11 Va. Admin. Code § 5-90-50

Current through Register Vol. 40, No. 22, June 17, 2024

Section 11VAC5-90-50 - Investigations

A. An applicant for a license or permit shall submit to a personal and background investigation conducted by the department.

B. A person who is required to provide personal and background information under this chapter shall provide a statement that irrevocably gives consent to the director, department staff and its investigative contractors, and persons authorized by the director to:

1. Verify all information provided in the application; and

2. Conduct a background investigation of the individual.

C. An applicant shall authorize the director, department staff, and investigative contractors to have access to any and all information the applicant has provided to any other jurisdiction while seeking a gaming or similar license in that other jurisdiction, as well as the information obtained by that other jurisdiction during the course of any investigation it may have conducted regarding the applicant.

D. The background investigation shall include a criminal history records check and fingerprinting for:

1. Every individual applying for a license or permit pursuant to this chapter;

2. Every individual who is an officer, director, or principal of a licensee or applicant for a license and every employee of the licensee who conducts gaming operations;

3. All individual security personnel of any licensee; and

4. All permit holders and officers, directors, principals, and employees of permit holders whose duties relate to gaming operations in Virginia.

E. In the form and format required by the department, each individual required by subsection D of this section to undergo a criminal history records check shall submit fingerprints and personal descriptive information to the Central Criminal Records Exchange to be forwarded to the Federal Bureau of Investigation for a national criminal records search and to the Department of State Police for a Virginia criminal history records check. The results of the background check and national and state criminal records check shall be returned to the department.

F. Administrative costs of background investigations.

1. An applicant is responsible for the administrative costs to the department of conducting the personal and background investigations required by this chapter.

2. The administrative costs of the personal and background investigation are independent of and in addition to fingerprinting fees and, except for a service permit, any license or permit issuance fees.

3. The administrative costs associated with performing the background investigation of a particular facility operator or supplier permit applicant and any individual required to be investigated will vary depending on the:

a. Complexity of the investigation;

b. Time necessary to properly conduct the investigation;

c. Type of license or permit sought; and

d. Types of activities the license or permit will authorize the applicant to undertake if the license or permit is granted.

4. When a preferred casino gaming operator submits its application for the facility operator's license, it shall send by wire transfer to the department a nonrefundable application and background investigation fee of $50,000 per principal.

5. When an applicant for a supplier permit submits its application to the department, it shall send by wire transfer:

a. A nonrefundable application fee of $5,000; and

b. A background investigation fee of $50,000 per principal.

6. When an applicant for a service permit submits its application to the department, it shall send by wire transfer $500 as a nonrefundable fee to cover the administrative costs of conducting the personal and background check and issuing the permit.

7. In addition to other fees set out in this subsection, the forms submitted in compliance with this regulation shall be accompanied by the:

a. Fee for access to Virginia criminal history record information;

b. Mandatory processing fee required by the Federal Bureau of Investigation for a national criminal history records check; and

c. Mandatory processing fee required by Interpol for an international criminal history records check for an applicant who is a citizen of any country other than the United States.

G. An applicant for a facility operator license or supplier permit shall ensure that all principals, key managers, and other required individuals have submitted appropriate and complete applications.

H. The director may require initial and additional deposits from an applicant for the administrative costs of conducting the applicant's background investigation.

I. Promptly upon receipt of an invoice from the department, an applicant for a license or permit shall reimburse the department for:

1. The additional administrative costs associated with performing background investigations of the applicant and any individual required to provide information under this chapter; and

2. Any payments made by the director to a person approved by the director to conduct the background investigation.

J. Failure to reimburse the department shall be grounds for disqualification of the applicant.

K. Unless otherwise specified, the director shall refund to an applicant for a license or permit any unused portion of an advance deposit required to offset the additional costs of conducting the applicant's background investigation and submitted under subsection H of this section.

