reverse the
decision of the Commission, or remand the matter to the Commission for such
further investigation and reconsideration as the Commission may order. While
the application for licensure, registration or a finding of suitability review
of the Commission's action requiring the filing of such application is pending,
the institutional investor shall not directly or indirectly, cause or attempt
to cause any management, policy, or operating changes in the corporate licensee
or holding company.
10. The
corporate licensee or the holding company shall immediately notify the
Commission of any information about, fact concerning or actions of, an
institutional investor holding any of its voting or equity securities, that may
materially affect the institutional investor's eligibility to hold a waiver
under this section.
11. For
purposes of this Rule "institutional investors" shall have the meaning set
forth in these Rules, and "debt restructuring" shall have the meaning set forth
in these Rules.
13.482-1
Definitions; general. All terms defined in the Amendment shall
have the same meaning in these Rules as in the Amendment.
13.482-2 "Associate" defined. The term
"associate" when used to indicate a relationship with any person, means:
(1) any corporation or organization of which
such person is an officer or partner or is, directly or indirectly, the
beneficial owner of any share of any class of equity securities;
(2) any trust or other estate in which such
person has a substantial beneficial interest or as to which such person serves
as trustee or in a similar capacity; and
(3) any relative or spouse of such person, or
any relative of such spouse, who has the same home as such person or who is a
director or officer of such corporation or any of its parents or
subsidiaries.
13.482-3
"Affiliate" defined. An "affiliate" of, or a person "affiliated" with, a
specified person is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified.
13.482-4
"Control" defined. The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession, direct
or indirect, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting securities,
by contract, or otherwise.
13.482-5
"Controlled affiliate" and "controlling affiliate" defined.
(a) A "controlled affiliate" of a specified
person is another person which, directly or indirectly, is controlled by the
person specified.
(b) A
"controlling affiliate" of a specified person is another person which, directly
or indirectly, controls the person specified.
13.482-6 "Own," "hold" and "have" defined. A
person shall be deemed to own, hold or have a security of, or interest in, a
corporation or other form of business organization if such person or any
associate of such person has a record or beneficial interest therein.
13.482-7 "Sale" and "sell" defined. "Sale" or
"sell" includes every contract of sale of, contract to sell, or disposition of,
a security or interest in a security whether or not for value. "Sale" or "sell"
includes any exchange of securities and any material change in the rights,
preferences, privileges or restrictions of or on outstanding
securities.
13.482-8 "Security"
defined. The term "security" means any stock; membership in an incorporated
association; bond; debenture or other evidence of indebtedness; investment
contract; voting trust certificate; certificate of deposit for a security; or,
in general, any interest or instrument commonly known as a "security"; or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, or warrant or right to subscribe to or purchase, any of the
foregoing. All of the foregoing are securities whether or not evidenced by a
written document, provided that any evidence of indebtedness reported under
these Rules is not a security.
13.485-1 "Holding company" defined. Included,
without limitation, within the meaning of the term "holding company" shall be
any person, other than an individual, of which a corporation holding or
applying for a state Casino license is a controlled affiliate.
13.488-1 "Subsidiary" defined. Included,
without limitation, within the meaning of the term "subsidiary" shall be any
person, other than an individual, which is a controlled affiliate of another
person, other than an individual.
13.489.2-1
Waiver of requirements of
Rules. The Commission may waive one or more requirements of these Rules
if it makes a written finding that such waiver is consistent with state
policy.
13.500.3-1
Public
offerings by corporate licensees, holding companies and stockholders. No
corporate licensee, no stockholder of a corporate licensee, no holding company,
and no stockholder of a holding company shall make a public offering of
securities of a corporate licensee or of a holding company except as is
permitted by, and in accordance with, these Rules.
13.510.1-1
Beneficial ownership,
granting of proxies and assignments of other interests.
(a) The terms "sale, assignment, transfer,
pledge or other disposition" extend to dispositions of any type of ownership
referred to in these Rules.
(b)
Included within the meaning of the term "disposition" as used in the Rules are,
without limitation, the following
(1) The
granting of a proxy in respect of a security (other than a proxy granted to a
person who is licensed or found suitable to own securities of the same
corporation or securities of an affiliate of that corporation), in which case
the person to whom the proxy is granted is to be regarded as the
transferee.
(2) Any transfer or
disposition, whether or not for value, of any interest in the profits or
proceeds (including, without limitation, interest payments, dividends and other
distributions by the issuer of a security) realized from the holding or
disposition of a security.
13.510.1-2
Issuer dispositions.
Application for approval of any sale, assignment, transfer, pledge or other
disposition of a security to be made by the issuer thereof shall be made
pursuant to the Rules.
13.510.1-3
Procedures for obtaining approvals for transfers of outstanding
securities. The provisions of these Rules shall govern all transfers for
which approval is required.
13.510.2-1
Persons who may be
determined to be unsuitable. The following persons may be determined to
be unsuitable within the meaning of this section:
(a) Any person who, having been notified by
the corporation or by the Commission of the requirement that such person be
licensed fails, refuses or neglects to apply for such licensing within 30 days
after being requested to do so by the Commission.
(b) Any record holder of a security issued by
a corporate licensee or a holding company who shall have failed, refused or
neglected, upon request of the Commission, to furnish to the Commission within
30 days after such request, full, complete, and accurate information as to the
beneficial ownership of such security.
(c) Any record owner of a security which is
beneficially owned, in whole or in part, by a person determined to be
unsuitable by the Commission.
13.510.2-2
Escrow of securities.
The Commission may, from time to time and at any time, require that securities
issued by a corporate licensee be placed in escrow on specified terms and
conditions.
13.510.3-1
Proscribed corporate activities in respect of persons found
"unsuitable". Beginning upon the date when the Commission serves notice
of a determination of unsuitability upon the corporation, it shall be grounds
for disciplinary action for such corporation:
(a) To pay any person found to be unsuitable
any dividend or interest upon any security held, as defined in these Rules, by
such person;
(b) To recognize the
exercise by any such unsuitable owner, directly or through any trustee or
nominee, of any voting right conferred by such security;
(c) To pay to any such unsuitable owner any
remuneration in any form for services rendered or otherwise; or
(d) To make any other payment or
distribution, of any kind whatsoever, in respect of any such security, by way
of or pursuant to payment of principal, redemption, conversion, exchange or
liquidation or any other transaction.
13.510.4-1
Statement required.
Every security issued by a corporation, other than a publicly traded
corporation, which holds a state gaming license must bear a statement, on both
sides of the certificate evidencing the security, of the restrictions imposed
by this section. The statement required shall be substantially as follows:
"The sale, assignment, transfer, pledge or other disposition of this
security is ineffective unless approved in advance by the Arkansas Racing
Commission. If at any time such commission finds that an owner of this security
is unsuitable to continue to have an involvement in gaming in such state, such
owner must dispose of such security as provided by the laws of the State of
Arkansas and the Rules of the Arkansas Racing Commission thereunder. Such laws
and Rules restrict the right under certain circumstances:
(a) to pay or receive any dividend or
interest upon any such security;
(b) to exercise, directly or through any
trustee or nominee, any voting right conferred by such security; or
(c) to receive any remuneration in any form
from the corporation, for services rendered or otherwise."
13.530-1
Individual Licensing of
stockholders of corporate licensee.
1.
Except as provided in subsection 2, each person must be licensed before they
may:
(a) Own more than 5 percent of the equity
security issued by a corporate licensee, or
(b) Hold more than 5 percent of the
securities issued by a corporate licensee which give the holders voting rights
in the corporation.
2. An
individual who has a beneficial interest in an employee trust formed as a part
of a stock bonus plan meeting the requirements of section 401(a) of the
Internal Revenue Code of 1954 as amended and holding legal title to any equity
security issued by a corporate licensee need not be licensed individually as to
such beneficial interest provided the plan or the trust formed thereunder
requires that either:
(a) Any stock received
by a transferee shall be transferred back to the trust within 24 hours;
or
(b) The transferee shall apply
immediately for licensing as a stockholder of the licensee. Until such time as
the Commission acts upon the application for transfer, the transferee shall not
exercise any voting rights nor receive any dividends, and if the transferee is
not approved by the Commission, the stock shall be immediately transferred back
to the trust and any cash or stock dividends accumulated thereon shall remain
in the trust. If the transferee is approved by the Commission, any accumulated
dividends may be passed to the transferee.
3. All stockholders owning or holding 5
percent or less of the equity and voting securities of a corporate licensee,
other than a publicly traded corporation, must register in that capacity with
the Commission and affirmatively state in writing that they submit to the
Commission's jurisdiction. Such registration must be made on forms prescribed
by the Commission. A stockholder who is required to be registered by this
section shall apply for registration before the stockholder obtains an
ownership interest of 5 percent or less in a corporate licensee.
4. If the Commission finds a stockholder
unsuitable, denies an application of the stockholder, or revokes an approval of
the stockholder, the stockholder shall immediately offer the security to the
issuing corporation for purchase. The corporation shall purchase the security
so offered, for cash at fair market value, within 10 days after the date of the
offer. Beginning upon the date when the Commission serves notice of a
determination of unsuitability upon the corporation, it is unlawful for the
unsuitable stockholder:
(a) To receive any
dividend or interest upon any such security;
(b) To exercise, directly or through any
trustee or nominee, any voting right conferred by such security; or
(c) To receive any remuneration in any form
from the corporation, for services rendered or otherwise.
5. An application for registration with the
Commission shall:
(a) Include a completed
application for registration form as prescribed by the Commission;
(b) Include fully executed waivers and
authorizations as determined necessary by the Commission to investigate the
registrant;
(c) Include an
affirmative statement that the registrant submits to the jurisdiction of the
Commission;
(d) Include an
affirmative statement that the registrant has no intent to exercise control
over the licensee other than to vote the registrant's shares in the ordinary
course;
(e) Include the
fingerprints of the registrant for purposes of investigating the registrant's
criminal history. Such fingerprints shall be provided in a form and manner
acceptable to the Commission. The Commission, in the Commission's sole and
absolute discretion, may waive this requirement upon a written request which
specifically sets out the reasons for the request for waiver;
(f) Be accompanied by a fee to cover
registration investigation costs as follows:
(1) For registrations related to 2 or fewer
restricted licenses, an investigative fee in the amount of [$550.00]
and
(2) For all other
registrations, an investigative fee in the amount of [$2,500.00].
This fee does not include the application fee or investigation costs
should the Commission require the registrant to apply for licensure;
and
(g) Include
such other information as the Commission may require.
6. The Commission may require a stockholder
who is required to be registered by this section to apply for licensure at any
time in the Commission's discretion by sending notice through the United States
Postal Service to the registrant at the address on the registrant's
registration on file with the Commission and to the corporate licensee at the
address on file with the Commission. A stockholder shall apply for licensure as
required by the Commission within 40 days of the stockholder's receipt of
notice. The notice shall be deemed to have been received by the stockholder 5
days after such notice is deposited with the United States Postal Service with
the postage thereon prepaid.
7.
Upon receipt of a completed application for registration with the Commission,
the application shall be placed on an agenda for consideration by the
Commission not later than the first regular monthly Commission agenda following
the expiration of 120 days after the Commission receives the completed
application for registration with the Commission.
(a) At the meeting in which the Commission
considers the application, it shall register the person with the Commission,
decline to register the person with the Commission, or refer the application
back to staff. At the meeting in which the Commission considers the
application, it may also recommend the Commission require the person required
to be registered by this section to apply for licensure. If the Commission
declines to register a person pursuant to this subsection, such action in so
declining to register a person with the Commission shall not be considered a
denial under the act.
(b) A person
who has the person's application for registration with the Commission declined
or referred back to staff may file an application for licensure even if not
required to do so by the Commission.
8. If a stockholder of a corporate licensee
is a holding company and is required to register with the Commission under this
section, the stockholder is not also required to register as a subsidiary
unless the Commission requires the stockholder to apply for
licensure.
9. In enacting this
Rule, the Commission finds that waiver is appropriate to the extent required by
this section. In making this waiver, the Commission finds such waiver is
consistent with state policy because such waiver is for purposes including but
not limited to fostering the growth of the gaming industry which is vitally
important to the economy of the State and the general welfare of its
inhabitants and broadening the opportunity for investment in gaming. The
Commission further finds such waiver does not diminish the Commission's roles
in strictly regulating gaming and effectively controlling the conduct of gaming
by business organizations because the Commission still require, at a minimum,
registration with the Commission of all persons involved with gaming and may
call such persons subject to registration with the Commission forward for
licensure, registration with the Commission, or findings of
suitability.
10. Upon the
Commission requiring a stockholder who is required to be registered by this
section to apply for licensure, the stockholder does not have any right to the
granting of the application. Any license hereunder is a revocable privilege,
and no holder acquires any vested right therein or thereunder.
13.530-2
Licensing of
certain payees. Any person who receives payments computed on the basis
of the earnings profits or receipts from gaming of a corporate licensee, other
than as the owner of an equity security issued by the corporate licensee, may
be required to be licensed or approved.
13.530-3
Corporate
non-compliance. Whenever it is the judgment of the Commission that the
public interest will be served by requiring any or all of the corporation's,
lenders, holders of evidences of indebtedness, underwriters, key executives and
agents, employees or other persons dealing with the corporation and having the
power to exercise a significant influence over decisions made by the
corporation to be licensed, the Commission shall serve a notice of such
determination upon the corporation, and if the person, persons or other entity
or entities which are the subject of such determination shall not have, within
30 days following the service of such notice, applied for a license, the
corporation may be deemed to have failed to comply.
13.540.1-1
Beneficial ownership.
The terms "issue or transfer" extend to transactions involving any type of
ownership referred to in these Rules.
13.540.1-2
Procedures for obtaining
approvals for issuance of securities.
After licensing a corporation, other than a publicly traded
corporation:
A. Before it may issue or
transfer any security to any person, shall file a report of its proposed action
with the Commission. The Commission shall have 90 days within which to approve
or deny the request. If the Commission denies the request, the corporation
shall not issue or transfer any such security.
B. Shall file a report of each change of the
corporate officers and the members of its board of directors with the
Commission within 30 days after the change becomes effective. The Commission
has 90 days within which to approve or disapprove the change. During the 90-day
period and thereafter if the Commission does not disapprove the change, the
officer or member of the board of directors is entitled to exercise all powers
of the office to which the officer or member was so elected or appointed.
The report shall consist of an application signed by the president, or
a vice president, and the secretary, or assistant secretary, of the applicant
on an official form and, to the extent not inconsistent with the requirements
of such form, setting forth the following information:
1. The name, address and telephone number of
the applicant.
2. Whether or not
the applicant is a licensee, holding company or intermediary company. If the
applicant is not a licensee, but has applied for a license, the application
shall set forth the date of such application and a statement of its current
status.
3. If the applicant is the
holder of or has pending an application for a state Casino license, the
application shall set forth all of the information required to be set forth in
a registration statement by such applicant. Such information may be
incorporated by reference to the registration statement of the applicant;
provided, however, that such information shall be as of a date not later than
30 days preceding the date of such application.
4. If the applicant is a holding company or
intermediary company, the application shall set forth all of the information
required to be set forth in a registration statement or furnished to the
Commission. Such information may be incorporated by reference to the
registration statement of, or information previously filed by such person;
provided, however, that such information shall be as of a date not later than
30 days prior to the date of such application.
5. The identity and address of each proposed
purchaser or transferee of the securities covered by such application.
The application will not be approved unless and until the proposed
transferee complies with these Rules.
13.550.1
Licensing. After
licensing pursuant to these Rules, the corporation shall:
(a) Report to the Commission in writing any
change in corporate personnel who have been designated by the Commission as key
executives.
(b) Furnish the
Commission an annual profit and loss statement and an annual balance sheet.
2. The Commission may require that any such
corporation furnish the Commission with a copy of its federal income tax return
within 30 days after such return is filed with the Federal
Government.
13.585.3-1
Persons who may be deemed
unsuitable. The several nonexclusive criteria of unsuitability set forth
in these Rules are also nonexclusive criteria of unsuitability under this
subsection.
13.585.3-2
Escrow
of securities. The Commission shall have the same power with respect to
securities issued by holding companies as it has under these Rules with respect
to securities issued by corporate licensees.
13.585.4-1
Proscribed corporate
activities in respect of "unsuitable" persons. The Commission may
determine a holding company to be unsuitable, or take other disciplinary
action, if after the Commission serves notice that a person is unsuitable to
have a relationship to or involvement with such holding company, the holding
company, or an intermediary company:
(a) Pays
to any person found to be unsuitable any dividend or interest upon any
securities referred to in said section, or any payment or distribution of any
kind whatsoever;
(b) Recognizes the
exercise by any such unsuitable person, directly or indirectly, or through any
proxy, trustee or nominee, of any voting right conferred by any securities or
interest in any securities;
(c)
Pays to any such unsuitable person any remuneration in any form, for services
rendered or otherwise, or permits the corporate Casino licensee to make any
such payment; or
(d) Makes any
other payment or distribution, of any kind whatsoever, in respect of any such
security or interest by way of, or pursuant to payment of principal,
redemption, conversion, exchange or liquidation or any other
transaction.
13.585.5-1
Statement required. Any part of the outstanding equity securities
of a corporation holding a gaming license or the interests in a partnership,
limited partnership, limited-liability company or other business organization
holding a gaming license shall bear a statement, on both sides of the
certificate evidencing such security, of the restrictions imposed by these
Rules. The statement required shall be substantially the same as the statement
required by these Rules.
13.585.6-1
Public offerings by holding companies.
13.585.7-1
Approval by Commission
required for all issues or transfers by a holding company or intermediary
company of its securities.
No holding company shall, and it shall be grounds for disciplinary
action if a holding company shall, issue or transfer any security of which it
is the issuer without the prior approval of the Commission. As used herein, the
terms "issue or transfer" extend to transactions involving any type of
ownership referred to in these Rules. Every approval required by this Rule
shall be sought by the filing of an application complying with these
Rules..
13.585.7-2
Commission approval required for dispositions of outstanding securities
issued by holding companies or intermediary companies.
No person other than the issuer shall sell, assign, transfer, pledge or
make any other disposition of any security issued by any holding company
without the prior approval of the Commission. As used herein, the terms "sale,
assignment, transfer, pledge or other disposition" extend to dispositions of
any type of ownership referred to in these Rules. Included within the meaning
of the term "disposition" as used in this Rule are the granting of a proxy or a
transfer or disposition of a type described in these Rules.
Every approval required by this Rule shall be sought by the filing of
an application complying with the procedures set forth in these
Rules.
13.585.7-4
Stockholders of holding companies.
1. Each stockholder of a holding company must
be found suitable to be a stockholder or, in the discretion of the Commission,
be licensed if the stockholder owns more than 5 percent of any licensee owned
by the holding company.
2. All
stockholders of a holding company which own 5 percent or less of any licensee
owned by the holding company must register in that capacity with the Commission
and affirmatively state in writing that they submit to the Commission's
jurisdiction. Such registration must be made on forms prescribed by the
Commission. A stockholder who is required to be registered by this section
shall apply for registration before the stockholder obtains an ownership
interest in the holding company.
3.
If the Commission finds a stockholder unsuitable, denies an application of the
stockholder, or revokes an approval of the stockholder, the stockholder and the
corporate holding company shall comply with the following:
A. If at any time the Commission finds that
any person owning, controlling or holding with power to vote any part of any
class of security of, or any interest in, any holding company or intermediary
company is unsuitable to be connected with a licensed gaming enterprise, it
shall so notify the unsuitable person, the holding company or intermediary
company, or both. The unsuitable person shall immediately offer the security to
the issuing corporation, or the interest to the firm, partnership, trust or
other business organization, for purchase. The corporation shall purchase the
security so offered, or the firm, partnership, trust or other business
organization shall purchase the interest so offered, for cash at fair market
value within 10 days after the date of the offer.
B. Beginning upon the date when the
Commission serves notice of a determination of unsuitability pursuant to
subsection 3, it is unlawful for the unsuitable person:
(a) To receive any dividend or interest upon
any such securities, or any dividend, payment or distribution of any kind from
any holding company or intermediary company;
(b) To exercise, directly or indirectly or
through any proxy, trustee or nominee, any voting right conferred by such
securities or interest; or
(c) To
receive any remuneration in any form from the corporation, partnership, limited
partnership, limited-liability company or other business organization holding a
license or from any holding company or intermediary company with respect
thereto, for services rendered or otherwise.
4. An application for registration with the
Commission shall:
(a) Include a completed
application for registration form as prescribed by the Commission;
(b) Include fully executed waivers and
authorizations as determined necessary by the Commission to investigate the
registrant;
(c) Include an
affirmative statement that the registrant submits to the jurisdiction of the
Commission;
(d) Include an
affirmative statement that the registrant has no intent to exercise control
over the licensee other than to vote the registrant's shares in the ordinary
course;
(e) Include the
fingerprints of the registrant for purposes of investigating the registrant's
criminal history. Such fingerprints shall be provided in a form and manner
acceptable to the Commission. The Commission, in the Commission's sole and
absolute discretion, may waive this requirement upon a written request which
specifically sets out the reasons for the request for waiver;
(f) Be accompanied by a fee to cover
registration investigation costs as follows:
(1) For registrations related to 2 or fewer
restricted licenses, an investigative fee in the amount of $550.00
and
(2) For all other
registrations, an investigative fee in the amount of $2,500.00.
This fee does not include the application fee or investigation costs
should the Commission require the registrant to apply for licensure;
and
(g) Include
such other information as the Commission may require.
5. The Commission may require a stockholder
who is required to be registered by this section to apply for a finding of
suitability at any time in the Commission's discretion by sending notice
through the United States Postal Service to the registrant at the address on
the registrant's registration on file with the Commission and to the holding
company at the address on file with the Commission. A stockholder shall apply
for a finding of suitability as required by the Commission within 40 days of
the stockholder's receipt of notice. The notice shall be deemed to have been
received by the stockholder 5 days after such notice is deposited with the
United States Postal Service with the postage thereon prepaid.
6. Upon receipt of a completed application
for registration with the Commission, the application shall be placed on an
agenda for consideration by the Commission not later than the first regular
monthly Commission agenda following the expiration of 120 days after the
Commission receives the completed application for registration with the
Commission.
(a) At the meeting in which the
Commission considers the application, it shall register the person with the
Commission, decline to register the person with the Commission, or refer the
application back to staff. At the meeting in which the Commission considers the
application, it may also recommend the Commission require the person required
to be registered by this section to apply for licensure. If the Commission
declines to register a person pursuant to this subsection, such action in so
declining to register a person with the Commission shall not be considered a
denial under the act.
(b) A person
who has the person's application for registration with the Commission declined
or referred back to staff may file an application for licensure even if not
required to do so by the Commission.
7. If a stockholder of a holding company is
also a holding company and is required to register with the Commission under
this section, the stockholder is not required to register as a subsidiary
unless the Commission requires the stockholder to apply for a finding of
suitability.
8. In enacting this
Rule, the Commission finds that waiver is appropriate to the extent required by
this section. In making these waivers, the Commission finds such waivers are
consistent with state policy because such waivers are for purposes including
but not limited to fostering the growth of the gaming industry which is vitally
important to the economy of the State and the general welfare of its
inhabitants and broadening the opportunity for investment in gaming. The
Commission further finds such waivers do not diminish the Commission's roles in
strictly regulating gaming and effectively controlling the conduct of gaming by
business organizations because the Commission still requires, at a minimum,
registration with the Commission of all persons involved with gaming and may
call such persons subject to registration with the Commission forward for
licensure, registration with the Commission, or findings of
suitability.
9. Upon the Commission
requiring a stockholder who is required to be registered by this section to
apply for licensure, the stockholder does not have any right to the granting of
the application. Any license hereunder is a revocable privilege, and no holder
acquires any vested right therein or thereunder. Judicial review is not
available for decisions of the Commission made or entered under the provisions
of this section.
13.585.7-5
Officers and directors of
holding companies.
1. Except as
otherwise specified in this section, any person who has a relationship to a
holding company of a type described in these Rules with respect to publicly
traded corporations shall file an application for finding of suitability and
may be required to be licensed.
2.
An officer or director of a holding company
(a) who would otherwise be required to be
found suitable pursuant to subsection 1;
(b) who does not serve on any committee to
which is delegated the authority of the Commission to act in any matter
involving the activities of a corporate Casino licensee; and
(c) who does not have a relationship to a
holding company of a type described in these Rules with respect to publicly
traded corporations is not required to be found suitable or licensed and must
register in that capacity with the Commission if the holding company is not,
directly or indirectly, a general partner or manager of any licensee and does
not control any licensee. A person who is required to be registered by this
section shall apply for registration within 30 days after the person assumes
office.
3. If the
Commission finds a person who has a relationship to a holding company of a type
described in these Rules with respect to publicly traded corporations
unsuitable, denies an application of the person, or revokes an approval of the
person, the person and the holding company shall comply with the following :
A. If any officer, employee, director,
partner, principal, manager, member, trustee or direct or beneficial owner
required to be found suitable fails to apply for a finding of suitability or a
gaming license within 30 days after being requested so to do by the Commission,
is not found suitable or is denied a license by the Commission, or if his or
her license or the finding of his or her suitability is revoked after
appropriate findings by the Commission, the holding company or intermediary
company, or both, shall immediately remove that person from any position in the
administration or supervision of, or any other significant involvement with,
the activities of a licensee. If the Commission suspends the suitability or
license of any officer, employee, director, partner, principal, manager,
member, trustee or owner, the holding company or intermediary company, or both,
shall, immediately and for the duration of the suspension, suspend the person
from performing any duties in administration or supervision of the activities
of the licensee and from any other significant involvement therewith.
4. An application for registration
with the Commission shall:
(a) Include a
completed application for registration form as prescribed by the
Commission;
(b) Include fully
executed waivers and authorizations as determined necessary by the Commission
to investigate the registrant;
(c)
Include an affirmative statement that the registrant submits to the
jurisdiction of the Commission;
(d)
Include an affirmative statement that the registrant has no intent to exercise
control over the licensee;
(e)
Include the fingerprints of the registrant for purposes of investigating the
registrant's criminal history. Such fingerprints shall be provided in a form
and manner acceptable to the Commission. The Commission, in the Commission's
sole and absolute discretion, may waive this requirement upon a written request
which specifically sets out the reasons for the request for waiver;
(f) Be accompanied by a fee to cover
registration investigation costs as follows:
(1) For registrations related to 2 or fewer
restricted licenses, an investigative fee in the amount of $550.00
and
(2) For all other
registrations, an investigative fee in the amount of $2,500.00.
This fee does not include the application fee or investigation costs
should the Commission require the registrant to apply for licensure;
and
(g) Include
such other information as the Commission may require.
5. The Commission may require a person who is
required to be registered by this section to apply for a finding of suitability
or licensure at any time in the Commission's discretion by sending notice
through the United States Postal Service to the registrant at the address on
the registrant's registration on file with the Commission and to the holding
company at the address on file with the Commission. Such person shall apply for
a finding of suitability or licensure as required by the Commission within 40
days of the individual's receipt of notice. The notice shall be deemed to have
been received by such person 5 days after such notice is deposited with the
United States Postal Service with the postage thereon prepaid.
6. Upon receipt of a completed application
for registration with the Commission, the application shall be placed on an
agenda for consideration by the Commission not later than the first regular
monthly Commission agenda following the expiration of 120 days after the
Commission receives the completed application for registration with the
Commission.
(a) At the meeting in which the
Commission considers the application, it shall register the person with the
Commission, decline to register the person with the Commission, or refer the
application back to staff. At the meeting in which the Commission considers the
application, it may also recommend the Commission require the person required
to be registered by this section to apply for licensure. If the Commission
declines to register a person pursuant to this subsection, such action in so
declining to register a person with the Commission shall not be considered a
denial under the act.
(b) A person
who has the person's application for registration with the Commission declined
or referred back to staff may file an application for licensure even if not
required to do so by the Commission.
7. In enacting this Rule, the Commission
finds that waiver is appropriate to the extent required by this section. In
making this waiver, the Commission finds such waiver is consistent with state
policy because such waiver is for purposes including but not limited to
fostering the growth of the gaming industry which is vitally important to the
economy of the State and the general welfare of its inhabitants and broadening
the opportunity for investment in gaming. The Commission further finds such
waiver does not diminish the Commission's roles in strictly regulating gaming
and effectively controlling the conduct of gaming by business organizations
because the Commission still requires, at a minimum, registration with the
Commission of all persons involved with gaming and may call such persons
subject to registration with the Commission forward for licensure, registration
with the Commission, or findings of suitability.
8. Upon the Commission requiring a person who
has a relationship to a holding company of a type described in Rules 17.410 and
17.415 with respect to publicly traded corporations who is required to be
registered by this section to apply for licensure, the person does not have any
right to the granting of the application. Any license hereunder is a revocable
privilege, and no holder acquires any vested right therein or thereunder.
Judicial review is not available for decisions of the Commission made or
entered under the provisions of this section.
13.585.7-6
Certain payees. Any
person who receives payments from a holding company computed on the basis of
the earnings or profits of the holding company, or on the basis of the receipts
from gaming of a subsidiary corporate licensee of such holding company, may be
required to be found suitable or licensed or approved.
13.585.7-7
Reporting requirements for
certain holding companies. Each holding company which is a firm,
partnership, trust or other form of business organization not a natural person
or a corporation, must furnish the Commission with information analogous to the
following:
If a corporation, partnership, limited partnership, limited-liability
company or other business organization applying for or holding a license is or
becomes a subsidiary, each holding company and each intermediary company with
respect thereto must:
(a) Qualify to
do business in the State of Arkansas.
(b) If it is a corporation, register with the
Commission and furnish:
(1) A complete list
of all stockholders when it first registers, and annually thereafter, within 30
days after the annual meeting of the stockholders of the corporation, showing
the number of shares held by each.
(2) The names of all corporate officers
within 30 days of their appointment.
(3) The names of all members of the Board of
Directors within 30 days of their election.
13.625.1
Exclusion of publicly traded
corporations. Rule 13 shall not apply to the securities of, nor other
interest in, any holding company that is publicly traded, nor to its
stockholders, directors, officers, agents, employees, underwriters, lenders,
and other holders of evidence of indebtedness, as such.
RULE 14
LIMITED PARTNERSHIP LICENSEES
14.010
Definitions. As used in
Rule 14:
1. "Capital account" as reflected on
the books of the partnership shall mean the partner's initial and any
subsequent contributions to the limited partnership; as increased by the
partner's pro rata share of net income of the partnership; and decreased by the
partner's pro rata share of net losses incurred by the partnership, as well as
any draws or distributions to the partner of any kind or nature.
2. Unless otherwise specified, "Commission"
means the Arkansas Racing Commission or the Commission's designee.
3. "Certificate of limited partnership" means
the certificate referred to in Ark. Code Ann. §
4-47-201,
et seq., and the certificate as amended or restated, or in the
case of a foreign limited partnership, the substantial equivalent of a
certificate of limited partnership as required by the law of the jurisdiction
in which the limited partnership is formed.
4. "Contribution" means any cash, property,
services rendered, or a promissory note or other binding obligation to
contribute cash or property or to perform services, which a partner contributes
to a limited partnership in his or her capacity as a partner.
5. "Control," including the terms
"controlling," "controlled by" and "under common control with," means the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a person, whether through the ownership of
voting securities, by contract, or otherwise.
6. A "controlled affiliate" of a specified
person is another person which, directly or indirectly, is controlled by the
person specified.
7. A "controlling
affiliate" of a specified person is another person which, directly or
indirectly controls the person specified.
8. "Delayed licensing" means an approval
granted by the Commission to a limited partner of a limited partnership
licensee, enabling the limited partner to receive a share or percentage of
revenues derived from the conduct of gaming prior to the limited partner being
licensed.
9. "Holding company"
means, in addition to any corporation, firm, partnership, limited partnership,
limited-liability company, trust or other form of business organization not a
natural person which, directly or indirectly:
(a) owns;
(b) has the power or right to control;
(c) holds with power to vote any
part of the limited partnership interests, interests in a limited-liability
company or outstanding voting securities of a corporation which holds or
applies for a license, a limited partnership that owns or has the power or
right to control all or any part of the outstanding securities of a limited
partnership that holds or applies for a state Casino license.
10. "Limited partnership" means a
partnership formed by two or more persons pursuant to the terms of Title 4,
Chapter 47 of the Arkansas Code Annotated, having as members one or more
general partners and one or more limited partners.
11. "Own," "hold" and "have" mean the
possession of a record or beneficial interest in a limited
partnership.
12. "Partnership
agreement" means any valid, written agreement of the partners as to the affairs
of a limited partnership and the conduct of its business.
13. "Sale" or "sell" includes every contract
of sale of, contract to sell, or disposition of, a security or interest in a
security whether or not for value. "Sale" or "sell" includes any exchange of
securities and any material change in the rights, preferences, privileges or
restrictions of or on outstanding securities.
14. The term "security" means any stock;
membership in an incorporated association; partnership interest in any limited
or general partnership; bond; debenture or other evidence of indebtedness;
investment contract; voting trust certificate; certificate of deposit for a
security; or, in general, any interest or instrument commonly known as a
"security"; or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, or warrant or right to subscribe to or
purchase, any of the foregoing. All of the foregoing are securities whether or
not evidence of indebtedness reported under these Rules is a
security.
14.030
Powers of Commission. The Commission shall have full and absolute
power and authority, to the extent permitted by law, to recommend the granting,
denial, limitation, conditioning, restriction, revocation, or delay of any
license, registration, approval, or finding of suitability required or
permitted by this Rule, or any application therefor, or to recommend other
disciplinary action for any cause deemed reasonable by the Commission. The
Commission shall have full and absolute power and authority, to the extent
permitted by law, to grant, deny, condition, restrict, revoke, suspend, or
delay any license, registration, approval, or finding of suitability required
or permitted under this Rule, or any application therefor, or to take other
disciplinary action for any cause deemed reasonable by the
Commission.
14.040
Burden of
proof. The burden of proof with respect to the granting of any approval
required or permitted by this Rule is at all times upon the person applying for
such approval. Each applicant shall satisfy the Commission, as the case may be,
that the granting of an approval is consistent with the state policies
regarding gaming set forth in the Commission's Rules.
14.060
Prohibition with respect to
ownership of limited partnership licensees. Except as otherwise
provided, no person shall acquire any equity security issued by a limited
partnership licensee or a holding company, become a controlling affiliate of a
limited partnership licensee or a holding company, become a holding company of
a limited partnership licensee or of a holding company without first obtaining
the prior approval of the Commission in accordance with these Rules.
14.065
Registration of certain limited
partners of limited partnerships.
1.
All limited partners with a 5 percent or less ownership interest in a limited
partnership licensee must register in that capacity with the Commission and
affirmatively state in writing that they submit to the Commission's
jurisdiction. Such registration must be made on forms prescribed by the
Commission. A limited partner who is required to be registered by this section
shall apply for registration before the limited partner obtains an ownership
interest of 5 percent or less in a limited partnership licensee.
2. If the Commission finds a limited partner
unsuitable, denies an application of the limited partner, or revokes an
approval of the limited partner, the limited partner and the limited
partnership shall comply with the following:
a) If at any time the Commission finds that
an individual owner of any such interest is unsuitable to hold that interest,
the Commission shall immediately notify the limited partnership of that fact.
The limited partnership shall, within 10 days after the date that it receives
the notice from the Commission, return to the unsuitable owner, in cash, the
amount of the unsuitable owner's capital account as reflected on the books of
the partnership.
b) Beginning on
the date when the Commission serves notice of a determination of unsuitability
pursuant to subsection 2(a) upon the limited partnership, it is unlawful for
the unsuitable owner:
(i) To receive any
share of the profits or interest upon any limited partnership
interest;
(ii) To exercise,
directly or through any trustee or nominee, any voting right conferred by such
interest; or
(iii) To receive any
remuneration in any form from the limited partnership, for services rendered or
otherwise.
3.
An application for registration with the Commission shall:
(a) Include a completed application for
registration form as prescribed by the Commission;
(b) Include fully executed waivers and
authorizations as determined necessary by the Commission to investigate the
registrant;
(c) Include an
affirmative statement that the registrant submits to the jurisdiction of the
Commission;
(d) Include an
affirmative statement that the registrant has no intent to exercise control
over the licensee other than (i) to vote the registrant's shares in the
ordinary course; and (ii) if applicable, to take action in another licensed
capacity under the Commission Rules that are not prohibited by any Commission
Rule;
(e) Include the fingerprints
of the registrant for purposes of investigating the registrant's criminal
history. Such fingerprints shall be provided in a form and manner acceptable to
the Commission. The Commission, in the Commission's sole and absolute
discretion, may waive this requirement upon a written request which
specifically sets out the reasons for the request for waiver;
(f) Be accompanied by a fee to cover
registration investigation costs as follows:
(1) For registrations related to 2 or fewer
restricted licenses, an investigative fee in the amount of [$550.00]
and
(2) For all other
registrations, an investigative fee in the amount of [$2,500.00].
This fee does not include the application fee or investigation costs
should the Commission require the registrant to apply for licensure;
and
(g) Include
such other information as the Commission may require.
4. The Commission may require a limited
partner who is required to be registered by this section to apply for licensure
at any time in the Commission's discretion by sending notice through the United
States Postal Service to the registrant at the address on the registrant's
registration on file with the Commission and to the limited partnership at the
address on file with the Commission. A limited partner shall apply for
licensure as required by the Commission within 40 days of the limited partner's
receipt of notice. The notice shall be deemed to have been received by the
limited partner 5 days after such notice is deposited with the United States
Postal Service with the postage thereon prepaid.
5. Upon receipt of a completed application
for registration with the Commission, the application shall be placed on an
agenda for consideration by the Commission not later than the first regular
monthly Commission agenda following the expiration of 120 days after the
Commission receives the completed application for registration with the
Commission.
(a) At the meeting in which the
Commission considers the application, it shall register the person with the
Commission, decline to register the person with the Commission, or refer the
application back to staff. At the meeting in which the Commission considers the
application, it may also recommend the Commission require the person required
to be registered by this section to apply for licensure. If the Commission
declines to register a person pursuant to this subsection, such action in so
declining to register a person with the Commission shall not be considered a
denial under the act.
