W. Va. Code R. § 178-10-3

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 178-10-3 - Authorization to conduct advance deposit account wagering

3.1. No person or entity shall conduct advance deposit account wagering (ADW) in the state of West Virginia unless the person or entity has applied for and has been granted an ADW license by the Racing Commission. No ADW license shall be granted by the Commission unless the applicant meets all requirements specified in § 19-23-12e of the West Virginia code and this rule.

3.2. An ADW license shall be valid for the calendar year in which it is issued. Provided that, those initial ADW licenses issued by the Racing Commission on or after the July 1, 2020 effective date of West Virginia §§ 19-23-12e et seq., and the effective date of this rule, shall be valid from the date of issuance until December 31, 2020.

3.3. An application shall include, on a form prescribed by the Racing Commission and located on its website at https://racing.wv.gov, the names, addresses and telephone numbers of all officers and directors. The following information shall be required to be provided by an applicant to the Commission:

3.3.a. An application shall include an affidavit from the chief executive officer or a major financial participant in the applicant setting forth:

3.3.a.1. That the application is made for a license to conduct ADW in the state of West Virginia;

3.3.a.2. That the affiant is the agent of the applicant, its owners, partners, members, directors, officers, and personnel and is duly authorized to make the representations in the application on their behalf. Documentation of the authority shall be attached;

3.3.a.3. That the applicant seeks a grant of a privilege from the state of West Virginia, and the burden of proving the applicant's qualifications rests at all times with the applicant;

3.3.a.4. That the applicant consents to inquiries by the state of West Virginia, its employees, the Racing Commission, its staff and agents, into the financial, character, and other qualifications of the applicant by contacting individuals and organizations;

3.3.a.5. That the applicant, its owners, partners, members, directors, officers, and personnel accept any risk of adverse public notice, embarrassment, criticism, or other circumstance, including financial loss, which may result from action with respect to the application and expressly waive any claim which otherwise could be made against the state of West Virginia, its employees, the Racing Commission, staff, or agents;

3.3.a.6. That the affiant has read the application and knows the contents; the contents are true to affiant's own knowledge, except matters therein stated as information and belief; as to those matters, affiant believes them to be true;

3.3.a.7. That the applicant recognizes all representations in the application are binding on it, and false or misleading information in the application, omission of required information, or substantial deviation from representations in the application may result in denial, revocation, suspension or conditioning of a license or imposition of a fine, or any or all of the foregoing;

3.3.a.8. That the applicant will comply with all applicable state and federal statutes and rules, all rules of the Racing Commission and all other local ordinances;

3.3.a.9. The affiant's signature, name, organization, position, address, and telephone number; and

3.3.a.10. The date.

3.3.b. An applicant must disclose the following ownership and control information:

3.3.b.1. The type of organizational structure of the applicant, whether individual, business corporation, nonprofit corporation, partnership, joint venture, trust, association, or other;

3.3.b.2. If the applicant is an individual, the applicant's legal name, whether the applicant is a United States citizen, any aliases and business or trade names currently or previously used by the applicant, and copies of all state and federal tax returns for the past five years;

3.3.b.3. If the applicant is a corporation:

3.3.b.3.A. The applicant's full corporate name and any trade names currently or previously used by the applicant;

3.3.b.3.B. The jurisdiction and date of incorporation;

3.3.b.3.C. The date the applicant began doing business in West Virginia and a copy of the applicant's certificate of authority to do business in West Virginia;

3.3.b.3.D. Copies of the applicant's articles of incorporation, bylaws, and all state and federal corporate tax returns for the past five years;

3.3.b.3.E. The general nature of the applicant's business;

3.3.b.3.F. Whether the applicant is publicly held as defined by the rules and regulations of the Securities and Exchange Commission;

3.3.b.3.G. The classes of stock of the applicant. As to each class, the number of shares authorized, number of shares subscribed to, number issued, number outstanding, par value per share, issue price, current market price, number of shareholders, terms, position, rights, and privileges must be disclosed;

3.3.b.3.H. Whether the applicant has any other obligations or securities authorized or outstanding which bear voting rights either absolutely or upon any contingency, the nature thereof, face or par value, number of units authorized, number outstanding, and conditions under which they may be voted;

