006.06.19 Ark. Code R. 023

Current through Register Vol. 49, No. 10, October, 2024

Rule 006.06.19-023 - CGR 23 Off-Track Pari-Mutuel Sports Wagering and Off-Track Pari-Mutual Other Event Wagering

23.010Scope. 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.

23.020Definitions. 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 pari-mutuel 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 off-track 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.

23.030Authorization 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.

23.040Conduct 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 pari-mutuel 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 pari-mutuel 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 pari-mutuel 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.

23.050Approval 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.

23.060Criteria 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.

23.070Requirements 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.

23.080Participation 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.

23.090Licensing 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.

23.100Requirements 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.

23.110Approval 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.

23.120Minimum 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.

23.130Operation 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 off-track 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 pari-mutuel sports books at post time.

23.140Approval 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 off-track 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.

23.150Deduction 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.

23.160Limits and conditions on approvals. The Commission may impose limits or place conditions upon any license or approval issued pursuant to this Rule.

23.170Record 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.

23.180Grounds for disciplinary action. Violation of any applicable law or rule by a pari-mutuel sports book or systems operator constitutes reasonable cause for disciplinary action.

23.190Waivers. 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.

23.200Gross 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.

23.210Effective date of Rule. This Rule shall be effective upon passage.

006.06.19 Ark. Code R. 023

3/1/2019