(b) A person
who has the person's application for registration with the Commission declined
or referred back to staff may file an application for licensure even if not
required to do so by the Commission.
6. If a limited partner of a limited
partnership licensee is a holding company and is required to register with the
Commission under this section, the limited partner is not also required to
register with the Commission as a subsidiary unless the Commission requires the
limited partner to apply for licensure.
7. In enacting this Rule, the Commission
finds that waiver is appropriate to the extent required by this section. In
making this waiver, the Commission finds such waiver is consistent with state
policy because such waiver is for purposes including but not limited to
fostering the growth of the gaming industry which is vitally important to the
economy of the State and the general welfare of its inhabitants and broadening
the opportunity for investment in gaming. The Commission further finds such
waiver does not diminish the Commission's roles in strictly regulating gaming
and effectively controlling the conduct of gaming by business organizations
because the Commission still require, at a minimum, registration with the
Commission of all persons involved with gaming and may call such persons
subject to registration with the Commission forward for licensure, registration
with the Commission, or findings of suitability.
8. Upon the Commission requiring a limited
partner who is required to be registered by this section to apply for
licensure, the limited partner does not have any right to the granting of the
application. Any license hereunder is a revocable privilege, and no holder
acquires any vested right therein or thereunder. Judicial review is not
available for decisions of the Commission made or entered under the provisions
of this section.
14.070
Institutional investor.
1. An
institutional investor that intends to become subject to these Rules as a
result of its ownership of an interest in or equity security issued by a
limited partnership licensee or a holding company, may apply to the Commission
for a waiver of the qualification and registration requirements of these Rules
with respect to the ownership of the interest in or equity securities issued by
the limited partnership licensee or a holding company if such institutional
investor intends to and does hold the interest or equity securities for
investment purposes only. An institutional investor shall not be eligible to
receive or hold a waiver if the institutional investor will own, directly or
indirectly, more than a 15 percent interest in or of the equity securities
issued by the limited partnership licensee or a holding company on a fully
diluted basis where any such interest or securities are to be acquired other
than through a debt restructuring. Limited partnership interests or securities
acquired before a debt restructuring or as a result of an exchange, exercise or
conversion, after a debt restructuring, of any securities issued to an
institutional investor through a debt restructuring, shall be deemed to have
been acquired through a debt restructuring. A waiver granted under this section
shall be effective only as long as the institutional investor's direct or
indirect ownership interest in or of the equity securities issued by a limited
partnership meets the limitations set forth above.
2. An institutional investor shall not be
deemed to hold an interest in or equity security issued by a limited
partnership licensee or a holding company, for investment purposes only unless
the interest or equity securities will be acquired and held in the ordinary
course of business as an institutional investor, is not a general partnership
interest, and does not, directly or indirectly, allow the institutional
investor to vote for the election or appointment of a general partner(s), cause
any change in the partnership agreement, certificate of limited partnership, or
other organic document, management, policies or operations of the limited
partnership licensee or the holding company, or cause any other action which
the Commission finds to be inconsistent with investment purposes only. The
following activities shall not be deemed to be inconsistent with holding an
interest or equity securities for investment purposes only:
(a) Serving as a member of any committee of
creditors or security or interest holders in connection with a debt
restructuring;
(b) Nominating any
candidate for election or appointment to a Creditors Committee or the
equivalent in connection with a debt restructuring;
(c) Making financial and other inquiries of
management of the type normally made by securities analysts for informational
purposes and not to cause a change in its management, policies or operations;
and
(d) Such other activities as
the Commission may determine to be consistent with such investment
intent.
3. An application
for a waiver must include:
(a) A description
of the institutional investor's business and a statement as to why the
institutional investor is within the definition of "institutional investor" set
forth in section 11 of this Rule.
(b) A certification made under oath and the
penalty of perjury, that:
(1) The interest in
or equity securities of the limited partnership licensee or the holding company
will be acquired and held for investment purposes only as defined in subsection
2 and a statement by the signatory explaining the basis of the signatory's
authority to sign the certification and to bind the institutional investor to
its terms.
(2) The applicant agrees
to be bound by and comply with the Amendment and the Rules adopted thereunder,
to be subject to the jurisdiction of the courts of Arkansas, and to consent to
Arkansas as the choice of forum in the event any dispute, question, or
controversy arises regarding the application or any waiver granted under this
section.
(3) The applicant agrees
that it shall not grant an option to purchase, or sell, assign, transfer,
pledge or make any other disposition of any interest in or equity security
issued by the limited partnership licensee or the holding company without the
prior approval of the Commission.
(c) A description of all actions, if any,
taken or expected to be taken by the institutional investor relating to the
activities described in subsection 2.
(d) The name, address, telephone number and
social security number of the officers and directors, or their equivalent, of
the institutional investor as well as those persons that have direct control
over the institutional investor's holdings of an interest in or equity
securities of the limited partnership licensee or the holding
company.
(e) The name, address,
telephone number and social security or federal tax identification number of
each person who has the power to direct or control the institutional investor's
exercise of its rights as a holder of the interest in or equity securities of
the limited partnership licensee or the holding company.
(f) The name of each person that beneficially
owns more than 5 percent of the institutional investor's voting securities or
other equivalent.
(g) A list of the
institutional investor's affiliates.
(h) A list of all regulatory agencies with
which the institutional investor or any affiliate that owns any voting or
equity securities or any other interest in a company which is licensed or
registered with the Arkansas Racing Commission files periodic reports, and the
name, address, and telephone number of the person, if known, to contact at each
agency regarding the institutional investor.
(i) A disclosure of all criminal or
regulatory sanctions imposed during the preceding 10 years and of any
administrative or court proceedings filed by any regulatory agency during the
preceding 5 years against the institutional investor, its affiliates, and
current officer or director, or any former officer or director whose tenure
ended within the preceding 12 months. As to a former officer or director, such
information need be provided only to the extent that it relates to actions
arising out of or during such person's tenure with the institutional investor
or its affiliates.
(j) Any
additional information the Commission may request.
4. The Commission shall consider all relevant
information in determining whether to grant a waiver requested pursuant to
subsection 1, including but not limited to:
(a) Whether the waiver is consistent with the
policy set forth in these Rules; and
(b) Any views expressed to the Commission by
the limited partnership licensee or any affiliate thereof.
5. Any waiver granted pursuant to this
section may be limited or conditioned in any respect by the Commission,
including, but not limited to, requiring a certification, made under oath and
the penalty of perjury, which contains the following:
(a) A statement attesting that the
institutional investor holds and/or has held the interest in or equity
securities issued by the limited partnership licensee or the holding company
for (1) investment purposes only, and (2) in the ordinary course of business as
an institutional investor and not for the purpose of (A) causing, directly or
indirectly, the appointment of any general partner(s), or (B) effecting any
change in the partnership agreement, certificate of limited partnership, other
organic document, management, policies or operations of the limited partnership
licensee or any of its affiliates.
(b) A statement that the institutional
investor has not engaged in any activities inconsistent with the holding of an
interest in or equity securities of a limited partnership licensee or the
holding company for investment purposes only in accordance with the provisions
of section 2 hereof.
(c) The name,
title and telephone number of the persons having direct control over the
institutional investor's holdings of an interest in or equity securities issued
by the limited partnership licensee or the holding company.
(d) A statement of all complaints, arrests,
indictments or convictions of any officer or director of the institutional
investor regarding the rules and regulations of the Securities and Exchange
Commission and any regulatory agency of any State where it conducts business,
or any offense which would constitute a gross misdemeanor or felony if
committed in the State of Arkansas. The name, position, charge, arresting
agency, and a brief description of the event must also be included in the
statement.
(e) A Statement
indicating any change to the structure and/or operation of the institutional
investor which could affect its classification as an institutional investor as
defined within these Rules.
6. An institutional investor that has been
granted a waiver of licensing, registration or finding of suitability as
required by these Rules and that subsequently intends not to hold its interest
in or equity securities issued by the limited partnership licensee or the
holding company for investment purposes only, or that intends to take any
action inconsistent with its prior intent shall, within 2 business days after
its decision, deliver notice to the Commission in writing of the change in its
investment intent. The Commission may then take such action under these Rules,
or any other provisions of the Amendment or Rules of the Commission as the
Commission deems appropriate.
7. A
waiver that has been granted pursuant to this section and these Rules shall
subject the institutional investor to the requirements found in these Rules, as
applicable, in that any purported sale, assignment, transfer, pledge or other
disposition of any interest in or equity security issued by the limited
partnership licensee or the holding company, or the granting of an option to
purchase such an interest or equity security, shall be void unless approved in
advance by the Commission.
8. The
institutional investor shall be entitled to whatever economic advantage,
including, but not limited to, distributions, that may flow from ownership of
the interest or equity securities as though it has been licensed, registered or
found suitable.
9. If the
Commission finds that an institutional investor has failed to comply with the
provisions of this section, or should be subject to licensing, registration,
finding of suitability or any approval to protect the public interest, the
Commission may, in accordance with these Rules or any other provision of the
Amendment or Rules of the Commission the Commission deems appropriate, require
the institutional investor to apply for licensing, registration or a finding of
suitability. The institutional investor affected by the action taken by the
Commission may request a hearing on the merits of such action. The hearing
shall be included on the agenda of the next regularly scheduled Commission
meeting occurring more than 10 working days after the request for hearing. Upon
good cause shown by the institutional investor, the Commission may waive the
10-day requirement and place such hearing on an earlier Commission agenda. The
Commission, for any cause deemed reasonable, may by a majority vote, sustain,
modify or reverse the decision of the Commission, or remand the matter to the
Commission for such further investigation and reconsideration as the Commission
may order. While the application for licensure, registration or a finding of
suitability review of the Commission's action requiring the filing of such
application is pending, the institutional investor shall not directly or
indirectly, cause or attempt to cause any management, policy, or operating
changes in the limited partnership licensee or the holding company.
10. The limited partnership licensee or the
holding company shall immediately notify the Commission of any information
about, fact concerning or actions of, an institutional investor holding any
interest in or equity securities of the limited partnership licensee or the
holding company, that may materially affect the institutional investor's
eligibility to hold a waiver under this section.
11. For purposes of this Rule, "institutional
investor" shall have the meaning set forth in these Rules and "debt
restructuring" shall have the meaning set forth in these Rules.
14.110
Required provisions
in certificate of limited partnership. The following provisions must be
included in the certificate of limited partnership of every limited partnership
that receives a state Casino license:
1. A
purpose clause containing language substantially as follows:
The character and general nature of the business to be conducted by the
partnership is to operate, manage, and conduct gaming in a gaming casino on or
within the premises known as _________________ and located at
____________________
2. The
certificate shall include language substantially as follows:
Notwithstanding anything to the contrary expressed or implied in this
agreement, the sale, assignment, transfer, pledge, or other disposition of any
interest in the partnership is void unless approved in advance by the
Commission. If at any time the Commission finds that an individual owner of any
such interest is unsuitable to hold that interest, the Commission shall
immediately notify the partnership of that fact. The partnership shall, within
ten days from the date that it receives the notice from the Commission, return
to the unsuitable owner the amount of the unsuitable owner's capital account as
reflected on the books of the partnership. Beginning on the date when the
Commission serves notice of a determination of unsuitability, pursuant to the
preceding sentence, upon the partnership, it is unlawful for the unsuitable
owner:
(a) to receive any share of the
profits or distributions of any cash or other property other than a return of
capital as required above;
(b) to
exercise, directly or through any trustee or nominee, any voting right
conferred by such interest; or
(c)
to receive any remuneration in any form from the partnership, for services
rendered or otherwise.
3.
The certificate shall include language substantially as follows:
Any limited partner granted delayed licensing that is later found
unsuitable by the Commission shall return all evidence of any ownership in the
limited partnership to the limited partnership, at which time the limited
partnership shall refund to the unsuitable limited partner no more than the
amount that the unsuitable partner paid for his or her ownership interest, and
the unsuitable limited partner shall no longer have any direct or indirect
interest in the limited partnership.
14.120
Public offerings by limited
partnership licensees and holding companies. No limited partnership
licensee and no holding company shall make a public offering of securities of a
limited partnership licensee of a holding company except as is permitted by,
and in accordance with, these Rules.
14.130
Assignment of interest in a
security. The purported sale, assignment, transfer, pledge, exercise of
an option to purchase, including any transfer, whether or not for value, of any
interest in the profits or proceeds realized from the holding or disposition of
a security, or other disposition of any interest in a limited partnership which
holds a state gaming license or which is a holding company or an intermediary
company for an entity that holds a state gaming license is void unless approved
in advance by the Commission.
14.140
Procedure for obtaining approval
for transfer of securities. The provisions of these Rules shall govern
all transfers for which approval is required.
14.150
Persons who may be determined to
be unsuitable. If at any time the Commission finds that an individual
owner of any such interest is unsuitable to hold that interest, the Commission
shall immediately notify the limited partnership of that fact. The limited
partnership shall, within 10 days after the date that it receives the notice
from the Commission, return to the unsuitable owner, in cash, the amount of the
unsuitable owner's capital account as reflected on the books of the
partnership. Without in any manner limiting the foregoing, the following
persons may be determined to be unsuitable:
1.
Any person who, having been notified by the general partners, the Commission,
or the Commission of the requirement that such persons be licensed, fails,
refuses, or neglects to apply for such licensing within 30 days after being
requested to do so by the Commission.
2. Any record holder of a security issued by
a limited partnership licensee or a holding company who fails, refuses, or
neglects, upon request of the Commission, to furnish to the Commission within
30 days after such request, full, complete, and accurate information as to the
owner of any beneficial interest in such security.
3. Any record owner of a security that is
beneficially owned, in whole or in part, by a person determined to be
unsuitable by the Commission.
14.160
Limited partnership
non-compliance. Whenever the Commission determines that the public
interest will be served by requiring any or all of the limited partnership's
lenders, holders of evidences of indebtedness, underwriters, key executives and
agents, employees or other persons dealing with the limited partnership and
having the power to exercise a significant influence over decisions by the
limited partnership to be licensed, the Commission shall serve a notice of such
determination upon the limited partnership either personally or by certified
mail. If the person or entity that is the subject of such determination shall
not have, within 30 days following the receipt of such notice, applied for a
license, the limited partnership may be deemed to have failed to
comply.
14.170
Approval by
Commission required for all issues or transfers by a holding company of its
securities. No holding company shall issue or transfer any security of
which it or its controlled affiliate is the issuer without the prior approval
of the Commission. As used herein, the terms "issue or transfer" extend to
transactions involving any type of ownership referred to in these
Rules.
14.180
Commission
approval required for dispositions of outstanding securities issued by holding
companies. No person other than the issuer shall sell, assign, transfer,
pledge or make any other disposition of any security issued by any holding
company without the prior approval of the Commission. As used herein, the terms
"sale, assignment, transfer, pledge or other disposition" extend to disposition
of any type of ownership referred to in these Rules.
14.190
Licensing of general partners
and limited partners of limited partnership holding companies.
1. Except as otherwise provided in this
section, each general partner of a limited partnership holding company must be
licensed. Each limited partner of a limited partnership holding company must be
licensed if the limited partner owns more than 5 percent of any licensee owned
by the limited partnership holding company, except to the extent delayed
licensing is approved by the Commission. For the purposes of this section,
"own" means the possession of a record or beneficial interest in any business
organization.
2. All limited
partners of a limited partnership holding company which own 5 percent or less
of any licensee owned by the limited partnership holding company must register
in that capacity with the Commission and affirmatively state in writing that
they submit to the Commission's jurisdiction. Such registration must be made on
forms prescribed by the Commission. A limited partner who is required to be
registered by this section shall apply for registration before the limited
partner obtains an ownership interest in the limited partnership holding
company.
3. A general partner of a
limited partnership holding company is not required to be licensed and must
register in that capacity with the Commission if both of the following apply:
(a) The general partner owns 5 percent or
less of each licensee owned by the limited partnership holding company;
and
(b) The limited partnership
holding company is not, directly or indirectly, a general partner or manager of
any licensee and does not control any licensee.
A general partner who is required to be registered by this section
shall apply for registration before the general partner obtains an ownership
interest in the limited partnership holding company.
4. If the Commission
finds a limited partner or general partner unsuitable, denies an application of
the limited partner or general partner, or revokes an approval of the limited
partner or general partner, the limited partner, general partner, and the
limited partnership holding company shall comply with the following:
a) If at any time the Commission finds that
any person owning, controlling or holding with power to vote any part of any
class of security of, or any interest in, any holding company or intermediary
company is unsuitable to be connected with a licensed gaming enterprise, it
shall so notify the unsuitable person, the holding company or intermediary
company, or both. The unsuitable person shall immediately offer the security to
the issuing corporation, or the interest to the firm, partnership, trust or
other business organization, for purchase. The corporation shall purchase the
security so offered, or the firm, partnership, trust or other business
organization shall purchase the interest so offered, for cash at fair market
value within 10 days after the date of the offer.
b) Beginning upon the date when the
Commission serves notice of a determination of unsuitability, it is unlawful
for the unsuitable person:
i. To receive any
dividend or interest upon any such securities, or any dividend, payment or
distribution of any kind from any holding company or intermediary
company;
ii. To exercise, directly
or indirectly or through any proxy, trustee or nominee, any voting right
conferred by such securities or interest; or
iii. To receive any remuneration in any form from the corporation,
partnership, limited partnership, limited-liability company or other business
organization holding a license or from any holding company or intermediary
company with respect thereto, for services rendered or
otherwise.
c) If any
officer, employee, director, partner, principal, manager, member, trustee or
direct or beneficial owner required to be found suitable fails to apply for a
finding of suitability or a gaming license within 30 days after being requested
so to do by the Commission, is not found suitable or is denied a license by the
Commission, or if his or her license or the finding of his or her suitability
is revoked after appropriate findings by the Commission, the holding company or
intermediary company, or both, shall immediately remove that person from any
position in the administration or supervision of, or any other significant
involvement with, the activities of a licensee. If the Commission suspends the
suitability or license of any officer, employee, director, partner, principal,
manager, member, trustee or owner, the holding company or intermediary company,
or both, shall, immediately and for the duration of the suspension, suspend the
person from performing any duties in administration or supervision of the
activities of the licensee and from any other significant involvement
therewith.
5. An
application for registration with the Commission shall:
(a) Include a completed application for
registration form as prescribed by the Commission;
(b) Include fully executed waivers and
authorizations as determined necessary by the Commission to investigate the
registrant;
(c) Include an
affirmative statement that the registrant submits to the jurisdiction of the
Commission;
(d) Include an
affirmative statement that the registrant has no intent to exercise control
over the licensee other than (i) to vote the registrant's shares in the
ordinary course; and (ii) if applicable, to take action in another licensed
capacity under Commission Rules that are not prohibited by any Commission
Rule;
(e) Include the fingerprints
of the registrant for purposes of investigating the registrant's criminal
history. Such fingerprints shall be provided in a form and manner acceptable to
the Commission. The Commission, in the Commission's sole and absolute
discretion, may waive this requirement upon a written request which
specifically sets out the reasons for the request for waiver;
(f) Be accompanied by a fee to cover
registration investigation costs as follows:
(1) For registrations related to 2 or fewer
restricted licenses, an investigative fee in the amount of [$550.00];
and
(2) For all other
registrations, an investigative fee in the amount of [$2,500.00].
This fee does not include the application fee or investigation costs
should the Commission require the registrant to apply for licensure;
and
(g) Include
such other information as the Commission may require.
6. The Commission may require a limited
partner or general partner who is required to be registered by this section to
apply for licensure at any time in the Commission's discretion by sending
notice through the United States Postal Service to the registrant at the
address on the registrant's registration on file with the Commission and to the
limited partnership holding company at the address on file with the Commission.
A limited partner or general partner shall apply for licensure as required by
the Commission within 40 days of the limited partner or general partner's
receipt of notice. The notice shall be deemed to have been received by the
limited partner or general partner 5 days after such notice is deposited with
the United States Postal Service with the postage thereon prepaid.
7. Upon receipt of a completed application
for registration with the Commission, the application shall be placed on an
agenda for consideration by the Commission not later than the first regular
monthly Commission agenda following the expiration of 120 days after the
Commission receives the completed application for registration with the
Commission.
(a) At the meeting in which the
Commission considers the application, it shall register the person with the
Commission, decline to register the person with the Commission, or refer the
application back to staff. At the meeting in which the Commission considers the
application, it may also recommend the Commission require the person required
to be registered by this section to apply for licensure. If the Commission
declines to register a person pursuant to this subsection, such action in so
declining to register a person with the Commission shall not be considered a
denial under the act.
(b) A person
who has the person's application for registration with the Commission declined
or referred back to staff may file an application for licensure even if not
required to do so by the Commission.
8. If a limited partner or general partner of
a limited partnership holding company is also a holding company and is required
to register with the Commission under this section, the limited partner or
general partner is not also required to register with the Commission as a
subsidiary unless the Commission requires the limited partner, officer,
director or general partner to apply for licensure.
9. In enacting this Rule, the Commission
finds that waiver is appropriate to the extent required by this section. In
making these waivers, the Commission finds such waivers are consistent with
state policy because such waivers are for purposes including but not limited to
fostering the growth of the gaming industry which is vitally important to the
economy of the State and the general welfare of its inhabitants and broadening
the opportunity for investment in gaming. The Commission further finds such
waivers do not diminish the Commission's roles in strictly regulating gaming
and effectively controlling the conduct of gaming by business organizations
because the Commission still require, at a minimum, registration with the
Commission of all persons involved with gaming and may call such persons
subject to registration with the Commission forward for licensure, registration
with the Commission, or findings of suitability.
10. Upon the Commission requiring a limited
partner or general partner who is required to be registered by this section to
apply for licensure, the limited partner or general partner does not have any
right to the granting of the application. Any license hereunder is a revocable
privilege, and no holder acquires any vested right therein or thereunder.
Judicial review is not available for decisions of the Commission made or
entered under the provisions of this section.
14.200
Certain payees required to be
found suitable, licensed or approved. The Commission may require any
person who receives payments from a limited partnership holding company
computed on the basis of the earnings or profits of the holding company or on
the basis of the receipts from gaming of the subsidiary limited partnership
licensee of such holding company to be found suitable, licensed or
approved.
14.210
Delayed
licensing for limited partners. Pursuant to the provisions of this Rule,
the Commission may waive licensing of limited partners and, in lieu thereof,
grant approval of delayed licensing for any limited partner.
14.220
Eligibility for delayed
licensing.
1. A limited partnership
that has filed an application to be registered with the Commission may file an
application for approval of delayed licensing of its limited
partners.
2. Only limited partners
whose aggregate effective ownership percentage in the limited partnership is no
more than 10 percent will be considered for delayed licensing approval. For
purposes of determining aggregate effective ownership percentage, a natural
person who is part of a legal entity that is a limited partner shall be deemed
to have the percentage ownership interest held by the legal entity.
3. A general partner is not eligible for
delayed licensing.
4. A limited
partnership seeking delayed licensing of its limited partners shall apply for a
ruling from the Commission, upon recommendation of the Commission, that it is
eligible for delayed licensing of its limited partners. Such application may be
made at the same time that the limited partnership applies for a state Casino
license or registers with the Commission, and must include the information from
limited partners required by these Rules.
14.225
Application for delayed
licensing by individual limited partners. Once a limited partnership has
been found eligible for delayed licensing pursuant to these Rules, each limited
partner seeking delayed licensing shall file an application for delayed
licensing pursuant to these Rules. A limited partner may file an application
for delayed licensing prior to the Commission's ruling on the eligibility of
the limited partnership, but the application will not be considered by the
Commission until the Commission rules that the limited partnership is eligible
for delayed licensing.
14.230
Procedure for consideration of application for delayed licensing.
Any application for delayed licensing, whether by the limited partnership
pursuant to these Rules, or by an individual limited partner pursuant to these
Rules, shall be made to the Commission on forms furnished by the Commission and
in accordance with these Rules. The Commission shall investigate the applicant
and act upon the application pursuant to these Rules.
14.240
Information to be provided by
applicant for delayed licensing. In addition to filing a completed
personal history record and personal financial questionnaire, along with all
required releases and fingerprint cards, each limited partner applying for
approval of delayed licensing shall provide the following information:
1. A listing of any other business interest
between the applicant and a general partner existing prior to, at the time of,
or after the formation of the limited partnership.
2. Whether the applicant has a familial
relationship, either by blood, marriage or adoption, with a general
partner.
3. A certification that
the applicant does not have and will not have a material relationship to, or
material involvement with, a general partner of the limited partnership with
respect to gaming operations of the limited partnership, except in another
licensed capacity under Commission Rules in accordance with Commission Rules. A
person may be deemed to have a material relationship to, or material
involvement with, a general partner if the person is a shareholder, controlling
person or key employee of a legal entity that is a general partner, or if the
person, as an agent, consultant, advisor or otherwise, exercises a significant
influence upon the management or affairs of such general partner.
14.250
Effect of the
Commission's ruling on a limited partnership's application for delayed
licensing. If the Commission rules that a limited partnership is
eligible for delayed licensing of its limited partners, the Commission shall
direct the Commission, based upon such investigation as the Commission deems
appropriate, to recommend to the Commission which of the limited partners who
have applied for delayed licensing, if any, should be granted delayed
licensing.
14.260
Standards. The Commission shall consider all relevant material
facts in determining whether to grant an approval of delayed licensing to a
limited partnership, and thereafter to a limited partner, as permitted by this
Rule. The Commission may further consider the effects of the action or approval
requested by the applicant, the benefits to the State of Arkansas, and whether
other facts are deemed relevant, including, but not limited to, the following:
1. Whether the applicant, either individually
or in conjunction with other limited partners, has any direct or indirect
control or significant influence over a general partner, or over the management
of the limited partnership's business or gaming operations, or the ability to
acquire such control. The limited partnership agreement will be scrutinized to
determine if it has clear and specific provisions covering the following:
(a) Restricting the priority rights with
respect to income, losses, or other distributions, whether during the term of
the limited partnership or upon its dissolution, of limited partners seeking
delayed licensing;
(b) Vesting the
general partner(s) with the sole and exclusive right to manage and control the
limited partnership's business;
(c)
Defining the scope of the general partner's (or partners') authority and any
limitations thereon;
(d)
Restricting the right of the limited partners to remove or elect general
partners, except to the extent necessary to elect a general partner upon the
retirement, death, or disability of a general partner who is a natural person;
and
(e) Whether any additional
assessment or capital contribution can be required of the limited
partners.
2. Whether the
applicant has, or has had, a material relationship with a general partner.
Applicants who have a familial relationship, either by blood, marriage or
adoption, to a general partner may be deemed to have such a material
relationship.
3. The commonality of
other business interests between a general partner and any limited partners
prior to, or existing at, formation of the limited partnership.
4. Whether the applicant had a key role in
forming the limited partnership.
5.
The relative level of risk for each general partner.
6. The business probity of each general
partner, in gaming or otherwise.
7.
The presence or absence of restrictions on the limited partners.
8. Whether a substantial portion of the
assets of the limited partnership were owned by only one or more limited
partners prior to formation of the limited partnership.
9. Whether substantial portion of the
depreciable assets involved in the proposed gaming operation will be owned by
the limited partnership.
10. The
number of persons and entities involved in the limited partnership. The
Commission will not ordinarily grant delayed licensing status to a limited
partnership with fewer than 25 limited partners.
11. The various percentage ownership
interests in the limited partnership.
12. Whether any limited partner has obligated
his or her personal assets as a guarantee for the limited partnership or made
any loans to the limited partnership in any manner whatsoever.
13. The terms of any agreement that provides
for a buyout of a limited partner's interest in the event that a limited
partner is found unsuitable for licensing.
14. The presence or absence of any tax
benefits to the limited partner.
14.270
Post-approval monitoring after
approval of delayed licensing. The partnership agreement of a limited
partnership that seeks delayed licensing must contain language to the effect
that the licensing of any limited partner granted delayed licensing may be
activated at any time pursuant to this Rule. The granting of delayed licensing
to a limited partner by the Commission shall be a revocable approval. The
Commission shall not relinquish jurisdiction. Any limited partner receiving
approval for delayed licensing from the Commission has no legal vested right or
privilege inherent in that approval, nor shall the limited partners that have
been granted delayed licensing accrue any privilege from the licensing of the
limited partnership.
14.280
Powers of the Commission after delayed licensing approval. The
Commission may exercise, without limitation, any of the following powers:
1. After the granting of delayed licensing to
a limited partner, the Commission may activate the licensing process for any
limited partner granted delayed licensing if it determines that:
(a) A limited partner has thereafter
developed a material relationship with or to a general partner;
(b) A limited partner, individually or in
conjunction with other limited partners, has acquired the ability to exercise
significant control or influence over the management of the limited
partnership's gaming operations or business affairs;
(c) A limited partner, individually or in
conjunction with other limited partners, has exercised, for any reason,
significant control or influence over the management of the limited
partnership's gaming operations, either directly or indirectly, even if such
control is contemplated or authorized by the partnership agreement;
(d) There is reason to believe that a limited
partner cannot demonstrate his or her suitability;
(e) The aggregate effective ownership
percentage held by a limited partnership granted delayed licensing has
increased to more than 10 percent; or
(f) Any other cause it deems
reasonable.
2. The
Commission, after considering the recommendation of its Director or staff, may
activate the licensing process for any limited partner granted delayed
licensing at any time.
3. The
Commission may delegate to its Director or staff the authority to activate,
without Commission approval, the licensing process for any particular limited
partner granted delayed licensing.
4. The Commission may issue an order
requiring escrow of the funds, profits, or other monies due any limited partner
granted delayed licensing from the licensed limited partnership for any cause
deemed reasonable. Any such escrow ordered by the Commission automatically
terminates at the conclusion of the next regular Commission meeting unless:
(a) The Commission recommends that the
Commission activate the licensing process for the limited partner that is the
subject of the order;
(b) The
Commission continues discussion of whether it should recommend that the
licensing process be activated to a future meeting at the request of the
limited partner that is the subject of the order; or
(c) The Commission activates the licensing
process pursuant to a delegation of authority from the Commission under these
Rules.
5. Any escrow
ordered by the Commission pursuant to subsection 4 automatically terminates if
the Commission decides not to activate the licensing process for the limited
partner that is the subject of the order or if the Commission licenses the
limited partner.
14.290
Nontransferability of delayed licensing approval. Delayed
licensing approval shall be personal to the limited partnership or limited
partner granted delayed licensing. A limited partnership interest that is held
under delayed licensing may not be transferred, assigned, encumbered or
hypothecated in any manner without the prior approval of the Commission, upon
recommendation of the Commission.
14.300
Exclusion of public limited
partnerships. This Rule shall not apply to the limited partnership
interest or securities of, nor other interest in, any limited partnership
holding company that has been permitted to comply with the regulations
governing public limited partnerships, nor to its general partners, limited
partners, agents, employees, underwriters, lenders, and other holders of
evidence of indebtedness, as such.
14.310
Waiver of requirement of
Rule. The Commission may waive one or more requirements of these Rules
if it makes a written finding that such waiver is consistent with state policy.
RULE 15
LIMITED-LIABILITY COMPANY LICENSEES
15.010
Definitions. As used in
Rule 15:
1. "Articles of organization" means
the articles of organization filed with the secretary of state for the purpose
of forming a limited-liability company pursuant to Title 4, Chapter 32 of the
Arkansas Code Annotated.
2.
"Capital account" as reflected on the books of the limited-liability company
shall mean the member's initial and any subsequent contributions to the
limited-liability company; as increased by the member's pro rata share of net
income of the limited-liability company; and decreased by the member's pro rata
share of net losses incurred by the limited-liability company, as well as any
draws or distributions to a member of any kind or nature.
3. Unless otherwise specified, "Commission"
means the Arkansas Racing Commission or the Commission's designee.
4. "Contribution" means anything of value
which a person contributes to the limited-liability company as a prerequisite
for or in connection with membership, including cash, property, or services
rendered or a promissory note or other binding obligation to contribute cash or
property or to perform services.
5.
"Control," including the term "controlling," "controlled by" and "under common
control with," means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract, or
otherwise.
6. A "controlled
affiliate" of a specified person is another person which, directly or
indirectly, is controlled by the person specified.
7. A "controlling affiliate" of a specified
person is another person which, directly or indirectly, controls the person
specified.
8. "Delayed licensing"
means the approval granted by the Commission to a member of a limited-liability
company licensee, enabling the member to receive a share or percentage of
revenues derived from the conduct of gaming prior to the member being
licensed.
9. "Holding company"
means, in addition to any corporation, firm, partnership, limited partnership,
limited-liability company, trust or other form of business organization not a
natural person which, directly or indirectly:
(a) owns;
(b) has the power or right to control;
(c) holds with power to vote any
part of the limited partnership interests, interests in a limited-liability
company or outstanding voting securities of a corporation which holds or
applies for a license, a limitedliability company that owns or has the power or
right to control all or any part of the outstanding securities of a
limited-liability company that holds or applies for a state Casino
license.
10. "Interest in
a limited-liability company" means a member's share of the profits and losses
of a limited-liability company and the right to receive distributions of the
company's assets. The definition provided within this subsection is not
intended to be a definition of "Interest" for use in this or any Rule or
statute.
11. "Limited-liability
company" means a limited-liability company organized and existing pursuant to
the terms of Title 4, Chapter 32 of the Arkansas Code Annotated.
12. "Manager" means a person elected by the
members of a limited-liability company to manage the company pursuant to Title
4, Chapter 32.
13. "Member" means a
person who owns an interest in a limited-liability company.
14. "Member's interest" means a member's
share of the profits and losses of a limited-liability company and the right to
receive distributions of the limited-liability company's assets. The definition
provided within this subsection is not intended to be a definition of
"Interest" for use in this or any Rule or statute.
15. "Operating agreement" means any valid
written agreement of the members as to the affairs of a limited-liability
company and the conduct of its business.
16. "Own," "hold" and "have" mean the
possession of a record or beneficial interest in a limited-liability
company.
17. "Sale" or "sell"
includes every contract of sale or, contract to sell, or disposition of, a
security or interest in a security whether or not for value. "Sale" or "sell"
includes any exchange of an interest or securities and any material change in
the rights, preferences, privileges or restrictions of or on outstanding
interest or securities.
18. The
term "security" means any stock; membership in an incorporated association;
partnership interest in any limited or general partnership; interest in any
limited-liability company; bond; debenture or other evidence of indebtedness;
investment contract; voting trust certificate; certificate of deposit for a
security; or, in general, any interest or instrument commonly known as a
"security"; or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, or warrant or right to subscribe to or
purchase, any of the foregoing. All of the foregoing are securities whether or
not evidence of indebtedness reported under these Rules is a
security.
15.030
Powers of Commission. The Commission shall have full and absolute
power and authority, to the extent permitted by law, to recommend the granting,
denial, limitation, conditioning, restriction, revocation, or delay of any
license, registration, approval, or finding of suitability required or
permitted by this Rule, or any application therefor, or to recommend other
disciplinary action for any cause deemed reasonable by the Commission. The
Commission shall have full and absolute power and authority, to the extent
permitted by law, to grant, deny, condition, restrict, revoke, suspend, or
delay any license, registration, approval, or finding of suitability required
or permitted under these Rule, or any application therefor, or to take other
disciplinary action for any cause deemed reasonable by the
Commission.
15.040
Burden of
proof. The burden of proof with respect to the granting of any approval
required or permitted by these Rules is at all times upon the person applying
for such approval. Each applicant shall satisfy the Commission, as the case may
be, that the granting of an approval is consistent with the state policies
regarding gaming.
15.060
Ownership of limited-liability company licensees. Except as
otherwise provided by law, no person shall acquire any interest in or equity
security issued by a limited-liability company licensee or a holding company,
become a controlling affiliate of a limited-liability company licensee or a
holding company, become a holding company of a limited-liability licensee or of
a holding company without first obtaining the prior approval of the Commission
in accordance with these Rules.
15.065
Registration of certain members
of limited-liability companies.
1. All
members with a 5 percent or less ownership interest in a limited-liability
company licensee must register in that capacity with the Commission and
affirmatively state in writing that they submit to the Commission's
jurisdiction. Such registration must be made on forms prescribed by the
Commission. A member who is required to be registered by this section shall
apply for registration before the member obtains an ownership interest of 5
percent or less in a limited-liability company licensee.
2. If the Commission finds a member
unsuitable, denies an application of the member, or revokes an approval of the
member, the member and the limited-liability company shall comply with the
following:
a) If at any time the Commission
finds that a member is unsuitable to hold an interest in a limited-liability
company, the Commission shall immediately notify the limited-liability company
of that fact. The limited-liability company shall, within 10 days after it
receives the notice from the Commission, return to the member, in cash, the
amount of the member's capital account as reflected on the books of the
company.
b) Except as otherwise
provided in subsection 2(a), beginning on the date when the Commission serves
notice of a determination of unsuitability pursuant to subsection 2(a) upon the
limited-liability company, it is unlawful for the unsuitable member:
i. To receive any share of the distribution
of profits of the limited-liability company or any payments upon dissolution of
the company;
ii. To exercise any
voting right conferred by the member's interest in the limitedliability
company;
iii. To participate in the
management of the limited-liability company; or
iv. To receive any remuneration in any form
from the limited-liability company, for services rendered or
otherwise.
3.
An application for registration with the Commission shall:
(a) Include a completed application for
registration form as prescribed by the Commission;
(b) Include fully executed waivers and
authorizations as determined necessary by the Commission to investigate the
registrant;
(c) Include an
affirmative statement that the registrant submits to the jurisdiction of the
Commission;
(d) Include an
affirmative statement that the registrant has no intent to exercise control
over the licensee other than (i) to vote the registrant's shares in the
ordinary course; and (ii) if applicable, to take action in another licensed
capacity under Commission Rules that are not prohibited by any Commission
Rule;
(e) Include the fingerprints
of the registrant for purposes of investigating the registrant's criminal
history. Such fingerprints shall be provided in a form and manner acceptable to
the Commission. The Commission, in the Commission's sole and absolute
discretion, may waive this requirement upon a written request which
specifically sets out the reasons for the request for waiver;
(f) Be accompanied by a fee to cover
registration investigation costs as follows:
(1) For registrations related to 2 or fewer
restricted licenses, an investigative fee in the amount of [$550.00];
and
(2) For all other
registrations, an investigative fee in the amount of [$2,500.00].
