205 CMR, § 234.01

Current through Register 1536, December 6, 2024

Section 234.01 - Vendors

(1)Requirement for Licensure or Registration.

(a) Unless otherwise licensed as a gaming vendor pursuant to 205 CMR 134.00: Licensing and Registration of Employees, Vendors, Junket Enterprises and Representatives, and Labor Organizations, no Person shall conduct business with a Sports Wagering Operator as a Sports Wagering Vendor unless such Person has been licensed as a Sports Wagering Vendor. A Person shall be considered to be conducting business upon commencement of performance of a contract or provision of a good or service.

(b) Except as provided in 205 CMR 234.01(2), a Non-sports Wagering Vendor shall not be required to obtain a Sports Wagering Vendor License or to register as a Sports Wagering Registrant under 205 CMR 234.00. As part of its license application process, a prospective Operator shall be required to identify all of its known or anticipated vendors providing goods or services to whom the prospective Operator reasonably expects to pay an amount of $10,000 or more within a 12-month period, including Non-Sports Wagering Vendors, and if licensed the Operator shall have a continuing duty to update the Bureau relative to the identification of any new vendors. The Bureau may, at its discretion, require the submission of additional information and documents from an Operator, prospective Operator, or a Non-Sports Wagering Vendor.

(c) Except as provided in 205 CMR 234.01(2) and in 205 CMR 234.01(1)(e), a Sports Wagering Subcontractor shall not be required to obtain a Sports Wagering Vendor License or to register as a Sports Wagering Registrant under this 205 CMR 234.00. As part of its application process, a prospective Sports Wagering Vendor shall be required to identify all of its known or anticipated Sports Wagering Subcontractors providing goods or services to whom the vendor reasonably expects to pay an amount of $10,000 or more within a 12-month period, and if licensed the vendor shall have a continuing duty to update the Bureau relative to the identification of any new Subcontractors. The Bureau may, at its discretion, require the submission of additional information and documents from a Sports Wagering Subcontractor or a Sports Wagering Vendor or Applicant for a Sports Wagering Vendor License including, but not limited to, the Sports Wagering Subcontractor Information Form as provided in 205 CMR 234.02(3).

(d)Third-party Marketing and Advertising Entities.

1. For purposes of 205 CMR 234.00, a "third-party marketing or advertising entity" is a Person:

a. who is not a Sports Wagering Subcontractor;

b. who is not a revenue-sharing advertiser as defined in 205 CMR 234.01(1)(e)1.;

c. who regularly promotes or directs patrons to sports wagering on mobile applications or other digital platforms, or who regularly hires or recruits persons to do the same, in exchange for a fee paid by the Operator;

d. who does not otherwise provide goods, software, or services which directly relate to Sports Wagering operations; and

e. who is not an entity described in 205 CMR 234.01(3)(a)2. as "television, radio, newspaper, internet or other similar media used for advertising purposes."

2. Notwithstanding 205 CMR 234.01(1)(a) and 205 CMR 234.01(1)(c), no Person shall conduct business with a Sports Wagering Operator as a third-party marketing or advertising entity unless such Person has been registered as a Sports Wagering Registrant under 205 CMR 234.00. A Person shall be considered to be conducting business upon commencement of performance of a contract or provision of a good or service.

3. Notwithstanding any other provision of 205 CMR 234.00, the Division of Licensing may, after consultation with the Bureau, require a third-party marketing or advertising entity to be licensed as a Sports Wagering Vendor.

4. In making the determination whether to require a third-party marketing or advertising entity to be licensed as a Sports Wagering Vendor, the Bureau may consider, without limitation, any factor listed in 205 CMR 231.01(2)(b)1. through 10.

5. If the Division of Licensing, after consultation with the Bureau, determines that the third-party marketing or advertising entity should instead be licensed as a Sports Wagering Vendor, it shall notify the entity of that decision and of the vendor's obligation to register. Within 45 days of service of the notice, the entity shall submit the applicable completed Registration Form-Sports Wagering Vendor as set forth in 205 CMR 234.02(1) for licensure or file a written request to the Division of Licensing for reconsideration from the determination requiring filing of an application for licensure. The Bureau may order any Person that fails to comply with such notice to cease conducting business with a Sports Wagering Vendor or an Operator immediately.

6. Any other Person, by submission of a written petition, may request a determination from the Bureau that despite meeting the definition of a third-party marketing or advertising entity they need not be registered, on the grounds that they are not providing goods or services on a regular or continuing basis, that the goods or services they provide do not directly relate to Sports Wagering, or that they are otherwise licensed as a gaming vendor or non-gaming vendor.

(e)Revenue-sharing Advertisers.

