11 Va. Admin. Code § 5-70-50

Current through Register Vol. 41, No. 8, December 2, 2024

Section 11VAC5-70-50 - Sports betting permit applications

A. An application for a sports betting permit shall consist of two parts and shall include:

1. A narrative description in an electronic format of the applicant's plan for offering a sports betting platform in the Commonwealth; and

2. Information to be provided to the department in an electronic format for the purposes of allowing the department to conduct its background investigation.

B. The narrative component of the application shall include information describing:

1. The applicant's background in sports betting;

2. The applicant's experience in wagering activities in other jurisdictions, including the applicant's history and reputation of integrity and compliance;

3. The applicant's proposed internal control standards, including controls to ensure that no prohibited or voluntarily excluded person will be able to participate in sports betting;

4. The applicant's history of working to prevent compulsive gambling including training programs for its employees;

5. If applicable:

a. All supporting information and documentation necessary to establish eligibility for substantial and preferred consideration pursuant to the provisions of the sports betting law;

b. The identity of any partner, subcontractor, or other affiliate through which the applicant wishes to demonstrate compliance with the requirements of this chapter; and

c. Assurances that the permit application also includes a completed application, along with all applicable permitting, licensing, registration, and background investigation fees, for the applicant's partner, subcontractor, or other affiliate, and their applicable principals.

6. The applicant's proposed procedures to detect and report suspicious or illegal gambling activity;

7. Whether the applicant intends to limit its participation in any of the types of allowable sports events available in the Commonwealth;

8. Whether the applicant has entered into or plans to enter into any agreements to offer its sports betting platform in coordination with other applicants or persons; and

9. If the applicant is the subsidiary of another entity, an explicit statement that the parent organization will fully and absolutely guarantee the performance of the subsidiary for at least the first year of operation.

C. Information that is provided to the department in electronic format for the purposes of allowing the department to conduct its background investigation need not be repeated in the narrative submission.

D. The applicant shall include in its narrative:

1. A high-level description of the application, which shall be designed to be released to the public; and

2. An authorization for the department to release that portion of the narrative despite the otherwise-applicable provisions of § 2.2-3704.01 of the Code of Virginia.

E. The applicant shall submit the information described in subsections F through X of this section using the electronic form required by the director, along with copies if requested by department staff.

F. If the applicant is a corporation, the application shall include a:

1. Statement of when the corporation was organized;

2. Copy of the articles of incorporation and bylaws of the corporation;

3. Statement and documentation of whether the corporation has been reorganized or reincorporated during the five-year period preceding the date on which the application is submitted to the director;

4. Statement and documentation of whether the corporation has filed restated articles of incorporation; and

5. List identifying each person who:

a. Exercises voting rights in the corporation; and

b. Directly or indirectly owns 5.0% or more of the corporation.

G. If the applicant is an unincorporated business association, the application shall include a:

1. Copy of each organizational document of the applicant, including any partnership agreement;

2. Description of any oral agreements involving the organization of the applicant; and

3. List identifying each person who:

a. Exercises voting rights in the applicant;

b. Directly or indirectly owns 5.0% or more of the business association.

H. If the applicant is authorized to issue capital stock, the applicant shall state for each class of stock authorized the:

1. Total number of shares;

2. Par value if any;

3. Voting rights;

4. Current rate of dividend;

5. Number of shares outstanding and the market value of each share on the date of the application;

6. Existence of any voting trust or voting agreement in which capital stock of the applicant is held; and

7. The following information:

a. Name and address of each stockholder participating in the trust or agreement;

b. Class of stock involved; and

c. Total number of shares held by the trust or agreement.

I. The application shall include a certified copy of each voting trust or voting agreement in which capital stock is held.

J. The application shall describe the terms of any proxy by which any capital stock may be voted and shall state the:

1. Name and address of the person holding the proxy;

2. Name and address of the stockholder who granted the proxy;

3. Class of stock for which the proxy may vote; and

4. Total number of shares voted by the proxy.

K. The application shall state any provisions, and the procedures by which these provisions may be modified, for the redemption, repurchase, retirement, conversion, or exchange of an ownership interest.

L. The application shall state whether the applicant's stock may be traded through options and whether the corporation or a stockholder has executed an agreement or contract to convey any of the corporation's or the stockholder's stock at a future date.

M. The application shall include a copy or a description of each agreement or contract disclosed under subsection L of this section.

N. The application shall include a copy of each prospectus, pro forma, or other promotional material given to potential investors about the permit holder applicant's operation.