This fee does not include the application fee or investigation costs
should the Commission require the registrant to apply for licensure;
and
(g) Include
such other information as the Commission may require.
4. The Commission may require a member who is
required to be registered by this section to apply for licensure at any time in
the Commission's discretion by sending notice through the United States Postal
Service to the registrant at the address on the registrant's registration on
file with the Commission and to the limited-liability company at the address on
file with the Commission. A member shall apply for licensure as required by the
Commission within 40 days of the member's receipt of notice. The notice shall
be deemed to have been received by the member 5 days after such notice is
deposited with the United States Postal Service with the postage thereon
prepaid.
5. Upon receipt of a
completed application for registration with the Commission, the application
shall be placed on an agenda for consideration by the Commission not later than
the first regular monthly Commission agenda following the expiration of 120
days after the Commission receives the completed application for registration
with the Commission.
(a) At the meeting in
which the Commission considers the application, it shall register the person
with the Commission, decline to register the person with the Commission, or
refer the application back to staff. At the meeting in which the Commission
considers the application, it may also recommend the Commission require the
person required to be registered by this section to apply for licensure. If the
Commission declines to register a person pursuant to this subsection, such
action in so declining to register a person with the Commission shall not be
considered a denial under the act.
(b) A person who has the person's application
for registration with the Commission declined or referred back to staff may
file an application for licensure even if not required to do so by the
Commission.
6. If a
member of a limited-liability company licensee is a holding company and is
required to register with the Commission under this section, the member is not
also required to register with the Commission as a subsidiary unless the
Commission requires the member to apply for licensure.
7. In enacting this Rule, the Commission
finds that waiver is appropriate to the extent required by this section. In
making this waiver, the Commission finds such waiver is consistent with the
state policy because such waiver is for purposes including but not limited to
fostering the growth of the gaming industry which is vitally important to the
economy of the State and the general welfare of its inhabitants and broadening
the opportunity for investment in gaming. The Commission further finds such
waiver does not diminish the Commission's roles in strictly regulating gaming
and effectively controlling the conduct of gaming by business organizations
because the Commission still require, at a minimum, registration with the
Commission of all persons involved with gaming and may call such persons
subject to registration with the Commission forward for licensure, registration
with the Commission, or findings of suitability.
8. Upon the Commission requiring a member who
is required to be registered by this section to apply for licensure, the member
does not have any right to the granting of the application. Any license
hereunder is a revocable privilege, and no holder acquires any vested right
therein or thereunder. Judicial review is not available for decisions of the
Commission made or entered under the provisions of this section.
15.070
Institutional
investor.
1. An institutional investor
that intends to become subject to Rules 15.060 and 15.190 as a result of its
ownership of an interest in or equity security issued by a limited liability
company licensee or a holding company, may apply to the Commission for a waiver
of the requirements of Rules 13.585.7-4, 13.585.7-5, 15.060 and 15.190 with
respect to the ownership of the interest in or equity securities issued by the
limited liability company licensee or a holding company if such institutional
investor intends to and does hold the interest or equity securities for
investment purposes only. An institutional investor shall not be eligible to
receive or hold a waiver if the institutional investor will own, directly or
indirectly, more than a 15 percent interest in or of the equity securities
issued by the limited liability company licensee or a holding company on a
fully diluted basis where any such interest or securities are to be acquired
other than through a debt restructuring. Limited liability company interests or
securities acquired before a debt restructuring and retained after a debt
restructuring or as a result of an exchange or conversion, after a debt
restructuring, of any securities issued to an institutional investor through a
debt restructuring, shall be deemed to have been acquired through a debt
restructuring. A waiver granted under this section shall be effective only as
long as the institutional investor's direct or indirect ownership interest in
or of the equity securities issued by a limited liability company meets the
limitations set forth above.
2. An
institutional investor shall not be deemed to hold an interest in or equity
security issued by a limited liability company licensee or a holding company,
for investment purposes only unless the interest or equity securities were
acquired and are held in the ordinary course of business as an institutional
investor, does not give the institutional investor management authority, and
does not, directly or indirectly, allow the institutional investor to vote for
the appointment of a manager, cause any change in the articles of organization,
operating agreement, other organic document, management, polices or operations
of the limited liability company licensee or the holding company, or cause any
other action which the Commission finds to be inconsistent with investment
purposes only. The following activities shall not be deemed to be inconsistent
with holding an interest or equity securities for investment purposes only:
(a) Serving as a member of any committee of
creditors or security or interest holders in connection with a debt
restructuring;
(b) Nominating any
candidate for election or appointment to a Commission or the equivalent in
connection with a debt restructuring;
(c) Making financial and other inquires of
management of the type normally made by securities analyst for informational
purposes and not to cause a change in its management, policies or operations;
and
(d) Such other activities as
the Commission may determine to be consistent with such investment
intent.
3. An application
for a waiver must include:
(a) A description
of the institutional investor's business and a statement as to why the
institutional investor is within the definition of "institutional investor" set
forth in section 11 of this Rule.
(b) A certification made under oath and the
penalty of perjury, that:
(1) The interest in
or equity securities of the limited liability company licensee or the holding
company will be acquired and held for investment purposes only as defined in
these Rules and a statement by the signatory explaining the basis of the
signatory's authority to sign the certification and to bind the institutional
investor to its terms.
(2) The
applicant agrees to be bound by and comply with the Amendment and the Rules
adopted thereunder, to be subject to the jurisdiction of the courts of
Arkansas, and to consent to Arkansas as the choice of forum in the event any
dispute, question, or controversy arises regarding the application or any
waiver granted under this section.
(3) The applicant agrees that it shall not
grant an option to purchase, or sell, assign, transfer, pledge or make any
other disposition of any interest in or equity security issued by the limited
liability company licensee or the holding company without the prior approval of
the Commission.
(c) A
description of all actions, if any, taken or expected to be taken by the
institutional investor relating to the activities described in these
Rules.
(d) The name, address,
telephone number and social security number of the officers and directors, or
their equivalent, of the institutional investor as well as those persons that
have direct control over the institutional investor's holdings of an interest
in or equity securities of the limited liability company licensee or the
holding company.
(e) The name,
address, telephone number and social security or federal tax identification
number of each person who has the power to direct or control the institutional
investor's exercise of its rights as a holder of the interest in or equity
securities of the limited liability company licensee or the holding
company.
(f) The name of each
person that beneficially owns more than 5 percent of the institutional
investor's voting securities or other equivalent.
(g) A list of the institutional investor's
affiliates.
(h) A list of all
regulatory agencies with which the institutional investor or any affiliate that
owns any voting or equity securities or any other interest in a company which
is licensed or registered with the Arkansas Racing Commission files periodic
reports, and the name, address, and telephone number of the person, if known,
to contact at each agency regarding the institutional investor.
(i) A disclosure of all criminal or
regulatory sanctions imposed during the preceding 10 years and of any
administrative or court proceedings filed by any regulatory agency during the
preceding 5 years against the institutional investor, its affiliates, and
current officer or director, or any former officer or director whose tenure
ended within the preceding 12 months. As to a former officer or director, such
information need be provided only to the extent that it relates to actions
arising out of or during such person's tenure with the institutional investor
or its affiliates.
(j) Any
additional information the Commission may request.
4. The Commission shall consider all relevant
information in determining whether to grant a waiver requested pursuant to
subsection 1, including but not limited to:
(a) Whether the waiver is consistent with the
policy set forth in these Rules; and
(b) Any views expressed to the Commission by
the limited liability company licensee or affiliate thereof.
5. Any waiver granted pursuant to
this section may be limited or conditioned in any respect by the Commission,
including, but not limited to, requiring a certification, made under oath and
the penalty of perjury, which contains the following:
(a) A statement attesting that the
institutional investor holds and/or has held the interest in or equity
securities issued by the limited liability company licensee or the holding
company for (1) investment purposes only, and (2) in the ordinary course of
business as an institutional investor and not for the purpose of (A) causing,
directly or indirectly, the appointment of any manager(s), or (B) effecting any
change in the articles of organization, operating agreement, other organic
document, management, policies or operations of the limited liability company
licensee or any of its affiliates.
(b) A statement that the institutional
investor has not engaged in any activities inconsistent with the holding of an
interest in or equity securities of a limited liability company licensee for
investment purposes only in accordance with the provisions of section 2
hereof.
(c) The name, title and
telephone number of the persons having direct control over the institutional
investor's holdings of an interest in or equity securities issued by the
limited liability company licensee or the holding company.
(d) A statement of all complaints, arrests,
indictments or convictions of any officer or director of the institutional
investor regarding the rules and regulations of the Securities and Exchange
Commission and any regulatory agency of any State where it conducts business,
or any offense which would constitute a gross misdemeanor or felony if
committed in the State of Arkansas. The name, position, charge, arresting
agency, and a brief description of the event must also be included in the
statement.
(e) A statement
indicating any change to the structure and/or operation of the institutional
investor which could affect its classification as an institutional investor as
defined within these Rules.
6. An institutional investor that has been
granted a waiver of licensing, registration or finding of suitability as
required by these Rules and that subsequently intends not to hold its interest
in or equity securities issued by the limited liability company licensee or the
holding company for investment purposes only, or that intends to take any
action inconsistent with its prior intent shall, within 2 business days after
its decision, deliver notice to the Commission in writing of the change in its
investment intent. The Commission may then take such action under these Rules,
or any other provision of the Amendment or Rules of the Commission as the
Commission deems appropriate.
7. A
waiver that has been granted pursuant to this section and these Rules shall
subject the institutional investor to requirements similar to those found
within these Rules, as applicable, in that any purported sale, assignment,
transfer, pledge or other disposition of any interest in or equity security
issued by the limited liability company licensee or the holding company, or the
granting of an option to purchase such an interest or equity security, shall be
void unless approved in advance by the Commission.
8. The institutional investor shall be
entitled to whatever economic advantage, including, but not limited to,
distributions of profits, that may flow from ownership of the interest or
equity securities as though it has been licensed, registered or found
suitable.
9. If the Commission
finds that an institutional investor has failed to comply with the provisions
of this section, or should be subject to licensing, registration, finding of
suitability or any approval to protect the public interest, the Commission may,
in accordance with these Rules or any other provision of the Amendment or Rules
of the Commission the Commission deems appropriate, require the institutional
investor to apply for licensing, registration or a finding of suitability. The
institutional investor affected by the action taken by the Commission may
request a hearing on the merits of such action. The hearing shall be included
on the agenda of the next regularly scheduled Commission meeting occurring more
than 10 working days after the request for hearing. Upon good cause shown by
the institutional investor, the Commission may waive the 10-day requirement and
place such hearing on an earlier Commission agenda. The Commission, for any
cause deemed reasonable, may by a majority vote, sustain, modify or reverse the
decision of the Commission, or remand the matter to the Commission for such
further investigation and reconsideration as the Commission may order. While
the application for licensure, registration or a finding of suitability review
of the Commission's action requiring the filing of such application is pending,
the institutional investor shall not directly or indirectly, cause or attempt
to cause any management, policy, or operating changes in the limited liability
company licensee or the holding company.
10. The limited liability company licensee or
the holding company shall immediately notify the Commission of any information
about, fact concerning or actions of, an institutional investor holding any
interest in or equity securities of the limited liability company licensee or
the holding company, that may materially affect the institutional investor's
eligibility to hold a waiver under this section.
11. For purposes of this Rule "institutional
investor" shall have the meaning set forth in these Rules and "debt
restructuring" shall have the meaning set forth in these Rules.
15.110
Required provisions
in articles of organization. The following provisions must be included
in the articles of organization of every limited-liability company that
receives a state Casino license:
1. A purpose
clause containing language substantially as follows:
The character and general nature of the business to be conducted by the
limitedliability company is to operate, manage, and conduct gaming in a gaming
casino on or within the premises known as _________________ and located at
_________________.
2. The
articles of organization shall include language substantially as follows:
Notwithstanding anything to the contrary expressed or implied in these
articles, the sale, assignment, transfer, pledge or other disposition of any
interest in the limited-liability company is ineffective unless approved in
advance by the commission. If at any time the commission finds that a member
who owns any such interest is unsuitable to hold that interest, the commission
shall immediately notify the limited-liability company of that fact. The
limited-liability company shall, within 10 days from the date that it receives
the notice from the commission, return to the unsuitable member the amount of
the unsuitable member's capital account as reflected on the books of the
limited-liability company. Beginning on the date when the commission serves
notice of a determination of unsuitability, pursuant to the preceding sentence,
upon the limited-liability company, it is unlawful for the unsuitable member:
(a) To receive any share of the distribution
of profits or cash or any other property of, or payments upon dissolution of,
the limited-liability company, other than a return of capital as required
above;
(b) To exercise directly or
through a trustee or nominee, any voting right conferred by such
interest;
(c) To participate in the
management of the business and affairs of the limited-liability company;
or
(d) To receive any remuneration
in any form from the limited-liability company, for services rendered or
otherwise.
3. The
articles of organization shall include language substantially as follows:
Any member that is found unsuitable by the commission shall return all
evidence of any ownership in the limited-liability company to the
limited-liability company, at which time the limited-liability company shall
within 10 days, after the limited-liability company receives notice from the
commission, return to the member in cash, the amount of the member's capital
account as reflected on the books of the limited-liability company, and the
unsuitable member shall no longer have any direct or indirect interest in the
limited-liability company.
15.120
Public offerings by
limited-liability company licensees and holding companies. No
limited-liability company licensee and no holding company shall make a public
offering of interests or securities of a limited-liability company licensee or
of a holding company except as is permitted by, and in accordance with, these
Rules.
15.130
Assignment of
interest in a security. The purported sale, assignment, transfer,
pledge, exercise of an option to purchase, including any transfer, whether or
not for value, of any interest in the profits or proceeds realized from the
holding or disposition of a security, or other disposition of any interest in a
limited-liability company which holds a state gaming license or which is a
holding company or an intermediary company for an entity that holds a state
gaming license is void unless approved in advance by the Commission.
15.140
Procedure for obtaining approval
for transfer of interests. The provisions of these Rules shall govern
all transfers for which approval is required.
15.150
Persons who may be determined to
be unsuitable. If at any time the Commission finds that an individual
owner of any such interest is unsuitable to hold that interest, the Commission
shall immediately notify the limited-liability company of that fact. The
limitedliability company shall, within 10 days after the date that it receives
the notice from the Commission, return to the unsuitable owner, in cash, the
amount of the unsuitable owner's capital account as reflected on the books of
the company. Without in any manner limiting the foregoing, the following
persons may be determined to be unsuitable:
1.
Any person who, having been notified by the member, the Commission, or the
Commission of the requirement that such persons be licensed, fails, refuses, or
neglects to apply for such licensing within 30 days after being requested to do
so by the Commission.
2. Any record
holder of a security issued by a limited-liability company licensee or a
holding company who fails, refuses, or neglects, upon request of the
Commission, to furnish to the Commission within 30 days after such request,
full, complete, and accurate information as to the owner of any beneficial
interest in such security.
3. Any
record owner of a security that is beneficially owned, in whole or in part, by
a person determined to be unsuitable by the Commission.
15.160
Limited-liability company
non-compliance. Whenever the Commission determines that the public
interest will be served by requiring any or all of the limited-liability
company's lenders, holders of evidences of indebtedness, underwriters, key
executives and agents, employees or other persons dealing with the
limited-liability company and having the power to exercise a significant
influence over decisions by the limited-liability company to be licensed, the
Commission shall serve a notice of such determination upon the
limited-liability company either personally or by certified mail. If the person
or entity that is the subject of such determination shall not have, within 30
days following the receipt of such notice, applied for a license, the limited
partnership may be deemed to have failed to comply.
15.170
Approval by Commission required
for all issues or transfers by a holding company of its securities. No
holding company shall issue or transfer any security or member's interest of
which it or its controlled affiliate is the issuer without the prior approval
of the Commission. As used herein, the terms "issue or transfer" extend to
transactions involving any type of ownership referred to in these
Rules.
15.180
Commission
approval required for dispositions of outstanding securities issued by holding
companies. No person other than the issuer shall sell, assign, transfer,
pledge or make any other disposition of any interest in or security issued by
any holding company without prior approval of the Commission. As used herein,
the terms "sale, assignment, transfer, pledge or other disposition" extend to
dispositions of any type of ownership referred to in these Rules.
15.190
Licensing of managers and
members of limited-liability company holding companies.
1. Except as otherwise provided in this
section, each manager of a limited-liability company holding company must be
licensed. Each member of a limited-liability company holding company must be
licensed if the member owns more than 5 percent of any licensee owned by the
limitedliability company holding company, except to the extent delayed
licensing is approved by the Commission. For the purposes of this section,
"own" means the possession of a record or beneficial interest in any business
organization.
2. All members which
own 5 percent or less of any licensee owned by the limited-liability company
holding company must register in that capacity with the Commission and
affirmatively state in writing that they submit to the Commission's
jurisdiction. Such registration must be made on forms prescribed by the
Commission. A member who is required to be registered by this section shall
apply for registration before the member obtains an ownership interest in the
limited-liability company holding company.
3. A manager of a limited-liability company
holding company is not required to be licensed and must register in that
capacity with the Commission if the limited-liability company holding company
is not, directly or indirectly, a general partner or manager of any licensee
and does not control any licensee. A manager who is required to be registered
by this section shall apply for registration within 30 days after the manager
assumes office.
4. If the
Commission finds a member or manager unsuitable, denies an application of the
member or manager, or revokes an approval of the member or manager, the member,
manager, and the limited-liability company holding company shall comply with
the following:
a) If at any time the
Commission finds that any person owning, controlling or holding with power to
vote any part of any class of security of, or any interest in, any holding
company or intermediary company is unsuitable to be connected with a licensed
gaming enterprise, it shall so notify the unsuitable person, the holding
company or intermediary company, or both. The unsuitable person shall
immediately offer the security to the issuing corporation, or the interest to
the firm, partnership, trust or other business organization, for purchase. The
corporation shall purchase the security so offered, or the firm, partnership,
trust or other business organization shall purchase the interest so offered,
for cash at fair market value within 10 days after the date of the
offer.
b) Beginning upon the date
when the Commission serves notice of a determination of unsuitability, it is
unlawful for the unsuitable person:
i. To
receive any dividend or interest upon any such securities, or any dividend,
payment or distribution of any kind from any holding company or intermediary
company;
ii. To exercise, directly
or indirectly or through any proxy, trustee or nominee, any voting right
conferred by such securities or interest; or
iii. To receive any remuneration in any form
from the corporation, partnership, limited partnership, limited-liability
company or other business organization holding a license or from any holding
company or intermediary company with respect thereto, for services rendered or
otherwise.
If any officer, employee, director, partner, principal, manager,
member, trustee or direct or beneficial owner required to be found suitable
fails to apply for a finding of suitability or a gaming license within 30 days
after being requested so to do by the Commission, is not found suitable or is
denied a license by the Commission, or if his or her license or the finding of
his or her suitability is revoked after appropriate findings by the Commission,
the holding company or intermediary company, or both, shall immediately remove
that person from any position in the administration or supervision of, or any
other significant involvement with, the activities of a licensee. If the
Commission suspends the suitability or license of any officer, employee,
director, partner, principal, manager, member, trustee or owner, the holding
company or intermediary company, or both, shall, immediately and for the
duration of the suspension, suspend the person from performing any duties in
administration or supervision of the activities of the licensee and from any
other significant involvement therewith.
5. An application for registration with the
Commission shall:
(a) Include a completed
application for registration form as prescribed by the Commission;
(b) Include fully executed waivers and
authorizations as determined necessary by the Commission to investigate the
registrant;
(c) Include an
affirmative statement that the registrant submits to the jurisdiction of the
Commission;
(d) Include an
affirmative statement that the registrant has no intent to exercise control
over the licensee other than (i) to vote the registrant's shares in the
ordinary course; and (ii) if applicable, to take action in another licensed
capacity under Commission Rules that are not prohibited by any Commission
Rule;
(e) Include the fingerprints
of the registrant for purposes of investigating the registrant's criminal
history. Such fingerprints shall be provided in a form and manner acceptable to
the Commission. The Commission, in the Commission's sole and absolute
discretion, may waive this requirement upon a written request which
specifically sets out the reasons for the request for waiver;
(f) Be accompanied by a fee to cover
registration investigation costs as follows:
(1) For registrations related to 2 or fewer
restricted licenses, an investigative fee in the amount of [$550.00];
and
(2) For all other
registrations, an investigative fee in the amount of [$2,500.00].
This fee does not include the application fee or investigation costs
should the Commission require the registrant to apply for licensure;
and
(g) Include
such other information as the Commission may require.
6. The Commission may require a member or
manager who is required to be registered by this section to apply for licensure
at any time in the Commission's discretion by sending notice through the United
States Postal Service to the registrant at the address on the registrant's
registration on file with the Commission and to the limited-liability company
holding company at the address on file with the Commission. A member or manager
shall apply for licensure as required by the Commission within 40 days of the
member or manager's receipt of notice. The notice shall be deemed to have been
received by the member or manager 5 days after such notice is deposited with
the United States Postal Service with the postage thereon prepaid.
7. Upon receipt of a completed application
for registration with the Commission, the application shall be placed on an
agenda for consideration by the Commission not later than the first regular
monthly Commission agenda following the expiration of 120 days after the
Commission receives the completed application for registration with the
Commission.
(a) At the meeting in which the
Commission considers the application, it shall register the person with the
Commission, decline to register the person with the Commission, or refer the
application back to staff. At the meeting in which the Commission considers the
application, it may also recommend the Commission require the person required
to be registered by this section to apply for licensure. If the Commission
declines to register a person pursuant to this subsection, such action in so
declining to register a person with the Commission shall not be considered a
denial under the act.
(b) A person
who has the person's application for registration with the Commission declined
or referred back to staff may file an application for licensure even if not
required to do so by the Commission.
8. If a member or manager of a
limited-liability company holding company is also a holding company and is
required to register with the Commission under this section, the member or
manager is not also required to register with the Commission as a subsidiary
unless the Commission requires the member or manager to apply for
licensure.
9. In enacting this
Rule, the Commission finds that waiver is appropriate to the extent required by
this section. In making these waivers, the Commission finds such waivers are
consistent with state policy because such waivers are for purposes including
but not limited to fostering the growth of the gaming industry which is vitally
important to the economy of the State and the general welfare of its
inhabitants and broadening the opportunity for investment in gaming. The
Commission further finds such waivers do not diminish the Commission's roles in
strictly regulating gaming and effectively controlling the conduct of gaming by
business organizations because the Commission still require, at a minimum,
registration with the Commission of all persons involved with gaming and may
call such persons subject to registration with the Commission forward for
licensure, registration with the Commission, or findings of
suitability.
10. Upon the
Commission requiring a member or manager who is required to be registered by
this section to apply for licensure, the member or manager does not have any
right to the granting of the application. Any license hereunder is a revocable
privilege, and no holder acquires any vested right therein or thereunder.
Judicial review is not available for decisions of the Commission made or
entered under the provisions of this section.
15.200
Certain payees required to be
found suitable, licensed or approved. The Commission may require any
person who receives payments from a limited-liability company holding company
computed on the basis of earnings or profits of the holding company or on the
basis of receipts from gaming of the subsidiary limited-liability company
licensee of such holding company to be found suitable, licensed or
approved.
15.210
Delayed
licensing for members. Pursuant to the provisions of these Rules, the
Commission may waive licensing of members and, in lieu thereof, grant approval
of delayed licensing for any member.
15.220
Eligibility for delayed
licensing.
1. A limited-liability
company that has filed an application to be registered with the Commission may
file an application for approval of delayed licensing of its members.
2. Only members whose aggregate effective
ownership percentage in the limited-liability company is no more than 10
percent will be considered for delayed licensing approval. For purposes of
determining aggregate effective ownership percentage, a natural person who is
part of a legal entity that is a member shall be deemed to have the percentage
ownership interest held by the legal entity.
3. Neither a member having management
authority or responsibility nor a manager is eligible for delayed
licensing.
4. A limited-liability
company seeking delayed licensing of its members shall apply for a ruling from
the Commission, upon recommendation from the Commission, that it is eligible
for delayed licensing of its members. Such application may be made at the same
time that the limited-liability company applies for state Casino license or
registers with the Commission, and must include the information from members
required by these Rules.
15.225
Application for delayed
licensing by individual members. Once a limited-liability company has
been held eligible for delayed licensing pursuant to these Rules, each member
seeking delayed licensing shall file an application for delayed licensing
pursuant to these Rules. A member may file an application for delayed licensing
prior to the Commission's ruling on the eligibility of the limited-liability
company, but the application will not be considered by the Commission until the
Commission rules that the limited-liability company is eligible for delayed
licensing.
15.230
Procedure
for consideration of application for delayed licensing. Any application
for delayed licensing, whether by the limited-liability company pursuant to
these Rules, or by any individual member pursuant to these Rules, shall be made
to the Commission on forms furnished by the Commission and in accordance with
these Rules. The Commission shall investigate the applicant and act upon the
application pursuant to these Rules.
15.240
Information to be provided by
applicant for delayed licensing. In addition to filing a completed
personal history record and personal financial questionnaire, along with all
required releases and fingerprint cards, each member applying for approval of
delayed licensing shall provide the following information:
1. A listing of any other business interest
between the applicant and a manager existing prior to, at the time of, or after
the formation of the limited-liability company.
2. Whether the applicant has a familial
relationship, either by blood, marriage or adoption, with a manager of the
limited-liability company.
3. A
certification that the applicant does not have and will not have a material
relationship to, or a material involvement with, a manager of the
limited-liability company with respect to the gaming operations of the
limited-liability company, except in another licensed capacity under Commission
Rules in accordance with Commission Rules. A person may be deemed to have a
material relationship to, or a material involvement with, a manager if the
person is a stockholder, controlling person or key employee of a legal entity
that is a manager, or if the person, as an agent, consultant, advisor or
otherwise, exercises a significant influence upon the management or affairs of
such manager.
15.250
Effect of the Commission's ruling on a limited-liability company's
application for delayed licensing. If the Commission rules that a
limited-liability company is eligible for delayed licensing of its members, the
Commission shall direct the Commission, based upon such investigation as the
Commission deems appropriate, to recommend to the Commission which of the
members who have applied for delayed licensing, if any, should be granted
delayed licensing.
15.260
Standards. The Commission shall consider all relevant material
facts in determining whether to grant an approval of delayed licensing to a
limited-liability company, and thereafter to a member, as permitted by this
Rule. The Commission may consider the effects of the action or approval
requested by the applicant, the benefits to the State of Arkansas, and whatever
other facts are deemed relevant, including, but not limited to, the following:
1. Whether the applicant, either individually
or in conjunction with other members, has any direct or indirect control or
significant influence over a manager or over the management of the
limited-liability company's business or gaming operations, or the ability to
acquire such control. The limited-liability company's operating agreement will
be scrutinized to determine if it has clear and specific provisions covering
the following:
(a) Restricting the priority
rights with respect to income, losses, or other distributions, whether during
the term of the limited-liability company or upon its dissolution, of members
seeking delayed licensing;
(b)
Vesting the managers or the members with the sole and exclusive right to manage
and control the limited-liability company's business;
(c) Defining the scope of the manager's
authority and any limitations thereon;
(d) Restricting the right of members to
remove or elect managers, except to the extent necessary to elect a manager
pursuant to state or federal law, or these Rules, or upon the retirement, death
or disability of a manager who is a natural person; and
(e) Whether any additional assessment or
capital contribution can be required of the members.
2. Whether the applicant has, or has had, a
material relationship with a manager. Applicants who have a familial
relationship, either by blood, marriage or adoption, to a manager, may be
deemed to have such a material relationship.
3. The communality of other business
interests between a manager and any member prior to, or existing at, formation
of the limited-liability company.
4. Whether the applicant had a key role in
forming the limited-liability company.
5. The relative level of risk for each
manager.
6. The business probity of
each manager, in gaming or otherwise.
7. The presence or absence of restrictions on
the members.
8. Whether a
substantial portion of the assets of the limited-liability company were owned
by only one or more members prior to formation of the limited-liability
company.
9. Whether substantial
proportion of the depreciable assets involved in the proposed gaming operation
will be owned by the limited-liability company.
10. The number of persons and entities
involved in the limited-liability company. The Commission will not ordinarily
grant delayed licensing status to a limited-liability company with fewer than
25 members.
11. The various
percentage ownership interests in the limited-liability company.
12. Whether any member has obligated his or
her personal assets as a guaranty for the limited-liability company or made any
loans to the limited-liability company in any manner whatsoever.
13. The terms of any agreement that provides
for a buyout of a member's interest in the event that a member is found
unsuitable for licensing.
14. The
presence or absence of any tax benefit to the member.
15.270
Post-approval monitoring after
approval of delayed licensing. The operating agreement of a
limited-liability company that seeks delayed licensing must contain language to
the effect that the licensing of any member granted delayed licensing may be
activated at any time pursuant to this Rule. The granting of delayed licensing
to a member by the Commission shall be a revocable approval. The Commission
shall not relinquish jurisdiction. Any member receiving approval for delayed
licensing from the Commission has no legal vested right or privilege inherent
in that approval, nor shall the members that have been granted delayed
licensing accrue any privilege from the licensing of the limited-liability
company.
15.280
Powers of the
Commission after delayed licensing approval. The Commission may
exercise, without limitation, any of the following powers.
1. After the granting of delayed licensing to
a member, the Commission may at any time activate the licensing process for any
member granted delayed licensing if it determines that:
(a) A member has thereafter developed a
material relationship with or to a manager;
(b) A member, individually or in conjunction
with other members, has acquired the ability to exercise significant control or
influence over the management of the limited-liability company's gaming
operations or business affairs;
(c)
A member, individually or in conjunction with other members, has exercised, for
any reason, significant control or influence over the management of the
limited-liability company's gaming operations, either directly or indirectly,
even if such control is contemplated or authorized by the operating
agreement;
(d) There is reason to
believe that a member cannot demonstrate his or her suitability;
(e) The aggregate effective ownership
percentage held by a member granted delayed licensing has increased to more
than 10 percent;
(f) There is a
change in the manager, except upon the retirement, death or disability of a
manager who is a natural person; or
(g) Any other cause it deems
reasonable.
2. The
Commission may activate the licensing process for any member granted delayed
licensing at any time.
3. The
Commission may delegate to its Director or staff the authority to activate,
without Commission approval, the licensing process for a particular member who
has been granted delayed licensing.
4. The Commission may issue an order
requiring escrow of the funds, profits, or other moneys due any member granted
delayed licensing from the licensed limited-liability company for any cause
deemed reasonable. Any such escrow ordered by the Commission automatically
terminates at the conclusion of the next regular Commission meeting unless:
(a) The Commission recommends that the
Commission activate the licensing process for the member that is the subject of
the order;
(b) The Commission
continues discussion of whether it should recommend that the licensing process
be activated to a future meeting at the request of the member that is the
subject of the order; or
(c) The
Commission activates the licensing process pursuant to a delegation of
authority from the Commission under these Rules.
5. Any escrow ordered by the Commission
pursuant to subsection 4 automatically terminates if the Commission decides not
to activate the licensing process for the member that is the subject of the
order or if the Commission licenses the member.
15.290
Non-transferability of delayed
licensing approval. Delayed licensing approval shall be personal to the
limited-liability company or member granted delayed licensing. An interest in a
limited-liability company that is held under delayed licensing may not be
transferred, assigned, encumbered or hypothecated in any manner without the
prior approval of the Commission, upon recommendation of the
Commission.
15.300
Exclusion
of public limited-liability companies. This Rule shall not apply to an
interest in a limited-liability company or securities of, nor other interest
in, any limited-liability company holding company that has been permitted to
comply with public limited-liability companies, inclusive, nor to its managers,
members, agents, employees, underwriters, lenders, and other holders of
evidence of indebtedness, as such.
15.310
Waiver of requirement of
Rule. The Commission may waive one or more requirements of this Rule if
it makes a written finding that such waiver is consistent with state policy.
RULE 16
PRIVATE INVESTMENT COMPANIES
16.010
Definitions. As used in
Rule 16:
1. "Private investment company" means
any privately held legal entity except a natural person which holds or applies
for a license, or owns, directly or indirectly, a beneficial interest in any
corporation, firm, partnership, limited partnership, limited-liability company,
trust or other form of business organization which holds or applies for a
license, and which has the following characteristics:
(a) 100% of the economic securities of the
company are held, directly or indirectly, by (i) one or more private investment
funds that are managed by an investment manager or managers, which investment
manager or managers collectively have more than one billion dollars in assets
under management or (ii) one or more institutional investors as defined in
these Rules that each has assets of more than one billion dollars;
(b) 100% of the voting securities of the
company are held by one or more legal entities that is controlled by one or
more controlling persons or key executives of the investment managers or
institutional investors; and
(c)
The company is not a "publicly traded corporation" or has received Commission
approval to convert its registration from a publicly traded corporation to a
private investment company.
The Commission may waive or modify one or more of the characteristics
above for reasons consistent with these Rules.
2. "Affiliate" or "affiliated company" means
a subsidiary company, holding company, intermediate company or any other form
of business organization that controls, is controlled by or is under common
control with a private investment company.
3. "Control," when used as a noun, means the
possession, direct or indirect, of the power to direct or cause the direction
of management and policies of a person, and when used as a verb means to
possess, directly or indirectly, such power.
4. "Controlling person" means, with respect
to a private investment company, each person who controls the private
investment company.
5. "Economic
security" means a non-voting interest which entitles the holder to the economic
benefits, without the right to control or vote, of a corporation, firm,
partnership, limited partnership, limited-liability company, trust or other
form of business organization.
6.
"Holding company" defined.
(a) "Holding
company" means any corporation, firm, partnership, limited partnership,
limited-liability company, trust or other form of business organization not a
natural person which, directly or indirectly:
(1) Owns;
(2) Has the power or right to control;
or
(3) Holds with power to vote,
any part of the limited partnership interests, interests in a limited-liability
company or outstanding voting securities of a private investment
company
(b) For purposes
of this section, in addition to any other reasonable meaning of the words used,
a holding company "indirectly" has, holds or owns any power, right or security
mentioned in subsection (a) if it does so through any interest in a subsidiary
or successive subsidiaries, however many such subsidiaries may intervene
between the holding company and the private investment company.
7. "Intermediary company" means
any corporation, firm, partnership, limited partnership, limited-liability
company, trust or other form of business organization other than a natural
person which:
(a) Is a holding company with
respect to private investment company; and
(b) Is a subsidiary with respect to any
holding company.
8. "Key
executive" means any person performing a principal business or policy making
function for a business organization, as determined by the Commission on a case
by case basis.
9. "Person" means
any natural person, corporation, firm, partnership, limited partnership,
limited-liability company, trust or other form of business organization,
whether or not a legal entity.
10.
"Private investment fund" means a business entity exempted from registration
under
15 USC §
80a-3(c).
11. "Subsidiary" means: any corporation,
firm, partnership, limited partnership, limitedliability company, trust or
other form of business organization not a natural person, any interest in which
is:
(a) Owned;
(b) Subject to a power or right of control;
or
(c) Held with power to vote, by
a holding company or intermediary company.
12. "Voting security" means an interest which
entitles the holder to vote for the election of a member or members of the
board of directors or board of trustees of a corporation or a comparable person
or persons in the case of a partnership, limited-liability company, or other
form of business organization.
16.020
Powers of Commission. The
Commission shall have full and absolute power and authority, to the extent
permitted by law, to recommend the granting, denial, limitation, conditioning,
restriction, revocation, or delay of any license, registration, approval, or
finding of suitability required or permitted by this Rule, or any application
therefor, or to recommend other disciplinary action for any cause deemed
reasonable by the Commission. The Commission shall have full and absolute power
and authority, to the extent permitted by law, to grant, deny, condition,
restrict, revoke, suspend, or delay any license, registration, approval, or
finding of suitability required or permitted under this Rule, or any
application therefor, or to take other disciplinary action for any cause deemed
reasonable by the Commission.
16.030
Burden of proof. The
burden of proof with respect to the granting of any approval required or
permitted by this Rule is at all times upon the person applying for such
approval. Each applicant shall satisfy the Commission, as the case may be, that
the granting of an approval is consistent with the state policies regarding
gaming set forth in these Rules.
16.040
Exemptions from certain
requirements. Except as otherwise set forth herein, private investment
companies are exempt from the requirements of these Rules. However, the legal
entities that own the voting securities of the private investment company shall
be registered and found suitable by the Commission as holding companies and
shall be subject to Rules 7, 13.585.7-1 to 13.585.7-7, 14.170 to 14.190, and
15.170 to 15.190.
16.050
Private investment companies owning or controlling applicant or licensee;
Duties and power of Commission to investigate.
1. If a corporation, partnership, limited
partnership, limited-liability company or other business organization applying
for or holding a state Casino license is, or becomes owned or controlled, in
whole or in part, by a private investment company, or if a private investment
company applies for or holds a state Casino license, the private investment
company shall:
(a) Maintain a ledger in its
principal office or the principal office of its subsidiary which is licensed to
conduct gaming in this state, which must:
(1)
Reflect the ownership of record of each holder of economic securities and
voting securities in the private investment company; and
(2) Be available for inspection by the
Commission and their authorized agents at all reasonable times without
notice.