L. Personal and background information.

1. Except as otherwise provided by the department, application documents shall include the information under subdivision 2 of this subsection, for an individual who is:

a. The applicant;

b. A director, officer, or key manager employed by the applicant;

c. A partner of the applicant;

d. An owner of an interest of 5.0% or more in the applicant; or

e. A principal.

2. An individual listed under subdivision 1 of this subsection shall furnish the following:

a. Full name and any previous names or aliases;

b. Date of birth;

c. Physical description;

d. Home and business addresses and telephone numbers;

e. Driver's license number and state of issuance;

f. Social Security number;

g. Passport or identification photo;

h. Fingerprints for a criminal records check:

(1) For a Virginia resident, from an electronic fingerprinting service approved by the board; or

(2) For a resident from outside Virginia, one Federal Bureau of Investigation and one local fingerprint card, taken within the previous 45 days before submission to the department; and

i. Any other document or information required by the department.

3. If the applicant is a corporation, the application documents shall state the:

a. State in which the applicant is incorporated; and

b. Name and address of the applicant's agent for service of process in Virginia.

4. If an applicant is a nonprofit corporation, only an individual who is a director or officer of the applicant shall provide the information required under subdivision 2 of this subsection.

5. The department may require an applicant to furnish the information listed in subdivision 2 of this subsection with regard to the applicant's family and associates.

6. Inadvertent, nonsubstantive errors that might be made in furnishing the information required by this regulation may not be used as a reason by the board for disqualifying the applicant.

M. Information for background investigation. An individual required to provide information under this section shall complete a background form supplied by the department that includes a statement disclosing whether the individual has ever been:

1. Arrested;

2. Convicted of, pled nolo contendere to, or received probation before judgment for a felony or misdemeanor, other than a misdemeanor traffic offense;

3. Sanctioned by a government agency related to gaming;

4. Found liable in connection with a civil action related to gaming;

5. A debtor in a bankruptcy proceeding; or

6. Denied a bond.

N. If the applicant for a facility operator's license or a supplier permit is a corporation, the application shall include a:

1. Statement of when the corporation was organized;

2. Copy of the articles of incorporation and bylaws of the corporation;

3. Statement and documentation of whether the corporation has been reorganized or reincorporated during the five-year period preceding the date on which the application is submitted to the director;

4. Statement and documentation of whether the corporation has filed restated articles of incorporation; and

5. List identifying each person who:

a. Exercises voting rights in the corporation; and

b. Directly or indirectly owns 5.0% or more of the corporation.

O. If the applicant for a facility operator's license or a supplier permit is an unincorporated business association, the application shall include a:

1. Copy of each organizational document of the applicant, including any partnership agreement;

2. Description of any oral agreements involving the organization of the applicant; and

3. List identifying each person who:

a. Exercises voting rights in the applicant; or

b. Directly or indirectly owns 5.0% or more of the business association.

P. If the applicant for a facility operator's license or a supplier permit is authorized to issue capital stock, the applicant shall state, for each class of stock authorized, the:

1. Total number of shares;

2. Par value, if any;

3. Voting rights;

4. Current rate of dividend;

5. Number of shares outstanding and the market value of each share on the date of the application; and

6. Existence of any voting trust or voting agreement in which capital stock of the applicant is held, and the:

a. Name and address of each stockholder participating in the trust or agreement;

b. Class of stock involved; and

c. Total number of shares held by the trust or agreement.

Q. The application for a facility operator's license or a supplier permit shall include a certified copy of each voting trust or voting agreement in which capital stock is held.

R. The application for a facility operator's license or a supplier permit shall describe the terms of any proxy by which any capital stock may be voted and shall state the:

1. Name and address of the person holding the proxy;

2. Name and address of the stockholder who granted the proxy;

3. Class of stock for which the proxy may vote; and

4. Total number of shares voted by the proxy.

S. The application for a facility operator's license or a supplier permit shall state any provisions and the procedures by which these provisions may be modified for the redemption, repurchase, retirement, conversion, or exchange of an ownership interest.

