Md. Code Regs. 36.10.14.06

Current through Register Vol. 51, No. 24, December 2, 2024

Section 36.10.14.06 - Reserve

A. A sports wagering licensee shall maintain a reserve in cash, cash equivalents, irrevocable letter of credit, surety bond set forth in §F of this regulation, or a combination thereof in an amount approved by the Commission to cover the outstanding liability of the sports wagering licensee to bettors.

B. A sports wagering licensee may not remove, release, or withdraw funds from its reserve without the written approval of the Commission.

C. The amount in the reserve shall be at least $500,000 and equal or exceed the aggregate sum of:

(1) The total amount of funds to cover the potential liability for all wagers accepted by the sports wagering licensee on sporting events with outcomes that have not been determined; and

(2) Money owed but unpaid by the sports wagering licensee to bettors on winning wagers.

D. A sports wagering licensee shall ensure that the reserve is held:

(1) By a financial institution insured by the Federal Deposit Insurance Corporation and licensed to transact business in the State; or.

(2) For sports wagering facility licensee, in cash held on facility premises.

E. A sports wagering licensee shall:

(1) Calculate its reserve requirements each day; and

(2) If the sports wagering licensee determines its reserve is insufficient to cover the requirement of this regulation, notify the Commission in writing:

(a) Within 24 hours of the deficiency; and

(b) The steps to be taken to remedy the deficiency.

F. Surety Bonds.

(1) The sports wagering licensee may obtain a single surety bond or multiple bonds to be used as a cash reserve to pay the current outstanding liability of all winnings and awards offered to a winning bettor as set forth in this regulation and COMAR 36.10.13.40.

(2) A surety bond shall:

(a) Be in a form approved by the Agency and:

(i) Identify the sports wagering licensee or applicant as the principal of the surety bond;

(ii) Indicate what license type and class the sports wagering licensee or applicant offers or intends to offer in the State of Maryland;

(iii) Provide that the surety bond is protected against claims by creditors of the principal, including the patrons for whose benefit and protection the reserve account is established;

(iv) Allow the Director of the Agency or the Director's designee to make demand upon the surety for the payment of valid winning amounts not paid by the principal;

(v) Require the sports wagering licensee to provide an updated listing of winning wagers that form the basis of the reserve to the Agency within 72 hours;

(vi) Include a statement that within 24 hours of receiving the updated listing of winning wagers that form the basis of the reserve that the Agency will commence review of the list of outstanding patron accounts;

(vii) Include a statement that within 10 business days of the demand made by the Director or the Director's designee the processing of the payment will commence;

(viii) Include a statement that within 60 days of the demand made by the Director or the Director's designee issuance of the payment shall occur; and

(ix) Include a statement that if the surety provides written notice of withdrawal, the withdrawal is not effective until 60 days have elapsed after receipt of the notice.

(b) Be by and between the sports wagering licensee or applicant and the surety company;

(c) Identify the Agency as the obligee;

(d) Specify that it guarantees the portion of the sports wagering licensee's reserve that is not covered by a cash reserve; and

(e) Specify that the surety bond is valid for at least the 5-year license term.

(3) The sports wagering licensee or applicant shall provide the original surety bond to the Agency.

(4) Agency staff may not issue a sports wagering license unless the applicant or awardee has provided Agency staff with a copy of any surety bond that comprises any portion of the reserve the sports wagering licensee is required to hold.

Md. Code Regs. 36.10.14.06

Regulations .06 amended effective 49:1 Md. R.16, eff. 1/13/2022; amended effective 50:26 Md. R. 1130, effective 12/12/2023, exp. 6/9/2024 (Emergency); amended effective 51:10 Md. R. 529, eff. 5/27/2024.