(b) Subject to
subsection (d) below, register with the Commission and provide the following
information to the Commission:
(1) The
organization, financial structure and nature of the business of the private
investment company, including the names of all key executives and employees
actively and directly engaged in the administration or supervision of the
activities of the Casino licensee, and the names, addresses and percentage
ownership interest held of record by each economic security holder and each
voting security holder;
(2) The
rights and privileges accorded the holders of different classes of its
authorized economic securities and voting securities;
(3) The terms on which its economic
securities and voting securities are to be, and during the preceding three
years have been, offered by the private investment company to the public or
otherwise initially issued by it;
(4) The terms and conditions of all its
outstanding loans, mortgages, trust deeds, pledges or any other indebtedness or
security device, directly relating to the gaming activities of the Casino
licensee;
(5) The extent of the
economic securities and voting securities of record in the private investment
company held by all key executives and any employees, and any payment received
by any such persons from the private investment company for each of its three
preceding fiscal years for any reason whatever;
(6) Remuneration exceeding [$100,000] per
annum to persons other than key executives and employees who are actively and
directly engaged in the administration or supervision of the gaming activities
of the Casino licensee;
(7) Bonus
and profit-sharing arrangements of the private investment company directly or
indirectly relating to the gaming activities of the Casino licensee;
(8) Management and service contracts of the
private investment company directly or indirectly relating to the gaming
activities of the Casino licensee;
(9) Options existing or from time to time
created in respect of its economic securities and voting securities;
(10) Balance sheets, certified by independent
public accountants, for at least the three preceding fiscal years, or if the
private investment company is less than three years old, balance sheets from
the time of its formation;
(11)
Profit and loss statements, certified by independent certified public
accountants, for at least the three preceding fiscal years, or, if the private
investment company is less than three years old, profit and loss statements
from the time of its formation;
(12) A description of the private investment
company's affiliated companies and intermediary companies, and the various
Casino licenses and approvals obtained by those entities; and
(13) Any further information within the
knowledge or control of the private investment company which either the
Commission may deem necessary or appropriate for the protection of this state,
or licensed gambling, or both. The Commission may make such investigation of
the private investment company or any of its key executives, interest holders
or other persons associated therewith as it deems necessary.
(c) Upon request of the
Commission, furnish to the Commission a non-interference letter, in a form
acceptable to the Commission, which provides that the investment managers and
institutional investors described in these Rules will not take any action to
influence the controlling persons or key executives described in these Rules,
as applicable, in the exercise of their management or voting rights in respect
of the gaming activities of the private investment company or any of its
affiliated, intermediary or subsidiary companies, and that such controlling
persons or key executives, as applicable, are authorized to exercise such
rights independently of, and without consultation with, the investment managers
and institutional investors.
(d) A
private investment company registered with the Commission as a publicly traded
corporation will be considered registered for purposes of this section and will
not be required to re-register under subsection (b) above following the
submission to the Commission and an approval by the Commission of an
application to convert the registration to that of a private investment
company.
2. If the
private investment company is a foreign legal entity, it must also qualify to
do business in this state.
16.060
Individual licensing of key
executives and employees; removal from position if found unsuitable or if
license is denied or revoked; suspension of suitability by Commission.
1. Each key executive and employee of a
private investment company who the Commission determines is or is to become
actively and directly engaged in the administration or supervision of, or have
any other significant involvement with, the gaming activities of the private
investment company or any of its affiliated, intermediary or subsidiary
companies must be found suitable therefor and may be required to be licensed by
the Commission. Any person who has a relationship to a private investment
company of a type described in these Rules with respect to publicly traded
corporations shall file an application for finding of suitability and may be
required to be licensed.
2. If any
key executive or employee of a private investment company required to be
licensed or found suitable pursuant to subsection 1 fails to apply for a Casino
license or finding of suitability within 30 days after being requested to do so
by the Commission, or is denied a license or is not found suitable by the
Commission, or if his or her license or the finding of his or her suitability
is revoked after appropriate findings by the Commission, the private investment
company shall immediately remove that key executive or employee from any office
or position wherein the key executive or employee is actively and directly
engaged in the administration or supervision of, or has any other significant
involvement with, the gaming activities of the private investment company or
any of its affiliated or intermediary companies. If the Commission suspends the
finding of suitability of any key executive or employee, the private investment
company shall, immediately and for the duration of the suspension, suspend that
key executive or employee from performance of any duties wherein the key
executive or employee is actively and directly engaged in administration or
supervision of, or has any other significant involvement with, the gaming
activities of the private investment company or any of its affiliated or
intermediary companies.
16.070
Suitability of persons acquiring
beneficial or record ownership of any economic security or debt security in
private investment company; report of acquisition; application; penalty.
1. Each person who acquires beneficial
ownership or record ownership of any direct or indirect interest in any
economic security in a private investment company which is registered with the
Commission may be required to be found suitable in the discretion of the
Commission.
2. Each person who
acquires beneficial or record ownership of any direct or indirect interest in
any debt security in a private investment company which is registered with the
Commission may be required to be found suitable in the discretion of the
Commission.
3. Any person required
by the Commission or by this section to be found suitable shall:
(a) Apply for a finding of suitability within
30 days after the Commission requests that the person do so; and
(b) Together with the application, deposit
with the Commission a sum of money which, in the opinion of the Commission,
will be adequate to pay the anticipated costs and charges incurred in the
investigation and processing of the application, and deposit such additional
sums as are required by the Commission to pay final costs and
charges.
4. Any person
required by the Commission or this section to be found suitable who is found
unsuitable by the Commission shall not hold directly or indirectly the
beneficial or record ownership of any economic security or debt
security.
5. As used in this
section, "debt security" means any instrument generally recognized as a
corporate security representing money owed and reflected as debt on the
financial statement of a legal entity.
16.080
Remuneration, contracts and
employment prohibited for certain unsuitable or unlicensed persons. If
any person who is required, pursuant to this Rule, to be licensed or found
suitable because of the person's connection with a corporation, partnership,
limited partnership, limited-liability company or other business organization
holding a license, or a holding company or intermediary company, including a
private investment company, fails to apply for a license or a finding of
suitability after being requested to do so by the Commission or is denied a
license or a finding of suitability, or if the person's license or finding of
suitability is revoked, the corporation, partnership, limited partnership,
limited-liability company, business organization, holding company, intermediary
company or any person who directly or indirectly controls, is controlled by or
is under common control with the corporation, partnership, limited partnership,
limited-liability company, business organization, holding company or
intermediary company shall not, and any licensee or an affiliate of the
licensee shall not, after receipt of written notice from the Commission:
1. Pay the person any remuneration for any
service relating to the activities of a licensee, except for amounts due for
services rendered before the date of receipt of notice of such action by the
Commission. Any contract or agreement for personal services or the conduct of
any activity at a licensed gaming establishment between a former employee whose
employment was terminated because of failure to apply for a license or a
finding of suitability, denial of a license or finding of suitability, or
revocation of a license or a finding of suitability, or any business enterprise
under the control of that employee and the licensee, holding or intermediary
company or private investment company is subject to termination. Every such
agreement shall be deemed to include a provision for its termination without
liability on the part of the licensee upon a finding by the Commission that the
business or any person associated therewith is unsuitable to be associated with
a gaming enterprise. Any failure to include expressly such a condition in the
agreement is not a defense in any action brought pursuant to this section to
terminate the agreement;
2. Enter
into any contract or agreement with the person or with a business organization
that the licensee knows or under the circumstances reasonably should know is
under the person's control which involves the operations of a licensee, without
the prior approval of the Commission; or
3. Employ the person in any position
involving the activities of a licensee without prior approval of the
Commission.
16.090
Powers of Commission. The Commission may determine, upon
recommendation of the Commission, at the time of initial application by a
private investment company, or at any time thereafter, that the public interest
and the purposes of the Act require that any person who has a material
relationship to, or material involvement with, a private investment company,
affiliated company or a licensee that is subject to the jurisdiction of the Act
should apply for a finding of suitability or licensing. A person may be deemed
to have a material relationship to, or material involvement with, a private
investment company, affiliated company or licensee if the person is a
controlling person or key executive of the private investment company,
affiliated company or licensee, or if the person, as an agent, consultant,
advisor or otherwise, exercises significant influence upon the management or
affairs of the private investment company, affiliated company or licensee. The
foregoing powers of the Commission are not limited to persons having a formal
and direct involvement or relationship with a private investment company,
affiliated company or licensee, nor to persons who are beneficial owners of any
stated percentage of the outstanding economic securities of a private
investment company, affiliated company or licensee.
16.100
Required reports and statements;
income tax return; documents filed with Commission.
1. After a private investment company has
registered pursuant to this chapter, and while the private investment company
or any of its affiliated, intermediary or subsidiary companies holds a Casino
license, the private investment company shall:
(a) Report promptly to the Commission, in
writing, any change in its key executives or employees who are actively and
directly engaged in the administration or supervision of the gaming activities
of the private investment company or any of its affiliated, intermediary or
subsidiary companies;
(b) Within 45
days after the close of the quarter to which they relate, furnish to the
Commission a quarterly profit and loss statement and a balance sheet of the
private investment company;
(c)
Each year furnish to the Commission a profit and loss statement and a balance
sheet of the private investment company as of the end of the year, certified by
independent certified public accountants, and, upon request of the Commission
therefor, a copy of the private investment company's federal income tax return
within 30 days after the return is filed with the Internal Revenue Service. All
profit and loss statements and balance sheets must be submitted within 120 days
after the close of the fiscal year to which they relate;
(d) Report promptly to the Commission, in
writing, any changes that would result in the private investment company no
longer having one or more of the characteristics of a private investment
company as described in these Rules, unless such characteristic has been waived
or modified by the Commission;
(e)
Establish and maintain a gaming compliance program for the purpose of, at a
minimum, performing due diligence, determining the suitability of relationships
with other persons, and to review and ensure compliance by the private
investment company, its subsidiaries and any affiliated companies, with the
Act, as amended, the Rules, as amended, and the laws and regulations of any
other jurisdictions in which the private investment company, its subsidiaries
and any affiliated entities operate. The gaming compliance program, any
amendments thereto, and the members of the compliance committee, at least one
such member who shall be independent and knowledgeable of the Act and the
Rules, shall be administratively reviewed and approved by the Commission or the
Commission's designee. The private investment company shall amend the gaming
compliance program, or any element thereof, and perform such duties as may be
assigned by the Commission or the Commission's designee, related to a review of
activities relevant to the continuing qualification of the private investment
company, its subsidiaries and any affiliated companies under the provisions of
the Act and the Rules;
2.
In addition to the requirements set forth in subsection (1), upon request of
the Commission, the private investment company shall provide any other
documents, papers, reports, or other information deemed relevant by the
Commission.
16.200
Approvals required for dividends and distributions. Without the
prior approval of the Commission, neither the private investment company, nor
any of its affiliated, intermediary or subsidiary companies who have been found
suitable by the Commission pursuant to these Rules, shall declare any dividends
or distributions on any class of securities to any person who has not been
licensed or found suitable by the Commission; provided, however, that any of
the foregoing entities may, with the prior administrative approval of the
Commission or the Commission's designee, pay dividends and make distributions
to their direct or indirect equity owners who have not been licensed or found
suitable by the Commission for the purpose of defraying tax liabilities and
tax-related expenses of such direct or indirect equity owners that arise
directly out of such direct or indirect ownership interest, and further
provided that any of the foregoing entities may, upon five days prior written
notice to the Commission, make distributions to their direct or indirect equity
owners who have not been licensed or found suitable by the Commission for the
purpose of the payment of debt service by such direct or indirect equity owners
for debt incurred in connection with the acquisition of any licensed subsidiary
or the assets comprising a licensed establishment.
16.210
Administrative approval required
for certain transfers of economic securities in private investment
companies. Each person who acquires beneficial ownership or record
ownership of any direct interest in any economic security in a private
investment company which is registered with the Commission shall not, without
the prior administrative approval of the Commission, sell, assign, transfer,
pledge or otherwise dispose of any economic security of such private investment
company, or any other security held by it that is convertible or exchangeable
into an economic security of the private investment company.
16.220
Reporting required for certain
transfers and changes affecting economic securities in private investment
companies. A private investment fund and any of its affiliates and
subsidiaries who acquire beneficial ownership or record ownership of any
indirect interest in any economic security in a private investment company
which is registered with the Commission, shall report quarterly to the
Commission, in writing:
(i) the sale,
assignment, transfer, pledge or other disposition of any interest in the
private investment fund, affiliate or subsidiary; and
(ii) the addition of any new members,
partners, shareholders, trustees or beneficiaries in the private investment
fund, affiliate or subsidiary, excluding persons that are holders of publicly
traded securities issued by those entities. The Commission may require the
private investment company to provide such additional information regarding any
of the aforesaid transactions as it deems necessary.
16.230
Commission approval required for
transfers by the beneficial owners of voting securities of private investment
companies. Each person who acquires beneficial ownership or record
ownership of any direct or indirect interest in any voting security in a
private investment company which is registered with the Commission, and who has
been found suitable by the Commission shall not, without the prior approval of
the Commission, sell, assign, transfer, pledge or otherwise dispose of any
voting security of such private investment company, or any other security held
by it that is convertible or exchangeable into a voting security of the private
investment company.
16.240
Commission approval required to issue voting securities. A private
investment company which is registered with the Commission shall not issue
voting securities, or any other security that is convertible or exchangeable
into a voting security, without the prior approval of the Commission.
16.300
Penalties for noncompliance with
laws and Rules. If any corporation, partnership, limited partnership,
limited-liability company or other business organization holding a license is
owned or controlled by a private investment company subject to the provisions
of this chapter, or that private investment company, does not comply with the
laws of this state and the Rules of the Commission, the Commission may in its
discretion do any one, all or a combination of the following:
1. Revoke, limit, condition or suspend the
license of the licensee; or
2. Fine
the persons involved, the licensee or the private investment company in
accordance with the laws of this state and the Rules of the
Commission.
16.310
Fraudulent and deceptive practices prohibited. It is grounds for
disciplinary action if any person, in connection with the purchase or sale of
any security issued by a private investment company or an affiliated company or
in connection with any document required to be filed pursuant to these Rules or
the Amendment:
1. Employs any device, scheme
or artifice to defraud;
2. Makes
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading;
3. Engages in any act, practice, or course of
business which operates or would operate as a fraud or deceit upon any person;
or
4. Causes any document,
correspondence, filing or statement containing materially untrue, incorrect or
misleading information to be made or filed with the Commission, regardless of
whether said information has been made or filed with another regulatory
agency.
16.400
Exemptions.
1. The Commission
may, either generally or specifically, exempt a person, a security, a
transaction, or any portion thereof, from the application of these Rules or any
portion thereof if the Commission determines that such exemption is consistent
with the purpose of the Amendment.
RULE 17
PUBLICLY TRADED CORPORATIONS AND PUBLIC OFFERINGS OF
SECURITIES
GENERAL
17.010
Definitions. As used in Rule 17:
1. "Acquire control" or "acquiring control"
means any act or conduct by a person whereby the person obtains control,
whether accomplished through the ownership of equity or voting securities,
ownership of rights to acquire equity or voting securities, by management or
consulting agreements or other contract, by proxy or power of attorney, by
statutory mergers, by consummation of a tender offer, by acquisition of assets,
or otherwise.
2. Unless otherwise
specified, "Commission" means the Arkansas Racing Commission or the
Commission's designee.
3.
"Control," when used as a noun, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a
person, and when used as a verb, means to possess, directly or indirectly, such
power.
4. "Controlling person" with
respect to a publicly traded corporation means each person who controls the
publicly traded corporation.
5.
"Corporate acquisition opposed by management" means an attempt to acquire
control of a publicly traded corporation that is an affiliated company by means
of a tender offer that is opposed by the board of directors of the affiliated
company.
6. "Corporate licensee"
means a corporation that is licensed and registered with the
Commission.
7. "Current market
price" means the average of the daily closing prices for the 20 consecutive
trading days immediately preceding the date of a transaction or the closing
price on the day immediately preceding the date of such transaction, whichever
is higher. For the purpose of this definition, the closing price for each day
shall be the last reported sale price, regular way, or in case no such reported
sale takes place on such date, the average of the last reported bid and asked
prices, regular way, in either case on the principal national securities
exchange registered under the Securities Exchange Act of 1934 on which such
security is admitted to trading or listed, or if not listed or admitted to
trading on any national securities exchange, the closing price of such
security, or in case no reported sale takes place, the average of the closing
bid and asked prices, on NASDAQ or any comparable system, or if such security
is not listed or quoted on NASDAQ or any comparable system, the closing sale
price, or in case no reported sale takes place, the average of the closing bid
and asked prices, as furnished by any member of the National Association of
Securities Dealers, Inc., selected from time to time by the issuer for that
purpose.
8. "Debt restructuring"
means:
(a) A proceeding under the United
States Bankruptcy Code; or
(b) Any
out-of-court reorganization of a person that is insolvent or generally unable
to pay its debts as they become due.
9. "Exceptional repurchase of securities"
means the direct or indirect purchase by a corporation of securities
representing beneficial ownership of more than 1 percent of its voting
securities, whether in a single transaction or a series of related
transactions, at a price more than 10 percent above the current market price of
such securities on the date of the agreement to purchase such securities from
any person, other than a person who has been an executive officer or a member
of the board of directors for at least the past 2 years, who, on the date of
the agreement to purchase, is the beneficial owner of more than 3 percent of
the voting securities of such corporation and has been the beneficial owner of
more than 3 percent of such securities for less than 1 year, unless such
purchase has been approved by the affirmative vote of a majority of the holders
of voting securities voting on the transaction exclusive of the selling
security holder, or is pursuant to the same offer and terms as made to all
holders of voting securities of such class, other than holders, if any, who
have consented in writing to be excluded from the class of offerees, executive
officers, or members of the board of directors. For the purpose of this
definition, when determining whether a corporation has purchased more than 1
percent of its voting securities, the amount of voting securities of such
corporation shall be deemed to include voting securities issuable pursuant to
purchase rights where the price of the purchase rights is less than the current
market price of such securities on a given determination date provided,
however, that in any event, the amount of such voting securities beneficially
owned by a selling security holder pursuant to purchase rights shall be
included to determine the amount of the corporation's voting securities for
purposes of such computation if not otherwise included based on the foregoing
provision.
10. "Executive officer,"
with respect to a publicly traded corporation, means the president, secretary,
treasurer, any vice president in charge of a principal business function (such
as sales, administration or finance) and any other person who performs similar
policy-making functions for a publicly traded corporation.
11. "Federal Securities Act" means Title 15
United States Code sections 77a-77aa, as amended from time to time, and the
rules and regulations of the United States Securities and Exchange Commission
now or hereafter promulgated thereunder.
12. "Federal Securities Exchange Act" means
Title 15 United States Code sections 78a-78kk, as amended from time to time,
and the rules and regulations of the United States Securities and Exchange
Commission now or hereafter promulgated thereunder.
13. "Full disclosure" with respect to a
transaction or to a series of transactions means a descriptive statement
thereof that does not make an untrue statement of a material fact nor omit to
state a material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading.
14. "Institutional investor" means:
(a) A bank as defined in Section 3(a)(6) of
the Federal Securities Exchange Act;
(b) An insurance company as defined in
Section 2(a)(17) of the Investment Company Act of 1940, as amended;
(c) An investment company registered under
Section 8 of the Investment Company Act of 1940, as amended;
(d) An investment advisor registered under
Section 203 of the Investment Advisors Act of 1940, as amended;
(e) Collective trust funds as defined in
Section 3(c)(11) of the Investment Company Act of 1940, amended;
(f) An employee benefit plan or pension fund
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, excluding an employee benefit plan or pension fund sponsored by a
publicly traded corporation registered with the Commission;
(g) A state or federal government pension
plan;
(h) A group comprised
entirely of persons specified in (a) through (g); or
(i) Such other persons as the Commission may
determine for reasons consistent with the policies of these Rules.
To qualify as an institutional investor, a person other than a state or
federal pension plan must meet the requirements of a "qualified institutional
buyer" as defined in Rule 144A of the Federal Securities
Act.
15. "Plan of
recapitalization" means a plan proposed by the Commission to the security
holders of a publicly traded corporation that is an affiliated company, which
plan:
(a) Contains recommended action in
response to a corporate acquisition opposed by management, which acquisition
cannot be consummated until approval has been obtained pursuant to section
16.200, and which acquisition has not been consummated, withdrawn or
terminated;
(b) Involves either a
cash dividend to voting securities or an exchange of voting securities held by
security holders in return for a payment of cash or the issuance of securities
of the issuer or a combination of cash and securities of the issuer, with an
aggregate value in excess of 50 percent of the aggregate current market price
of the voting securities of the company on the day of the public announcement
of the plan of recapitalization; and
(c) Is financed in substantial part by
borrowings from financial institutions or the issuance of debt
securities.
16. "Public
offering" means a sale of securities that is subject to the registration
requirements of section 5 of the Federal Securities Act, or that is exempt from
such requirements solely by reason of an exemption contained in section 3(a)10,
3(a)11 or 3(c) of said Act or Regulation A adopted pursuant to section 3(b) of
said Act.
17. "Purchase rights"
means a security or contractual right in securities issued or issuable on the
exercise of options, warrants or other beneficial interest in securities
obtained for value upon the issuance of securities, or on conversion of other
securities.
18. "Speculative
securities" means:
(a) Securities, the value
of which depends substantially upon proposed or promised future promotion or
development rather than on material existing assets, conditions or operating
results; or
(b) Securities, an
investment in which involves an extraordinary risk of loss to the
investor.
19. "Tender
offer" means a public offer by a person other than the issuer to purchase
voting securities of a publicly traded corporation that is an affiliated
company, made directly to security holders for the purpose of acquiring control
of the affiliated company.
20.
"Voting security" means a security the holder of which is entitled to vote for
the election of a member or members of the board of directors or board of
trustees of a corporation or a comparable person or persons in the case of a
partnership, trust, or other form of business organization other than a
corporation.
17.020
Burden of proof. The burden of proof for the granting of any
approval required or permitted by these Rules is at all times upon the
applicant. Each applicant shall satisfy the Commission or the Commission, as
the case may be, that the granting of any approval required or permitted by
these Rules is consistent with the state policies concerning gaming set forth
in these Rules.
17.030
Powers
of Commission.
1. The Commission may
provide:
(a) That a time period be accelerated
or extended; or
(b) That as a
condition to the processing of an application or to the granting of an
approval:
(1) An application be supplemented
in any particular and to any extent either before or after the Commission has
acted thereon;
(2) An applicant or
other person urging the approval or denial of an application appear personally
before the Commission and submit to interrogation under oath or
otherwise;
(3) Funds, securities,
instruments or agreements be placed in escrow upon specified
conditions;
(4) A transaction be in
compliance with the applicable laws and regulations of any federal, state, or
local governmental entity or agency;
(5) A transaction be approved by an
applicant's board of directors;
(6)
An opinion of an applicant's legal counsel be furnished to the
Commission;
(7) An opinion of an
applicant's auditors be furnished to the Commission;
(8) All or any portion of an application be
examined or evaluated by a consultant to the Commission at the expense of the
applicant.
2.
The Commission has the power to delegate to its Director or staff, in its order
granting approval, the power to issue an interlocutory stop order. The
interlocutory stop order may be issued for any cause deemed reasonable by the
Commission.
17.040
Commission review of stop orders. If a stop order is issued by the
Commission pursuant to the provisions of these Rules, the Commission shall,
upon request of the person that is the subject of the order, conduct a hearing
on the merits of the matter no later than its next regular meeting for which
notice of the hearing is practicable.
17.050
Timing of investigations and
approvals.
1. The Commission is hereby
delegated the power to accelerate or extend the time period in which the
Commission may grant approval of any act for which approval by the Commission
is required or permitted by these Rules.
2. The Commission shall use its best efforts
to take final action upon an application by a person making a tender offer
within 60 days of the date upon which the application is filed and any fees are
paid consistent with the public policy of this state concerning gaming as
provided in these Rules. If the Commission cannot take final action upon the
application within 60 days of filing of such application, the Commission shall
transmit to the applicant written notice of a time certain for completion of
the investigation and the final action of the Commission. The notice required
by this subsection shall be transmitted at least 10 days prior to the sixtieth
day after the filing of the application.
17.060
Standards for Commission
action. The Commission will consider all relevant material facts in
determining whether to grant an approval required or permitted by these Rules.
With respect to any approvals requested pursuant to or in accordance with these
Rules, the Commission may further consider not only the effects of the action
or approval requested by the applicant, but whatever other facts are deemed
relevant, including but not limited to the following:
1. The business history of the applicant,
including its record of financial stability, integrity, and success of its
operations.
2. The current business
activities and interest of the applicant, as well as those of its executive
officers, promoters, lenders, and other sources of financing, or any other
individuals associated therewith.
3. The current financial structure of the
applicant, as well as changes which could reasonably be anticipated to occur to
such financial structure as a consequence of the proposed action of the
applicant.
4. The gaming-related
goals and objectives of the applicant, including a description of the plans and
strategy for achieving such goals and objectives.
5. The relationship between such goals and
objectives and the requested approval.
6. The adequacy of the proposed financing or
other action to achieve the announced goals and objectives.
7. The present and proposed compensation
arrangement between the applicant and its directors, executive officers,
principal employees, security holders, lenders, or other sources of
financing.
8. The equity
investment, commitment or contribution of present or prospective directors,
officers, principal employees, investors, lenders, or other sources of
financing.
9. The dealings and
arrangements, prospective or otherwise, between the applicant and any
investment bankers, promoters, finders or lenders, and other sources of
financing.
10. The effect of the
proposed action on existing and prospective security holders of the applicant,
both before and after the intended action.
11. Whether the applicant has made full and
complete disclosure of all material facts relative to the proposed action to
the Commission and made provision for such disclosure to all prospective
security holders.
12. Whether the
proposed action tends not to work a fraud upon the public.
13. Whether a proposed public offering
contains speculative securities.
14. Whether a proposed transaction will
create a significant risk that the publicly traded corporation and its
affiliated companies will not:
(a) Satisfy
their financial obligations as they become due; or
(b) Satisfy all financial and regulatory
requirements imposed by the Rules adopted by the Commission.
PUBLIC OFFERINGS
17.100
Corporate licensees. A
corporate licensee shall not guarantee a security issued by an affiliated
company pursuant to a public offering, nor hypothecate its assets to secure the
payment or performance of the obligations evidenced by a security issued by an
affiliated company pursuant to a public offering, without first obtaining the
prior approval of the Commission.
17.110
Public offerings of affiliated
companies. Prior approval of the Commission is required for any public
offering of any securities of an affiliated company:
1. Which is not a publicly traded corporation
if the securities will be offered by such an affiliated company or by a
controlling person thereof.
2.
Which is a publicly traded corporation if the securities will be offered by
such affiliated company and if such securities or the proceeds from the sale
thereof are intended to be used:
(a) To pay
for construction of gaming facilities in Arkansas to be owned or operated by
the affiliated company or a subsidiary of the affiliated company;
(b) To acquire any direct or indirect
interest in gaming facilities in Arkansas;
(c) To finance the operation by the
affiliated company or a subsidiary of such affiliated company of gaming
facilities in Arkansas; or
(d) To
retire or extend obligations incurred for one or more such purposes.
17.115
Continuous
or delayed public offerings.
1. An
affiliated company which is a publicly traded corporation may apply for
approval of a continuous or delayed public offering of its securities if such
an affiliated company:
(a) Has a class of
securities listed on either the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers Automatic Quotation
System, or has stockholders' equity in an amount of $10 million or more as
reported in its most recent report on Form 10-K or Form 10-Q filed with the
United States Securities and Exchange Commission immediately preceding the
application; and
(b) Has filed all
reports required to be filed by section 13 or section 15(d) of the Federal
Securities Exchange Act, or in the case of a foreign issuer or foreign private
issuer, pursuant to Regulations 13d-16 and 15a-16 of the Federal Securities
Exchange Act, during the preceding 12 months, or for such a shorter period that
such affiliated company has been required to file such reports.
2. The Commission may grant
approval of a continuous or delayed offering for a period of up to 3 years. An
approval granted pursuant to this Rule does not constitute an approval of other
related transactions for which separate Commission approval is otherwise
required by the Rules adopted by the Commission.
3. If an application is approved, the
affiliated company shall notify the Commission of its intent to make the public
offering and identify the type and amount of securities it proposes to sell and
the date on which it is anticipated the sale will occur. If such notification
is not written, it must be followed, as soon as practicable, with a written
confirmation which need not precede such sale.
17.118
Public offerings by entities not
presently licensees or affiliated companies.
1. Any entity that is not a licensee or an
affiliated company or otherwise subject to the provisions of the Act or the
Rules which plans to make a public offering of securities intending to use such
securities, or the proceeds from the sale thereof, to construct gaming
facilities in Arkansas to be operated by the entity, or a subsidiary of the
entity, or any other corporation or other form of business organization under
common control with the entity, to acquire any direct or indirect interest in
gaming facilities in Arkansas, to finance the operation by the entity, or a
subsidiary of the entity, or any other corporation or other form of business
organization under common control with the entity, of gaming facilities in
Arkansas, or to retire or extend obligations incurred for one or more such
purposes, may apply to the Commission for prior approval of such an
offering.
2. The Commission may act
on any such application.
3. Any
entity which submits an application pursuant to this Rule shall pay all costs
connected with the processing of the application including but not limited to
investigative costs.
4. An approval
sought under this Rule will not include a finding regarding the suitability of
the individuals involved.
5. The
Commission may find an entity unsuitable based solely on the fact that it did
not submit an application pursuant to subsection 1, unless the Commission has
ruled pursuant to subsection 6, that it is not necessary to submit an
application pursuant to subsection 1.
6. Upon receipt of a written request for a
ruling, the Commission may issue an administrative ruling that it is not
necessary for an entity to submit an application pursuant to subsection 1 upon
review of such factors as the Commission deems appropriate, including but not
limited to the following:
(a) The standards
enumerated in these Rules;
(b)
Whether the entity has any applications pending before the Commission and if
so, the nature of such applications;
(c) The operational and ownership structure
and history of the entity;
(d) A
description of the regulatory authorities that the entity is subject to the
jurisdiction of and the entity's regulatory history; and
(e) Such other facts as the Commission may
deem relevant and material.
7. Any entity for which the Commission has
approved an application submitted pursuant to subsection 1 shall cause the
following statement to be included in the prospectus, offering circular or
other offering document, or if such a document is not required by law the
offeror shall maintain adequate records that the statement was furnished to
potential investors, for the public offering which was approved by the
Commission: Because proceeds of this offering are to be used in connection with
gaming facilities in Arkansas, the entity making the offering voluntarily
sought and received approval of the Arkansas Racing Commission to make the
offering. That approval relates solely to the terms of the offering. It does
not constitute a finding that the entity has been or will be found qualified to
be involved with gaming activities in Arkansas for which a separate Arkansas
Racing Commission approval will be required. It also does not involve a finding
by the Arkansas Racing Commission as to the accuracy or adequacy of this
document.
17.120
Certain public offerings and stockholder approvals. The Commission
may find a publicly traded corporation unsuitable to be a holding company of a
corporate licensee if:
1. At a time when the
applicant was not subject to the jurisdiction of the Commission it made a
public offering of securities intending to use such securities, or the proceeds
from the sale thereof, to construct gaming facilities in Arkansas to be
operated by the applicant, or a subsidiary of the applicant, or any other
corporation or other form of business organization under common control with
the applicant, to acquire any direct or indirect interest in gaming facilities
in Arkansas, to finance the operation by the applicant, or a subsidiary of the
applicant, or any other corporation or other form of business organization
under common control with the applicant, of gaming facilities in Arkansas, or
to retire or extend obligation incurred for one or more such purposes;
or
2. At a time when the applicant
was not subject to the jurisdiction of the Commission it obtained the approval
or consent of its stockholders to have a material involvement with gaming in
the State of Arkansas, and in connection with such offering, approval or
consent, it did not make a full disclosure of all material facts to the
offerees or its stockholders relating to such material involvement including,
without limitation, a description of the nature and scope of the state and
applicable local laws of Arkansas regarding gaming control.
17.125
Approval of
securities issuable on exercise of options or warrants or conversion of other
securities. If the Commission approves a public offering of securities
which involves securities issuable on exercise of purchase rights, such
approval is deemed continuing for the entire period of exercisability or
convertibility and further approval is not required for the actual issuance of
such securities.
17.130
Application for approval of public offering. A person applying for
approval of a public offering pursuant to these Rules shall make a full
disclosure of all material facts relating thereto to the Commission. To the
extent applicable, the application must include the following information:
1. A description of the securities to be
offered.
2. The terms upon which
the securities are to be offered.
3. The gross and net proceeds of the
offering, including a detailed list of expenses.
4. The use of proceeds.
5. The name and address of the lead
underwriter and the participating underwriters, if any.
6. The forms of the underwriting agreement,
the agreement among underwriters, if any, and the selected dealer's agreements,
if any.
7. A statement of intended
compliance with all applicable federal, state, local and foreign securities
laws.
8. The names and addresses of
the applicant's general counsel, local counsel, special securities counsel,
independent auditors, and any special consultants on the offering.
9. If any securities to be issued are not to
be offered to the general public, the names and addresses of the other offerees
and the form of the offering thereto.
10. True copies or descriptions of all papers
filed with the United States Securities and Exchange Commission and all
material communications between the applicant and the United States Securities
and Exchange Commission or, if the offering is not subject to the registration
requirements of Section 5 of the Federal Securities Act other than by reason of
an exemption contained in Regulation A adopted pursuant to Section 3 of said
Act, copies or descriptions of all papers filed with, and all material
communications between the applicant and such other governmental entity charged
with securities regulation, if any. A copy of each registration statement and
each amendment thereto must be filed with the Commission by the end of the next
business day after their filing with the United States Securities and Exchange
Commission. All other papers required to be included pursuant to this
subsection must be filed with the Commission as soon as practicable.
17.140
Coordination.
The Commission will ordinarily permit an application for approval of a
public offering pursuant to this Rule to be completed over a period of time as
documents and information become available in accordance with the normal and
customary practice in the securities industry. An application may be filed
without all the information required by these Rules if all such information
required by the Commission is supplied prior to the sale of the
securities.
MERGERS, ACQUISITIONS AND CHANGES OF CONTROL
17.200
Approval of acquisition of
control. A publicly traded corporation shall not directly or indirectly
acquire control of a corporate licensee or affiliated company, and a person
shall not acquire control of a publicly traded corporation which is an
affiliated company, without the prior approval of the Commission.
17.210
Application for approval of
acquisitions of control. An application for approval of a transaction
subject to these Rules must contain full disclosure of all material facts
relating thereto, and include to the extent applicable:
1. The following information:
(a) A complete list of all stockholders when
it first registers, and annually thereafter, within 30 days after the annual
meeting of the stockholders of the corporation, showing the number of shares
held by each;
(b) The names of all
corporate officers within 30 days of their appointment;
(c) The names of all members of the Board of
Directors within 30 days of their election;
2. The terms and provisions of the
contemplated transaction;
3. A
statement of any contemplated management and operating changes to be effected
after completion of the contemplated transaction; and
4. Copies or descriptions of all material
documents and correspondence filed with the United States Securities and
Exchange Commission in connection with the contemplated transaction, if any,
or, if the transaction is not subject to the Federal Securities Act, copies or
descriptions of all material documents and correspondence filed with such other
governmental entity charged with securities regulation, if any.
17.250
Approval of plan of
recapitalization. Except as provided by these Rules, a publicly traded
corporation that is an affiliated company shall not consummate a plan of
recapitalization without the prior approval of the Commission.
17.260
Approval of exceptional
repurchases of securities. Except as provided in these Rules, a publicly
traded corporation that is an affiliated company shall not make an exceptional
repurchase of securities without the prior approval of the
Commission.
17.270
Exempt
transactions. Unless otherwise required by the Rules adopted by the
Commission, the approval of the Commission is not required before a publicly
traded corporation that is an affiliated company may repurchase securities
issued by such corporation if:
1. The
repurchase is made pursuant to contractual rights or arrangements, including
without limitation puts and price guarantees, given the issuee of such
securities or the issuee's designee at the time of the original issuance of the
security;
2. The repurchase is made
for purposes of compromising a bona fide dispute with a security holder arising
from the original issuance of such securities;
3. The repurchase is made pursuant to calls
or redemptions of any securities in accordance with the terms and conditions of
the governing instruments of such securities;
4. The repurchase involves securities
evidenced by a scrip certificate, order form, or similar document that
represents a fractional interest in a share of stock or similar
securities;
5. The repurchase is
made pursuant to a statutory procedure for the purchase of dissenting security
holders' securities;
6. The
repurchase is made in order to comply with any court or administrative
order;
7. The repurchase is made in
accordance with or to effectuate the provisions of any employee compensation
arrangement, employee stock plan, or employee benefit program including,
without limitation, an employee stock ownership plan or to eliminate or cancel
outstanding employee stock options or create a "disposition" for federal income
tax purposes as to securities acquired as a result of the exercise of an
employee incentive stock option as defined under the Internal Revenue
Code;
8. The repurchase involves a
transaction or series of related transactions occurring within a fiscal quarter
in which the aggregate price of the securities purchased is less than the
greater of $1 million or 5 percent of the consolidated net worth of the
corporation purchasing the securities determined using the most recent audited
financial statements of the corporation or the financial statements most
recently filed by the corporation with the Securities and Exchange Commission;
or
9. The repurchase is made
pursuant to a publicly announced open market securities repurchase program in
which the price and other terms of sale are not negotiated between the
purchaser and seller.
17.280
Application for approval of
recapitalization plan or exceptional securities repurchases. An
application for approval of a plan of recapitalization subject to these Rules
or an exceptional repurchase of securities subject to these Rules must contain
full disclosure of all material facts relating thereto, and include to the
extent applicable:
1. The terms and provisions
of the contemplated transaction.
2.
A statement of any contemplated management and operating changes to be effected
after completion of the contemplated transaction.
3. An analysis showing on a pro forma basis
the effect of the transaction on the financial statements of the publicly
traded corporation that is an affiliated company.
4. A general description of the source of
funds for the purchase and any financing arrangements.
5. Copies or descriptions of all material
documents and correspondence filed with the United States Securities and
Exchange Commission in connection with the contemplated transaction, if any,
or, if the transaction is not subject to the Federal Securities Act, copies or
descriptions of all material documents and correspondence filed with any other
governmental entity charged with securities regulation.
6. Any other documents, papers, reports, or
other information deemed relevant by the Commission.
MARKETS AND TRADING
17.300
Fraudulent and deceptive
practices prohibited. It is grounds for disciplinary action if any
person, in connection with the purchase or sale of any security issued by a
corporate licensee or an affiliated company or in connection with any document
required to be filed pursuant to these Rules or the Act:
1. Employs any device, scheme or artifice to
defraud;
2. Makes any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made, in the light of the circumstances under
which they were made, not misleading;
3. Engages in any act, practice, or course of
business which operates or would operate as a fraud or deceit upon any person;
or
4. Causes any document,
correspondence, filing or statement containing materially untrue, incorrect or
misleading information to be made or filed with the Commission, regardless of
whether said information has been made or filed with another regulatory
agency.