1. For purposes of 205 CMR 234.00, a "revenue-sharing advertiser" is any Person who promotes or directs patrons to sports wagering on mobile applications or other digital platforms, or who hires or recruits persons to do the same, in exchange for a percentage of net sports wagering revenue earned from users that the entity directs to the Operator.

2. Notwithstanding 205 CMR 234.01(1)(a) and 205 CMR 234.01(1)(c), no Person shall regularly conduct business with a Sports Wagering Operator as a revenue-sharing advertiser unless such Person has been licensed as a Sports Wagering Vendor under 205 CMR 234.00, or otherwise conduct business with a Sports Wagering Operator as a revenue-sharing advertiser unless such person has been registered as a Sports Wagering Registrant under 205 CMR 234.00. A Person shall be considered to be conducting business upon commencement of performance of a contract or provision of a good or service.

(2)Designation for Registration.

(a) Notwithstanding any other provision of 205 CMR 234.00, the Division of Licensing may, after consultation with the Bureau, designate a Non-Sports Wagering Vendor or a Sports Wagering Subcontractor a Sports Wagering Registrant, regardless of the types of goods or services being provided by that vendor.

(b) In making the determination whether to designate a vendor or a Subcontractor a Sports Wagering Registrant, the Bureau may consider the following factors, without limitation:

1. whether the total dollar amount by which the vendor's or Subcontractor's business with an Operator exceeds $250,000 in gross sales within a 12-month period, or $100,000 in gross sales within a three-month period; or

2. the relative value of the vendor or Subcontractor's business with the Operator compared to the Operator's overall disbursements to vendors;

3. whether the goods or services are limited to the pre-operating phase of the Operator's business in the Commonwealth;

4. the duration of the contract;

5. whether the vendor will be providing goods or services at an on site facility of the Operator;

6. the number of Sports Wagering Subcontractors involved in the performance of the vendor's contract with the Operator;

7. the number of employees employed by the vendor;

8. whether the vendor is licensed, registered or certified and regulated by another Governmental Authority;

9. the nature of the goods or services; and

10. public safety considerations.

(c) If the Division of Licensing, after consultation with the Bureau, determines that the Non-sports Wagering vendor or subcontractor should instead be registered as a Sports Wagering Registrant, it shall notify the vendor of that decision and of the vendor's obligation to register. Within 45 days of service of the notice, the vendor shall submit the applicable completed Registration Form-Sports Wagering Vendor as set forth in 205 CMR 234.02(2) for registration or file a written request to the Division of Licensing for reconsideration from the determination requiring filing of an application for registration. The Bureau may order any Person that fails to comply with such notice to cease conducting business with a Sports Wagering Vendor or an Operator immediately.

(d) Nothing in 205 CMR 234.00 shall be construed to limit the Commission's or the Bureau's ability to require a Person designated as a Non-sports Wagering Vendor or Subcontractor by an Operator to be licensed as a Sports Wagering Vendor.

(3)Exceptions.

(a) For purposes of 205 CMR 234.01, Persons engaged in the following fields of commerce who provide goods or services to an Operator or an Applicant for a Sports Wagering Operator license and who are not otherwise required to be licensed or registered by the Commission as a Sports Wagering Vendor or Sports Wagering Registrant, shall not be required to obtain licensure or registration as a vendor:

1. insurance companies and insurance agencies, other than Sports Wagering risk management vendors;

2. television, radio, newspaper, internet or other similar media used for advertising purposes, not including third-party marketing or advertising entities;

3. Governmental Authorities or other governmental entities;

4. legal, accounting, lobbying and financial services entities;

5. labor organizations, unions, or Affiliates registered in accordance with 205 CMR 134.00: Licensing and Registration of Employees, Vendors, Junket Enterprises and Representatives, and Labor Organizations;

6. utility companies;

7. telecommunications companies;

8. providers of training seminars, publications, subscriptions, conference registration or membership dues for professional associations intended to directly contribute to the work performance or professional development of an employee;

9. nonprofit charitable corporations or organizations, provided that no consideration is received for the contribution;

10. court order or stipulation of settlement or for settlement of consumer losses or consumer refunds;

11. payments for freight charges to freight transporters selected by the vendor for delivering goods;

12. professional entertainers and/or celebrity appearances;

13. any Person that, by submission of a written petition, can demonstrate to the Division of Licensing after consultation with the Bureau that licensure as a Sports Wagering vendor is not necessary to protect the public interest;

14. upon submission of a written certification by an Operator, any Person providing goods or services not directly related to Sports Wagering to whom the Operator reasonably expects to pay an amount less than $10,000 within a 12-month period.

