La. Admin. Code tit. 42 § XI-2421

Current through Register Vol. 50, No. 11, November 20, 2024

Section XI-2421 - Miscellaneous

A. Required Meetings

1. The division may summon a licensee or permittee to appear for a consultation, explanation, discussion, clarification, training session, or other meeting considered by the division to be of potential benefit, or otherwise aid in the effective regulation of the video gaming industry.

2. Any information obtained in any required meeting may be used by the division to substantiate the imposition of an administrative sanction.

B. Security Interest Holders

1. Any variance to the rules pertaining to security interests and trusts contained herein shall be at the discretion of the division only, and shall only be granted by the division in writing.

2. The division recognizes the rights of a person who holds a security interest in video gaming devices. However, the right to possess a video gaming device under the Act requires an entity to be licensed by the division, and that any movement within, into, or from Louisiana be monitored by the division.

3. In order to facilitate both the security interest holder's and the division's regulatory responsibilities, the following procedures shall be followed during voluntary repossession proceedings and judicial actions to recognize and enforce security interests:

a. the security interest holder shall notify the division in writing regarding its intent to repossess any video gaming device;

b. the video gaming devices shall be identified by make, model, serial number, and location;

c. the security interest holder shall notify the division, in writing, of the proposed date and time of repossession of the devices;

d. agents from the division shall be present at the location to secure the gaming device, and to record serial numbers and meter readings of the devices;

e. the division shall be advised of the location of all devices and shall coordinate activities regarding the movement of such devices. The division shall issue a document authorizing the movement of the devices and said document shall accompany the devices during movement;

f. the security interest holder or former security interest holder which purchases devices at a judicial sale, may be granted a provisional license for a maximum of 90 days only, inclusive of weekends and holidays, for the express purpose of selling the same devices to a licensed manufacturer, distributor, or device owner only;

g. upon request, names and addresses of licensed manufacturers, distributors, and device owners may be provided by the division to the security interest holder in order to aid in the sale of the devices; and

h. all applicable transportation forms shall be completed in whole by the licensee before video gaming devices are transported by the security interest holder.

C. Proceeds from the Sale of Devices

1. For purposes of these rules and the Act, a device owner may pay an entity holding a security interest in a device a portion or percentage of the proceeds received by the owner from the device as long as there is a fixed purchase price, with or without a fixed rate of interest, which shall not exceed a payment term of four years.

2. All contracts for the sale of devices where the price is paid to the seller by the owner out of device proceeds shall be in writing and approved by the division.

D. Disposition of Secured Assets

1. The division recognizes that distributors, device owners, device operators, and establishment owners have a need to secure financing for their business and operations, that the rights of persons granting such financing require protection in order to insure the continued availability of financing, and that the disposition of assets in liquidation, foreclosure and bankruptcy requires regulation in order to insure compliance with the provisions of the Act.

2. In order to facilitate the disposition of assets that are regulated or require licensure as regulated activities under the Act, in whole or in part, the following provisions shall apply to the transfer or assignment of such assets:

a. creditors who have provided financing to distributors, operators, or establishment owners and who have secured such financing by security interests under Article 9 of the Uniform Commercial Code may enforce their rights or remedies through the transfer or assignment of assets in accordance with the provisions of this Section;

b. the benefits of this provision shall apply only to state or federally chartered and insured banking institutions, chartered or licensed lending institutions authorized to do business in Louisiana, or persons holding any form of video gaming license under the Act; and

c. the transfer or assignment of assets may only be made pursuant to a confirmed bankruptcy plan of reorganization or liquidation, or other judicial proceedings to foreclose on a security interest under Louisiana law, and only after the division shall have been given notice of such assignment and the opportunity to be heard in the bankruptcy or other proceeding on all aspects of the assignment or transfer.

E. Provisions for Transfer of Assets

1. Unless the proposed transferee of the asset is fully licensed under the Act to own and/or operate the particular asset to be transferred, or if previously approved by the division, has contracted with a properly licensed device owner and/or operator of the asset to be transferred, the following provisions shall apply to such transfer:

a. the creditor shall establish a trust for its benefits in a form acceptable to the division to which legal title to the asset may be transferred; and

b. no transfer of assets shall be consummated until the trust shall have been established, and the trust and the trustee(s) thereof shall have received all required approvals, permits and/or licenses from the division.

2. The trust shall be managed by one or more trustees who shall be appointed by the creditor beneficiary.

3. No trustee shall be empowered to act without first having received approval to serve in such position from the division.

F. Operation of Trust

1. The trustee(s) shall hold legal title to the assets of the trust and administer those assets in accordance with the provisions of the Act, and shall perform such other duties as may be required by law or the trust instrument.

2. The trust shall neither conduct nor contract for the operation of any video gaming activity without first having obtained all approvals or licenses which may be required for such activity from the division.

3. The trust shall be permitted to contract with a person holding the appropriate video gaming license from the division for the operation of any video gaming activity without the necessity of the trust itself receiving such license.

4. In the event that the creditor who is the beneficiary of the trust shall be a person holding any form of video poker license under the Act, then the trust may delegate the right to contract with a licensee for any licensed activity to the creditor beneficiary pursuant to provisions of the trust instrument.

G. Required Provisions of Trust Instrument

1. The trust shall be constituted for a limited term under provisions that shall require it to divest itself of all assets within six months after the creditor beneficiary has recouped in net disbursements from the trust the full amount of its original indebtedness, plus accrued interest and other monies due under the security agreement.

2. The trustee(s) shall be required to provide the division with reports on a quarterly basis as to the financial affairs, operations and other business of the trust as the division may direct.

3. The trust instrument shall contain provisions governing contracts for the conduct of activities requiring licensure under the Act that are satisfactory to the division and appropriate to the particular circumstances of the creditor beneficiary. The division shall review and approve such provisions of the trust instrument and, upon approval, and provided that the trust and creditor beneficiary only enter into contracts consistent with such provisions, the division shall not require either the trust, the trustee(s) or the creditor beneficiary to apply for or obtain any license under the Act. This provision shall not affect the requirement for approvals from the division required by other provisions of this Section.

La. Admin. Code tit. 42, § XI-2421

Promulgated by the Department of Public Safety and Corrections, Office of State Police, Gaming Enforcement Section, Video Gaming Division, LR 18:197 (February 1992), amended LR 21:582 (June 1995), amended by the Department of Public Safety and Corrections, Gaming Control Board, LR 30:270 (February 2004), repromulgated LR 30:447 (March 2004).

AUTHORITY NOTE: Promulgated in accordance with R.S. 33:4862.1 et seq.