17.310
Approval of proxy and information statements related to gaming.
1. Before any person sends to the holders of
a voting security of a publicly traded corporation a proxy statement subject to
Regulation 14A of the United States Securities and Exchange Commission, or an
information statement subject to Regulation 14C of the United States Securities
and Exchange Commission, and includes a discussion of the nature and scope of,
and procedures under, the Act and regulations, such proxy statement or
information statement must be approved by the Commission.
2. A proxy statement or information statement
is deemed to have been approved if it has been filed with the Commission for at
least 10 days and the Commission has not issued a stop order during such
period.
17.330
Reporting requirements.
1. Upon
the request of the Commission, whenever any material document, including any
document considered to be confidential or furnished to the holders of voting
securities of the publicly traded corporation, is filed by a publicly traded
corporation with the United States Securities and Exchange Commission or with
any national or regional securities exchange, such publicly traded corporation
shall within 5 business days file a true copy of such document with the
Commission.
2. Upon the request of
the Commission, whenever a publicly traded corporation receives any material
document filed with the United States Securities and Exchange Commission by any
other person relating to such publicly traded corporation, it shall, within 10
days following such receipt, file a true copy of such document with the
Commission.
3. Upon the request of
the Commission, each publicly traded corporation shall file with the Commission
annually a list of the holders of its voting securities or more frequently as
such lists are prepared.
4. Each
publicly traded corporation shall, within 60 days of election or appointment,
report to the Commission, on the form prescribed by the Commission, the
election or appointment of any director, any executive officer and any other
officer actively and directly engaged in the administration or supervision of
the gaming activities at a licensed gaming establishment of the corporate
licensee.
5. Whenever a publicly
traded corporation is informed that any person determined by the Commission to
be a controlling person in respect of such corporation has disposed of any of
such corporation's voting securities, such corporation shall thereupon promptly
report such information to the Commission.
6. Each publicly traded corporation shall
file promptly with the Commission such other documents within its control as
the Commission may lawfully request
INDIVIDUALS
17.400
Powers of Commission. The
Commission may determine, upon the recommendation of the Commission, at the
time of initial application by a publicly traded corporation for registration
as a holding company, or at any time thereafter, that the public interest and
the purposes of the Amendment require that any individual who has a material
relationship to, or material involvement with, a publicly traded corporation,
affiliated company or a licensee that is subject to the jurisdiction of the
Amendment should apply for a finding of suitability or licensing. A person may
be deemed to have a material relationship to, or material involvement with, a
corporation, affiliated company or a licensee if the person is a controlling
person or key employee of the corporation, affiliated company or a licensee, or
if the person, as an agent, consultant, advisor or otherwise, exercises a
significant influence upon the management or affairs of the corporation,
affiliated company or a licensee. The foregoing powers of the Commission are
not limited to individuals having a formal and direct involvement or
relationship with a publicly traded corporation, affiliated company or a
licensee, nor to individuals who are beneficial owners of any stated percentage
of the outstanding equity securities of a publicly traded corporation,
affiliated company or a licensee.
17.405
Beneficial owners of voting
securities.
1. The Commission shall
consider the following in making its determination as to which beneficial
owners of voting securities of publicly traded corporations must or may be
required to be found suitable or to be licensed:
(a) Each person who acquires, directly or
indirectly:
i. Beneficial ownership of any
voting security; or
ii. Beneficial
or record ownership of any nonvoting security, in a publicly traded corporation
which is registered with the Commission may be required to be found suitable if
the Commission has reason to believe that the person's acquisition of that
ownership would otherwise be inconsistent with the declared policy of this
state.
(b) Each person
who acquires, directly or indirectly, beneficial or record ownership of any
debt security in a publicly traded corporation which is registered with the
Commission may be required to be found suitable if the Commission has reason to
believe that the person's acquisition of the debt security would otherwise be
inconsistent with the declared policy of this state.
(c) Each person who, individually or in
association with others, acquires, directly or indirectly, beneficial ownership
of more than 5 percent of any class of voting securities of a publicly traded
corporation registered with the Arkansas Racing Commission, and who is required
to report, or voluntarily reports, the acquisition to the Securities and
Exchange Commission pursuant to section 13(d)(1), 13(g) or 16(a) of the
Securities Exchange Act of 1934, as amended,
15 U.S.C. §§
78m(d)(1),
78m(g)
and
78p(a),
respectively, shall, within 10 days after filing the report and any amendment
thereto with the Securities and Exchange Commission, notify the Arkansas Racing
Commission that the report has been filed with the Securities and Exchange
Commission.
(d) Each person who,
individually or in association with others, acquires, directly or indirectly,
the beneficial ownership of more than 10 percent of any class of voting
securities of a publicly traded corporation registered with the Commission, or
who is required to report, or voluntarily reports, such acquisition pursuant to
section 13(d)(1), 13(g) or 16(a) of the Securities Exchange Act of 1934, as
amended,
15 U.S.C. §§
78m(d)(1),
78m(g)
and
78p(a),
respectively, shall apply to the Commission for a finding of suitability within
30 days after the Commission mails the written notice.
(e) A person who acquires, directly or
indirectly:
i. Beneficial ownership of any
voting security; or
ii. Beneficial
or record ownership of any nonvoting security or debt security, in a publicly
traded corporation created under the laws of a foreign country which is
registered with the Commission shall file such reports and is subject to such a
finding of suitability as the Commission may prescribe.
2. All rules and regulations of
the Securities and Exchange Commission applicable in determining whether a
person is the beneficial owner of a particular equity security for purposes of
Section 13(d) of the Federal Securities Exchange Act may be considered by, but
shall not be binding upon, the Commission in making its determination whether,
and the extent to which, a person is the beneficial owner of a voting security
for the purposes of sections 17.010(8), 17.330, 17.405, and 17.430 of this
Rule.
3. This Rule applies to every
person who is, directly or indirectly, the beneficial owner of any voting
security in a publicly traded corporation which is registered with the
Commission, irrespective of the time of acquisition of such
ownership.
4. If any securities of
a publicly traded corporation are held in street name, by a nominee, an agent
or trust, the publicly traded corporation shall render maximum assistance to
the Commission, upon its request, to determine the beneficial ownership of such
securities.
17.410
Officers and employees.
1. The
Commission shall require application for finding of suitability and may require
licensing of any officer or employee of a publicly traded corporation whom the
Commission finds to be actively and directly engaged in the administration or
supervision of, or any other significant involvement with, the activities of a
corporate Casino licensee.
2. The
Commission may require application for licensing or finding of suitability by
any officer or employee of a publicly traded corporation whose application is
not otherwise required pursuant to paragraph 1 of this Rule, if the Commission
determines that the policies of the state regarding gaming would be served by
such action.
3. The following
officers or employees of the publicly traded corporation are deemed to be
actively and directly engaged in the administration or supervision of, and
significantly involved with, the activities of the corporate licensee and
therefore are normally required to be licensed or found suitable:
(a) Each employee who is involved in gaming
and who is also a director of the publicly traded corporation; and
(b) The president, any persons performing the
function of principal executive officer or principal operating officer, the
principal financial officer, and any persons performing the function of chief
technology officer or chief information officer.
17.415
Directors.
1. The Commission shall require application
for finding of suitability and may require licensing of any director whom the
Commission finds to be actively and directly engaged in the administration or
supervision of the gaming activities at a licensed gaming establishment of a
subsidiary corporate licensee.
2.
The Commission may require application for licensing or finding of suitability
by any director of a publicly traded corporation whose application is not
otherwise required by paragraph 1 of this Rule, if the Commission determines
that the policies of the state regarding gaming would be served by such
action.
3. The following directors
of the publicly traded corporation are deemed to be actively and directly
engaged in the administration or supervision of the gaming activities of the
subsidiary corporate licensee and therefore are normally required to be
licensed or found suitable:
(a) Each director
who serves as Director of the board of directors;
(b) Each director who serves as the Director
of the audit committee;
(c) Each
director who, individually or in association with others, is the beneficial
owner of greater than 5 percent of any class of voting securities of the
registered publicly traded corporation for which he or she serves as a
director; and
(d) Each person,
whether as director or otherwise, who serves on any committee to which is
delegated the authority of the Commission to act in any matter involving the
activities of a corporate Casino licensee and each director who serves in the
capacity of lead director.
17.420
Appointments and
elections. Except in a transaction subject to these Rules which involved
a change of control of a publicly traded corporation as a whole, an individual
may be appointed or elected to a position described in Rules 17.410 or 17.415
without the prior approval of the Commission, and may occupy the position and
exercise the authority and duties thereof until otherwise ordered by the
Commission. The Commission may impose stricter requirements, including a
requirement of prior approval, on any publicly traded corporation or with
respect to any individual at any time.
17.430
Institutional investor.
1. An institutional investor that becomes or
intends to become subject to these Rules as a result of its beneficial
ownership of voting securities of a publicly traded corporation registered with
the Commission may apply to the Commission for a waiver of the requirements
with respect to the beneficial ownership of the voting securities of such
publicly traded corporation if such institutional investor holds the securities
for investment purposes only; provided, however, that an institutional investor
shall not be eligible to receive or hold a waiver if the institutional investor
beneficially owns, directly or indirectly, except as otherwise provided in
subsection 2, more than 25 percent of the voting securities and if any of the
voting securities were acquired other than through a debt restructuring. Voting
securities acquired before a debt restructuring and retained after a debt
restructuring or as a result of an exchange, exercise or conversion, after a
debt restructuring, of any securities issued to the institutional investor
through a debt restructuring, shall be deemed to have been acquired through a
debt restructuring. A waiver granted under this section shall be effective only
as long as the institutional investor's direct or indirect beneficial ownership
interest in such voting securities meets the limitations set forth
above.
2. An institutional investor
that has been granted a waiver pursuant to subsection 1, may beneficially own
more than 25 percent, but not more than 29 percent, of the voting securities of
a publicly traded corporation registered with the Commission, only if such
additional ownership results from a stock repurchase program conducted by such
publicly traded corporation, and upon the condition that such institutional
investor does not purchase or otherwise acquire any additional voting
securities of the publicly traded corporation that would result in an increase
in the institutional investor's ownership percentage.
3. An institutional investor shall not be
deemed to hold voting securities for investment purposes only unless the voting
securities were acquired and are held in the ordinary course of business as an
institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the board of
directors, any change in the corporate charter, bylaws, management, policies or
operations of the publicly traded corporation registered with the Commission or
any of its gaming affiliates, or any other action which the Commission finds to
be inconsistent with investment purposes only. The following activities shall
not be deemed to be inconsistent with holding voting securities for investment
purposes only:
(a) Voting, directly or
indirectly through the delivery of a proxy furnished by the board of directors,
on all matters voted on by the holders of such voting securities;
(b) Serving as a member of any committee of
creditors or security holders formed in connection with a debt
restructuring;
(c) Nominating any
candidate for election or appointment to the board of directors in connection
with a debt restructuring;
(d)
Accepting appointment or election as a member of the board of directors in
connection with a debt restructuring and serving in that capacity until the
conclusion of the member's term;
(e) Making financial and other inquiries of
management of the type normally made by securities analysts for informational
purposes and not to cause a change in its management, policies or operations;
and
(f) Such other activities as
the Commission may determine to be consistent with such investment
intent.
4. An application
for a waiver must include:
(a) A description
of the institutional investor's business and a statement as to why the
institutional investor is within the definition of "institutional investor" set
forth in these Rules.
(b) A
certification made under oath and the penalty of perjury, that the voting
securities were acquired and are held for investment purposes only as defined
in subsection 2 and a statement by the signatory explaining the basis of the
signatory's authority to sign the certification and to bind the institutional
investor to its terms. The certification shall also provide that the applicant
agrees to be bound by and comply with the Amendment and the Rules adopted
thereunder, to be subject to the jurisdiction of the courts of Arkansas, and to
consent to Arkansas as the choice of forum in the event any dispute, question,
or controversy arises regarding the application or any waiver granted under
this section.
(c) A description of
all actions, if any, taken or expected to be taken by the institutional
investor relating to the activities described in subsection 2.
(d) The name, address, telephone number and
social security number of the officers and directors, or their equivalent, of
the institutional investor as well as those persons that have direct control
over the institutional investor's holdings of voting securities of the publicly
traded corporation registered with the Commission.
(e) The name, address, telephone number and
social security or federal tax identification number of each person who has the
power to direct or control the institutional investor's exercise of its voting
rights as a holder of voting securities of the publicly traded corporation
registered with the Commission.
(f)
The name of each person that beneficially owns more than 5 percent of the
institutional investor's voting securities or other equivalent.
(g) A list of the institutional investor's
affiliates.
(h) A list of all
securities of the publicly traded corporation registered with the Commission
that are or were beneficially owned by the institutional investor or its
affiliates within the preceding year, setting forth a description of the
securities, their amount, and the date of acquisition or sale.
(i) A list of all regulatory agencies with
which the institutional investor or any affiliate that beneficially owns voting
securities of the publicly traded corporation registered with the Commission
files periodic reports, and the name, address, and telephone number of the
person, if known, to contact at each agency regarding the institutional
investor.
(j) A disclosure of all
criminal or regulatory sanctions imposed during the preceding 10 years and of
any administrative or court proceedings filed by any regulatory agency during
the preceding 5 years against the institutional investor, its affiliates, any
current officer or director, or any former officer or director whose tenure
ended within the preceding 12 months. As to a former officer or director, such
information need be provided only to the extent that it relates to actions
arising out of or during such person's tenure with the institutional investor
or its affiliates.
(k) A copy of
the institutional investor's most recent Schedule 13D or 13G and any amendments
thereto filed with the United States Securities and Exchange Commission
concerning any voting securities of the publicly traded corporation registered
with the Commission.
(l) A copy of
any filing made under
15 U.S.C.
18a with respect to the acquisition or
proposed acquisition of voting securities of the publicly traded corporation
registered with the Commission.
(m)
Any additional information the Commission may request.
5. The Commission shall consider all relevant
information in determining whether to grant a waiver requested pursuant to
subsection 1, including but not limited to:
(a) Whether the waiver is consistent with the
policy set forth in these Rules;
(b) The factors set forth within these Rules;
and
(c) Any views expressed to the
Commission by the publicly traded corporation or any licensed affiliate
thereof.
6. An
institutional investor that has been granted a waiver of a finding of
suitability and that subsequently intends not to hold its voting securities of
the publicly traded corporation for investment purposes only, or that intends
to take any action inconsistent with its prior intent shall, within 2 business
days after its decision, deliver notice to the Commission in writing of the
change in its investment intent. The Commission may then take such action under
the these Rules as the Commission deems appropriate.
7. A waiver of the requirements that has been
granted pursuant to this section shall not be construed as a waiver of or
exemption from the prior approval requirements of these Rules. An institutional
investor that intends to apply for a waiver of the requirements pursuant to
this section must also simultaneously apply to the Commission for an exemption
from the prior approval requirements of these Rules if:
(a) The proposed acquisition would give the
institutional investor, directly or indirectly, the power to direct or cause
the direction of the management and policies of the publicly traded
corporation; or
(b) The
institutional investor intends to increase its beneficial ownership to more
than 20% but not more than 25% of the voting securities of the registered
publicly traded corporation.
If at the time an institutional investor applies to the Commission for
a waiver of the requirements it does not intend to increase its beneficial
ownership to more than 20% of the voting securities of the registered publicly
traded corporation but subsequently intends to increase to more than 20% but
not more than 25%, it must apply to the Commission for an exemption from the
prior approval requirements of these Rules.
8. If the Commission finds that an
institutional investor has failed to comply with the provisions of this
section, or should be subject to a finding of suitability to protect the public
interest, the Commission may, in accordance with these Rules, require the
institutional investor to apply for a finding of suitability. The institutional
investor affected by the action taken by the Commission may request a hearing
on the merits of such action. The hearing shall be included on the agenda of
the next regularly scheduled Commission meeting occurring more than 10 working
days after the request for hearing. Upon good cause shown by the institutional
investor, the Commission may waive the 10-day requirement and place such
hearing on an earlier Commission agenda. The Commission, for any cause deemed
reasonable, may by a majority vote, sustain, modify or reverse the decision of
the Commission, or remand the matter to the Commission for such further
investigation and reconsideration as the Commission may order. While the
application for a finding of suitability review of the Commission's action
requiring the filing of such application is pending, the institutional investor
shall not, directly or indirectly, cause or attempt to cause any management,
policy, or operating changes in the publicly traded corporation or any gaming
affiliate.
9. Any publicly traded
corporation registered with the Commission or any registered or licensed
subsidiary thereof shall immediately notify the Commission of any information
about, fact concerning or actions of, an institutional investor holding any of
its voting securities, that may materially affect the institutional investor's
eligibility to hold a waiver under this section.
10. An institutional investor that is subject
to this Rule as a result of its beneficial ownership of voting securities of a
publicly traded corporation registered with the Commission and that has not
been granted a waiver pursuant to subsection 1, may beneficially own more than
10 percent, but not more than 11 percent, of the voting securities of such
publicly traded corporation, only if such additional ownership results from a
stock repurchase program conducted by the publicly traded corporation, upon the
same conditions as provided in subsection 2. Unless otherwise notified by the
Commission, such an institutional investor is not required to apply to the
Commission for a finding of suitability, but shall be subject to reporting
requirements as prescribed by the Commission.
17.440
Proscribed activities with
respect to "unsuitable" persons.
1. If
a person required by the Commission to apply for a finding of suitability
fails, refuses or neglects to apply for a finding of suitability or a license
within 30 days after the Commission orders that such application be made, the
Commission may find such person to be unsuitable.
2. The Commission may determine a publicly
traded corporation registered with the Commission to be unsuitable, or take
other disciplinary action, if the publicly traded corporation, after the
Commission serves notice to the publicly traded corporation that a person is
unsuitable to be a stockholder or to have any other relationship or involvement
with such publicly traded corporation or with a corporate licensee or any other
affiliated company:
(a) Pays to any person
found to be unsuitable any dividend or interest upon any voting securities or
any payment or distribution of any kind whatsoever except as permitted by
paragraph (d) of this Rule;
(b)
Recognizes the exercise by any such unsuitable person, directly or indirectly,
or through any proxy, trustee or nominee, of any voting right conferred by any
securities or interest in any securities;
(c) Pays to any such unsuitable person any
remuneration in any form for services rendered or otherwise except as permitted
pursuant to these Rules; or
(d)
Fails to pursue all lawful efforts to require such unsuitable person to
relinquish his or her voting securities including, if necessary, the immediate
purchase of said voting securities by the publicly traded corporation for cash
at fair market value.
17.450
Exemptions.
1. The Commission may, either generally or
specifically, exempt a person, a security, a transaction, or any portion
thereof, from the application of this Rule or any portion thereof if the
Commission determines that such exemption is consistent with the purpose of the
Act.
2. The Commission may by its
order, from time to time, delegate to the Commission the power to grant
exemptions from the application of this Rule, to the extent, and within the
scope, specified in such order.
RULE 18
SUPERVISION
18.020
Policy. The Commission
finds and hereby declares that the continuation of a Casino gaming
establishment's gaming operation following surrender, lapse, suspension or
revocation of a license essential to such operation presents significantly
enhanced dangers to the public health, safety, morals, good order and general
welfare of the inhabitants of the State of Arkansas and should only be
permitted when:
1. The possible adverse
economic impact of closure of the gaming operations upon the specific community
in which the establishment is located and upon the state generally is
significant; and
2. Continued
gaming operation pursuant to a supervisorship would facilitate speedy transfer
of ownership of the establishment in a manner that does not unreasonably
endanger the public health, safety, morals, good order and general
welfare.
18.030
Determination to seek supervisor.
1. Only the Commission is empowered to
petition ex parte for court appointment of a supervisor if the license of any
person whose license is essential to the operation of a gaming establishment:
(a) Is revoked by the Commission;
(b) Is suspended by the Commission;
(c) Lapses; or
(d) Is surrendered because the gaming
establishment or the ownership thereof has been conveyed or transferred to a
secured party who does not possess the licenses necessary to operate the
establishment.
2. The
decision to file such a petition is discretionary with the Commission, and in
determining whether such a petition shall be filed, the Commission shall
consider, at any time following issuance of an order revoking, suspending or
allowing surrender or lapse of a Casino license:
(a) The nature of the violation which
resulted in the revocation, suspension, surrender or lapse;
(b) The ability and actions taken, if any,
for a removal by licensees in good standing of persons who committed the
violation;
(c) The involvement
during a proposed supervisorship in any operation of the establishment of
persons whose licenses were revoked, suspended, surrendered or
lapsed;
(d) The economic impact of
closure of the gaming operations upon the community in which the establishment
is located;
(e) The economic impact
of closure of the gaming operations upon the State of Arkansas;
(f) The prior efforts, if any, to sell the
establishment;
(g) The involvement,
if any, of undisclosed interests in the establishment;
(h) The presence, if any, of a publicly
traded holding company and the public trading that would occur during a
supervisorship;
(i) The current
status of all fees and taxes applicable to the operation;
(j) The adequacy of existing financing for
the operation, if continued, and the suitability of the source of such
financing;
(k) The impact upon
public confidence and trust that gaming operations in Arkansas are conducted
honestly, competitively and free from criminal and corruptive
elements;
(l) The ownership of the
gaming establishment premises or an interest therein by persons other than the
offending, surrendering or lapsed licensee;
(m) Any other matter material to a full and
complete consideration of the particular circumstances presented;
(n) The availability of two or more persons
qualified and willing to assume the position of supervisor for the
establishment in question, unless, in the opinion of the Commission, only one
person is available who is qualified to serve, in which case the Commission may
name only that person.
3.
The Commission may decline to petition for appointment of a supervisor if
satisfied that because of any or all of the above considerations or for any
other reason, a continuation of the gaming operation would not be in the best
interest of the State of Arkansas, the gaming industry, or both.
4. The Commission will not petition for a
supervisor to continue gaming operations at any establishment if:
(a) A rehearing has been granted by the
Commission to the licensee on the revocation or suspension of his or her
license and the rehearing has not been concluded; or
(b) The gaming establishment has never been
in operation and opened to the public; or
(c) The gaming establishment is, or
reasonably appears to be, insolvent; or
(d) Gaming operations ceased at the
establishment for any reason prior to revocation, suspension or lapse of an
essential license.
18.040
Qualifications of
supervisor.
1. Should the Commission
petition for appointment of a supervisor, the Commission shall include the
names of two or more persons who the Commission believes are suitable and
qualified to manage the gaming establishment involved and who are available for
appointment by the court, unless, in the opinion of the Commission, only one
person is available who is qualified to serve, in which case the Commission may
name only that person.
2. The
Commission shall not petition for appointment of any person unless first
satisfied that the person meets the following qualifications:
a) An application to receive a license or be
found suitable must not be granted unless the Commission is satisfied that the
applicant is:
i. A person of good character,
honesty and integrity;
ii. A person
whose prior activities, criminal record, if any, reputation, habits and
associations do not pose a threat to the public interest of this State or to
the effective regulation and control of gaming or charitable lotteries, or
create or enhance the dangers of unsuitable, unfair or illegal practices,
methods and activities in the conduct of gaming or charitable lotteries or in
the carrying on of the business and financial arrangements incidental thereto;
and
iii. In all other respects
qualified to be licensed or found suitable consistently with the declared
policy of the State.
b) A
license to operate a gaming establishment or an inter-casino linked system must
not be granted unless the applicant has satisfied the Commission that:
i. The applicant has adequate business
probity, competence and experience, in gaming or generally; and
ii. The proposed financing of the entire
operation is:
A. Adequate for the nature of
the proposed operation; and
B. From
a suitable source.
Any lender or other source of money or credit which the Commission
finds does not meet the standards set forth in subsection 2 may be deemed
unsuitable.
3. The Commission may petition for the
appointment of more than a single individual, such as a management team,
association or company, where such an appointment would better meet the
circumstances and the needs of the establishment.
18.050
Termination.
1. Once a license essential to a continuation
of the gaming operations has been revoked, suspended, surrendered or has
lapsed, there is no right or interest in any person to further conduct gaming
at the establishment, and the Commission may seek termination of a
supervisorship for any cause deemed reasonable by the Commission.
2. Without limiting the foregoing, the
Commission may seek termination whenever:
(a)
License fees and taxes are not paid when due;
(b) The establishment enters into voluntary
or involuntary bankruptcy proceedings;
(c) The establishment's debts exceed the
value of its assets or the establishment cannot meet its debts as they become
due;
(d) The Commission determines
that a violation of the Rules enacted pursuant thereto, relating to the
establishment has occurred subsequent to the supervisorship;
(e) A former owner, the former owner's agent,
employee or representative are determined by the Commission to have violated
any statute or regulation relating directly or indirectly to gaming or the
administration of the supervisorship, other than the violation, if any, which
resulted in the revocation, suspension, surrender or lapse;
(f) The death, disability, or removal of the
supervisor;
(g) Closure of gaming
operations at the establishment for any reason, regardless of fault;
or
(h) Any circumstances which, in
the determination of the Commission, renders continued operations under the
supervisorship impractical or detrimental to the interests of the State of
Arkansas, or licensed gaming, or both.
18.060
Distribution of earnings to
former legal owners.
1. A supervisor
shall not distribute earnings of the gaming establishment to the former
licensed owners thereof, until deduction is made for:
(a) The costs of the supervisorship,
including compensation and expenses incurred by the supervisor and those
engaged by the supervisor to aid in the supervisor's duties, then due and
owing;
(b) Amounts deemed necessary
by the supervisor for continuing the operation of the establishment, including,
but not limited to, bankroll, salaries, and foreseeable operating
expenses;
(c) Amounts deemed
necessary by the supervisor to preserve the assets of the gaming establishment;
and
(d) A reserve fund sufficient,
in the determination of the supervisor, to facilitate continued operation in
light of pending civil litigation, disputed claims, contractual obligations,
taxes, fees and any other contingency known to the supervisor which may require
payment by the establishment.
2. The supervisor is subject to the
provisions of these Rules, and shall not distribute any earnings of the gaming
establishment in contravention of any provision thereof.
RULE 19
[RESERVED]
Casino Gaming Rule 20
RULE 20
RACE BOOKS AND SPORTS POOLS
20.010
Definitions. As used in
this Rule:
1. "Account wagering system" means
a system of wagering using computer or other method of wagering communication
as approved by the Commission, including mobile applications and other digital
platforms that utilize communications technology, whose components shall be
located in this State. The components shall include, but not be limited to, the
systems operator, permanent information databases, system monitoring equipment,
and writers.
2. "Book" means a race
book or sports pool licensed and approved pursuant to Amendment 100 and this
Rule.
3. "Call center system" means
a computerized system, or a component of such a system, that is used to provide
technical support to a patron. A call center system shall not be used to
receive, transmit, or accept wagers from a patron to a licensed book.
4. "Cash" means coin and currency that
circulates, and is customarily used and accepted as money, in the issuing
nation.
5.
[Reserved]
6.
"Commission" means the Arkansas Racing Commission or the Commission's
designee.
7. "Communications
technology" means the methods used and the components employed to facilitate
the transmission of information including, but not limited to, transmission and
reception systems based on wire, cable, radio, microwave, light, optics,
cellular data, or computer data networks and the Internet.
8. "Internet" means the international
computer network of both Federal and non-Federal interoperable packet switched
data networks.
9. "Key employee"
means an employee in any of the classes described in Rule 4.
10. "Messenger bettor" means a person who
places a race book or sports pool wager for the benefit of another for
compensation.
11. "Nonpari-mutuel
wager" means a race book or sports pool wager other than one offered to be
included in a common pari-mutuel pool.
12. "Operator of a call center" means a
person who, as an agent of a licensed Arkansas book, engages in the business of
operating a call center system as a means of providing patron services to
assist a patron located in this state. An operator of a call center does not
receive, transmit, or accept wagers.
13. "Online sports pool" means an operation
in which wagers on sports events are made over the internet on websites or
mobile applications through computers, mobile devices, or other approved
interactive devices accepted through a gaming system approved by the
Commission. In order to operate an online sports pool, a casino licensee must
first operate and continue to operate a sports pool from the casino licensee's
premises. Further, operation of an online sports pool shall be prohibited in
circumstances in which a majority of the net casino gaming receipts, as defined
in Amendment 100, from the online sports pool is paid to a third-party vendor
assisting in the operation of the sports pool.
14. "Online sports pool platform" means an
integrated system of hardware, software or applications through which an online
sports pool operator operates, conducts, or offers an online sports
pool.
15. "Online sports pool
operator" means a casino licensee that has elected to operate an online sports
pool or a sports pool operator intermediary operating an online sports pool on
behalf of a casino licensee.
16.
"Payout" means the total payment due on a winning wager whether or not:
(a) The patron collects the total payment due
at one time;
(b) All or a portion
of the payment due is made in the form of cash, chips, or other form of
payment; or
(c) All or a portion of
the payment due is used by the patron to place another wager.
17. "Post time" means, unless an
earlier time is required by regulation in the state where the race is run:
(a) For users of live broadcasts and for
buyers of audible announcements of post time from disseminators of live
broadcasts, the later of either the time when the disseminator transmits an
audible announcement of the post time, or when the race is started by, as
applicable, the opening of the gates and/or box, the starting gate car begins
to close its arms, or such other method used by the track and administratively
approved by the Commission.
(b) For
races broadcast live on a national television network for which an agreement
has been reached with a disseminator to provide an audible announcement of post
time, that time when the disseminator relying upon information obtained
independently of the television broadcast, transmits an audible announcement of
post time which must be no later than when the race is started by, as
applicable, the opening of the gates and/or box, the starting gate car begins
to close its arms, or such other method used by the track and administratively
approved by the Commission.
(c) For
licensed race books that, pursuant to an agreement with a licensed systems
operator, use a computerized bookmaking system that allows the systems operator
to close wagering via electronic remote access, that time when the race is
started by, as applicable, the opening of the gates and/or box, the starting
gate car begins to close its arms, or such other method used by the track and
administratively approved by the Commission, as determined by the systems
operator through information the systems operator independently receives from a
disseminator.
(d) Except as
provided in paragraphs (a), (b) and (c) of this subsection, not later than 2
minutes before the scheduled post time as announced by the
disseminator.
18. "Race
book" means a business that accepts wagers on horse or other animal races. A
casino licensee that is also a franchise holder may elect to have its race book
operations relating to parimutuel wagering on horse and greyhound racing
regulated and governed by the Arkansas Horse Racing Law at Ark. Code Ann.
§§
23-110-101 et
seq. or the Arkansas Greyhound Racing Law at Ark. Code Ann. §§
23-111-101 et
seq., respectively, and rules promulgated by the Commission thereunder and not
by these Rules.
19.
[Reserved]
20. "Secure
personal identification" means a secure personal identification as that term is
defined in these Rules.
21. "Sports
event" or "sporting event" means any professional sport or athletic event,
amateur sport or athletic event, collegiate sport or athletic event, or motor
race event. Sports events upon which wagers may be accepted under these Rules
shall only include athletic sports events conducted live by human athletes
(including race car drivers), and shall not include any virtual or simulated
event, or event conducted in the past and rebroadcast for wagering
purposes.
22. "Sports pool" means a
business that accepts wagers on sporting events other than horse or other
animal races.
23. "Wagering
account" means a sports wagering account as that term is defined in these
Rules.
24. "Wagering communication"
means the transmission of a wager between a point of origin and a point of
reception by aid of a communications technology, including computers or mobile
application on mobile devices or other approved interactive devices approved by
the Commission.
25. "Wagering
instructions" means the instructions given by a patron on the grounds of the
licensee's facility where casino gaming is conducted or who maintains a mobile
wagering account at a book to effect a wagering communication to the
book.
20.020
License required; applications.
1. No person may operate or own any interest
in a race book or sports pool in Arkansas unless that person holds a Casino
license.
2. Authorization to
operate a race book or a license to operate a sports pool occurs immediately
upon adoption of rules and regulations required by Amendment 100.
3. Each application for authorization by a
licensee must be accompanied by an internal control system prepared and
submitted in accordance with Rule 6 and this Rule.
4. Each casino licensee, in its discretion
and with the approval of the Arkansas Racing Commission, may provide no more
than two individually branded online sports platforms and accompanying mobile
applications.
5. Any individually
branded online sports pool platform/mobile application provided by an online
sports pool operator intermediary must, on its webpage, conspicuously bear the
name of the casino licensee with which it is affiliated.
20.032
Finding of suitability required
to operate a call center; applications.
1. A person shall not function as the
operator of a call center unless the person has been found suitable to operate
a call center under these Rules.
2.
Applications for a finding of suitability to function as the operator of a call
center must be made, processed, and determined using such forms as the
Commission may require or approve.
20.040
Reserve requirements.
1. Notwithstanding the minimum reserve
requirements established for wagering accounts pursuant to these Rules, each
book shall comply with the following to calculate the minimum reserve
requirements:
(a) Each book shall at all times
maintain a reserve of not less than the greater of $25,000 or the sum of the
following amounts:
(1) Amounts held by the
book for the account of patrons;
(2) Amounts accepted by the book as wagers on
contingencies whose outcomes have not been determined; and
(3) Amounts owed but unpaid by the book on
winning wagers through the period established by the book for honoring winning
wagers.
(b) Before
beginning operations, each newly-licensed book must establish a reserve of at
least the greater of $25,000 or the amount the Commission projects will at
least equal the sum of the amounts specified in subparagraphs (1), (2), and (3)
of subsection 1(a) at the end of the first week of the book's operation. After
the book begins operations, the book's reserve must comply with subsection
1.
20.050
Issuance and control of betting tickets.
1. Immediately upon accepting a wager, other
than an account wager, the book shall create a betting ticket on which the
terms of the wager are written.
2.
Betting tickets must bear the name and address of the book.
20.055
Remote / Off premises
wagers on sporting events.
Licensees / books may accept wagers on sporting events from any person
who is not physically present on the Licensee's / franchise holder's premises
so long as the person is physically present in the State of Arkansas when
placing the wager and the wager is made pursuant to the account wagering system
provisions of these Rules. Wagers accepted by licensees / books on sporting
events shall be treated for all purposes as a wager made by the person on the
grounds of the licensee's facility where casino gaming is conducted. Also,
patrons may place wagers and franchise holders may accept such wagers on horse
and greyhound races pursuant to Ark. Code Ann. §
23-111-508(e)(1)
and Ark. Code Ann. §
23-110-405(e)(1).
20.060
Acceptance of wagers.
1. Books may not accept wagers unless made
with cash, chips or other representatives of value approved by the Commission,
or against credits made to a wagering account as provided for in Rule 20.160 or
on credit extended in accordance with the Rules of the Commission. A book shall
accept sports wagers only on its licensed premises, and only at betting
stations on the grounds of the licensee's facility where casino gaming is
conducted and as approved by the Commission or on sports events through an
account wagering system that has been approved by the Commission. The casino
licensee may utilize kiosks for wagering transactions in conjunction with an
approved system in a location on the grounds of the licensee's facility where
casino gaming is conducted and as approved by the Commission. No less often
than weekly, an operator of a book shall remove the bill validator boxes in the
kiosks (the sports pool kiosk drop). The sports pool kiosk drop shall be
monitored and recorded by surveillance. The casino licensee shall submit the
sports pool kiosk drop schedule to the Commission. The casino licensee's
accounting department shall reconcile the kiosks on a daily basis pursuant to
internal controls. Any variance of $ 500.00 or more shall be documented by the
accounting department and reported in writing to the Commission within 72 hours
of the end of the gaming day during which the variance was discovered. The
report shall indicate the cause of the variance and shall contain any
documentation required to support the stated explanation. All kiosks must
satisfy all MICS requirements and be detailed in the casino licensee's internal
controls approved by the Commission.
2. A book shall not knowingly accept money or
its equivalent ostensibly as a wager upon an event whose outcome has already
been determined. A licensed sports pool shall not accept a wager on an event
unless the date and time at which the outcome of the event is determined can be
confirmed from reliable sources satisfactory to the Commission or from records
created and maintained by the book in such manner as the Commission may
approve.
3. Licensed sports pools
may accept wagers, including parlay card wagers, as to which of the
participating contestants will win specified sports events and as to whether
the total points scored in a specified game, match, or similar sports event
will be higher or lower than a number specified for that event. Licensed sports
pools shall not accept wagers, including parlay card wagers, on other
contingencies unless their outcomes are reported in newspapers of general
circulation or in official, public records maintained by the appropriate league
or other governing body, or unless the pertinent sports events are televised
live at the book and a book employee other than a betting ticket writer
monitors the telecast, records the occurrence of the pertinent events and
contingencies simultaneously with their occurrence, and records the time of
their occurrence.
4. No book or
agent or employee of a book may accept a wager from a person who the book,
agent, or employee knows or reasonably should know is a messenger bettor or is
placing the wager in violation of state or federal law.
5. No book may hold a patron's money or its
equivalent on the understanding that the book will accept the money as a wager
only upon the occurrence of a specified, future contingency, unless a betting
ticket documenting the wager and contingency is issued immediately when the
book receives the money or its equivalent.
6. A race book or sports pool may not accept
wagers on a race or sporting event unless the wagering proposition is posted.
Propositions may be posted by electronic or manual means, including printed
media. If posted propositions are not updated simultaneously with actual
changes to the propositions, an announcement, audible throughout the race book
or sports pool, must be made simultaneously with the actual changes followed by
updating the posted propositions within a time specified in the house
rules.
20.061
Wagers and payouts in excess of $10,000.
1. Prior to accepting any nonpari-mutuel
wager in excess of $10,000 or making a payout in excess of $10,000 on a
nonpari-mutuel winning wager the book shall:
(a) Obtain the patron's name;
(b) Obtain the patron's permanent
address;
(c) Obtain the patron's
social security number or passport number;
(d) Obtain one of the following
identification credentials from the patron;
(1) Driver's license;
(2) Passport;
(3) Non-resident alien identification
card;
(4) Other reliable government
issued identification credentials; or
(5) Other picture identification credential
normally acceptable as a means of identification when cashing checks;
and
(e) Examine the
identification credential obtained to verify the patron's name and the accuracy
of the information obtained pursuant to paragraphs (b) and (c).
