Current through Register Vol. 49, No. 9, September, 2024
7.010
General.
1. No person shall sell, purchase, assign,
lease, grant or foreclose a security interest, hypothecate or otherwise
transfer, convey or acquire in any manner whatsoever any interest of any sort
whatever in or to any licensed gaming operation or any portions thereof, or
enter into or create a voting trust agreement or any other agreement of any
sort in connection with any licensed gaming operation or any portion thereof,
except in accordance with law and these Rules.
2. No licensee shall permit any person to
make any investment whatever in, or in any manner whatever participate in the
profits of, any licensed gaming operations, or any portion thereof, except in
accordance with law and these Rules.
3. No person shall transfer or convey in any
manner whatsoever any interest of any sort whatever in or to any licensed
gaming operation, or any portion thereof, to, or permit any investment therein
or participation in the profits thereof by, any person acting as agent, trustee
or in any other representative capacity whatever for or on behalf of another
person without first having fully disclosed all facts pertaining to such
representation to the Commission. No person acting in any such representative
capacity shall hold or acquire any such interest or so invest or participate
without first having fully disclosed all facts pertaining to such
representation to the Commission and obtained written permission of the
Commission to so act.
4. Rule 7
shall apply to transfers of interest in corporations subject to these Rules,
but shall not apply to transfers of interest in corporations subject to these
Rules.
7.020
Transfer of interest among licensees. If a person who is the owner of an
interest in a licensed gaming operation proposes to transfer any portion of his
or her interest to a person who is then the owner of an interest in such
licensed gaming operation, both parties shall give written notice of such
proposed transfer to the Commission, including the names and addresses of the
parties, the extent of the interest proposed to be transferred and the
consideration therefore. In addition, the proposed transferee shall furnish to
the Commission a sworn statement setting forth the source of funds to be used
by the proposed transferee in acquiring such interest; and the proposed
transferee also shall furnish to the Commission such further information as it
or the Commission may require. The Commission shall conduct such investigation
pertaining to the transaction as it or the Commission may deem appropriate and
shall report the results thereof to the Commission. If the Commission does not
give notice of disapproval of the proposed transfer of interest within 30 days
after the receipt by it of the report of the Commission, the proposed transfer
of interest will be deemed approved and the transfer of interest may then be
effected in accordance with the terms of transfer as submitted to the
Commission. The parties shall immediately notify the Commission when the
transfer of interest is actually affected.
7.030
Transfer of interest to stranger
to license.
1. Except as and to the
extent provided in these Rules pertaining to emergency situations, no
individual who is the owner of any interest in a licensed gaming operation
shall in any manner whatsoever transfer any interest therein to any person,
firm or corporation not then an owner of an interest therein, and no such
transfer shall become effective for any purpose until the proposed transferee
or transferees shall have made application for and obtained all licenses
required by the Amendment and these Rules, or have been found to be
individually qualified to be licensed, as appropriate.
2. Applications for a transfer of interest to
a stranger to the license, except the granting of a possessory security
interest in equity securities of a licensee or of a holding company subject to
these Rules, shall be made by the transferee applying for licensing or
registration under the regulations thereunder as appropriate, as provided in
these Rules.
3. Evidence of the
transferor's agreement to transfer the interest applied for must accompany the
application. Licensing or registration of the transferee shall be deemed to
constitute approval of the transfer by the Commission.
4. Applications for approval of the granting
of a possessory security interest shall be made in writing to the Commission.
The application shall set forth all material facts relating to the transaction
and be accompanied by copies of the documents evidencing the transaction. An
application will not ordinarily be granted unless such documents include the
following:
(a) The physical location of the
certificates evidencing the transaction shall at all times remain within the
territorial boundaries of the State of Arkansas.
(b) The holder of said certificates shall not
surrender possession of the securities without the prior approval of the
Commission.
[] An approval of the granting of a possessory security
interest shall be deemed to constitute approval of the transfer by the
Commission. No such approval, however, shall constitute permission to foreclose
without a further order of the Commission.
7.040
Duties of
corporations and agents. No licensee or holding company, or officer,
director or transfer agent thereof, shall cause or permit any stock certificate
or other evidence of beneficial interest therein to be registered in its books
or records in the name of any nominee, agent, trustee or any other person other
than the true and lawful owner of the beneficial interest therein without
written permission of the Commission to do so.
7.050
Escrow required. Except
as and to the extent provided in these Rules pertaining to emergency
situations, no money or other thing of value constituting any part of the
consideration for the transfer or acquisition of any interest in a licensed
gaming operation, in a licensee or in a holding company shall be paid over,
received or used until complete compliance has been had with all prerequisites
set forth in the law and these Rules for the consummation of such transaction;
but such funds may be placed in escrow pending completion of the transaction.
