Section 15.04 - Suitability of New and Existing Licensees, and Qualifiers(1)Durable Suitability Determinations.(a) An applicant or qualifier shall have the duty to establish its durable suitability by clear and convincing evidence.(b) No applicant shall be determined to be durably suitable in accordance with 205 CMR 15.04(1)(a) unless and until all qualifiers identified in 205 CMR 15.04(6) have been found by the Commission durably suitable in accordance with 205 CMR 15.04(1)(a) within the current or prior four calendar years.(c)Investigation. Before the Commission may determine that an applicant or qualifier is durably suitable in accordance with 205 CMR 15.04(1), the Bureau shall conduct an investigation into the qualifications and suitability of the applicant. At the completion of the Bureau's investigation, it shall submit a written report to the Commission, which will include recommendations and findings of fact relative to the suitability of the applicant or qualifier. (d) The Commission shall make any finding of durable suitability in accordance with 205 CMR 15.04(1) after an adjudicatory proceeding pursuant to 205 CMR 101.00: M.G.L. c. 23K Adjudicatory Proceedings.(e) After the proceedings under 205 CMR 15.04(1)(d), the Commission shall issue a written determination of durable suitability as follows:1.Negative Determination. If the Commission finds that an applicant or qualifier failed to meet its burden of demonstrating its durable suitability, the Commission, in its sole discretion, shall either: a. issue a negative determination of suitability; orb. request that the applicant or qualifier submit a certification in accordance with 205 CMR 15.04(2)(b) and, as appropriate, that the Bureau conduct an investigation in accordance with 205 CMR 15.04(2)(c), and thereafter consider whether the applicant or qualifier is temporarily suitable in accordance with 205 CMR 15.04(2).2.Positive Determination. If the Commission finds that an applicant or qualifier has met its burden of demonstrating its durable suitability, the Commission shall issue a positive determination of durable suitability which may include conditions and restrictions.(2)Temporary Suitability Determinations.(a) Notwithstanding any other provision of 205 CMR 15.04, the Commission, in its sole discretion, may deem an applicant or qualifier temporarily suitable, until the end of the calendar year in which the applicant proposes to hold a racing meeting based on a certification pursuant to 205 CMR 15.04(2)(b) and an investigatory report pursuant to 205 CMR 15.04(2)(c). 1. No applicant shall be determined to be temporarily suitable in accordance with this 205 CMR 15.04(2)(a) unless and until all qualifiers identified in 205 CMR 15.04(6) have been found durably suitable in accordance with 205 CMR 15.04(1)(b) or temporarily suitable in accordance with this 205 CMR 15.04(2)(a).3. Any evaluation of whether an applicant or qualifier is temporarily suitable shall take place in a public meeting, unless the applicant or qualifier requests that the evaluation take place after an adjudicatory proceeding held pursuant to 205 CMR 101.00: M.G.L. c. 23K Adjudicatory Proceedings.(b) To be found temporarily suitable in accordance with 205 CMR 15.04(2), the applicant or qualifier must certify:1. that it understands it may be denied a license or have a license revoked if it has willfully, knowingly, recklessly, or intentionally provided false or misleading information to the Commission;2. that, under pains and penalties of perjury, to the best of its reasonable knowledge and belief, it is suitable to hold a license pursuant to M.G.L. c. 128A and 205 CMR 15.04; and3. an applicant certifies, under pains and penalties of perjury, that to the best of its reasonable knowledge and belief, all of its qualifiers are also suitable to hold a license pursuant to M.G.L. c. 128A, and 205 CMR 15.04.(c) Before the Commission may determine that an applicant or qualifier is temporarily suitable in accordance with 205 CMR 15.04(2), the Bureau shall conduct an investigation into the qualifications and suitability of the applicant or qualifier. The investigation may be limited to a review of the applicant or qualifier's 205 CMR 15.04(2)(b) certification; an applicant's self-disclosed licensing and compliance history in other jurisdictions; self-disclosed open litigation involving an applicant; and an open-source check concerning the applicant or, if a natural person, a qualifier. At the completion of the Bureau's investigation, it shall submit a written report to the Commission. The Bureau's report may be redacted consistent with the Massachusetts Public Records Law, M.G.L. c. 66, and other sources of law.(d) After evaluating whether the applicant or qualifier is temporarily suitable in accordance with 205 CMR 15.04(2)(d): 1. If the Commission finds the applicant or qualifier temporarily suitable: the Commission shall issue a written determination of temporary suitability for the applicant or qualifier. The determination may include conditions and restrictions.2.Otherwise: the Commission may issue a negative determination of suitability.