3.3.b.3.I. The names, in alphabetical order, and addresses of the directors and, in a separate list, officers of the applicant. The number of shares held of record directly or indirectly by each director and officer as of the application date of each class of stock, including stock options and subscriptions, and units held of record or beneficially of other obligations or securities which bear voting rights must be disclosed;

3.3.b.3.J. The names, in alphabetical order, and addresses of each recordholder as of the date of application or beneficial owner of shares, including stock options and subscriptions, of the applicant or units of other obligations or securities which bear voting rights. As to each holder of shares or units, the number and class or type of shares or units shall be disclosed;

3.3.b.3.K. Whether the requirements of the Securities Act of 1933 and Securities and Exchange Act of 1934, as amended, and Securities and Exchange Commission rules and regulations have been met in connection with issuance of applicant's securities, and copies of the most recent registration statement and annual report filed with the Securities and Exchange Commission;

3.3.b.3.L. Whether the securities registration and filing requirements of the applicant's jurisdiction of incorporation have been met, and a copy of the most recent registration statement filed with the securities regulator in that jurisdiction; and

3.3.b.3.M. Whether the securities registration and filing requirements of the state of West Virginia have been met. If they have not, the applicant must disclose the reasons why. The applicant must provide copies of all securities filings with the West Virginia Securities Commission during the past five years.

3.3.b.4. If the applicant is an organization other than a corporation:

3.3.b.4.A. The applicant's full name and any aliases, business, or trade names currently or previously used by the applicant;

3.3.b.4.B. The jurisdiction of organization of the applicant;

3.3.b.4.C. The date the applicant began doing business in West Virginia;

3.3.b.4.D. Copies of any agreements creating or governing the applicant's organization and all of the applicant's state and federal tax returns for the past five years;

3.3.b.4.E. The general nature of the applicant's business;

3.3.b.4.F. The names, in alphabetical order, and addresses of any partners and officers of the applicant and other persons who have or share policy-making authority. As to each, the applicant must disclose the nature and extent of any ownership interest, direct or indirect, including options, or other voting interest, whether absolute or contingent, in the applicant; and

3.3.b.4.G. The names, in alphabetical order, and addresses of any individual or other entity holding a record or beneficial ownership interest, direct or indirect, including options, as of the date of the application, or other voting interest, whether absolute or contingent, in the applicant. As to each, the applicant must disclose the nature and extent of the interest.

3.3.b.5. If a non-individual record or beneficial holder of an ownership or other voting interest of 5.0% or more in the applicant is identified pursuant to subparagraph 3.b.3.I. or subparagraph 3.3.b.3.J. or subparagraphs 3.3.b.4.F. and 3.3. b.4.G., the applicant must disclose the information required by those subparagraphs as to record or beneficial holders of an ownership or other voting interest of 5.0% or more in that non-individual holder. The disclosure required by those subparagraphs must be repeated, in turn, until all other voting interests of 5.0% or more in the applicant or any non-individual holder are identified. When an applicant is unable to provide the information required, it shall explain fully and document its inability to do so;

3.3.b.6. Whether the applicant is directly or indirectly controlled to any extent or in any manner by another individual or entity. If so, the applicant must disclose the identity of the controlling entity and a description of the nature and extent of control;

3.3.b.7. Any agreements or understandings which the applicant or any individual or entity identified pursuant to this rule has entered into regarding ownership or operation of applicant's proposed ADW business, and copies of any such agreements in writing;

3.3.b.8. Any agreements or understandings which the applicant has entered into for the payment of fees, rents, salaries, or other compensation concerning the proposed ADW business by the applicant, and copies of any such agreements in writing; and

3.3.b.9. Whether the applicant, any partner, director, officer, other policymaker, or holder of a direct or indirect record or beneficial ownership interest or other voting interest or control of 5.0% or more has held or holds a license or permit issued by a governmental authority to own or operate a horse or greyhound racing facility, pari-mutuel wagering facility or any other form of gambling entity, or has a financial interest in such an enterprise or conducts any aspect of horse or greyhound racing or gambling. If so, the applicant must disclose the identity of the license or permit holder, nature of the license or permit, issuing authority, and dates of issuance and termination.