2. Prior to accepting a
nonpari-mutuel wager in excess of $10,000 or making a payout in excess of
$10,000 on a nonpari-mutuel winning wager, if a book knows a person is placing
a wager or receiving a payout allowed by the Arkansas Code and these Rules on
behalf of another person, the licensee shall obtain and record the information
required by paragraphs (a) through (e) of subsection 1 with respect to all
persons placing the wager or receiving the payout, and the licensee shall
reasonably attempt to obtain and, to the extent obtained, shall record the
information required by paragraphs (a) through (e) of subsection 1 with respect
to all persons for whom the wager was placed or the payout received.
3. Subsequent to accepting a nonpari-mutuel
wager in excess of $10,000 or making a payout in excess of $10,000 on a
nonpari-mutuel winning wager the book shall record or maintain records that
include:
(a) The patron's name and, if
applicable, the agent's name;
(b)
The patron's address and, if applicable, the agent's address;
(c) The patron's social security number and,
if applicable, the agent's social security number;
(d) A description including any document
number of the identification credential examined and, if applicable, for the
agent;
(e) The amount of the wager
or payout;
(f) Window number or
other identification of the location where the wager or payout
occurred;
(g) The time and date of
the wager or payout;
(h) The names
and signatures of the book employees accepting or approving the wager and
payout on the wager; and
(i) Any
other information as required by the Commission.
A book shall not implement alternative procedures to comply with this
subsection without the written approval of the Commission.
4. Each book shall
report the wagers or payouts required to be recorded pursuant to this section
on a "Book Wagering Report," a form published or approved by the Commission
that includes, but is not limited to:
(a) The
patron's and agent's (if applicable) name;
(b) The patron's and agent's (if applicable)
government issued identification credential information;
(c) The patron's and agent's (if applicable)
social security number;
(d) Wager
and payout amounts; and
(e) Date of
transactions.
Reports shall be submitted to the Commission no later than 15 days
after the end of the month of the occurrence of the transaction and in such
manner as the Commission may approve or require. Each book shall file an
amended report if the licensee obtains information to correct or complete a
previously submitted report, and the amended report shall reference to the
previously submitted report. Each book shall retain a copy of each report filed
for at least 5 years unless the Commission requires retention for a longer
period of time.
20.062
Multiple wagers.
1. A book and its employees and agents shall
not knowingly allow, and each book shall take reasonable steps to prevent, the
circumvention of these Rules by multiple wagers within its designated 24-hour
period with a patron or a patron's agent or by the use of a series of wagers
that are designed to accomplish indirectly that which could not be accomplished
directly. As part of a book's efforts to prevent such circumventions relative
to these Rules a book shall establish and implement wagering multiple
transaction logs.
2. Each book
shall record in a wagering multiple transaction log all nonpari-mutuel wagers
in excess of $5,000, or in smaller amounts that aggregate in excess of $5,000
when any single officer, employee, or agent of the book has actual knowledge of
the wagers or would in the ordinary course of business have reason to know of
the wagers between the book and a patron or a person who the book knows or has
reason to know is the patron's confederate or agent. This record shall be made
for nonpari-mutuel wagers occurring during a designated 24-hour period, within
a monitoring area.
3. Each log
entry in a wagering multiple transaction log shall be made by the employee
accepting or approving the wager, immediately after accepting the wager, and
shall include at a minimum:
(a) Description of
the patron (or agent), which may include such identifiers as age, sex, race,
eye color, hair, weight, height and attire, if the person is present when the
wager is accepted;
(b) Patron's
name and agent's name, if known;
(c) Window number or other identification of
the location where the wager occurred;
(d) Time and date of the wager;
(e) Dollar amount of the wager; and
(f) Signature or electronic signature of
person accepting or approving the wager.
One log shall be maintained for each monitoring area, for each
designated 24-hour period. A log is completed for each 24-hour period
regardless of whether any nonpari-mutuel wagers occurred. At the conclusion of
each designated 24-hour period, the last entry on a log which is recorded
manually shall be an indication that the end of the designated 24-hour period
has occurred. A book shall not implement alternative procedures or records to
comply with this subsection without the written approval of the
Commission.
4.
Each book shall aggregate all nonpari-mutuel wagers in excess of $5,000 or
smaller amounts when any single officer, employee, or agent of the book has
actual knowledge of the wagers or would in the ordinary course of business have
reason to know of the wagers between the book and a patron or a person who the
book knows or has reason to know is the patron's confederate or agent during a
designated 24-hour period within a monitoring area.
5. Before completing a wager that, when
aggregated with other wagers pursuant to subsection 4, will aggregate to an
amount that will exceed $10,000, the book shall complete the identification and
recordkeeping requirements described in these Rules. When aggregated wagers
exceed $10,000, the book shall complete the recording and reporting
requirements of these Rules.
6. If
a patron places a wager that pursuant to subsection 4 is to be aggregated with
previous wagers for which a record has been completed pursuant to these Rules,
the book shall complete the identification, recordation and reporting
procedures described in these Rules for any additional wager regardless of
amount occurring during a designated 24-hour period.
7. As used in this section:
(a) "Designated 24-hour period" means the
24-hour period ending at midnight each day unless otherwise approved by the
Commission.
(b) "Monitoring area"
means all race book and sports pool writing locations unless otherwise approved
by the Commission.
20.063
Structured wagers.
1. A book, its officers, employees or agents
shall not encourage or instruct the patron to structure or attempt to structure
wagers. This subsection does not prohibit a book from informing a patron of the
regulatory requirements imposed upon the book, including the definition of
structured wagers.
2. A book, its
officers, employees or agents shall not knowingly assist a patron in
structuring or attempting to structure wagers.
3. As used in this section, "structure
wagers" or "structuring wagers" means to willfully conduct or attempt to
conduct a series of wagers in any amount, at one or more books, on one or more
days in any manner as to willfully evade or circumvent the recording and
reporting requirements of Rule 20.061. The wager or wagers need not exceed the
dollar thresholds in Rule 20.061 at any single book in any single day in order
to constitute structuring within the meaning of this definition.
20.065
Imposition of
supplemental recordkeeping and reporting requirements. The Commission
may require a book to comply with the identification, recordkeeping, and
reporting requirements of Rules 20.061 and 20.062 for pari-mutuel wagers. The
Commission shall notify the book of the decision, in writing, and such decision
shall be considered an administrative decision, and therefore reviewable
pursuant to the procedures set forth in these Rules.
20.080
Payment of winning
wagers.
1. Except as otherwise provided
in this subsection, books shall make payment on a winning wager to the person
who presents the patron's copy of the betting ticket representing the wager or,
in the case of a wager made through an account wagering system approved by the
Commission, as soon as the wager settles. A book need not make payment to a
person who the book or an agent or employee of the book knows is not the person
to whom the patron's copy was issued. A book shall not make payment on a
winning wager to a person who the book or its agent or employee knows or
reasonably should know is collecting the payment on behalf of another for
monetary consideration or in violation of federal law. A book may withhold
payment of a winning wager if the patron refuses to supply identification or
any other documentation required by state or federal law.
2. Presentment of the betting ticket and
payment of the winning wager may be made at an affiliated book provided that:
(a) An adequate accounting of the payment is
kept for 5 years by both books; and
(b) The payout is properly included in the
computation of gross revenue of the licensee that initially accepted the
wager.
3. Books shall
honor winning betting tickets for 30 days after the conclusion of the event
wagered upon unless a longer period is established by the book. The book shall
state the redemption period on each betting ticket, in house rules and on
notices conspicuously placed about the licensed premises. Payment by mail may
be made only after presentment of the betting ticket and all identification
information and documentation required by state or federal law, and must be
made not later than 10 days after presentment. A book may accept a photocopy of
a driver license or passport in lieu of an actual driver license or passport
when presentment of the betting ticket is made by mail. Books shall maintain
the information and documentation presented for a period of 5 years.
4. A licensed race book shall determine the
winners of or payouts on wagers on horse and other animal races only with
information the book receives from licensed disseminators pursuant to these
Rules.
20.090
Parlay card wagers.
1. As used in
this section, "parlay card wager" means a wager on the outcome of a series of 3
or more games, matches, or similar sports events or on a series of 3 or more
contingencies incident to particular games, matches or similar sports events
preprinted on a form to assist in making selections for a parlay wager at a
betting window or kiosk.
2. Each
sports pool, including an online sports pool operator, that offers to accept
parlay card wagers shall fully, accurately, and unambiguously disclose on all
parlay card wagering forms:
(a) The amounts to
be paid to winners or the method by which such amounts are to be determined
and, if the sports pool limits payouts to an aggregate amount under subsection
3, the aggregate amount and the establishments to which it applies.
(b) The effect of ties.
(c) The minimum and maximum betting limits,
if any.
(d) The procedure for
claiming winnings, including but not limited to the documentation players must
present to claim winnings, time limits, if any, for claiming winnings, whether
winnings may be claimed and paid by mail and, if so, the procedure for claiming
winnings by mail.
(e) The effects
of an event wagered on not being played on the date specified and of other
events that will cause selections to be invalid.
(f) The requirement that a parlay card wager
must consist of at least three selections that have not become invalid under
applicable house rules or the wager will be void and the money wagered will be
refunded.
(g) The rights, if any,
reserved by the sports pool, including but not limited to reservation of the
right to refuse any wager or delete or limit any selection prior to the
acceptance of a wager, or to withhold payouts of specified amounts until the
outcome of each proposition offered by the parlay card has been
determined.
(h) The requirement
that the point spreads printed on the parlay card wagering form when the wager
is accepted will be used to determine the outcomes of the wagers.
(i) That the sports pool's house rules apply
to parlay cards unless otherwise stated on the parlay card wagering
form.
3. As used in this
subsection, "parlay card" means a wagering form offering exactly the same
propositions on exactly the same terms.
(a) A
sports pool may limit the aggregate amount to be paid to winners on a parlay
card in proportion to the amounts won.
(b) When a sports pool knows or reasonably
should know that actual payouts on a parlay card will be limited by an
aggregate amount established under paragraph (a), the sports pool shall cease
accepting wagers and making payouts on the parlay card. After the outcome of
the final game, match, or event covered by the parlay card has been determined,
the sports pool shall pay each winner at least that proportion of the payout
amount stated on the parlay card that the aggregate limit bears to total
payouts (including payouts made prior to the suspension of payouts) that would
otherwise have been made but for the limit.
(c) When a book ceases accepting wagers and
making payouts on a parlay card under paragraph (b), the book may accept wagers
on the parlay card on those propositions whose outcomes have not been
determined if the parlay card, patron receipts, and related documentation are
distinguishable from the card, receipts, and documentation as to which the book
has ceased accepting wagers, in which case the parlay card shall be considered
a different parlay card for purposes of this subsection.
(d) If a book pays the winner of a parlay
card wager more than 10 percent of the base amount established under paragraph
(a) before the outcome of every proposition offered by the parlay card has been
determined, the book must pay every winner of a wager on that parlay card the
proper payout amount stated on the parlay card in full and without regard to
any aggregate limit established under paragraph (a).
(e) In specific cases the Commission may
waive or impose requirements more restrictive than the requirements of this
subsection.
4. Prior to
adopting or amending parlay card rules, a book shall submit such rules to the
Commission for approval.
20.100
Computerized bookmaking
systems. Before beginning operations, each book shall install and
thereafter maintain a computerized bookmaking system meeting the specifications
approved by the Commission.
20.110
Layoff bets. Books may accept wagers placed by other books. Books
may place wagers only with other books. A book that places a wager shall inform
the book accepting the wager that the wager is being placed by a book and shall
disclose its identity.
20.115
Prohibition against rescission of wagers. A book may not
unilaterally rescind any wager without the prior written approval of the
Commission unless the wager was placed due to clear error by the book, as
defined in the book's internal control system. Any wager rescinded due to clear
error by the book is subject to subsequent review by the Commission.
20.120
Prohibited wagers; exception for
an event other than a horse race, greyhound race, or an athletic sports
event.
1. No wagers may be accepted or
paid by any Licensee / book on:
(a) Any
amateur sport or athletic event other than;
(1) Olympic sporting or athletic events
sanctioned by the International Olympic Committee, subject to limitation by the
Commission or the Commission's designee in the Commission's sole and absolute
discretion, and
(2) Collegiate
sporting or athletic events;
(b) Any collegiate sport or athletic event
which the licensee knows or reasonably should know, is being placed by, or on
behalf of a coach or participant in that collegiate event. Each licensee shall
take reasonable steps to prevent the circumvention of this Rule;
(c) The outcome of any election for any
public office both within and without the State of Arkansas; and
(d) Any event other than a horse race,
greyhound race, or an athletic sports event, unless such event is:
(1) Administratively approved by the
Commission in writing in accordance with subsection 3;
(2) After referral from the Commission,
approved by the Commission in accordance with subsection 5; or
(3) Approved by the Commission after review
pursuant to these Rules or, if applicable, approved by the Commission after
review pursuant to these Rules.
2. A request for approval to accept wagers on
an event other than a horse race, greyhound race, or an athletic sports event
shall be made by a book on such forms approved by the Commission, and shall
include:
(a) A full description of the event
and the manner in which wagers would be placed and winning wagers would be
determined.
(b) A full description
of any technology which would be utilized to offer the event.
(c) Such other information or documentation
which demonstrates that:
(1) The event could
be effectively supervised;
(2) The
outcome of the event would be verifiable;
(3) The outcome of the event would be
generated by a reliable and independent process;
(4) The outcome of the event would be
unlikely to be affected by any wager placed;
(5) The event could be conducted in
compliance with any applicable laws; and
(6) The granting of the request for approval
would be consistent with the public policy of the state.
(d) Such additional or supplemental
information as the Commission may require.
3. The Commission may refer a request for
approval to the full Commission for consideration, or grant, deny, limit,
restrict or condition a request made pursuant to subsection 2 for any cause the
Commission deems reasonable. A book aggrieved by an administrative decision of
the Commission may submit the matter for review by the Commission pursuant to
these Rules.
4. The Commission is
hereby granted the authority to issue an interlocutory order, revoking or
suspending any administrative approval granted pursuant to subsection 3 for any
cause deemed reasonable. An interlocutory order shall be deemed delivered and
effective when personally served upon the book, or if personal service is
impossible or impractical, when deposited, postage prepaid, in the United
States mail, to the book at its address as shown in the records of the
Commission. If an interlocutory order revoking or suspending the administrative
approval is issued, the effected book may request that the order be reviewed by
the Commission pursuant to these Rules.
5. Whenever the Commission refers a request
for approval to the Commission for consideration, the request shall be deemed
an application and the book which submitted the request shall submit the
application fee set forth in these Rules. Such application shall be included on
the agenda of the next regularly scheduled meeting of the Commission occurring
more than 10 working days after receipt of the application fee and, thereafter,
on the agenda of the next regularly scheduled meeting of the Commission. The
Commission, after considering the recommendation of the Commission, may grant,
deny, limit, restrict or condition the application for any cause it deems
reasonable and the decision of the Commission shall be final and shall not be
subject to any further administrative or judicial review.
6. Upon approval of the acceptance of wagers
on an event other than a horse race, greyhound race, or an athletic sports
event pursuant to the provisions of subsection 1(f), the Commission shall
provide public notice of such approval including any conditions and limitations
placed on such approval. Such notice shall occur by publication on the
Commission's website as close as practicable to the time at which the
Commission, Director, or Commission approves the other event. Thereafter, any
book may accept wagers on such other event pursuant to the approval and any
conditions and limitations placed thereon.
7. For purposes of this Rule, "collegiate
sport or athletic event" means a sport or athletic event offered or sponsored
by or played in connection with a public or private institution that offers
educational services beyond the secondary level.
20.121
Reports of suspicious
transactions.
1. As used in this
section, "suspicious transaction" means a transaction which a book knows or, in
the judgment of it or its directors, officers, employees or agents, has reason
to suspect:
(a) Is, or would be if completed,
in violation of, or is part of a plan to violate or evade, any federal, state
or local law or regulation;
(b) Is,
or would be if completed, wagering by, or on behalf of, a coach or participant
in a sporting event or other event on such event; or
(c) Has no business or apparent lawful
purpose or is not the sort of transaction the particular patron would normally
be expected to perform, and the book knows of no reasonable explanation for the
transaction after examining the available facts, including the background of
the transaction.
2. A
book:
(a) Shall file with the Commission, by
using a form developed by the Commission, a report of any suspicious
transaction, if it involves or aggregates to more than $5,000 in funds or other
assets; and
(b) May file a report
of any suspicious transaction, regardless of the amount if the licensee
believes it is relevant to the possible violation of any law or
regulation.
3. The report
in subsection 2(a) shall be filed no later than 30 calendar days after the
initial detection by the licensee of facts that may constitute a basis for
filing such a report. In situations involving violations that require immediate
attention, the licensee shall immediately notify, by telephone, the Commission
in addition to timely filing a report.
4. A licensee shall maintain a copy of any
report filed and the original or business record equivalent of any supporting
documentation for a period of five years from the date of filing the report.
Supporting documentation shall be identified, and maintained by the licensee as
such, and shall be deemed to have been filed with the report. A licensee shall
make all supporting documentation available to the Commission and any
appropriate law enforcement agencies upon request.
5. A licensee and its directors, officers,
employees, or agents who file a report pursuant to this Rule shall not notify
any person involved in the transaction that the transaction has been reported.
Any report filed with the Commission under this subsection is confidential and
is privileged and may be disclosed only by the Commission in the necessary
administration of their duties and responsibilities under the Amendment. Any
report, whether written or oral, is absolutely privileged and does not impose
liability for defamation or constitute a ground for recovery in any civil
action.
20.125
Wagers; terms and conditions.
1.
No book shall:
(a) Accept from a patron,
directly or indirectly, less than the full face value of an offtrack
pari-mutuel wager;
(b) Agree to
refund or rebate to a patron any portion or percentage of the full face value
of an off-track pari-mutuel wager; or
(c) Increase the payoff of, or pay a bonus
on, a winning off-track pari-mutuel wager.
2. The provisions of this subsection do not
prohibit the granting of the following by a book or a licensed gaming
establishment where a book is located, or an affiliate of one or more of those
entities that holds a Casino license:
(a)
Room, food, beverage, racing data subscriptions or services, including but not
limited to broadcasts, periodicals and electronic publications or services,
that are available to the public from other sources, tobacco, or other
services, including spa services, movies, bowling and entertainment
admission;
(b) Limousine or other
car service transportation to and from the gaming establishment where the book
is located;
(c) Merchandise or
other non-cash equivalents not exceeding $100 per patron per week with the
value of such $100 determined by the book's or the licensed gaming
establishment's cost;
(d) Player
loyalty program points based on wagers other than pari-mutuel wagers and such
points may be redeemed in accordance with the rules of the program, including
but not limited to being redeemed for free-play on any gaming device or
gambling game located at the Casino licensee's premises; or
(e) Increase the payoff of or pay a bonus on
any deposit or winning sports or non-pari-mutuel wager.
3. A book or a licensed gaming establishment
where a book is located, or an affiliate of one or more of those entities that
holds a Casino license, may award player loyalty program points based on
pari-mutuel wagers placed by a patron, however, such points may only be
redeemed in accordance with the rules of the program, provided that points
earned based on pari-mutuel wagers may not be redeemed for cash, items or
services that the book intends to or does redeem for cash, or free-play on any
gaming device or gambling game, or for items or services that do not fall under
one of the exceptions listed under subsection 2.
4. A book shall not, in an attempt to provide
a benefit to the patron in violation of subsection 1, offer a wagering
proposition, or set or move its wagering odds, lines or limits.
5. The Commission may require a book to:
(a) Disclose its betting limits in its house
rules and obtain approval from the Commission before changing those limits or
modifying its house rules; and
(b)
Document and report, in such manner as the Commission may approve or require,
wagering limits, temporary changes to such limits, or the acceptance of a wager
or series of wagers from the same patron that exceeds such limits. The report
may include, but is not limited to:
(1)
Recording the name of the patron for which betting limits are changed or
exceeded;
(2) Recording the name of
the employee approving the acceptance of a wager that exceeds betting limits or
causes a change in betting limits;
(3) Describing the nature of the temporary
change and any related wagers; and
(4) Describing how the temporary change in
limit will benefit the licensee.
The Commission shall notify the book, in writing, of the decision to
impose such requirements and such decision shall be considered an
administrative decision and, therefore, reviewable pursuant to the Arkansas
Administrative Procedures Act.
6. A book shall not set lines or odds, or
offer wagering propositions, designed for the purposes of ensuring that a
patron will win a wager or series of wagers.
20.130
Communications
technology.
1. Before installing or
permitting the installation or use of any communications technology, the book
shall notify the Commission in writing of the location and number or other
identifier of each communications technology and shall obtain the written
approval of the Commission for each communications technology. The Commission
may condition the approval in any manner the Commission considers
appropriate.
2. Before a book
accepts any wagering communications, the book must obtain the written approval
of the Commission to accept such wagering communications and wagering
instructions, and thereafter use only the communications technology approved
for that purpose. The book must obtain written permission from the Commission
for any substantive changes to the communications technology.
3. As a condition to the granting of the
privilege of using communications technology upon the licensed premises, the
book shall be deemed to have consented to the authority of the Commission to
require the immediate removal of any communications technology from the
licensed premises at any time without prior notice of hearing. After any such
removal, the book or the call center may request a hearing before the
Commission as to whether or not circumstances may warrant the permanent
revocation of the privilege of having communications technology upon the
premises.
4. Upon the request of
the Commission, a book shall provide a written consent for the Commission to
examine and copy the records of any telephone, telegraph, or other
communications company or utility that pertain to the operation of the book or
the call center.
20.140
Wagering communications; establishing patron wagering accounts for
sports, nonpari-mutuel race, and other event wagering.
1. A book may only accept a sports wager or
nonpari-mutuel race wager made in person, unless the transmission of a wager is
initiated by a patron while physically present within the State of Arkansas and
made pursuant to the account wagering system provisions of these Rules. Each
book must conspicuously display signs to that effect on its premises.
Consistent with the intent of the United States Congress as articulated in the
Unlawful Internet Gambling Enforcement Act of 2006 (
31 U.S.C. s.5361 et seq.)
the intermediate routing of electronic data relating to a lawful intrastate
wager authorized under this provision shall not determine the location or
locations in which such wager is initiated, received, or otherwise
made.
2. A book may only accept a
pari-mutuel horse race wager made in person unless a pari-mutuel horse race
account wager is accepted pursuant to the provisions of Rule 24. Each book must
conspicuously display signs to that effect on its premises.
3. Each licensee that accepts wagering
communications shall establish and implement pursuant to these Rules a system
of internal control for such transactions, and comply with both its system of
internal control and the minimum internal control standards contained in these
Rules.
4. Each book shall prepare a
written description of its rules and procedures for wagering communications,
and shall make a copy available to each patron for whom a wagering account is
established.
5. Before a book
accepts a wagering communication on any sporting event wager, on any
nonparimutuel race wager, or on any other event wager, the following must
occur:
(a) A book must register patrons and
create wagering accounts in accordance with Rule 4.225.
(b) In addition to the requirements of these
Rules, before registering a patron for a wagering account, the book must have
the patron affirm that the patron has been informed and acknowledges that:
(1) Patrons are prohibited by law from
placing sports wagers, nonpari-mutuel race wagers, and other event wager wagers
while physically present outside the State of Arkansas and the Licensee / book
is prohibited from accepting such wagers; and with regard to pari-mutuel horse
race and greyhound race wagers, a race book may only accept off-track
pari-mutuel horse race and greyhound race account wagers pursuant to the
provisions of Rule 24 or, with respect to franchise holders, patrons may place
wagers, and franchise holders may accept such wagers, on horse and greyhound
races pursuant to Ark. Code Ann. §
23-111-508(e)(1)
and Ark. Code Ann. §
23-110-405(e)(1).
Notwithstanding the requirements of these Rules, for a business entity patron,
the patron must provide an employee of the book with the following information
before the book registers and creates a wagering account for the patron.
i. The name, residential address, copy of a
valid photo identification which evidences that the person is at least 21 years
of age, and social security number or individual taxpayer identification
number, of each of the business entity's equity owners, holders of
indebtedness, directors, officers, managers and partners, anyone entitled to
payments based on the profits or revenues and any designated
individuals;
ii. The business
entity's formation documents and all filings with the Secretary of
State;
iii. Any other documentation
or information the Commission may require; and
iv. Any other documentation or information
the race book or sports pool may require. The employee must record such
information. Unless a book has otherwise been granted approval by the
Commission pursuant to these Rules, the information required pursuant to this
subsection shall be provided by the patron to an employee of the book at the
premises of the book.
6. Before a book accepts a wagering
communication on any sporting event wager, nonpari-mutuel race wager, or other
event wager from another book:
(a) The
authorized employee of the other book must personally appear at the premises of
the book to open a wagering account;
(b) The book employee must record:
(1) The authorized employee of the other
book's name, permanent business address (other than a post office box number),
and business telephone number;
(2)
The documents used to verify the other book is a book, the authorized employee
is an employee of the other book and is authorized to open this wagering
account;
(3) The amount of the
authorized employee of the other book's initial wagering account or front money
deposit;
(4) The authorized
employee of the other book's account number with the book; and
(5) The date the authorized employee of the
other book's account with the book is opened;
(c) The authorized employee of the other book
must sign, in the presence of a supervising employee of the book, statements
attesting that the authorized employee of the other book:
(1) Confirms the accuracy of the information
recorded;
(2) Has received a copy,
or has had a copy made available to them, of the book's rules and procedures
for wagering communications;
(3)
Has been informed and understands that authorized employees of other books that
establish a wagering account pursuant to this subsection are prohibited by law
from placing wagering communications from outside Arkansas and that the book is
prohibited by law from accepting them;
(4) Has been informed and understands that,
with regard to pari-mutuel horse race wagers, a race book may only accept
off-track pari-mutuel horse race account wagers pursuant to the provisions of
these Rules; and
(5) Consents to
the monitoring and recording by the Commission and the book of any wagering
communication; and
(d)
The employee who verifies the authorized employee of the other book's
information and who obtains and records the information on behalf of the book
and the supervising employee described in subparagraph (c), must each sign
statements that they witnessed the authorized employee's signature and
confirmed the authorized employee of the other book's identity and
residence.
7. In addition
to the posting of the wager in the computerized bookmaking system, all wagering
communications shall be electronically recorded and retained for a period of 60
days. The method of recording the wager must be approved by the Commission.
Such recordings must be made immediately available to any Commission agent upon
request.
8. All wagering account
applications or amendments thereto for active accounts must be retained by the
book. All wagering account applications or amendments thereto for rejected
applications shall be retained by the book for no less than one year following
the rejection of the related application. All wagering account applications or
amendments thereto for closed accounts shall be retained by the book for no
less than one year following the closure of the related wagering
account.
9. A book shall not allow
the use of a wagering account established pursuant to this section for forms of
wagering other than sports wagering, nonpari-mutuel race wagering, or other
event wagering unless:
(a) The establishment
and use of the wagering account otherwise meets all of the requirements of
these Rules; and
(b) Administrative
approval has been granted by the Commission.
20.145
Account wagering systems.
Account wagering systems shall:
1. for
systems that use other than voice-only wagering communications technology,
provide for the patron's review and confirmation of all wagering information
before the wagering communication is accepted by the book. The system shall
create a record of the confirmation. This record of the confirmation of the
wager shall be deemed to be the actual transaction of record, regardless of
what wager was recorded by the system;
2. except in the case of a wager placed due
to clear error by the book, as defined in the book's internal control system,
prohibit wagers from being changed after the patron has reviewed and confirmed
the wagering information, and the specific wagering communication transaction
has been completed;
3. prohibit the
acceptance of wagers after post time or the start of a sporting event except
those originated after post time or the start time of the sporting event that
are approved in the same manner as other events approved pursuant to these
Rules provided, however, that wagers on inprogress sporting events is not
prohibited under these Rules;
4.
prohibit a book from accepting an account wager, or a series of account wagers,
in an amount in excess of the available balance of the wagering
account;
5. prohibit a book from
accepting sports wagers and nonpari-mutuel horse race wagers from patrons while
physically located outside the state;
6. post payment on winning account wagers as
a credit to the patron's wagering account as soon as reasonably practicable
after the event is declared official;
7. unless otherwise approved by the
Commission, maintain a completely separate wagering account for pari-mutuel
horse race wagers. Wagering accounts for pari-mutuel sports wagers,
nonpari-mutuel horse race wagers and nonpari-mutuel sports wagers may be
commingled in a single wagering account;
8. maintain complete records of every
deposit, withdrawal, wager, winning payoff, and any other debit or credit for
each account; and
9. for systems
that use other than voice-only wagering communications technology, produce a
printable record of the entire transaction as required by this section and
shall not accept any wagering communication or transaction if the printable
record system is inoperable.
20.150
House rules. Each book
shall adopt, adhere to, and make available upon request or online, written
comprehensive house rules governing wagering transactions with patrons. Without
limiting the generality of the foregoing, the rules must specify the amounts to
be paid on winning wagers, the effect of schedule changes, the redemption
period for winning tickets, and the method of noticing odds or line changes to
patrons. House rules must state that wagers may be accepted at other than the
currently posted terms, if applicable. Prior to adopting or amending such house
rules, a book shall submit such rules to the Commission for approval.
20.155
Business entity wagering.
1. A book shall notify the Commission in
writing of its intent to accept wagers from business entities which have met
all of the applicable requirements found in these Rules.
2. A book is prohibited from accepting wagers
from a business entity unless all of the business entity's owners, directors,
officers, managers, partners, holders of indebtedness, and anyone entitled to
payments based on profits or revenues of the entity are fully disclosed. If the
business entity is owned or controlled by one or more holding companies, each
of the holding companies' owners, directors, officers, managers, partners,
holders of indebtedness and everyone entitled to payments based on profits or
revenues of the entity must be fully disclosed.
3. A book which elects to accept wagers from
business entities must conduct due diligence on each business entity from which
the book will accept wagers which, at a minimum, includes, but is not limited
to:
(a) Requiring the business entity to
affirm that it has met all of the applicable requirements found in this section
and that it is not established for the purpose of circumventing any applicable
federal or state laws including, but not limited to, laws concerning illegal
sports wagering, electronic communications, and money laundering;
(b) Ascertaining all equity owners, holders
of indebtedness, directors, officers, managers, partners, anyone entitled to
payments based on the profits or revenues, and any designated individuals;
and
(c) Ascertaining the natural
person who is the source of funds for each contribution to the business entity.
A book shall maintain records of the due diligence it performs on a
business entity for no less than one year following the closure of the wagering
account of the business entity or for no less than one year after rejection of
a business entity wagering account application by the book.
4. A book shall not
accept wagers from a business entity if:
(a)
The business entity does not make the affirmation or disclosures required by
these Rules;
(b) The book is unable
to verify the identity of all the equity owners, holders of indebtedness,
directors, officers, managers, partners, anyone entitled to payments based on
the profits or revenues, and any designated individuals of the business entity;
or
(c) The book is unable to verify
the natural person who is the source of funds for each contribution to the
business entity.
5. Upon
receipt of updated information from a business entity, a book shall verify the
updated information. If a book is unable to verify the updated information
within 30 days of the book's receipt of the updated information from the
business entity, the book shall suspend the wagering account and not allow
further wagering activity on the wagering account.
6. A book shall require a business entity
from which the book accepts wagers to provide:
(a) For business entities from which the book
accepts wagers aggregating more than $5,000,000 in a calendar year, an
independent third-party verification concerning to whom the business entity
made payments based on profits or revenues to ensure no payments were made to
persons other than those permitted by these Rules to receive such payments. If
the book does not receive a copy of the independent third-party verification
prior to April 1st of the year following the year in which the business entity
placed wagers in excess of $5,000,000, the book shall suspend the wagering
account and not allow further wagering activity on the wagering account
or
(b) For business entities from
which the book accepts wagers aggregating $5,000,000 or less within a calendar
year, an affirmation stating the business entity did not make payments based on
profits or revenues to persons other than those permitted by these Rules to
receive such payments. If the book does not receive such affirmation prior to
April 1st of the year following any year in which the business entity placed
wagers with the book, the book shall suspend the wagering account and not allow
further wagering activity on the wagering account.
7. A book shall report any violation or
suspected violation of law or regulation related to business entity wagering to
the Commission immediately. Such reporting shall include, but is not limited
to, any violation or suspected violation of relevant federal laws such as The
Federal Wire Act
18 U.S.C. §
1084, the Illegal Gambling Business Act
18 U.S.C. §
1955, and Title 31 anti-money laundering
laws.
8. A book may only accept
wagering activity from a business entity, acting through one or more designated
individuals, through a wagering account established by the business entity and
may only deposit winnings into such wagering account. The book must use an
account wagering system for such wagering activity.
9. A book shall not extend credit to a
business entity.
10. A book shall
report the suspension or closure of a business entity wagering account to the
Commission within 5 days of suspension or closure and shall include the reason
for such suspension or closure in the report. A book shall report the
reinstatement of a suspended business entity wagering account to the Commission
within 5 days of reinstatement and shall include the reasons the book
reinstated the wagering account.
11. A book that accepts wagers from business
entities shall adopt, conspicuously display at its premises, and adhere to
house rules governing business entity wagering transactions.
12. A book that accepts wagers from business
entities shall implement policies and procedures designed to ensure that
business entities' wagering accounts are used only to place book
wagers.
13. As used in this
section, "holding company" means any corporation, firm, partnership, limited
partnership, limited-liability company, trust or other form of business
organization which, directly or indirectly:
(a) Owns, as defined in these
Rules;
(b) Controls, as defined in
these Rules; or
(c) Holds with
power to vote any part of a business entity subject to this section. In
addition to any other reasonable meaning of the words used, a holding company
"indirectly" has, holds or owns any power, right or security if it does so
through any interest in a subsidiary or successive subsidiaries, however many
such subsidiaries may intervene between the holding company and the business
entity subject to this section.
20.160
Wagering account
transactions.
1. Except as otherwise
provided herein, deposits, withdrawals, credits, and debits to wagering
accounts shall be made in accordance with these Rules.
2. Business entity wagering account deposits
and withdrawals may only be made by transfers to and from the bank or financial
institution account maintained by the business entity. Business entity wagering
account deposits and withdrawals may not be made in cash.
20.165
Use of an operator of a call
center.
1. A Licensee, franchise holder
or book shall not utilize an operator of a call center, except to provide
technical support to a patron. A call center system shall not be used to
receive, transmit, or accept wagers from a patron to a licensed book.
2. The operator of a call center performs
such patron services as:
(a) Providing help
desk responses to patrons and the general public concerning sports wagers and
nonpari-mutuel horse race wagers at a licensed Arkansas book; and
(b) Such other patron services as may be
approved by the Commission.
3. In addition to the posting of the wager at
a licensed Arkansas book, all wagering instructions shall be electronically
recorded and retained for a period of 60 days. The method of recording the
wagering instructions must be approved by the Commission. Such recordings must
be made immediately available to any Commission agent upon request.
4. The operator of a call center shall allow
the members of the Commission, the Commission, their agents and employees to
immediately inspect and examine the premises and immediately inspect, examine,
photocopy, and examine all papers, books, and records, on the premises, or
elsewhere as practicable.
5. The
operator of a call center shall only use communications technology approved
pursuant to these Rules.
6. The
operator of a call center shall operate in compliance with all applicable
provisions of this Rule that may apply to it or the licensed Arkansas book
using its services.
7. The licensed
Arkansas book shall maintain responsibility for any operator of a call center,
used by the book, to operate in compliance with all state and federal laws and
regulations, as applicable.
8.
Violation of any applicable law or regulation by an operator of a call center
constitutes reasonable cause for disciplinary action.
20.180
Gross revenue computations and
layoff bets. The amounts of wagers placed by a book and the amounts
received by the book as payments on such wagers shall not affect the
computation of the book's gross gaming revenue.
20.190
Assigned agent. The
Commission may at any time require a book to allow an agent of the Commission
to be permanently present on the book's premises during all hours of operation,
and to require the costs and expenses for such agent to be borne by the book in
a manner deemed reasonable by the Commission. The agent shall have full and
complete access to all books, records, and to any telephone conversations
emanating from or received at the licensed premises.
20.195
Records and reports for users
and buyers. Each "user", which is defined as an operator of a race book,
sports pool or gambling game who is licensed in this state and receives and
displays a live broadcast within this state, who uses information included in a
live broadcast to determine winners of and payoffs on wagers accepted at the
user's race book, and each "buyer," as defined in these Rules, shall comply
with the recording and reporting requirements specified in these
Rules.
20.200
Records and
forms. Books shall create and maintain the records and reports required
by this Rule in such manner and using such forms as the Commission may require
or approve. The Commission may require books to create and maintain such other
records and reports as are necessary or convenient for strict regulation of
books. Except as otherwise provided in this Rule, books shall preserve the
records required by this Rule for at least 5 years after they are made. The
Commission may at any time examine and copy the records of any book. Each book
shall comply with all other applicable Rules of the Commission to the extent
not in conflict with this Rule.
20.220
Global Risk Management.
1. A book engaging in global risk management
may provide direction, management, consultation, and/or instruction to the
operator of a wagering pool located in a jurisdiction approved by the
Commission concerning:
(a) The management of
risks associated with a wagering pool for a race or sporting event or any other
event for which the wagering pool is permitted to accept wagers;
(b) The determination of where lines, point
spreads, odds, or other activity relating to betting or wagering are initially
set and the determination of whether to change such lines, point spreads, odds,
or other activity relating to betting or wagering;
(c) Whether or not to accept or reject bets
or wagers, to pool bets or wagers, or to lay off bets or wagers;
(d) The use, transmittal, and accumulation of
information and data for the purpose of providing global risk management;
and
(e) Any other activity
associated with a wagering pool if approved in writing by the Commission prior
to a book commencing direction, management, consultation, and/or instruction
concerning the activity.