Any loan, pledge or other transaction between the parties or with other parties
may be deemed an attempt to evade the requirements of this Rule and, as such,
in violation of this Rule.
7.060
Participation in operations.
1.
Except as provided in these Rules pertaining to emergency situations or on
approval of the Commission, no person who proposes to acquire an interest in
any licensed gaming operation; in a licensee; or in a holding company shall
take any part whatsoever, as an employee or otherwise, in the conduct of such
gaming operations or in the operation of the establishment at which such gaming
operations are conducted while the person's application for a license or for
approval to acquire such interest is pending.
2. An employee subject to these Rules may be
employed at the licensed gaming operation, licensee, or holding company pending
the Commission's decision on the employee's application for a license or for
approval to acquire an interest in the licensed gaming operation, licensee, or
holding company if, when the employee files his or her application or becomes
so employed, the employee requests permission from the Commission to continue
to be so employed pending Commission action on the employee's
application.
3. The Commission may
grant, deny, limit, restrict or condition a request for administrative approval
pursuant to this section for any cause the Commission deems reasonable, or
refer the request for administrative approval to the full Commission for
consideration. If the Commission, acting in the Commission's sole and absolute
discretion, does not within thirty (30) days deny the request to continue
employment, or provide written notification to the employee that the request is
being referred to the full Commission for consideration, the employee's request
to participate shall be deemed approved.
4. An employee's employment by a licensed
gaming operation, licensee, or holding company, pursuant to these Rules, is
limited to observing and learning the operations of the licensed location,
licensee, or holding company, unless otherwise specified by the Commission, and
the employee is prohibited from exerting or taking control of a licensed gaming
operation, licensee, or holding company until approved by the Commission unless
the employee has otherwise been licensed or found suitable to do so.
7.070
Emergency
situations. If a transfer of an interest in a licensed gaming operation,
in a licensee or in a holding company, is contemplated and, in the opinion of
the Commission, the exigencies of the situation require that the proposed
transferee or transferees be permitted to take part in the conduct of gaming
operations or in the operation of the establishment wherein such gaming
operations are conducted, or to make available funds or credit for use in
connection with such licensed gaming operation or establishment during the
pendency of an application for license or to be permitted to acquire such
interest, the Commission or any three members thereof may waive the
requirements of Rules 7.050 and 7.060, or either of them, in accordance with
the procedures hereinafter set forth.
7.080
Application for permission to
participate.
1. A proposed transferee
of an interest who desires to participate in any manner, whether financially or
otherwise, in the operation of the licensed establishment or games prior to
actual completion of the transfer of interest in accordance with the foregoing
Rules shall make written application to the Commission for permission to so
participate, setting forth, under oath, facts showing the necessity of such
participation, together with the following information to be given under oath:
(a) The extent to which and the manner in
which the proposed transferee desires to participate pending completion of the
proposed transfer.
(b) A complete
financial statement and a statement showing sources of all funds to be used in
connection with the proposed transfer of interest and in the participation
prior to transfer.
(c) A full and
complete statement of the proposed plan for affecting the proposed transfer of
interest, including:
(1) The extent of the
interest to be transferred;
(2) The
date on which it is desired to complete the transfer;
(3) The total consideration to be paid and
the time and manner of payment thereof;
(4) Details of any other financial
arrangements between all parties involved; as well as
(5) Details of all other pertinent
arrangements between the parties.
(d) Full, true and correct copies of all
documents pertaining to the proposed transaction or transactions, including all
agreements between the parties, leases, notes, mortgages or deeds of trusts,
and pertinent agreements or other documents with or involving third
parties.
(e) The names and
addresses of all persons with whom the proposed transferee expects to be
associated in connection with the operation of the licensed games or
establishment, or both, both as to the period pending completion of the
transfer and thereafter.
(f) A full
and complete statement of any proposed changes in manner or method of operation
of the licensed establishment and any proposed changes of or additions to
supervisory personnel, both as to the period pending completion of the transfer
and thereafter.
2. If
two or more individuals desire to participate in the operation of a licensed
establishment or games as a group, whether as individuals or as stockholders,
officers or directors of a corporation or other business entity, joint
application may be made in accordance with these Rules.
3. If the emergency requiring immediate
participation consists of the actual or threatened insolvency of a licensee or
holding company, and the interest to be transferred or issued is a financial
participation, the application will not be granted unless the applicant
demonstrates the immediate and unqualified availability of sufficient funds and
credit to cure such emergency to the same extent that such funds and credit
would be required in connection with an application for licensing or
registration not involving actual or threatened insolvency.