3.3.c. An applicant for an ADW license must disclose and furnish character information as to whether the applicant or any individual or other entity identified pursuant to this rule has:

3.3.c.1. Been charged in any criminal proceeding other than a traffic violation. If so, the applicant must disclose nature of the charge, the date charged, court and disposition;

3.3.c.2. Had a horse or greyhound racing, gambling, ADW, business, professional, or occupational license or permit revoked or suspended or renewal denied or been a party in a proceeding to do so. If so, the applicant must disclose the date of commencement, circumstances and disposition;

3.3.c.3. Been accused in an administrative or judicial proceeding of violating a statute or regulation relating to horse or greyhound racing, or gambling, or ADW operations;

3.3.c.4. Been charged in an administrative or judicial proceeding of violating a statute or regulation relating to unfair labor practices or discrimination;

3.3.c.5. Initiated an administrative or judicial action against a governmental regulator of horse or greyhound racing, or gambling, or ADW operations. If so, the applicant must disclose the date of commencement, forum, circumstances and disposition;

3.3.c.6. Been a party in any administrative or judicial action involving ADW. If so, the applicant must disclose the nature of the action, the forum of the action, the circumstances and disposition;

3.3.c.7. Been the subject of voluntary or involuntary bankruptcy proceedings. If so, the applicant must disclose the date of commencement, forum, circumstances, date of decision and disposition;

3.3.c.8. Failed to satisfy any judgment, decree or order of an administrative or judicial tribunal. If so, the applicant must disclose the date and circumstances; and

3.3.c.9. Been delinquent in filing a tax return required or remitting a tax imposed by any government. If so, the applicant must disclose the date and circumstances.

3.3.d. The disclosure of character information that is required by subdivision 3.3.c. of this rule must be made if the applicant, any individual or entity that owns a 5.0% or greater equity interest in the applicant, or any person or entity that will exercise any degree of management or control of the applicant, has committed any of the acts or otherwise meets any of the criteria listed in subdivision 3.3.c.

3.3.e. An applicant for an ADW license must provide the following with regard to financial resources:

3.3.e.1. The most recent independently audited financial statement showing:

3.3.e.1.A. The applicant's current assets, including investments in affiliated entities, loans and accounts receivable;

3.3.e.1.B. Fixed assets;

3.3.e.1.C. Current liabilities, including loans and accounts payable;

3.3.e.1.D. Long-term debt and equity; and

3.3.e.1.E. Statement of income and expenses, and statement of cash flow.

3.3.f. As part of the application process, the ADW license applicant shall submit a detailed plan, including a detailed budget of the cost of implementation, how its proposed ADW system will operate, and internal controls procedures. The Racing Commission may require changes in a proposed plan of operations as a condition of granting an ADW license. No subsequent material changes in the system's operation may occur unless ordered by the Racing Commission or until approval is obtained from the Racing Commission after it receives a written request.

3.4. The Racing Commission may conduct investigations or inspections or request additional information from the applicant for a license and its officers, directors, managers and equity holders, as applicable, holding 5.0% or more of the applicant's equity interest, as it deems appropriate in determining if the applicant has the financial resources to conduct ADW, and whether to allow the applicant to conduct ADW.

3.5. Before being granted its original ADW license, and every six months thereafter, an ADW licensee shall furnish the Racing Commission with proof that the account holders will be guaranteed the full value of their accounts regardless of the acts of the ADW licensee or any other entity. If the proof offered to the Racing Commission is not satisfactory to the Commission, the Commission may require the ADW licensee to purchase a bond or other form of insurance guaranteeing that the account holders receive the full value of their accounts.

3.6. An application to renew an ADW license for each succeeding calendar year is due in the offices of the Racing Commission by 5:00 p.m. on December 1 on a form prescribed by the Racing Commission and located on its website at https://racing.wv.gov. If December 1 falls on a Saturday, Sunday or designated state holiday, then the renewal application shall be submitted to the Racing Commission by 5:00 p.m. on the next business day.

W. Va. Code R. § 178-10-3