(3) In determining whether a person is suitable, the Commission shall evaluate and consider the overall reputation of the person, including, without limitation, and on the basis of a report from the Bureau, sworn attestations, or other information or evidence available to the Commission:(a) the person's integrity, honesty, good character and reputation;(b) the person's financial stability, integrity, and background;(c) whether the person has a history of compliance with racing or other gaming or sports wagering requirements in other jurisdictions;(d) whether the person, at the time of the request, is a defendant in litigation;(e) whether the person is ineligible to hold a license under 205 CMR 15.04(4), or M.G.L. c. 128A;(f) whether the person has been convicted of a crime of moral turpitude;(g) whether, and to what extent, the person has associated with members of organized crime and other persons of disreputable character;(h) whether the person has failed to demonstrate responsible business practices in any jurisdiction;(i) whether awarding a license to the applicant would have an adverse impact upon the integrity of the racing industry;(j) whether awarding a license to the applicant would have an adverse impact on the interest of members of the public in racing competition honestly managed and of good quality; and(k) the extent to which the person have cooperated with the Bureau during the review of the Racing Meeting License Application.(4) The Commission shall determine that an applicant is unsuitable if the applicant or one of its qualifiers: (a) has knowingly made a false statement of a material fact to the Commission or IEB;(b) has had a license revoked by any governmental authority responsible for regulation of racing or associated pari-mutuel wagering activities or gaming or sports wagering activities;(c) has been convicted of a felony or other crime involving embezzlement, theft, fraud, perjury or a gambling-related offense;(d) has not demonstrated to the satisfaction of the Commission financial responsibility sufficient to adequately meet the requirements of the proposed enterprise;(e) has affiliates or close associates that would not qualify for a license, or whose relationship with the applicant may pose an injurious threat to the interests of the Commonwealth.(5)Persons Required to Be Qualified. The following persons shall be qualifiers for any application: (a) If the applicant is a corporation: 3. Any person owning, or having another beneficial or proprietary interest in, 10% or more of the common stock of the applicant, or a holding, intermediary or subsidiary company of such company; and4. In the judgment of the Division of Licensing after consultation with the Bureau, any person with significant and substantial responsibility for the applicant's business under the jurisdiction of the Commission, or having the power to exercise significant influence over decisions concerning the applicant's operations in the Commonwealth.(b) If the applicant is a limited liability corporation: 2. Each transferee of a member's interest;3. Any other holder of a beneficial or proprietary interest of 10% or more in the applicant;5. In the judgment of the Division of Licensing after consultation with the Bureau, any person with significant and substantial responsibility for the applicant's business under the jurisdiction of the Commission or having the power to exercise significant influence over decisions concerning the prospective applicant's operations in the Commonwealth.(c) If the applicant is a partnership:2. Any other holder of a beneficial or proprietary interest of 10% or more in the applicant; and3. In the judgment of the Division of Licensing after consultation with the Bureau, any person with significant and substantial responsibility for the applicant's Business under the jurisdiction of the Commission or having the power to exercise significant influence over decisions concerning the applicant's operations in the Commonwealth.(6)Other Qualifiers. The Commission may, in its sole discretion, require other persons that have a business association of any kind with the applicant to undergo a qualifier review and determination process. These persons may include, but are not limited to, holding, intermediary or subsidiary companies of the applicant.(7)Waivers. In addition to any other exception or exemption under 205 CMR 15.04, upon written petition, the Commission may waive the requirement to be qualified as a qualifier under 205 CMR 15.04(5) and (6) for: (a) Institutional investors holding up to 15% of the stock of the applicant, or holding, intermediary or subsidiary company thereof, upon a showing by the person seeking the waiver that it purchased the securities for investment purposes only and does not have any intention to influence or affect the affairs or operations of the applicant or holding, intermediary or subsidiary company thereof. Provided, however, any institutional investor granted a waiver which subsequently determines to influence or affect the affairs or operations of the applicant, or a holding, intermediary or subsidiary company thereof shall provide not less than 30 days' notice to the Commission of such intent and shall file an application and may be subject to the licensing requirements of 205 CMR 15.00, 205 CMR 3.00: Harness Horse Racing and 205 CMR 4.00: Horse Racing respectively before taking any action that may influence or affect the affairs of the applicant or a holding, intermediary or subsidiary company; or(b) Any person who, in the opinion of the Bureau or the Commission, cannot exercise control or provide direction to an applicant or a holding, intermediary or subsidiary company thereof.