4. The Commission may require an applicant
for permission to participate to furnish such additional information as it may
desire before acting on the application.
7.090
Permission to
participate. After receipt of a proper application for permission to
participate and such additional information as the Commission may require, and
after such investigation as the Commission deems necessary, the Commission or
any three members thereof may grant emergency permission for a proposed
transferee to participate in the operation of the licensed games or
establishment, licensee or holding company, subject to joint management with
the existing licensee or licensees or managing officers of a corporate licensee
or holding company.
7.100
Extent of participation permitted.
1.
Pending final action on the application of a proposed transferee, the existing
licensee or licensees will be held responsible for the conduct of the licensed
games or establishment, for all license fees payable, and for all acts or
omissions of proposed transferees participating in the operation.
2. Except as hereinafter provided, no
proposed transferee who has been granted such emergency permission to
participate shall be permitted to withdraw or receive any portion of the
profits of such establishment or licensee or holding company derived for gaming
until final approval of the proposed transfer of interest has been granted by
the Commission. If granted, such approval shall be retroactive to the date of
emergency permission to participate.
3. A proposed transferee who has been granted
emergency permission to participate and who actually renders services may be
paid a salary or otherwise be compensated for such actual services, but such
salary or other compensation shall not exceed the usual and customary
compensation in the industry for similar services.
7.110
Application for license.
Any proposed transferee to whom emergency permission to participate has been
granted shall, within 10 days thereafter if the transferee has not already done
so, make formal application for licensing, registration, or approval as
required by law and these Rules.
7.120
Effect of permission to
participate; withdrawal.
1. The
granting of emergency permission to participate is a revocable privilege, and
is not to be a finding on the part of the Commission that the proposed
transferee is qualified or suitable to hold a state Casino license or to be
registered or to be approved. Such permission will be without prejudice to any
action that the Commission may take with respect to any application for final
approval of the proposed transfer of interest.
2. Emergency permission to participate may be
withdrawn summarily at any time in the uncontrolled discretion of the
Commission, without notice or hearing or other proceedings of any
kind.
3. Upon receipt of notice
that emergency permission to participate has been withdrawn the proposed
transferee shall be immediately disassociated from any participation whatever
in the operation of the licensed establishment, licensee or holding company.
Any money or other thing of value which may have been invested or made use of
in the operation of the licensed establishment, licensee or holding company
shall be forthwith returned to the proposed transferee or deposited in escrow
in compliance with these Rules. Any participation whatever on the part of a
proposed transferee after notice of withdrawal of emergency permission to
participate may be deemed to be in violation of law and these Rules and, as
such, grounds for denial of the application of the proposed transferee and also
grounds for revocation or suspension of the existing license, registration or
approval.
7.130
Transaction reports. As used in this section, "licensee" means any
person to whom a valid Casino license, mobile gaming system, or an inter-casino
linked system, manufacturer's, distributor's, or disseminator's license, or a
service provider license has been issued. The term does not include a person
licensed solely as a holder of a security or other ownership interest in, as an
officer, director or key employee of, or due to any other relationship with, a
licensed operation.
1. Any licensee that
receives, accepts, or makes use of any cash, property, credit, guaranty,
benefit or any form of security loaned to, leased to, or provided for or on
behalf of the licensee or an officer, director, agent, employee or stockholder
of the licensee, in a transaction required to be reported under these Rules,
must report the transaction to the Commission in the manner required by these
Rules within 30 days after the end of the calendar quarter in which the
transaction is consummated. A transaction is considered consummated the earlier
of the contract date or the date the cash, property, credit, guaranty, benefit
or security is received.
2. Except
as provided in these Rules, each of the following transactions must be reported
to the Commission, if the dollar amount of the transaction or the fair market
value of the assets involved exceeds $300,000 or the average monthly payment
exceeds $30,000:
(a) Leases, including
leaseback transactions and capital leases.
(b) Deposits received by the licensee
pursuant to an arrangement for use of space at the licensee's
establishment.
(c) Installment
purchase contracts.
(d) Property
donated to the licensee.
3. Except as provided in these Rules, each of
the following transactions must be reported to the Commission, if the dollar
amount of the transaction exceeds $30,000:
(a)
Loans, mortgages and trust deeds.
(b) Capital contributions and loans by a
person who is a stockholder, partner or proprietor of the licensee.
(c) Safekeeping deposits which:
(1) Are made by an individual beneficially
owning, directly or indirectly, a 10 percent or greater interest in the
licensee;
(2) Are commingled with
the licensee's funds;
(3) Are left
for more than 10 days; and
(4) At
any time during that period, aggregate to an amount greater than 25 percent of
cash in the cage.