O. The application shall provide full disclosure for any stock options that may exist or have been granted.

P. The application shall:

1. Disclose all individuals and entities that have an ownership interest of 5.0% or more in the applicant, including any beneficial ownership as defined in § 13.1-1201 of the Code of Virginia; and

2. Describe the:

a. Nature of the ownership; and

b. Extent of control exercised by the owner; and

3. Include information and documents required by this chapter as to each owner.

Q. If the applicant is not an individual, the application shall include a list of the individuals who are serving or who are designated to serve, during the first year after the date the application is submitted to the director, as a director, officer, partner, or principal as defined in this chapter. The application shall also provide:

1. The individual's name and address;

2. Each position or office of the applicant held by the individual;

3. The individual's primary occupation during the five-year period preceding the date on which the application is submitted to the director; and

4. The nature and extent of any ownership interest that the individual has in the applicant.

R. The director shall take final action on a completed initial application for a sports betting permit within the timeframe set forth in § 58.1-4032 of the Code of Virginia, including the application of any required principals.

S. The director may award a sports betting permit after consideration of the application and based on:

1. The contents of the submitted application;

2. The extent to which the applicant has demonstrated past experience, financial viability, compliance with applicable laws and regulations, and success with sports betting in other jurisdictions in the United States;

3. The extent to which the applicant has demonstrated that the applicant will be able to meet the duties of a permit holder;

4. Whether the applicant has demonstrated that the applicant has made serious, good faith efforts to solicit and interview a reasonable number of investors that are minority individuals as defined in § 2.2-1604 of the Code of Virginia;

5. The amount of adjusted gross revenue and associated tax revenue that an applicant expects to generate;

6. The effect of issuing an additional permit on the amount of gross revenue and associated tax revenue generated by all permit holders, considered in the aggregate;

7. The extent to which the applicant will generate new jobs within the Commonwealth of Virginia;

8. Whether the applicant has adequate capitalization and the financial ability and the means to develop, construct, operate, and maintain the applicant's proposed internet sports betting platform in accordance with the sports betting law and this chapter;

9. Whether the applicant has the financial ability to purchase and maintain adequate liability and casualty insurance and to provide an adequate surety bond;

10. Whether the applicant has adequate capitalization and the financial ability to responsibly pay its secured and unsecured debts in accordance with its financing agreements and other contractual obligations;

11. Whether the applicant has a history of material noncompliance with casino or casino-related licensing requirements or compacts with this state or any other jurisdiction, where the noncompliance resulted in enforcement action by the person with jurisdiction over the applicant;

12. Whether the applicant or the applicant's principals have been (i) indicted for, (ii) charged with, (iii) arrested for, (iv) convicted of, (v) pleaded guilty or nolo contendere to, (vi) forfeited bail concerning, or (vii) had expunged any criminal offense under the laws of any jurisdiction, either felony or misdemeanor, not including traffic violations, regardless of whether the offense has been expunged, pardoned, or reversed on appeal or otherwise. The board may consider mitigating factors;

13. Whether the applicant has filed or had filed against it a proceeding for bankruptcy or has ever been involved in any formal process to adjust, defer, suspend, or otherwise work out the payment of any debt;

14. Whether the applicant has a history of material noncompliance with any regulatory requirements in the Commonwealth or any other jurisdiction where the noncompliance resulted in an enforcement action by the regulatory agency with jurisdiction over the applicant;

15. Whether at the time of application the applicant is a defendant in litigation involving the integrity of the applicant's business practices; and

16. Any other factor the director considers relevant.

T. If during the initial application period the director receives more applications for permits than are authorized under the sports betting law, the director shall:

1. Evaluate whether any of the applications are so deficient that they should be rejected immediately;

2. Qualitatively compare the remaining applications and award permits only from the pool of the top two-thirds of the remaining applicants that meet all the qualifications of a permit holder and are not otherwise disqualified from holding a permit; and

3. Conduct further investigation and comparison before determining which, if any, of the remaining one-third of the applicants should be awarded a permit.

U. Prior to issuance of a permit, an applicant awarded a permit shall pay to the Virginia Lottery a nonrefundable permit issuance fee of $250,000.

V. The term of a permit is three years from the date of issuance.

W. At least 60 days before the end of the term of a permit, a permit holder shall submit a:

1. Renewal application in the form required by the department; and

2. Nonrefundable wire transfer of $200,000 as a permitting and background investigation fee.

X. Renewal applications not submitted in compliance with subdivision W 1 or W 2 of this section will not be considered.

11 Va. Admin. Code § 5-70-50

Derived from Virginia Register Volume 37, Issue 04, eff. 10/12/2020.

Statutory Authority: §§ 58.1-4007, 58.1-4015.1, and 58.1-4030 through 58.1-4047 of the Code of Virginia.