2. A book which intends to provide global
risk management shall:
(a) Enter into a
written agreement to provide global risk management with any operator of a
wagering pool to which the book proposes to provide global risk management. A
copy of such executed agreement with an operator of a wagering pool located
outside of Arkansas shall be provided to the Commission no later than the date
on which the book commences global risk management for the operator of the
wagering pool;
(b) Provide details
to the Commission regarding any permissible jurisdiction other than Arkansas
where the book intends to provide global risk management no later than the date
on which the book commences global risk management in such permissible
jurisdiction;
(c) No later than the
date on which a book commences global risk management, submit the book's
systems of accounting and internal control utilized for global risk management
to the Commission. Such systems must include provisions for complying with all
federal laws and regulations; and
(d) Provide such other information as the
Commission may require concerning global risk management.
3. In addition to the requirements contained
in subsection 2 of this section, at least 30 days prior to providing global
risk management to a Arkansas licensee, a book shall submit to the Commission
the written agreement for the global risk management provided to the Arkansas
licensee. The Commission may object in writing to such agreements in the
Commission's sole and absolute discretion. If the Commission objects to an
agreement, the book shall not provide global risk management to the Arkansas
licensee until the book has resubmitted the agreement to the Commission, and
the Commission has indicated in writing that the Commission does not object to
the resubmitted agreement.
RULE 21
CARD GAMES
21.010
Authority and applicability. The Commission hereby provides for
the regulation of the method of operation and fiscal affairs of games of poker
and all other similar games.
21.020
Definitions. As used herein, the following terms shall have the
following meanings:
1. Ante: A player's
initial wager or predetermined contribution to the pot prior to the dealing of
the first hand.
2. Call: A wager
made in an amount equal to the immediately preceding wager.
3. Card game shill: An employee engaged and
financed by the licensee as a player for the purpose of starting and/or
maintaining a sufficient number of players in a card game.
4. Card room bank: An imprest fund which is a
part of and accountable to the licensee's casino cage or bankroll but which is
maintained in the card room exclusively for the purposes set forth in these
Rules.
5. Card table bank: An
imprest inventory of cash and chips physically located in the table tray on the
card table and controlled by the licensee through accountability established
with the card room bank. The card table bank shall be used only for the
purposes set forth in these Rules.
6. Check: To waive the right to initiate the
wagering, but to retain the right to call after all the other players have
either wagered or folded.
7. Hand:
One game in a series, one deal in a card game, or the cards held by a
player.
8. Pot: The total amount
anted and wagered by players during a hand.
9. Proposition player: A person paid a fixed
sum by the licensee for the specific purpose of playing in a card game who uses
his or her own funds and who retains his or her winnings and absorbs his or her
losses.
10. Raise: A wager made in
an amount greater than the immediately preceding wager.
11. Rake-off: A percentage of the pot which
may be taken by the licensee for maintaining or dealing the game.
12. Stake: The funds with which a player
enters a game.
13. Stakes player: A
person financed by the licensee to participate in a game under an arrangement
or understanding where by such person is entitled to retain all or any portion
of his or her winnings.
14. Table
tray: A receptacle used to hold the card table bank.
15. Time buy-in: A charge to a player,
determined on a time basis, by the licensee for the right to participate in a
game.
21.025
Card
game drop box procedures.
1. Each card
table shall have one card game drop box with the drop slot located at least
four inches in front of the table tray and to the right thereof, unless the
table is equipped with a drop slot located at least two inches to the right of
and even with the top right-hand corner of the table tray, with a cover over
the drop slot, which when activated will cause the rake to drop directly into
the drop box. The card game drop box shall be a locked container marked with a
permanent number corresponding to a permanent number on the card table and
permanently marked to indicate game and shift, all of which markings shall be
clearly visible at a distance of 20 feet. The locked container shall be locked
to the card table and shall be separately keyed from the container
itself.
2. All card game drop boxes
shall be removed from their respective card tables at the end of each gaming
day at the times previously designated in writing to the Commission. The
removal of card game drop boxes shall be without any interruptions so that an
observer may be able to observe the markings on the boxes. The boxes must be
transported directly to the room designated for counting where they shall be
stored in a secure place or immediately counted.
21.030
Sale of stakes. No cash
or chips received for the sale of stakes shall be commingled with any rake-offs
or other compensation received by the licensee from the players for the right
to play.
21.040
Accounting
for transactions between card table bank and card room bank.
1. When the card table bank is to be
replenished with chips from the card room bank, all cash or chips to be
transferred must be counted down by the dealer in public view on the card table
and verified by the person who transports the cash or chips.
2. The transfer shall be preceded by the
placement of appropriately designated marker buttons (lammer) on the card table
of a value equivalent to the cash or chips to be transferred to the card room
bank. Such marker buttons may only be removed by the dealer after the
transaction has been completed.
3.
Upon written Commission approval, those licensees wishing to utilize the casino
cage in lieu of a card room bank may do so provided that the same procedures as
set forth in these Rules shall be followed by the casino cage for such
transactions.
21.045
Limitations on the use of card room banks and card table banks.
1. Card room banks shall be used exclusively
for the purposes of the issuance and receipt of shill funds, the maintenance of
card table banks used in card games, and the issuance of chips to and
redemption of chips from players.
2. Card table banks shall be used only for
the purposes of making change or handling player buy-ins.
21.050
Rake-off and time buy-in.
1. Rake-offs shall not exceed 10 percent of
all sums wagers in the hand. Rake-offs shall only be pulled from the pot by the
dealer in an obvious manner after each wager and call or at the completion of
the hand. The rake-off shall be placed in a designated rake circle and shall
remain in the designated rake circle until a winner is declared and paid. The
rake-off shall then be dropped into the card game drop box.
2. The designated rake circle must be clearly
visible to all players and shall be positioned in a location on the table where
it is at least four inches from and in front of the table tray and at least
eight inches from the table drop slot, unless the table is equipped with a drop
slot located at least two inches to the right of and even with the top
right-hand corner of the table tray, with a cover over the drop slot, which
when activated will cause the rake to drop directly into the drop box; such
drop slot shall serve as the rake circle.
21.065
Restrictions on use of shills
and proposition players.
1. Shills may
not check and raise or play in any manner between themselves or in collusion
with others to the disadvantage of other players within the game.
2. Each establishment employing shills or
proposition players shall identify such shills or proposition players upon
request and shall display a sign clearly legible from each table which states:
"Arkansas gaming rules allow the use of shills and proposition players.
Shills and proposition players shall be identified by management upon
request."
3. Each licensee
shall maintain, in a manner as in the case of all other employees, employment
records on each individual engaged as a shill or proposition player;
additionally, a list of all shills and proposition players shall be maintained
at the card room bank and shall be readily available for inspection.
4. Persons who participate in the management
or supervision of games subject to this Rule shall be permitted to act as a
shill or proposition player in the establishment where employed if supervision
is otherwise provided.
5. All
advances to and winnings of a shill shall be utilized only for wagering in card
games or turned into the card room bank at the conclusion of play.
6. No more than two proposition players may
play in a card game. No more than a combination of four shills and proposition
players may play in a card game.
7.
Shills may only wager chips or coins.
21.070
Restrictions on other
players.
1. Stakes players shall not be
utilized by any licensee.
2. No
dealer may wager in any game in which he or she is dealing.
21.080
Posting of
rules. The rules of each game shall be posted and be clearly legible
from each table and must designate:
1. The
maximum rake-off percentage, time buy-in, or other fee charged.
2. The number of raises allowed.
3. The monetary limit of each
raise.
4. The amount of
ante.
5. Other rules as may be
necessary.
RULE
22
OFF-TRACK PARI-MUTUEL WAGERING
22.010
Scope. This Rule and Rule
24 govern all off-track pari-mutuel wagering in Arkansas for which a license or
approval has been granted by the Commission pursuant to Amendment 100. A casino
licensee that is also a franchise holder may elect to have its race book
operations relating to pari-mutuel wagering and horse and greyhound racing
regulated and governed by the Arkansas Horse Racing Law at Ark. Code Ann.
§§
23-110-101, et
seq., or the Arkansas Greyhound Racing Law at Ark. Code Ann. §§
23-111-101, et
seq., respectively, and rules promulgated by the Commission thereunder and not
by these Rules.
22.020
Definitions. As used in this Rule:
1. "Affiliate" has the same meaning as
defined in these Rules.
2.
"Breakage" means:
(a) The rounding of a payout
on a winning pari-mutuel wager, as determined by the track in accordance with
the laws and regulations that are applicable to the jurisdiction in which the
track operates;
(b) Those
deficiencies arising from payouts made pursuant to these Rules; or
(c) Those deficiencies arising from the
payment of a guaranteed payout pursuant to these Rules.
4. "Commission on wagers" ("takeout") means
the amount retained and not returned to patrons by a pari-mutuel book from the
total amount of off-track pari-mutuel wagers.
5. "Foreign track" means a track located
outside of the United States.
6.
"Gross revenue" means the amount of the commission on wagers received by a
licensee, plus positive breakage and the dollar amount of winning tickets that
remain unpaid pursuant to this Rule, less negative breakage and the amount paid
to a track for the right to be part of an interstate or intrastate common
pari-mutuel pool ("track fee").
7.
"Interstate common pari-mutuel pool" means a pari-mutuel pool consisting of the
parimutuel wagers placed at a track, its intrastate betting locations, other
jurisdictions and the offtrack pari-mutuel wagers placed and accepted at
pari-mutuel books.
8. "Intrastate
common pari-mutuel pool" means a pari-mutuel wagering pool operated by a
systems operator consisting solely of the wagers placed and accepted at two or
more pari-mutuel books on races at tracks.
9. "Live audio visual signal" ("simulcast")
means the audio and visual transmission of a race, or series of races, as it
occurs at a track.
10. "Manual
merge" means the process used in the event of a systems or communications
failure by which the systems operator transmits to the track through telephone,
telecopy, cellular, or other means of communication, the pari-mutuel books
wagering information and the process by which the track includes the off-track
pari-mutuel wagers in the interstate common parimutuel pool in such
event.
11. "Nonpari-mutuel race
wager" means a wager other than one offered to be included in an interstate or
intrastate common pari-mutuel pool.
12. "Off-track pari-mutuel system" means a
computerized system or component of a system that is used to transmit wagering
data:
(a) In an interstate common pari-mutuel
system, to and from a track which offers interstate common pari-mutuel pools;
or
(b) In an intrastate common
pari-mutuel system, between the pari-mutuel books and a systems operator, and
includes the totalizator equipment used to determine the winners of and payoffs
on intrastate common pari-mutuel pools.
13. "Off-track pari-mutuel wager" means
either:
(a) A wager placed by a patron and
accepted by a pari-mutuel book on a race or races offered as part of an
interstate common pari-mutuel pool whether or not the wager is actually
included in the total amount of the interstate common pari-mutuel pool;
or
(b) A wager placed by a patron
and accepted by a pari-mutuel book on a race or races offered as part of an
intrastate common pari-mutuel pool.
14. "Pari-mutuel book" means a race book that
has received a license to accept off-track parimutuel wagers pursuant to the
provisions of this Rule. The term "pari-mutuel book" shall include pari-mutuel
only books, unless stated otherwise within this Rule.
15. "Pari-mutuel only book" means a race book
that has received a license to accept off-track pari-mutuel wagers pursuant to
the provisions of this Rule, but has elected not to accept nonparimutuel race
wagers.
16. "Post time" means "post
time" as that term is defined in these Rules.
17. "Source market fee" means a track fee
paid for accepting wagering account wagers, in accordance with Rule 24, from a
customer residing in the track's defined market area.
18. "Systems operator" or "operator of a
system" means a person engaged in providing the off-track pari-mutuel system or
services directly related to the reconciliation of the interstate or intrastate
common pari-mutuel pool and transfers of funds between the tracks and the
pari-mutuel books, or among the pari-mutuel books.
19. "Track" means an out-of-state facility
licensed to operate horse or other racing where pari-mutuel wagering on races
is conducted, or a person licensed in another jurisdiction to conduct
pari-mutuel wagering on such races. Where applicable, the term also includes a
person or governmental agency from outside this state that operates a track,
holds a track's rights to offtrack pari-mutuel wagering or shares in its
revenues. The term also includes an association of tracks.
20. "Wagering data" means the information
regarding results, actual payouts, and the amount of pari-mutuel and off-track
pari-mutuel wagers accepted for each race or group of races in an interstate or
intrastate common pari-mutuel pool.
21. "Wagering information" means the amount
of off-track pari-mutuel wagers accepted for each race or group of races by a
pari-mutuel book.
22.030
Authorization required to accept off-track pari-mutuel wagers;
applications.
1. A person shall not
accept off-track pari-mutuel wagers unless it has received authorization to
accept such wagers from the Commission. Authorization to accept off-track
parimutuel wagers shall not be granted to anyone other than a
Licensee.
2. Applications for
authorization to accept off-track pari-mutuel wagers must be made, processed,
and determined using such forms as the Commission may require or approve. Each
application must be accompanied by an internal control system prepared and
submitted in accordance with these Rules.
3. Applications for authorization to accept
off-track pari-mutuel wagers must enter into agreements and arrangements with
other parties, consistent with federal law and approval by the Commission,
pursuant to which its patrons may wager on races run at race tracks that are
shown live or in any other manner approved by the Commission, by television, or
otherwise, at locations on the grounds of the race book.
4.
(a) For
purposes of this Rule, "horse racing franchisor" means a franchisor licensed to
conduct horse racing, and pari-mutuel wagering thereon, in Garland County,
Arkansas under the Arkansas Horse Racing Law, Ark. Code Ann. Section
23-110-101 et
seq.; and (ii) "greyhound racing franchisor" means a franchisor licensed to
conduct greyhound racing, and pari-mutuel wagering thereon, in Crittenden
County under the Arkansas Greyhound Racing Law, Ark. Code Ann. Section
23-111-101 et
seq.
(b) In the case of a casino
(other than one licensed to a horse racing franchisor), the casino (including
any race book) shall not accept wagers on horse racing unless the casino
licensee has a commercially reasonable agreement, acceptable to the Commission,
in place with the horse racing franchisor setting forth the terms and
conditions for acceptance of such wagers on horse racing that fairly attempts
to ensure that the acceptance of such wagers will not adversely impact horse
racing at the horse racing franchisor's racetrack, and related purses, and
thoroughbred breeding activities in Arkansas, and related Arkansas thoroughbred
breeding purse support programs.
(c) In the case of a casino (other than one
licensed to a greyhound racing franchisor), the casino (including any race
book) shall not accept wagers on greyhound racing unless the casino licensee
has a commercially reasonable agreement, acceptable to the Commission, in place
with the greyhound racing franchisor setting forth the terms and conditions for
acceptance of such wagers on greyhound racing that fairly attempts to ensure
that the acceptance of such wagers will not adversely impact greyhound racing
at the greyhound franchisor's racetrack, and related purses, and greyhound
breeding activities in Arkansas, and related Arkansas greyhound breeding purse
support programs.
(d) The
provisions of this Section shall likewise also apply to any wagers on horse or
greyhound racing by a race book under these Rules.
22.040
Conduct of off-track
pari-mutuel wagering.
1. Off-track
pari-mutuel wagering may be conducted only within a race book or any other area
approved by the Commission.
2. A
pari-mutuel book offering off-track pari-mutuel wagering must comply with the
provisions of these Rules, when not in conflict with this Rule.
3. A pari-mutuel book shall not use the
information received from the off-track parimutuel system to determine the
winners of or payoffs on nonpari-mutuel race wagers.
4. A pari-mutuel book shall not use the
information received from a live broadcast to determine the winners of or
payoffs on off-track pari-mutuel wagers.
5. A pari-mutuel book may use the information
received from a live audio visual signal to determine the winners of or payoffs
on off-track pari-mutuel wagers in the event the systems operator notifies the
pari-mutuel book that it is unable to relay that information to the pari-mutuel
book through the off-track pari-mutuel system. A pari-mutuel book shall comply
with the Rule 6 minimum internal control standards when making such
payoffs.
6. A pari-mutuel book
shall pay winning interstate off-track pari-mutuel wagers in accordance with
official results at the track, irrespective of whether the wagering information
from the pari-mutuel book was included in the interstate common pari-mutuel
pool.
7. A pari-mutuel book shall
pay winnings, intrastate off-track pari-mutuel wagers in accordance with
official results from the approved, off-track pari-mutuel system and shall
return at least one dollar and five cents for each winning dollar wagered, and
any other guaranteed payout.
8. The
pari-mutuel books shall be jointly responsible for any deficiencies and shall
share in any excesses resulting from the requirements of these Rules. The terms
of any such agreement must be approved pursuant to the provisions of this
Rule.
9. A pari-mutuel book, other
than a pari-mutuel only book, that has agreed to accept off-track pari-mutuel
wagers may only accept nonpari-mutuel race wagers on types of bets not offered
as part of the interstate or intrastate common pari-mutuel pool, and may accept
nonparimutuel race wagers on types of bets offered as part of an interstate or
intrastate common parimutuel pool in the event the off-track pari-mutuel system
is not functioning.
10. A
pari-mutuel book shall not pay a systems operator or a track any compensation
for the right to be part of an interstate or intrastate common pari-mutuel pool
unless the agreement setting forth the terms of the compensation has been
approved pursuant to the provisions of this Rule.
11. A pari-mutuel book shall adopt,
conspicuously display, and adhere to written house rules governing off-track
pari-mutuel wagering transactions with patrons. Prior to adopting or amending
such house rules, a pari-mutuel book shall submit such rules to the Commission
for approval.
12. A pari-mutuel
book shall allow patrons to cash an outstanding off-track pari-mutuel ticket
for 120 days from the date of purchase or 30 days after the close of the racing
meet whichever shall first occur. Tickets which are not redeemed within such
time become valueless, unless the time period is otherwise extended by the
licensee, and the sum of money represented by them shall accrue to the issuing
licensee.
13. Pari-mutuel books may
not accept intrastate pari-mutuel wagers placed by any book, affiliate of the
pari-mutuel book, or a systems operator providing the intrastate common
pari-mutuel system. Books or systems operators may not place wagers into an
intrastate common pari-mutuel pool.
14. Each pari-mutuel book that accepts an
intrastate pari-mutuel wager must visually display to patrons, through direct
communications with the off-track pari-mutuel system conducting the intrastate
pool, the current odds and minutes to post for each race or wagering
proposition on which intrastate wagers are being accepted as well as the
official results and payoffs. The odds and post information shall be displayed
at least 10 minutes prior to the scheduled post time and shall be updated at
least every 90 seconds prior to post time. An intrastate parimutuel pool shall
not be approved unless the systems operator has the capability to deliver this
visual information to the pari-mutuel books in a form acceptable to the
Commission, and each parimutuel book must be capable of displaying the
information in a form acceptable to the Commission, before being approved to
participate in that intrastate pari-mutuel pool.
22.050
[Reserved.]
22.060
Approval to share in revenues;
applications.
1. A pari-mutuel book
shall not pay a share of the revenue from off-track pari-mutuel wagering to any
person for the right to be part of an interstate or intrastate common
pari-mutuel pool or for any services relating to the interstate or intrastate
common pari-mutuel pool or off-track pari-mutuel system, unless the person
sharing the revenue from the off-track pari-mutuel wagering has received
approval from the Commission.
2.
Applications for approval to be paid a share of the revenue from off-track
pari-mutuel wagering must be made, processed, and determined using such forms
as the Commission may require or approve.
22.070
Criteria for approval to share
in revenue. The Commission may consider the following suitability
criteria in determining whether to approve an application by a person to
receive a share of the revenue from off-track pari-mutuel wagering:
(a) A person of good character, honesty and
integrity;
(b) A person whose prior
activities, criminal record, if any, reputation, habits and associations do not
pose a threat to the public interest of this State or to the effective
regulation and control of gaming or charitable lotteries, or create or enhance
the dangers of unsuitable, unfair or illegal practices, methods and activities
in the conduct of gaming or charitable lotteries or in the carrying on of the
business and financial arrangements incidental thereto; and
(c) In all other respects qualified to be
licensed or found suitable consistently with the declared policy of the
State.
22.080
Requirements imposed upon tracks approved to share in the revenue or
otherwise receive compensation.
1. A
track approved to share in the revenue or otherwise receive compensation from
parimutuel books for the right to be part of an interstate common pari-mutuel
pool or for permitting pari-mutuel books to conduct an intrastate pari-mutuel
pool shall:
(a) For each racing meet for which
it is offering an interstate common pari-mutuel pool or permitting pari-mutuel
books to conduct an intrastate pari-mutuel pool, provide a live broadcast
signal to a disseminator at a fee which is less than the amount the
disseminator may charge pursuant to these Rules, which amount shall not exceed
three percent of the total live broadcast handle;
(b) Offer all pari-mutuel books the right to
be part of an interstate common parimutuel pool or intrastate pari-mutuel pool
and charge the same percentage of the revenue from off-track pari-mutuel
wagering to all pari-mutuel books. If charging a fixed daily fee amount, the
track shall charge each pari-mutuel book its proportional share of the fixed
amount based upon each pari-mutuel book's percentage of the total off-track
parimutuel wagers.
(c) Comply with
all applicable state and federal laws for all racing meets for which it is
offering an interstate common pari-mutuel pool or permitting pari-mutuel books
to conduct an intrastate pari-mutuel pool;
(d) Engage the services of the disseminator
authorized to disseminate the live broadcast signal of a racing meet to provide
racing information not part of wagering data, but which is the type of
information provided to users and buyers, and to transmit the live audio visual
signal of the racing meet to the pari-mutuel books and the systems operator.
The live audio visual signal must meet the production requirements of these
Rules applicable to live broadcasts. Nothing in this section shall be deemed to
require a pari-mutuel book to display a live audio visual signal in conjunction
with an interstate or intrastate common pari-mutuel pool.
2. A track approved to share in the revenue
from off-track pari-mutuel wagering shall maintain a revolving fund with the
Commission in an amount determined by the Commission, which may not exceed
$10,000 without Commission approval, for post-approval investigative costs. A
track shall remit the amount requested by the Commission within 15 days of the
request.
22.090
Licensing of off-track pari-mutuel systems operator.
1. A pari-mutuel book shall not use an
interstate or intrastate off-track pari-mutuel system unless the systems
operator has been licensed by the Commission.
2. Applications for a license to serve as a
systems operator must be made, processed, and determined using such forms as
the Commission may require or approve. Each application must include an
internal control system prepared and submitted in accordance with these
Rules.
22.100
Requirements imposed upon systems operators.
1. Each systems operator shall maintain an
office in Arkansas and designate a key employee located in the Arkansas office
to supervise and be responsible for the day-to-day operations of the off-track
pari-mutuel system.
2. Each systems
operator shall submit and comply with an internal control system and all
amendments to such system as have been approved by the Commission pursuant to
Rule 6. Each systems operator shall, if required by the Commission, amend the
written system to comply with any requirements consistent with these Rules that
the Commission deems appropriate.
3. Each systems operator shall prepare
financial statements covering all financial activities of the systems operator
for each business year and shall engage an independent accountant who shall
audit the financial statements in accordance with generally accepted auditing
standards, unless the Commission allows the systems operator upon written
request to engage the independent accountant to review the financial statements
in accordance with standards for accounting and review services.
4. Each systems operator shall submit to the
Commission two copies of its audited or reviewed financial statements not later
than 120 days after the last day of the systems operator's business
year.
5. If a systems operator
changes its business year, the systems operator shall prepare and submit to the
Commission audited or reviewed financial statements covering the "stub" period
from the end of the previous business year to the beginning of the new business
year, not later than 120 days after the end of the stub period or incorporate
the financial results of the stub period in the financial statements for the
new business year.
6. Reports that
directly relate to the independent accountant's review or audit of the systems
operator's financial statements must be submitted within 120 days after the end
of the systems operator's business year.
7. Each systems operator shall require the
independent accountant engaged by the systems operator to audit or to review
the systems operator's financial statements to submit to the systems operator
two copies of a written report of its compliance with the internal control
system approved by the Commission. Not later than 150 days after the end of the
systems operator's business year, the systems operator shall submit two copies
of the independent accountant's report or any other correspondence directly
relating to the systems operator's system of internal control to the
Commission, accompanied by the systems operator's statement addressing each
item of noncompliance noted by the independent accountant and describing the
corrective measure taken.
8. The
Commission may request additional information and documents from either the
systems operator or the systems operator's independent accountant, through the
systems operator, regarding the financial statements or the services performed
by the independent accountant.
9.
Each systems operator shall maintain a revolving fund with the Commission in an
amount determined by the Commission, which may not exceed $10,000 without
Commission approval, for post-licensing investigative costs. A systems operator
shall remit the amount requested by the Commission within 15 days of the
request.
22.110
Approval of off-track pari-mutuel systems; applications. A
pari-mutuel book shall not use an off-track pari-mutuel system unless the
system has been approved pursuant to the provisions of these Rules governing
associated equipment.
22.120
Minimum technical requirements for off-track pari-mutuel systems.
An off-track pari-mutuel wagering system must include a fully redundant
computer system and must:
1. For each race for
which wagers are to be included in an interstate common parimutuel pool,
receive, aggregate by pool and report to a track at regular intervals to be
approved by the Commission, all off-track pari-mutuel wagering information
received separately from the pari-mutuel books;
2. For each race for which wagers are to be
included in an interstate common parimutuel pool receive and report to each
pari-mutuel book at regular intervals to be approved by the Commission, all
wagering data received from the track through the system;
3. For each race for which wagers are to be
included in an intrastate common parimutuel pool, the system shall include
totalizator equipment that shall aggregate by pool and report to the
pari-mutuel books at regular intervals approved by the Commission, all
pari-mutuel wagering information received separately from the pari-mutuel
books;
4. After each race on which
pari-mutuel wagering is conducted is declared official, receive and report to
each pari-mutuel book the results and payoff prices reported by the track in an
interstate common pari-mutuel pool, and the results reported by a licensed
disseminator and payoff prices determined by the off-track pari-mutuel system
in an intrastate common pari-mutuel pool. Nothing in this section shall be
deemed to require the systems operator or pari-mutuel book to display a live
audio visual signal in conjunction with an interstate or intrastate common
parimutuel pool; and
5. Provide all
accounting and reconciliation reports required by the Commission.
22.130
Operation of the
off-track pari-mutuel system.
1. A
systems operator operating an interstate common pari-mutuel pool shall
immediately notify the pari-mutuel books in the event that it is unable to
transmit wagering information to the track and shall cause the system to cease
accepting off-track pari-mutuel wagers if it is unable to transmit the wagering
information to the track either through the system or through a manual
merge.
2. A systems operator
operating an interstate common pari-mutuel pool may use the information
received from a live audio visual signal furnished by a track to input
information regarding winners of or payoffs on off-track pari-mutuel wagers in
the event that communications between the track and the systems operator is
disrupted.
3. A systems operator
operating an intrastate common pari-mutuel pool shall immediately notify the
pari-mutuel books in the event that it is unable to compile the information
necessary to maintain an intrastate common pari-mutuel pool and shall cause the
system to cease accepting intrastate pari-mutuel wagers in such an
event.
4. A systems operator shall
cause the system to cease accepting off-track pari-mutuel wagers from the
pari-mutuel books at post time.
22.140
Approval of agreements.
1. Except as provided in these Rules, the
terms and conditions of any agreement between the pari-mutuel books, any person
representing the pari-mutuel books, systems operator, disseminator, track, and
the holders of track rights agreements, or any combination thereof, relating in
any way to the operation of an off-track pari-mutuel wagering system, an
interstate or intrastate common pari-mutuel pool, or transmission of a live
audio visual signal of races on which off-track pari-mutuel wagering will be
conducted must be approved by the Commission upon a recommendation of the
Commission.
2. The Commission,
after whatever investigation or review the Commission deems necessary, may
approve the following agreements:
(a) Any
agreement, or amendment to an agreement, involving the sharing of parimutuel
revenue if the Commission has previously approved the person sharing in the
revenue; or
(b) Any agreement, or
amendment to an agreement, not involving the sharing of parimutuel revenue,
whether or not the Commission has previously approved such an
agreement.
3. Agreements
among the pari-mutuel books as to the types of intrastate pari-mutuel wagers to
be accepted for a particular race or races do not require approval by the
Commission or the Commission.
4. An
agreement between the pari-mutuel books and a track shall not be approved
unless the Commission or Commission, as applicable, is satisfied that:
(a) The agreement specifies the amount of the
commission on wagers and track fees, including source market fees if
applicable;
(b) The agreement
specifies the manner in which breakage is to be allocated;
(c) The agreement specifies the manner in
which the parties will handle a system or communication failure and
specifically requires the track to accept wagering information from the systems
operator through a manual merge for a reasonable amount of time; or the
agreement specifies that if the track is unable to accept wagering information
through a manual merge, or the applicable regulatory agency having jurisdiction
over the track or the laws of the jurisdiction in which the betting system is
located does not permit manual merge as a means of transmitting wagering
information, the requirement for manual merge set forth in these Rules may be
administratively waived by the Commission;
(d) The track has complied with all federal,
state and local interstate pari-mutuel wagering laws and regulations that are
applicable to the jurisdiction where the track operates;
(e) The track holds all necessary licenses in
its home state or country to participate in the off-track pari-mutuel system
and to provide the live audio visual signal;
(f) There are means for the and the
Commission to obtain adequate access to information pertaining to the operation
of the off-track pari-mutuel system, and the transmission of the live audio
visual signal, and to investigate any associate of the track in such operation
and transmission;
(g) There is
assurance that the track has engaged the services of a disseminator, as
required by these Rules, and that the related live broadcast proposal has been
approved by the Commission pursuant to these Rules;
(h) There is assurance that the operation of
the off-track pari-mutuel system and the transmission of the live audio visual
signal will be lawfully conducted after approval by the Commission or Director,
as applicable, and will not pose a threat to gaming control in
Arkansas;
(i) There is assurance
that the track and its associates in the off-track pari-mutuel wagering system
and live audio visual signal transmission will abide by the conditions and
restrictions imposed upon approval;
(j) There is assurance that the right of
Arkansas to collect license fees from the parimutuel books will be adequately
protected through an effective accounting system designed to prevent the
undetected employment of techniques to avoid payment; and
(k) There is assurance that the relationship
of the track with any associate will not pose a threat to the interest of
Arkansas in regulating the gaming industry within the state.
5. An executed agreement between
the pari-mutuel books and a track shall be submitted to the Commission for
approval no later than 10 days before the racing meet begins. Additionally, for
a foreign track, a draft agreement between the pari-mutuel books and the track
and an executed letter of contractual intent between the pari-mutuel books and
the track must be submitted to the Commission no later than 90 days before the
racing meet begins.
6. An agreement
between the pari-mutuel books and a systems operator relating to an interstate
or an intrastate common pari-mutuel pool shall not be approved unless the
Commission or Commission, as applicable, is satisfied that:
(a) The agreement specifies the amount of the
common pari-mutuel pool commission on wagers;
(b) The agreement specifies the manner in
which the common pari-mutuel pool breakage is to be allocated;
(c) The agreement specifies the manner in
which the parties will handle a system or communication failure;
(d) There are means for the Commission to
obtain adequate access to information pertaining to the operation of the
off-track pari-mutuel system; and
(e) There is assurance that the right of
Arkansas to collect license fees from the parimutuel books will be adequately
protected through an effective accounting system designed to prevent the
undetected employment of techniques to avoid payment.
22.150
Deduction of
commission on wagers. The total percentage of off-track pari-mutuel
wagers that is to be deducted as a commission on wagers must be:
1. For interstate common pari-mutuel pools,
the same percentage as deducted by the track, unless a different percentage is
otherwise approved by the Commission; and
2. For intrastate common pari-mutuel pools, a
percentage not to exceed 25 percent.
22.160
Limits and conditions on
approvals. The Commission may impose limits or place conditions upon any
license or approval issued pursuant to this Rule.
22.170
Record retention; access to
premises. Each pari-mutuel book, each licensed systems operator, and
each track which offers an interstate common pari-mutuel pool, shall:
1. Maintain and retain all records required
by the Commission, for at least 5 years after they are made and shall provide
them to the Commission upon the Commission's request; and
2. Allow the members of the Commission, their
agents and employees to immediately inspect and examine the premises and
immediately inspect, examine, photocopy, and audit all papers, books, and
records of the pari-mutuel book, track and systems operator, on the premises,
or elsewhere as practicable.
22.180
Grounds for disciplinary
action. Violation of any applicable law or rule by a parimutuel book,
track, or system operator constitutes reasonable cause for disciplinary
action.
22.190
Authority to
issue orders for racing meets. The Commission shall issue such orders as
the Commission deems appropriate to further the process of off-track
pari-mutuel wagering.
22.200
Waivers. The Commission may waive one or more of the requirements
of these Rules if the Commission finds that such waiver is consistent with the
public policy of the State.
RULE
23
OFF-TRACK PARI-MUTUEL SPORTS WAGERING AND OFF-TRACK PARIMUTUEL
OTHER EVENT WAGERING
23.010
Scope. This Rule governs and its applicability is limited to
off-track pari-mutuel wagering on sporting events and other events for which
approval has been granted by the Commission pursuant to Amendment 100.
Off-track pari-mutuel wagering on horse and greyhound races conducted by
franchise holders shall continue to be governed by the Arkansas Horse Racing
Law, Ark. Code Ann. §
23-110-101, et
seq., and Arkansas Greyhound Racing Law, Ark. Code Ann. §
23-111-101, et
seq., respectively, and the rules of the Commission thereunder, and not these
Rules.
23.020
Definitions. As used in this Rule:
1. "Breakage" means the odd cents over a
multiple of ten cents arising from the computation of odds and payoffs on
off-track pari-mutuel sports wagers.
2. "Commission" means the Arkansas Racing
Commission or the Commission's designee.
3. "Commission on wagers" means an amount
retained and not returned to patrons by a parimutuel sports book from the
aggregate amount of off-track pari-mutuel sports wagers.
4. "Common pari-mutuel pool" means a
pari-mutuel wagering pool consisting of the offtrack pari-mutuel sports wagers
placed at two or more pari-mutuel sports books.
5. "Manual merge" means the process used in
the event of a systems or communications failure by which participating
pari-mutuel sports books transmit to the systems operator through telephone,
telecopy, cellular or other means of communication, the sports books' wagering
information, and the process by which the systems operator includes the
off-track pari-mutuel sports wagers in the common pari-mutuel pool in such
event.
6. "Off-track pari-mutuel
sports system" means a computerized system or component of a system that is
used to receive wagering information from and transmit pool data to a
pari-mutuel sports book.
7.
"Off-track pari-mutuel sports wager" means a pari-mutuel wager on a sporting
event or other event offered as part of a common pari-mutuel pool, whether or
not the wager is actually included in the common pari-mutuel pool.
8. "Other event" means any event other than a
horse race, dog race, or athletic sporting event.
9. "Pari-mutuel sports book" means an
establishment within this state that has been authorized to accept off-track
pari-mutuel sports wagers pursuant to Amendment 100, or an out-of-state
facility approved to accept off-track pari-mutuel sports wagers. Where
applicable, the term also includes a person or governmental agency from outside
this state that operates such a facility, and an association of such
facilities.
10. "Pool data" means
data regarding the results, payoffs, odds or payoff prices, and the aggregate
amount of off-track pari-mutuel sports wagers accepted on each sporting event
or other event by all pari-mutuel sports books.
11. "Post time" means five minutes before the
scheduled start of a sporting event or other event or such other time as
designated by the Commission.
12.
"Sporting event" means an individual race, game, match or contest, and any
group, series or part thereof. The term does not include horse or dog
races.
13. "Systems operator" or
"operator of a system" means a person engaged in providing the off-track
pari-mutuel sports system or services directly related to the reconciliation of
a common pari-mutuel pool and transfers of funds between the participating
pari-mutuel sports books.
14.
"Wagering information" means the amount of off-track pari-mutuel sports wagers
accepted for each sporting event or other event by a single pari-mutuel sports
book.
23.030
Authorization required to accept off-track pari-mutuel sports wagers;
application.
1. A person shall not
accept off-track pari-mutuel sports wagers in Arkansas unless the person has
received authorization from the Commission to accept such wagers. Authorization
to accept off-track pari-mutuel sports wagers shall only be granted to a
nonrestricted operation licensed to accept wagers on sporting events or other
events.
2. An application for
authorization to accept off-track pari-mutuel sports wagers must be submitted
using such forms as the Commission approves. The application must be
accompanied by an internal control system that complies with these
Rules.
23.040
Conduct of off-track pari-mutuel sports wagering.
1. Off-track pari-mutuel sports wagering may
be conducted only at a pari-mutuel sports book.
2. A pari-mutuel sports book shall comply
with the provisions of these Rules.
3. A pari-mutuel sports book shall not accept
off-track pari-mutuel sports wagers after post time. Off-track pari-mutuel
sports wagers become final at the start of the sporting event or other
event.
4. A pari-mutuel sports book
shall conspicuously display, at periodic intervals to be determined by the
Commission, both the aggregate amount of off-track pari-mutuel sports wagers
accepted and the odds for each sporting event or other event on which off-track
parimutuel sports wagering is being conducted.
5. A pari-mutuel sports book shall pay
winning off-track pari-mutuel sports wagers in accordance with the pari-mutuel
payoff on the off-track pari-mutuel sports wagers accepted on a sporting event
or other event, irrespective of whether all wagering information from all
parimutuel sports books actually was included in the common pari-mutuel
pool.
6. A pari-mutuel sports book
shall return at least one dollar and five cents for each winning dollar
wagered.
7. The pari-mutuel sports
books shall be jointly responsible for any deficiencies and shall share in any
excesses resulting from the requirements of subsections 5 and 6 of this
section.
8. A pari-mutuel sports
book shall not pay any systems operator or any other pari-mutuel sports book
any compensation for the right to be part of a common pari-mutuel pool unless
the agreement setting forth the terms of the compensation has been approved
pursuant to section 23.140 of this Rule.
9. A pari-mutuel sports book shall adopt,
conspicuously display, and adhere to written house rules governing off-track
pari-mutuel sports wagering transactions with patrons. Prior to adopting or
amending such house rules, a pari-mutuel sports book shall submit the rules to
the Commission for the Commission's approval.