(8)Persons Deemed Suitable. (a) Any person may be deemed durably suitable for purposes of M.G.L. c. 128A and 205 CMR without an additional finding of suitability pursuant to 205 CMR 15.04 if they were previously: 1. qualified pursuant to M.G.L. c. 23K or 205 CMR 116.00: Persons Required to Be Licensed or Qualified; or2. found suitable pursuant to 205 CMR 215.01(1): Durable Finding of Suitability.(b) Any person may be deemed temporarily suitable for purposes of M.G.L. c. 128A and 205 CMR without an additional finding of suitability pursuant to 205 CMR 15.04 if they were previously found preliminarily suitable pursuant to 205 CMR 215.01(2): Preliminary Finding of Suitability.(9)Qualification of New Qualifiers. No person requiring qualification pursuant to 205 CMR 15.04 may perform any duties or exercise any powers relating to the position that said qualifier is seeking to assume for a licensee unless the person notifies the Bureau in writing within 30 days of appointment to the position. Such notification shall be accompanied by an applicable business entity or personal disclosure form, specified by the Bureau. Following such notification and submission of the completed form, the person may continue to perform duties and exercise powers relating to the position pending qualification.(a) A person with reason to believe that their new position with an applicant or licensee may require qualification pursuant to 205 CMR 15.04 shall notify the Bureau in writing within 30 days of appointment to the position. Such notification shall be accompanied by a summary of the responsibilities and/or features of the position. The Bureau shall determine whether the person shall be designated a qualifier pursuant to 205 CMR 15.04(5) and (6) and shall notify the person of such designation in writing. Within 30 days of designation as a qualifier, the person shall submit a completed personal disclosure form. Following submission of the completed form, the person may continue to perform duties and exercise powers relating to the position pending qualification.(b) The Bureau shall review the forms submitted by the new qualifier, as well as such other information that the Bureau may request, and, upon completion of its investigation, shall make a recommendation in accordance with 205 CMR 15.04(1)(c) whether the new qualifier meets the standards for suitability.(c) Upon notification by the Bureau of a determination that reasonable cause exists to believe the qualifier may not ultimately be found suitable, an applicant shall promptly remove the qualifier from his or her position until such time as the Commission makes its final determination on suitability.(10)Internal Review of Determinations. An applicant or qualifier may request review of any determination made by the Bureau in accordance with either 205 CMR 15.04(5) through (7) or 205 CMR 15.04(9) to the Commission, by filing a petition on a form prescribed by the Commission. The Commission shall decide the question at a public meeting on the matter at which it may allow representatives of the petitioner and Bureau to testify.(11)Unsuitable Qualifiers. An unsuitable qualifier may not hold an interest in a license. A licensee's articles of organization or other document governing the sale or transfer of securities or other interests shall contain provisions in a form approved by the Commission stating that the sale, assignment, transfer, pledge or other disposition of any security issued by it is conditional and shall be ineffective if disapproved by the Commission. Further, a licensee shall have a mechanism approved by the Commission in place by which it may effectuate divestiture or redemption of securities, or a like process, in the event of a negative determination of suitability being issued to a person required to be qualified.(12)Transfers of Interest in Licenses and Licensees. Prior to giving written approval to a sale, transfer, or conveyance of a beneficial or legal interest in a license or licensee in accordance with M.G.L. c. 128A, § 11C, the Commission must find the transferee durably or temporarily suitable in accordance with 205 CMR 15.04 as though the transferee was an applicant or qualifier for a new license.Adopted by Mass Register Issue 1511, eff. 12/8/2023 (EMERGENCY).Amended by Mass Register Issue 1518, eff. 12/8/2023 (EMERGENCY).Amended by Mass Register Issue 1519, eff. 12/8/2023 (COMPLIANCE).