T. The application for a facility operator's license or a supplier permit shall state whether the applicant's stock may be traded through options and whether the corporation or a stockholder has executed an agreement or contract to convey any of the corporation's or the stockholder's stock at a future date.

U. The application for a facility operator's license or a supplier permit shall include a copy or a description of each agreement or contract disclosed under subsection T of this section.

V. The application for a facility operator's license or a supplier permit shall include a copy of each prospectus, pro forma, or other promotional material given to potential investors about the permit holder applicant's operation.

W. The application for a facility operator's license or a supplier permit shall provide full disclosure for any stock options that may exist or have been granted.

X. If the applicant is not an individual, the application for a facility operator's license or a supplier permit shall include a list of the individuals who are serving, or who are designated to serve, during the first year after the date the application is submitted to the Executive Director of the Virginia Lottery, as a director, officer, partner, or principal as defined in this chapter and provide:

1. The individual's name and address;

2. Each position or office of the applicant held by the individual;

3. The individual's primary occupation during the five-year period preceding the date on which the application is submitted to the director; and

4. The nature and extent of any ownership interest that the individual has in the applicant.

Y. The application for a facility operator's license or a supplier permit shall:

1. Disclose all individuals and entities that have an ownership interest of 5.0% or more in the applicant, including any beneficial ownership as defined in Article 1 (§ 13.1-1200 et seq.) of Chapter 14 of Title 13.1 of the Code of Virginia;

2. Describe the:

a. Nature of the ownership, and

b. Extent of control exercised by the owner;

3. Include information and documents required by this chapter as to each owner; and

4. If the applicant is the subsidiary of another entity, include an explicit statement that the parent organization will fully and absolutely guarantee the performance and regulatory compliance of the subsidiary during the term of the subsidiary's license or permit.

Z. Outside interests.

1. The application documents for a facility operator's license or a supplier permit shall state whether the applicant, a director, an officer, a partner of the applicant, or an owner of 5.0% or more of an interest in the applicant:

(a) Has ever held an ownership interest personally or in an entity holding a license or permit issued by the board or the department; or

(b) Is currently engaged in the business of gaming in another state, and the nature and extent of that involvement.

2. The applicant shall describe the nature of participation stated under subdivision 1 of this subsection.

AA. Approval of institutional investors.

1. An institutional investor that holds or proposes to hold an ownership interest in a facility or supplier that would require a background investigation may request the director to waive the requirement of conducting a full background investigation of the institutional investor.

2. The board may approve the institutional investor's request for a waiver if it satisfactorily completes and submits an institutional investor waiver application as required by the department.

3. An entity for which the director has approved a waiver request is an approved institutional investor.

4. An institutional investor can maintain its approved status by:

a. Maintaining an ownership interest in an applicant, licensee, or permit holder; and

b. Providing the department with the statement of ownership percentage it reported to the Securities and Exchange Commission or a foreign equivalent approved for such reporting by the department:

(1) Annually, before the last day of April; or

(2) As otherwise directed by the department.

5. If an approved institutional investor complies with subdivision 4 of this subsection, the department's approval is valid for five years from the date of approval, and:

a. The waiver may apply to one or more applicants, licensees, or permit holders in which the entity is an institutional investor; and

b. The institutional investor shall submit an institutional waiver application every five years from the date of the department's last approval.

6. If an approved institutional investor does not meet the requirements of subdivision 4 of this subsection with respect to one or more applicants, licensees, or permit holders:

a. The approved institutional investor shall notify the department in writing if the institutional investor's ownership interest falls below 5.0%; and

b. The department may require the institutional investor to submit a new waiver application if the institutional investor acquires an ownership interest of 5.0% or greater in any applicant, licensee, or permit holder.

11 Va. Admin. Code § 5-90-50

Derived from Virginia Register Volume 37, Issue 16, eff. 3/11/2021; Amended, Virginia Register Volume 38, Issue 13, eff. 3/16/2022.

Statutory Authority: §§ 58.1-4101 and 58.1-4102 of the Code of Virginia.