10. A pari-mutuel sports book shall allow a
patron to cash an outstanding off-track parimutuel sports wagering ticket for
at least 30 days from the date the sporting event is concluded. A ticket which
is not redeemed within such time becomes valueless, unless the time period is
extended by the licensee, and the sum of money represented by the ticket shall
then accrue to the issuing licensee.
23.050
Approval to share in revenues;
application.
1. A pari-mutuel sports
book shall not share the revenue from off-track pari-mutuel sports wagering
with any person unless the person who is to share in the revenue has been
licensed by or received approval from the Commission.
2. An application for approval to receive a
share of the revenue from off-track pari-mutuel sports wagering must be
submitted using such forms as the Commission approves.
23.060
Criteria for licensing and
approval to share in revenue.
The Commission may consider the following suitability criteria in
determining whether to approve an application by a person to receive a share of
the revenue from off-track pari-mutuel wagering:
(a) A person of good character, honesty and
integrity;
(b) A person whose prior
activities, criminal record, if any, reputation, habits and associations do not
pose a threat to the public interest of this State or to the effective
regulation and control of gaming or charitable lotteries, or create or enhance
the dangers of unsuitable, unfair or illegal practices, methods and activities
in the conduct of gaming or charitable lotteries or in the carrying on of the
business and financial arrangements incidental thereto; and
(c) In all other respects qualified to be
licensed or found suitable consistently with the declared policy of the
State.
23.070
Requirements imposed upon out-of-state pari-mutuel sports books approved
to share in the revenue or otherwise receive compensation.
1. An out-of-state pari-mutuel sports book
approved to share in the revenue or otherwise receive compensation from
pari-mutuel sports books within this state for the right to be part of a common
pari-mutuel pool shall comply with all applicable state and federal laws
regarding wagers on sporting events or other events for which it is offering a
common pari-mutuel pool.
23.080
Participation in common
pari-mutuel pool. All pari-mutuel sports books in Arkansas must be
offered the right to accept wagers in a common pari-mutuel pool at the same fee
or rate.
23.090
Licensing of
off-track pari-mutuel sports systems operator.
1. A pari-mutuel sports book shall not use an
off-track pari-mutuel sports system unless the systems operator has been
licensed by the Commission.
2. An
application for a license to serve as a systems operator must be submitted
using such forms as the Commission approves. The application must be
accompanied by an internal control system that complies with these
Rules.
23.100
Requirements imposed upon systems operator.
1. Each systems operator shall maintain an
office in Arkansas and designate a key employee located in the Arkansas office
to supervise and be responsible for the day-to-day operations of the off-track
pari-mutuel sports system.
2. Each
systems operator shall comply with the internal control system and all
amendments to such system as have been approved by the Commission pursuant to
these Rules. Each systems operator shall, if required by the Commission, amend
the written internal control system to comply with any requirements consistent
with these Rules that the Commission deems appropriate.
3. Each systems operator shall prepare
financial statements covering all financial activities of the systems operator
for each business year and shall engage an independent accountant licensed by
the Arkansas state board of accountancy to audit the financial statements in
accordance with generally accepted auditing standards, unless the Commission
allows the systems operator upon written request to engage the independent
accountant to review the financial statements in accordance with standards
established by the American Institute of Certified Public
Accountants.
4. Each systems
operator shall submit to the Commission two copies of its audited or reviewed
financial statements not later than 120 days after the last day of the system
operator's business year.
5. If a
systems operator changes its business year, the systems operator shall prepare
and submit to the Commission audited or reviewed financial statements covering
the "stub" period from the end of the previous business year to the beginning
of the new business year, not later than 120 days after the end of the stub
period or incorporate the financial results of the stub period in the financial
statements for the new business year.
6. Reports that directly relate to the
independent accountant's review or audit of the systems operator's financial
statements must be submitted within 120 days after the end of the systems
operator's business year.
7. Each
systems operator shall require the independent accountant engaged by the
systems operator to audit or to review the systems operator's financial
statements to submit to the systems operator two copies of a written report of
its compliance with the internal control system approved by the Commission. Not
later than 150 days after the end of the systems operator's business year, the
systems operator shall submit a copy of the independent accountant's report or
any other correspondence directly relating to the systems operator's system of
internal control to the Commission, accompanied by the systems operator's
statement addressing each item of noncompliance noted by the independent
accountant and describing the corrective measures taken.
8. The Commission may request additional
information and documents from either the systems operator or the systems
operator's independent accountant, through the systems operator, regarding the
financial statements or the services performed by the independent
accountant.
23.110
Approval of off-track pari-mutuel sports system. A pari-mutuel
sports book shall not use an off-track pari-mutuel sports system unless the
system has been approved pursuant to the provisions of these Rules governing
associated equipment.
23.120
Minimum technical requirements for off-track pari-mutuel sports
systems. An off-track pari-mutuel sports system must include a fully
redundant computer system and must:
1. Receive
and aggregate by pool all off-track pari-mutuel sports wagering information
received separately from each of the pari-mutuel sports books;
2. Receive and report to each pari-mutuel
sports book at periodic intervals to be approved by the Commission all pool
data compiled through the system;
3. After each sporting event or other event
on which off-track pari-mutuel sports wagering is conducted, report to each
pari-mutuel sports book the results and payoffs; and
4. Provide all accounting and reconciliation
reports required by the Commission.
23.130
Operation of the off-track
pari-mutuel sports system. A systems operator shall:
1. Immediately notify the pari-mutuel sports
books in the event that it is unable to receive wagering information or
transmit pool data, and shall cause the system to cease accepting offtrack
pari-mutuel sports wagers if it is unable to receive the wagering information
or transmit the pool data.
2. Cause
the system to cease accepting off-track pari-mutuel sports wagers from the
parimutuel sports books at post time.
23.140
Approval of agreements.
1. The terms and conditions of any agreement
between pari-mutuel sports books, or between pari-mutuel sports books and a
systems operator relating in any way to the operation of an offtrack
pari-mutuel sports system, a common pari-mutuel pool or transmission of
wagering information or pool data regarding sporting events or other events on
which off-track pari-mutuel sports wagering will be conducted, must be approved
by the Commission upon a recommendation of the Commission, or by the Commission
pursuant to these Rules, after whatever investigation the Commission deems
necessary.
2. An agreement
described in subsection 1 may be approved by the Commission if it is an
extension, renewal or modification of an agreement previously approved by the
Commission. Any material modification of a previously approved agreement, such
as an increase in the amount of the commission on wagers, must also be approved
by the Commission.
3. An agreement
described in this Rule may not be approved unless the Commission is satisfied
that:
(a) The agreement specifies the manner
in which the line or proposition for each sporting event will be
established;
(b) The agreement
specifies the amount of the commission on wagers;
(c) The agreement specifies the manner in
which breakage is to be allocated;
(d) The agreement specifies the manner in
which the parties will handle a system or communication failure and
specifically requires the systems operator to accept wagering information from
the pari-mutuel sports books through a manual merge for a reasonable amount of
time;
(e) The agreement specifies
the manner in which the pari-mutuel sports books shall be responsible for any
deficiencies and share in any excesses resulting from the requirements of these
Rules.
(f) The agreement specifies
the manner in which the parties will handle pool amounts that are not won by
patrons.
(g) The systems operator
and pari-mutuel sports books have complied with all laws applicable to
off-track pari-mutuel sports wagering;
(h) The systems operator and pari-mutuel
sports books hold all necessary licenses and approvals to participate in the
off-track pari-mutuel system;
(i)
There are means for the Commission to obtain adequate access to information
pertaining to the operation of the off-track pari-mutuel sports system, and to
investigate any associate of the systems operator and pari-mutuel sports books
in such operation;
(j) There is
assurance that the operation of the off-track pari-mutuel sports system will be
lawfully conducted after approval by the Commission and will not pose a threat
to gaming control in Arkansas;
(k)
There is assurance that the systems operator, pari-mutuel sports books and
their associates in the off-track pari-mutuel sports system will abide by the
conditions and restrictions imposed upon approval;
(l) There is assurance that the right of
Arkansas to collect license fees from the pari-mutuel sports books will be
adequately protected through an effective accounting system designed to prevent
the undetected employment of techniques to avoid payment; and
(m) There is assurance that the relationships
of the systems operator and pari-mutuel sports books with any associate will
not pose a threat to the interest of Arkansas in regulating the gaming
industry.
23.150
Deduction of commission on
wagers. Except as provided in an agreement approved under these Rules,
the total percentage of off-track pari-mutuel sports wagers that is to be
deducted as a commission on wagers by pari-mutuel sports books in Arkansas must
not exceed 25 percent.
23.160
Limits and conditions on approvals. The Commission may impose
limits or place conditions upon any license or approval issued pursuant to this
Rule.
23.170
Record
retention; monthly reports; access to premises. Each pari-mutuel sports
book and each systems operator which offers a common pari-mutuel pool, shall:
1. Maintain and retain all records required
by the Commission for at least five years after they are made, and provide them
to the Commission upon the Commission's request.
2. Allow the members of the Commission, their
agents and employees to immediately inspect and examine the premises and
immediately inspect, examine, photocopy, and audit all papers, books and
records of the pari-mutuel sports book or systems operator, on its premises or
elsewhere as practicable; and
3.
File with the Commission all reports required by the Commission.
23.180
Grounds for
disciplinary action. Violation of any applicable law or rule by a
parimutuel sports book or systems operator constitutes reasonable cause for
disciplinary action.
23.190
Waivers. The Commission may waive one or more of the requirements of
these Rules if it finds that such waiver is consistent with the public policy
of the State.
23.200
Gross
revenue computations.
1. For purposes
of this Rule, "gross revenue" means the total commission on wagers, plus any
pool amounts not won by patrons and retained by the pari-mutuel sports book,
plus the face amount of unpaid winning tickets, plus breakage, less any rights
fee paid by the pari-mutuel sports book, less any commission on wagers returned
to a patron by the pari-mutuel sports book pursuant to these Rules.
2. As used in this section, "rights fee"
means any compensation paid by a pari-mutuel sports book for the right to
participate in a common pari-mutuel pool. The term does not include any amount
paid to a systems operator, a gaming licensee, an association of gaming
licensees or their affiliates.
23.210
Effective date of Rule.
This Rule shall be effective upon passage.
RULE 24
OFF-TRACK PARI-MUTUEL HORSE RACE ACCOUNT WAGERING
24.005
Scope. These Rules govern
all off-track pari-mutuel horse race account wagering in Arkansas for which a
license or approval has been granted by the Commission pursuant to Amendment
100. Franchise holders may continue to accept wagers pursuant to Ark. Code Ann.
§
23-110-405(e)(1)
or Ark. Code Ann. §
23-111-508(e)(1).
24.010
Definitions. As used in
this Rule:
1. "Account wagering system" means
a system of wagering using telephone, computer or other method of wagering
communication as approved by the Commission, whose components shall be located
in this State. The components shall include, but not be limited to, the systems
operator, permanent information databases, system monitoring equipment,
writers, and patron service representatives.
2. "Race book" means a business that accepts
wagers on horse or other animal races. A casino licensee that is also a
franchise holder may elect to have its race book operations relating to
pari-mutuel wagering and horse and greyhound racing regulated and governed by
the Arkansas Horse Racing Law at Ark. Code Ann. §§
23-110-101, et
seq., or the Arkansas Greyhound Racing Law at Ark. Code Ann. §§
23-111-101, et
seq., respectively, and rules promulgated by the Commission thereunder and not
by these Rules.
3. "Call center
system" means a computerized system, or a component of such a system, that is
used to receive and transmit pari-mutuel race wagering instructions from a
patron to a person licensed to accept off-track pari-mutuel race wagers. The
call center system is located within Arkansas but off the premises of a
licensed gaming establishment or any affiliated licensed gaming
establishment.
4. "Director" means
the Director of the Arkansas Racing Commission or the Commission's
designee.
5. "Communications
technology" means the methods used and the components employed to facilitate
the transmission of information, including but not limited to transmission and
reception systems based on wire, cable, radio, microwave, light, optics,
cellular data, or computer data networks and the Internet.
6. "Internet" means the international
computer network of both Federal and non-Federal interoperable packet switched
data networks.
7. "Key employee"
means an employee in any of the classes described in these Rules.
8. "Messenger bettor" means a person who
places a wager for the benefit of another for compensation.
9. "Operator of a call center" means a person
who, as an agent of a licensed Arkansas parimutuel race book, engages in the
business of operating a call center system as a means of providing patron
services to assist a patron located in a state or foreign jurisdiction where
such wagering is legal, to convey pari-mutuel horse race wagering instructions
to one or more licensed Arkansas parimutuel race books. A Arkansas pari-mutuel
race book operating a call center on the premises of their gaming establishment
or any affiliated licensed gaming establishment, with participation limited to
affiliated licensed gaming establishments, is not an operator of a call
center.
10. "Post time" means,
unless an earlier time is required by regulation in the state where the race is
run, the time when the race is started by, as applicable, the opening of the
gates and/or box, the starting gate car begins to close its arms, or such other
method used by the track and administratively approved by the
Commission.
11. "Secure personal
identification" means a secure personal identification as that term is defined
in Rule 4.225.
12. "Wagering
account" means a sports wagering account as that term is defined in these
Rules.
13. "Wagering communication"
means the transmission of a wager between a point of origin and a point of
reception by aid of a communications technology.
14. "Wagering instructions" means the
instructions given by a patron on the grounds of the licensee's facility where
casino gaming is conducted or who maintains a mobile wagering account at a book
to effect a wagering communication to the book.
24.020
License required;
applications.
1. No person may operate
or own any interest in a race book in Arkansas unless that person holds a
Casino gaming license specifically permitting the person to do so.
24.030
Finding of
suitability required to operate a call center; applications.
1. A person shall not function as the
operator of a call center unless the person has been found suitable pursuant to
these Rules.
2. Applications for a
finding of suitability to function as the operator of a call center must be
made, processed, and determined using such forms as the Commission may require
or approve.
24.040
Registration of managers or supervisors.
1. Any individual who fulfills the function
of race book manager or supervisor or who fulfills the function of a manager or
supervisor for an operator of a call center must register with the Commission.
Such registration must be made on a form provided by the Commission and shall
include the individual's:
(a) Full legal name
and any aliases, nicknames, maiden name and any other change, legal or
otherwise;
(b) Social security
number and current driver's license number;
(c) Date and place of birth;
(d) History of residence for the past 5
years;
(e) History of employment
for the past 10 years;
(f) Complete
history of arrests, detentions, or litigations including any which have been
sealed or expunged by court order;
(g) Consent to a full licensing
investigation, subject to the provisions of this Rule, by the Commission;
and
(h) Such other information as
required by the Commission.
2. Licensed key employees or key employees in
applicant status are not required to register pursuant to this
section.
3. Individuals required to
register must file within 30 days of assuming such duties.
4. After reviewing the registration forms,
the Commission may request that the individual file a completed application
form. Individuals who object to the request for submission of a completed
application form and commencement of a full licensing investigation by the
Commission may appeal the administrative decision to the full Commission in a
manner similar to that outlined in these Rules.
24.045
Employees of an operator of a
call center. Any employee of an operator of a call center who fulfills
the function of receiving and transmitting wagering instructions and any
employee supervising this function is a gaming employee as defined in these
Rules.
24.050
Reserve
requirements.
1. Notwithstanding the
minimum reserve requirements established for wagering accounts pursuant to
these Rules, each book shall comply with the following to calculate the minimum
reserve requirements:
(a) Each book shall at
all times maintain a reserve of not less than the greater of $25,000 or the sum
of the following amounts:
(1) Amounts held by
the book for the account of patrons;
(2) Amounts accepted by the book as wagers on
contingencies whose outcomes have not been determined; and
(3) Amounts due the patron on wagers whose
outcomes have been determined but that have not been posted to the patron's
wagering account.
(b)
Before beginning operations, each newly-licensed book must establish a reserve
of at least the greater of $25,000 or the amount the Commission projects will
at least equal the sum of the amounts specified in these Rules at the end of
the first week of the book's operation. After the book begins operations, the
book's reserve must comply with these Rules.
2. The reserve described in subsection 1 may
be combined as a single amount with the reserve described in these
Rules.
24.060
Recordation of wagers. Immediately upon accepting an account
wager, the book shall create an electronic record of the terms of the wager in
the off-track pari-mutuel race system.
24.070
Acceptance of wagers.
1. Books may not accept wagers unless made
against credits made to a wagering account as provided for in these Rules or on
credit extended in accordance with the Rules of the Commission.
2. A book shall accept wagers only on its
licensed premises, and only at betting stations approved by the Commission or
through an account wagering system that has been approved by the
Commission.
3. A book shall not
knowingly accept money or its equivalent ostensibly as a wager upon an event
whose outcome has already been determined.
4. No book or agent or employee of a book may
accept a wager from a person who the book, agent, or employee knows or
reasonably should know is a messenger bettor or is placing the wager in
violation of state or federal law.
5. No book may hold a patron's money or its
equivalent on the understanding that the book will accept the money as a wager
only upon the occurrence of a specified, future contingency, unless an
electronic record documenting the wager and contingency is immediately made in
the off-track pari-mutuel race system.
24.072
Imposition of supplemental
recordkeeping and reporting requirements. The Commission may require a
book to comply with the identification, recordkeeping, and reporting
requirements of these Rules for inter-state pari-mutuel horse race account
wagers. The Commission shall notify the book of the decision, in writing, and
such decision shall be considered an administrative decision, and therefore
reviewable pursuant to the procedures set forth in these Rules.
24.080
Payment of winning
wagers. In the event the off-track pari-mutuel system is not
functioning, a licensed race book shall determine the winners of or payouts on
wagers on horse races in accordance with the provisions of these
Rules.
24.090
Off-track
pari-mutuel race systems. Before beginning operations, each book shall
install and thereafter maintain an off-track pari-mutuel race system meeting
the specifications approved by the Commission.
24.100
Layoff bets. A book may
place or accept wagers from another book if the accepting book does not have
common control (as defined in these Rules) with the placing book. A book that
is permitted to place a layoff wager shall inform the book accepting the wager
that the wager is being placed by a book and shall disclose its
identity.
24.110
Prohibition
against rescission of wagers. A book may not unilaterally rescind any
wager without the prior written approval of the Commission.
24.120
Prohibited wagers. No
wagers may be accepted or paid by any pari-mutuel race book on any event other
than a horse race that is offered as part of a pari-mutuel pool.
24.130
Wagers; terms and
conditions. No book shall:
1. Accept
from a patron, directly or indirectly, less than the full face value of an
off-track pari-mutuel wager;
2.
Agree to refund or rebate to a patron any portion or percentage of the full
face value of an off-track pari-mutuel wager; or
3. Increase the payoff of, or pay a bonus on,
a winning off-track pari-mutuel wager.
The provisions of this section do not prohibit the granting of room,
food, beverage or entertainment admission complimentaries.
24.140
Communications technology.
1.
Before installing or permitting the installation of any communications
technology on the premises of a book or a call center, the book or the call
center shall notify the Commission in writing of the location and number or
other identifier of each communications technology and shall obtain the written
approval of the Commission for each communications technology. The Commission
may condition the approval in any manner the Commission considers
appropriate.
2. Before a book
accepts any wagering communications, and before a call center accepts any
wagering instructions, the book and the call center must obtain the written
approval of the Commission to accept such wagering communications and wagering
instructions, and thereafter use only the communications technology approved
for that purpose. The book or the call center must obtain written permission
from the Commission by March 1st of each calendar year to continue using the
communications technology.
3. As a
condition to the granting of the privilege of having communications technology
upon the licensed premises, the book and the call center shall be deemed to
have consented to the authority of the Commission to require the immediate
removal of any communications technology from the licensed premises at any time
without prior notice of hearing. After any such removal, the book or the call
center may request a hearing before the Commission as to whether or not
circumstances may warrant the permanent revocation of the privilege of having
communications technology upon the premises.
4. Upon the request of either the Commission,
a book or a call center shall provide a written consent for the Commission to
examine and copy the records of any telephone, telegraph, or other
communications company or utility that pertain to the operation of the book or
the call center.
5. A call center
system is associated equipment requiring approval pursuant to these
Rules.
6. A book receiving wagering
instructions from a call center system shall comply with the requirements of
these Rules prior to the use of this system.
7. Nothing herein prohibits the use of the
Internet for the purposes of establishing wagering accounts or transacting
wagering account deposits and withdrawals.
24.150
Use of an operator of a call
center.
1. A licensed Arkansas
pari-mutuel race book shall not utilize an operator of a call center unless the
operator of the call center has been found suitable by the
Commission.
2. The call center
system, or a component of such a system, will record patron instructions
received and transmitted to a licensed Arkansas pari-mutuel race book and the
date/time instructions are received from a patron for:
(a) Pari-mutuel horse race wagers to be
placed; and
(b) Any other
pari-mutuel horse race wagering instructions as may be approved by the
Commission.
3. The
operator of a call center performs such patron services as:
(a) Receiving pari-mutuel horse race wagering
instructions from a patron and performing procedures to provide reasonable
assurance that the patron is located within the borders of a state or foreign
jurisdiction in which pari-mutuel horse race wagering is legal, and that the
state or foreign jurisdiction does not otherwise restrict wagering on accounts
located outside its borders prior to accepting a wagering communication.
Reasonable assurance of patron location includes, but is not limited to, an
inquiry process through electronic or voice-only means in which patrons affirm
their physical location at the time of each wagering communication. A recording
of the inquiry process with the patron shall be retained for a period of 60
days;
(b) Providing help desk
responses to patrons and the general public concerning parimutuel horse race
wagers at a licensed Arkansas pari-mutuel race book; and
(c) Such other patron services as may be
approved by the Commission.
4. In addition to the posting of the wager in
the off-track pari-mutuel race system by the Arkansas pari-mutuel race book,
all wagering instructions shall be electronically recorded and retained for a
period of 60 days. The method of recording the wagering instructions must be
approved by the Commission. Such recordings must be made immediately available
to any Commission agent upon request.
5. The operator of a call center shall allow
the members of the Commission, their agents and employees to immediately
inspect and examine the premises and immediately inspect, examine, photocopy,
and examine all papers, books, and records, on the premises, or elsewhere as
practicable.
6. The operator of a
call center shall operate in compliance with all applicable provisions of this
Rule.
7. The licensed Arkansas
pari-mutuel race book shall maintain responsibility for any operator of a call
center, used by the book, to operate in compliance with all state and federal
laws and regulations, as applicable.
8. Violation of any applicable law or Rule by
an operator of a call center constitutes reasonable cause for disciplinary
action.
24.160
Wagering communications; establishing patron wagering accounts for
parimutuel race wagering.
1. Each
Casino licensee that accepts wagering communications shall establish and
implement pursuant to Rule 6 a system of internal control for such
transactions, and comply with both its system of internal control and the
minimum internal control standards contained in these Rules. Each licensee that
accepts wagering communications shall comply with the internal control
procedures contained in these Rules.
2. Each book shall prepare a written
description of its house rules and procedures for wagering communications, and
shall make a copy available to each patron for whom a wagering account is
established. Prior to adopting or amending such house rules, a book shall
submit such rules to the Commission for approval.
3. A race book licensed to accept off-track
pari-mutuel horse race wagers may establish wagering accounts for residents of
Arkansas and residents of any state or foreign jurisdiction in accordance with
these Rules. Patrons having established a wagering account may place off-track
pari-mutuel horse race wagers from within Arkansas or from other states or
foreign jurisdictions in which pari-mutuel horse race wagering is legal
provided that the state or foreign jurisdiction does not otherwise restrict
wagering on accounts located outside its borders. Before a race book accepts a
wagering communication, or a call center accepts a wagering instruction, on an
offtrack pari-mutuel horse race, the following must occur:
(a) A race book must register the patron and
create a wagering account for the patron in accordance with these Rules, except
that a race book may confirm the patron's identity remotely if the wagering
account is used solely to place off-track pari-mutuel horse race
wagers.
(b) A race book shall
confirm that the state or foreign jurisdiction in which the patron resides is a
jurisdiction in which off-track pari-mutuel horse race wagering is legal, and
that the state or foreign jurisdiction does not otherwise restrict wagering on
accounts located outside its borders, prior to the book accepting wagers on
such accounts. The race book shall maintain a record of such
confirmation.
(c) The race book
must have the patron affirm that the patron has been informed and acknowledges
that, with regard to off-track pari-mutuel horse race wagers, the book may
accept such wagers from patrons only when the patron is located within Arkansas
or other states or foreign jurisdictions in which pari-mutuel horse race
wagering is legal and such wagering on accounts located outside its borders is
not otherwise restricted.
(d)
Notwithstanding the requirements of these Rules, for a business entity patron,
the patron must provide an employee of the book, and the book must record and
maintain, the following information before the book registers and creates a
wagering account for the patron.
i. The name,
residential address, copy of a valid photo identification which evidences that
the person is at least 21 years of age, and social security number or
individual taxpayer identification number, of each of the business entity's
equity owners, holders of indebtedness, directors, officers, managers and
partners, anyone entitled to payments based on the profits or revenues and any
designated individuals;
ii. The
business entity's formation documents and all filings with the Secretary of
State;
iii. Any other documentation
or information the Commission may require; and
iv. Any other documentation or information
the race book or sports pool may require.
(e) The employee must record such
information. Unless a book has otherwise been granted approval by the
Commission pursuant to these Rules, the information required by this subsection
shall be provided by the patron to an employee of the book at the premises of
the book.
4. In addition
to the posting of the wager in the off-track pari-mutuel race system, all
wagering communications shall be electronically recorded and retained for a
period of 60 days. The method of recording the wager must be approved by the
Commission. Such recordings must be made immediately available to any
Commission agent upon request.
5.
All wagering account applications or amendments thereto for active accounts
must be retained by the book. All wagering account applications or amendments
thereto for rejected applications shall be retained by the book for no less
than one year following the rejection of the related application. All wagering
account applications or amendments thereto for closed accounts shall be
retained by the book for no less than one year following the closure of the
related wagering account.
6. A race
book shall not allow the use of a wagering account established pursuant to this
section for forms of wagering other than off-track pari-mutuel horse race
wagering unless:
(a) The establishment and use
of the wagering account otherwise meets all of the requirements of these Rules;
and
(b) Administrative approval has
been granted by the Commission.
24.170
Account wagering systems.
Account wagering systems shall:
1. For
systems that use other than voice-only wagering communications technology,
provide for the patron's review and confirmation of all wagering information
before the wagering communication is accepted by the book. The system shall
create a record of the confirmation. This record of the confirmation of the
wager shall be deemed to be the actual transaction of record, regardless of
what wager was recorded by the system;
2. Prohibit wagers from being changed after
the patron has reviewed and confirmed the wagering information, and the
specific wagering communication transaction has been completed;
3. Prohibit the acceptance of wagers after
post time;
4. Prohibit a book from
accepting an account wager, or a series of account wagers, in an amount in
excess of the available balance of the wagering account;
5. Prohibit a book from accepting sports
wagers and nonpari-mutuel horse race wagers from a patron while physically
located outside the state;
6. Post
payment on winning account wagers as a credit to the patron's wagering account
as soon as reasonably practicable after the event is declared
official;
7. Maintain a completely
separate wagering account for pari-mutuel horse race wagers. Wagering accounts
for pari-mutuel sports wagers, nonpari-mutuel horse race wagers and
nonpari-mutuel sports wagers may be commingled in a single separate wagering
account;
8. Maintain complete
records of every deposit, withdrawal, wager, winning payoff, and any other
debit or credit for each account; and
9. For systems that use other than voice-only
wagering communications technology, produce a printable record of the entire
transaction as required by this section and shall not accept any wagering
communication or transaction if the printable record system is
inoperable.
24.185
Business Entity Wagering.
1. A
book shall notify the Commission in writing of its intent to accept wagers from
business entities which have met all of the applicable requirements of these
Rules.
2. A book is prohibited from
accepting wagers from a business entity unless all of the business entity's
owners, directors, officers, managers, partners, holders of indebtedness, and
anyone entitled to payments based on profits or revenues of the entity are
fully disclosed. If the business entity is owned or controlled by one or more
holding companies, each of the holding companies' owners, directors, officers,
managers, partners, holders of indebtedness and everyone entitled to payments
based on profits or revenues of the entity must be fully disclosed.
3. A book which elects to accept wagers from
business entities must conduct due diligence on each business entity from which
the book will accept wagers which, at a minimum, includes, but is not limited
to:
(a) Requiring the business entity to
affirm that it has met all of the applicable requirements found in these Rules
and that it is not established for the purpose of circumventing any applicable
federal or state laws including, but not limited to, laws concerning illegal
sports wagering, electronic communications, and money laundering;
(b) Ascertaining all equity owners, holders
of indebtedness, directors, officers, managers, partners, anyone entitled to
payments based on the profits or revenues, and any designated individuals;
and
(c) Ascertaining the natural
person who is the source of funds for each contribution to the business entity.
A book shall maintain records of the due diligence it performs on a
business entity for no less than one year following the closure of the wagering
account of the business entity or for no less than one year after rejection of
a business entity wagering account application by the book.
4. A book shall not
accept wagers from a business entity if:
(a)
The business entity does not make the affirmation or disclosures required by
subsections 2 or 3(a);
(b) The book
is unable to verify the identity of all the equity owners, holders of
indebtedness, directors, officers, managers, partners, anyone entitled to
payments based on the profits or revenues, and any designated individuals of
the business entity; or
(c) The
book is unable to verify the natural person who is the source of funds for each
contribution to the business entity.
5. Upon receipt of updated information from a
business entity, a book shall verify the updated information. If a book is
unable to verify the updated information within 30 days of the book's receipt
of the updated information from the business entity, the book shall suspend the
wagering account and not allow further wagering activity on the wagering
account.
6. A book shall require a
business entity from which the book accepts wagers to provide:
(a) For business entities from which the book
accepts wagers aggregating more than $5,000,000 in a calendar year, an
independent third-party verification concerning to whom the business entity
made payments based on profits or revenues to ensure no payments were made to
persons other than those permitted by these Rules to receive such payments. If
the book does not receive a copy of the independent third-party verification
prior to April 1st of the year following the year in which the business entity
placed wagers in excess of $5,000,000, the book shall suspend the wagering
account and not allow further wagering activity on the wagering account
or
(b) For business entities from
which the book accepts wagers aggregating $5,000,000 or less within a calendar
year, an affirmation stating the business entity did not make payments based on
profits or revenues to persons other than those permitted by these Rules to
receive such payments. If the book does not receive such affirmation prior to
April 1st of the year following any year in which the business entity placed
wagers with the book, the book shall suspend the wagering account and not allow
further wagering activity on the wagering account.
7. A book shall report any violation or
suspected violation of law or Rule related to business entity wagering to the
Commission immediately. Such reporting shall include, but is not limited to,
any violation or suspected violation of relevant federal laws such as The
Federal Wire Act
18 U.S.C. §
1084, the Illegal Gambling Business Act
18 U.S.C. §
1955, and Title 31 anti-money laundering
laws.
8. A book may only accept
wagering activity from a business entity, acting through one or more designated
individuals, through a wagering account established by the business entity and
may only deposit winnings into such wagering account. The book must use an
account wagering system for such wagering activity. The requirement to use an
account wagering system will become effective upon the date approved by the
Commission.
9. A book shall not
extend credit to a business entity.
10. A book shall report the suspension or
closure of a business entity wagering account to the Commission within 5 days
of suspension or closure and shall include the reason for such suspension or
closure in the report. A book shall report the reinstatement of a suspended
business entity wagering account to the Commission within 5 days of
reinstatement and shall include the reasons the book reinstated the wagering
account.
11. A book that accepts
wagers from business entities shall adopt, conspicuously display at its
premises, and adhere to house rules governing business entity wagering
transactions.
12. A book that
accepts wagers from business entities shall implement policies and procedures
designed to ensure that business entities' wagering accounts are used only to
place book wagers.
13. As used in
this section, "holding company" means any corporation, firm, partnership,
limited partnership, limited-liability company, trust or other form of business
organization which, directly or indirectly:
(a) Owns, as defined in these
Rules;
(b) Controls, as defined in
these Rules; or
(c) Holds with
power to vote any part of a business entity subject to this section. In
addition to any other reasonable meaning of the words used, a holding company
"indirectly" has, holds or owns any power, right or security if it does so
through any interest in a subsidiary or successive subsidiaries, however many
such subsidiaries may intervene between the holding company and the business
entity subject to this section.
24.190
Wagering account
transactions.
1. Except as otherwise
provided herein, deposits, credits, and debits to wagering accounts shall be
made in accordance with these Rules.
2. Business entity wagering account deposits
and withdrawals may only be made by transfers to and from the bank or financial
institution account maintained by the business entity. Business entity wagering
account deposits and withdrawals may not be made in cash.
24.200
Gross revenue computations and
layoff bets. The amounts of wagers placed by a book and the amounts
received by the book as payments on such wagers shall not affect the
computation of the book's gross gaming revenue.
24.210
Assigned agent. The
Commission may at any time require a book to allow an agent of the Commission
to be permanently present on the book's premises during all hours of operation,
and to require the costs and expenses for such agent to be borne by the book in
a manner deemed reasonable by the Commission. The agent shall have full and
complete access to all books, records, and to any telephone conversations
emanating from or received at the licensed premises.
24.220
Records and forms. Books
shall create and maintain the records and reports required by this Rule in such
manner and using such forms as the Commission may require or approve. The
Commission may require books to create and maintain such other records and
reports as are necessary or convenient for strict regulation of books. Except
as otherwise provided in this Rule, books shall preserve the records required
by this Rule for at least 5 years after they are made. The Commission may at
any time examine and copy the records of any book. Each book shall comply with
all other applicable Rules of the Commission to the extent not in conflict with
this Rule.
RULE 25
EXCLUSIONS
25.01
Exclusions - Inimicals, Cheats, Career Criminals - Definitions
The following words and terms, when used in this section, shall have
the following meanings unless the context clearly indicates otherwise.
1. "Candidate" means any person whose name is
included on the exclusion list.
2.
"Career or professional offender" means any person, whose behavior is pursued
in an occupational manner or context for the purpose of economic gain,
utilizing methods that constitute violations of the laws of the State of
Arkansas.
3. "Cheat" means any
person whose act or acts in any jurisdiction would constitute any criminal
offense relating to gaming play.
4.
"Excluded Person" means any person who has been placed upon the List of
Excluded Persons by order of the Commission and is required to be ejected from
a gaming facility.
5. "Inimical"
means adverse, unfriendly or hostile to the integrity of gaming.
6. "List of Excluded Persons" means a list of
names of persons who are required to be excluded or ejected from the Licensee's
premises.
7. "Occupational manner
or context" means the systematic planning, administration, management or
execution of an activity for financial gain.
25.02
Maintenance and Distribution of
List
1. The Commission shall maintain a
list of persons to be excluded from a Licensee's premises.
2. The list shall be distributed to every
Licensee in the State of Arkansas on at least a quarterly basis via E-Mail or
U.S. Postal Service. Each Licensee shall acknowledge receipt thereof by
notifying the Commission via E-Mail or correspondence.
3. The following information and data shall
be provided for each excluded person:
(a) The
full name and aliases of the person to be excluded;
(b) A description of the person's physical
appearance, including height, weight, type build, color of hair and eyes and
other physical characteristics which might assist in the identification of the
person;
(c) Date of birth
(d) The effective date of the order of
exclusion; and
(e) A photograph, if
obtainable and the date of the photo or a photo taken by the Licensee's
surveillance department.
25.03
Criteria for Exclusion
1. The exclusion list may include any person
who meets the following criteria:
(a) A career
or professional offender whose presence in a Licensee's premises would be
contrary to the interests of the State of Arkansas.
(b) An associate of a career offender or
professional offender whose association is such that his or her presence in a
Licensee's premises would be inimical to the interest of the State of
Arkansas.
(c) Any person whose
presence in a Licensee's premises would be inimical to the interest of the
State of Arkansas, but not limited to:
(1)
Cheats;
(2) Persons whose
privileges for an Employee License have been revoked;
(3) Persons who pose a threat to the safety
of patrons or employees of the Licensee; and
(4) Persons with a documented history of
conduct involving undue disruption of a Licensee's operations.
25.04
Procedure for Entry of Names
The Racing Commission shall, on its own initiative, or upon referral by
the Licensee, investigate or review any individual who would appear to be an
appropriate candidate for placement on the exclusion list. An agent or other
representative of the Racing Commission may conduct the investigation and place
any candidate for exclusion on the list and notify that person. The Commission
administrator or designee shall, within 30 days of placement thereon, affirm
the decision of the Racing Commission representative to place an individual on
the exclusion list, or the person's name shall be removed from the
list.
25.05
Duty
of Licensee
Regarding Excluded Persons
1. A Licensee shall exclude or eject any
person that has been placed on the exclusion list.
2. If an excluded person enters, attempts to
enter, or is in a Licensee premises and is recognized by the Licensee
personnel, the Licensee personnel shall immediately notify the Racing
Commission.
3. It shall be a
continuing duty of Licensee to inform the Racing Commission of the names of
persons it believes are appropriate candidates for placement on the exclusion
list.
4. Each Licensee shall have
the right to exclude undesirable individuals from its premises, and without
limiting the generality of the forgoing, each Licensee may have the person
whose name appears on the exclusion list removed from the Licensee's premises
or may press trespass charges against the individual.
5. Any excluded person who has engaged in
gaming activity at a Licensee's premises prior to detection and whose gaming
has resulted in a win by the excluded patron, shall forfeit all winnings
immediately upon detection of the excluded person by the Licensee or Racing
Commission. A Licensee shall not reimburse the excluded person for any losses
incurred while the excluded person engaged in gaming activity.
25.06
Removal from the
Exclusion List
1. An excluded person
may petition the Commission to remove his or her name from the exclusion
list.
2. The petition for removal
shall state with specificity the grounds believed by the petitioner to
constitute good cause for the removal from the list.
3. The Racing Commission or designee may
decide the petition on the basis of the documents submitted or grant the
petitioner a hearing. A hearing shall be granted only upon a finding that there
is new evidence which is material and necessary, or that circumstances have
changed since the placement of the excluded person on the list. All exclusion
decisions may be appealed to the Racing Commission.