(b) Any other Person, by submission of a written petition, may request a determination from the Bureau that despite meeting the definition of a Sports Wagering Vendor they need not be licensed or registered, or despite meeting the definition of a Sports Wagering Vendor should be a Sports Wagering Registrant and do not require a Sports Wagering License, on the grounds that they are not providing goods or services on a regular or continuing basis, that the goods or services they provide do not directly relate to Sports Wagering, or that they are otherwise licensed as a gaming vendor or non-gaming vendor.

(4)Sports Wagering Vendor Qualifiers.

(a) Persons designated as Sports Wagering vendor qualifiers must establish their qualifications in accordance with 205 CMR 234.05.

(b)Sports Wagering Vendors. The following Persons shall be designated as Sports Wagering Vendor qualifiers:

1. If the prospective Sports Wagering Vendor is a sole proprietor: The owner.

2. If the prospective Sports Wagering Vendor is a corporation:

a. Each officer;

b. Each inside director;

3. If the prospective Sports Wagering Vendor is a limited liability corporation:

a. Each Member;

b. Each transferee of a Member's interest;

c. Each Manager; and

d. 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 vendor's operations in the Commonwealth.

4. If the prospective Sports Wagering Vendor is a limited partnership:

a. Each General Partner;

b. Each Limited Partner; and

c. 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 vendor's operations in the Commonwealth.

5. If the Sports Wagering Vendor is a partnership:

a. Each Partner; and

b. 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 Sports Wagering Vendor's operations in the Commonwealth.

c.Other Qualifiers. The Division of Licensing, after consultation with the Bureau, may, at its discretion, require other Persons that have a business association of any kind with the Applicant for a Sports Wagering Vendor License to be subject to the qualification requirements as a qualifier. These Persons include, but are not limited to, an Affiliate or holding, intermediary or subsidiary company of the Applicant for a Sports Wagering Vendor License.

d.Internal Review of Determinations. An Applicant may ask for review of any determination made by the Bureau, in accordance with 205 CMR 234.01(4), 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.

(c) Any Person owning more than 10% of the common stock of a company applying for licensure as a Sports Wagering Vendor, or a holding, intermediary or subsidiary company of such company and who has the ability to control the activities of the prospective vendor; and

(d) 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 vendor's operations in the Commonwealth.

(5)Waiver. In addition to any other exception or exemption under 205 CMR 234.00, upon written petition, the Commission may waive the requirement to be qualified as a Sports Wagering Vendor qualifier for:

(a) Institutional investors holding up to 15% of the stock of the Sports Wagering Vendor or Applicant for a Sports Wagering Vendor License, 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 Sports Wagering Vendor or Applicant or a Sports Wagering Vendor License or a 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 Sports Wagering Vendor or Applicant for a Sports Wagering Vendor License, 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 234.00 before taking any action that may influence or affect the affairs of the Sports Wagering Vendor or Applicant for a Sports Wagering Vendor License or a holding, intermediary or subsidiary company. Any Person holding over 15% of a Sports Wagering Vendor or Applicant for a Sports Wagering Vendor License, or a holding, intermediary or subsidiary company thereof, shall be required to apply for a license before doing business in the Commonwealth; or

(b) Any Person who, in the opinion of the Bureau or the Commission, cannot exercise control or provide direction to a Sports Wagering Vendor or Applicant for a Sports Wagering Vendor License or a holding, intermediary or subsidiary company thereof.

(6)Qualification of New Qualifiers for Sports Wagering Vendors.

(a) No Person requiring qualification pursuant to 205 CMR 234.01(4) may perform any duties or exercise any powers relating to the position that said qualifier is seeking to assume for a Sports Wagering Vendor unless the Person notifies the Bureau in writing within 30 days of appointment to the position. Such notification shall be accompanied by the 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.

(b) A Person with reason to believe that his or her new position with a Sports Wagering Vendor may require qualification pursuant to 205 CMR 234.01(4) 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 234.01(4)(b) 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 pursuant to 205 CMR 234.02(2). Following submission of the completed Form, the Person may continue to perform duties and exercise powers relating to the position pending qualification.

(c) 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 determination and inform the Commission in accordance with 205 CMR 234.00 whether the new qualifier meets the standards for suitability.

(d) Upon notification by the Bureau of a determination that reasonable cause exists to believe the qualifier may not ultimately be found suitable, a Sports Wagering Vendor shall promptly remove the qualifier from his or her position until such time as the Commission makes its final determination on suitability.

(7)Internal Review of Determinations. An Applicant may ask for review of any determination made by the Bureau in accordance with 205 CMR 234.01(4) through (6) 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.