(d)
Lines of credit.
(e) Accounts
payable and accrued expenses due to unaffiliated persons where the payment
terms or actual length of payments exceed 12 months.
(f) Conversions of accounts payable, accrued
expenses or other liabilities to notes payable.
(g) Debts forgiven by a lender.
(h) Guaranties received by the
licensee.
(i) Accruals of salary
due to an individual directly or indirectly owning an interest in the licensee
where the accrual period exceeds 90 days.
4. Those transactions specified in these
Rules which occur no more than 7 days apart from a single source shall be
considered a single transaction if they exceed the dollar amounts specified in
these Rules.
5. The following
transactions need not be reported to the Commission regardless of the dollar
amount of the transaction, fair market value of the assets involved, or average
monthly payment:
(a) Draws against a
previously reported extension of credit.
(b) Except for items specifically described
in these Rules goods or services which are exchanged for other goods or
services of an affiliate of the licensee.
(c) Short-term cash loans which have a
payback period of less than 7 days and are provided to the licensee on a
regularly recurring basis, provided the terms and conditions of the arrangement
have not changed, and provided the initial loan or financing arrangement has
been reported.
(d) Loans and other
financing activities that were reviewed during an investigation which resulted
in Commission action, provided the terms and conditions of the arrangements
have not changed.
(e) Financing of
gaming devices or associated equipment installed and used during a trial period
authorized pursuant to these Rules.
(f) Funds received by the licensee in
satisfaction of accounts or notes receivable.
(g) Purchases or leases of gaming devices and
associated equipment where the seller or lessor is a licensed manufacturer or
distributor, and the financing is not provided by a third party.
(h) Cash, property, credit, services,
guaranty, benefit or any form of security loaned to or provided for or on
behalf of the licensee by a licensed affiliate, licensed subsidiary or
registered parent of the licensee. However, such financing from a stockholder,
partner, unlicensed affiliate or proprietor of the licensed operation must be
reported.
(i) Assessments for
property taxes or other improvements by, or accruals for taxes due to, a
government entity.
(j) Payments of
gaming winnings over time to patrons.
(k) Deposits or payments received by the
licensee in conjunction with a convention or similar event.
(l) Leases, including leaseback transactions
and capital leases, where the lease term, including any extensions or renewals,
does not exceed 90 days.
(m)
Financing activity that has been filed and administratively approved by the
Commission pursuant to these Rules.
6. All renewals, changes or modifications to
the terms or conditions of transactions previously reported under this section
must be reported.
7. The report to
the Commission required by this section must include the names and addresses of
all parties to the transaction, the amount and source of the funds, property or
credit received or applied, the nature and amount of security provided by or on
behalf of the licensee, the purpose of the transaction, and any additional
information the Commission may require. For transactions reported pursuant to
requirements of these Rules, the report must also identify the dates of each
loan or contribution. The report must be made on a form provided or approved by
the Commission, accompanied by a fully executed copy of the financing
agreement, and signed by an owner or key employee as defined in these
Rules.
8. In the event a party to
any transaction reportable pursuant to this Rule is a person other than the
reporting licensee or a financial institution or related subsidiary, or a
publicly traded company, the report must be accompanied by a supplemental
filing which must include that person's federal tax identification number or
social security number and date of birth, banking references, and source of
funds, and any additional information the Commission may require.
9. If, after such investigation as the
Commission deems appropriate, the Commission finds that a reported transaction
is inimical to the public health, safety, morals, good order or general welfare
of the people of the State of Arkansas, or would reflect, or tend to reflect,
discredit upon the State of Arkansas or the gaming industry, it may order the
transaction rescinded within such time and upon such terms and conditions as it
deems appropriate.
10. A bankruptcy
filing by a licensee does not relieve that licensee of the reporting
requirements of this Rule.
11. The
Commission or the Commission's designee may waive one or more of the provisions
of this section or require a report of a transaction not otherwise addressed in
this section or a supplemental filing, upon a finding that the waiver,
reporting requirement or supplemental filing is consistent with the public
policy of the State of Arkansas.
7.135
Finding of suitability of a
person holding an option to acquire an interest in a general partnership
licensee.
1. No person shall acquire or
be granted an option to purchase an interest in a general partnership licensee
without first notifying the Commission, on such forms as may be required by the
Commission, of the terms and conditions upon which the option was granted or
acquired.
2. The Commission may,
upon a recommendation by the Commission, require the application of any person
for a determination of suitability to hold an option to purchase or otherwise
obtain an interest in a general partnership licensee.
