Current through Register 1531, September 27, 2024
(1)
Durable Suitability
Determinations.
(a) An applicant
or qualifier shall have the duty to establish its durable suitability by clear
and convincing evidence.
(b) No
applicant shall be determined to be durably suitable in accordance with
205
CMR 15.04(1)(a) unless and
until all qualifiers identified in
205
CMR 15.04(6) have been
found by the Commission durably suitable in accordance with
205
CMR 15.04(1)(a) within the
current or prior four calendar years.
(c)
Investigation.
Before the Commission may determine that an applicant or qualifier is durably
suitable in accordance with
205
CMR 15.04(1), the Bureau
shall conduct an investigation into the qualifications and suitability of the
applicant. At the completion of the Bureau's investigation, it shall submit a
written report to the Commission, which will include recommendations and
findings of fact relative to the suitability of the applicant or qualifier.
(d) The Commission shall make any
finding of durable suitability in accordance with
205
CMR 15.04(1) after an
adjudicatory proceeding pursuant to 205 CMR 101.00: M.G.L. c. 23K
Adjudicatory Proceedings.
(e) After the proceedings under
205
CMR 15.04(1)(d), the
Commission shall issue a written determination of durable suitability as
follows:
1.
Negative
Determination. If the Commission finds that an applicant or
qualifier failed to meet its burden of demonstrating its durable suitability,
the Commission, in its sole discretion, shall either:
a. issue a negative determination of
suitability; or
b. request that the
applicant or qualifier submit a certification in accordance with
205
CMR 15.04(2)(b) and, as
appropriate, that the Bureau conduct an investigation in accordance with
205
CMR 15.04(2)(c), and
thereafter consider whether the applicant or qualifier is temporarily suitable
in accordance with
205
CMR 15.04(2).
2.
Positive
Determination. If the Commission finds that an applicant or
qualifier has met its burden of demonstrating its durable suitability, the
Commission shall issue a positive determination of durable suitability which
may include conditions and restrictions.
(2)
Temporary Suitability
Determinations.
(a)
Notwithstanding any other provision of
205
CMR 15.04, the Commission, in its sole
discretion, may deem an applicant or qualifier temporarily suitable, until the
end of the calendar year in which the applicant proposes to hold a racing
meeting based on a certification pursuant to
205
CMR 15.04(2)(b) and an
investigatory report pursuant to
205
CMR 15.04(2)(c).
1. No applicant shall be determined to be
temporarily suitable in accordance with this
205
CMR 15.04(2)(a) unless and
until all qualifiers identified in
205
CMR 15.04(6) have been
found durably suitable in accordance with
205
CMR 15.04(1)(b) or
temporarily suitable in accordance with this
205
CMR 15.04(2)(a).
3. Any evaluation of whether an applicant or
qualifier is temporarily suitable shall take place in a public meeting, unless
the applicant or qualifier requests that the evaluation take place after an
adjudicatory proceeding held pursuant to 205 CMR 101.00: M.G.L. c. 23K
Adjudicatory Proceedings.
(b) To be found temporarily suitable in
accordance with
205
CMR 15.04(2), the applicant
or qualifier must certify:
1. that it
understands it may be denied a license or have a license revoked if it has
willfully, knowingly, recklessly, or intentionally provided false or misleading
information to the Commission;
2.
that, under pains and penalties of perjury, to the best of its reasonable
knowledge and belief, it is suitable to hold a license pursuant to M.G.L. c.
128A and
205
CMR 15.04; and
3. an applicant certifies, under pains and
penalties of perjury, that to the best of its reasonable knowledge and belief,
all of its qualifiers are also suitable to hold a license pursuant to M.G.L. c.
128A, and
205
CMR 15.04.
(c) Before the Commission may determine that
an applicant or qualifier is temporarily suitable in accordance with
205
CMR 15.04(2), the Bureau
shall conduct an investigation into the qualifications and suitability of the
applicant or qualifier. The investigation may be limited to a review of the
applicant or qualifier's
205
CMR 15.04(2)(b)
certification; an applicant's self-disclosed licensing and compliance history
in other jurisdictions; self-disclosed open litigation involving an applicant;
and an open-source check concerning the applicant or, if a natural person, a
qualifier. At the completion of the Bureau's investigation, it shall submit a
written report to the Commission. The Bureau's report may be redacted
consistent with the Massachusetts Public Records Law, M.G.L. c. 66, and other
sources of law.
(d) After
evaluating whether the applicant or qualifier is temporarily suitable in
accordance with
205
CMR 15.04(2)(d):
1. If the Commission finds the applicant or
qualifier temporarily suitable: the Commission shall issue a written
determination of temporary suitability for the applicant or qualifier. The
determination may include conditions and restrictions.
2.
Otherwise: the
Commission may issue a negative determination of suitability.
(3) In determining
whether a person is suitable, the Commission shall evaluate and consider the
overall reputation of the person, including, without limitation, and on the
basis of a report from the Bureau, sworn attestations, or other information or
evidence available to the Commission:
(a) the
person's integrity, honesty, good character and reputation;
(b) the person's financial stability,
integrity, and background;
(c)
whether the person has a history of compliance with racing or other gaming or
sports wagering requirements in other jurisdictions;
(d) whether the person, at the time of the
request, is a defendant in litigation;
(e) whether the person is ineligible to hold
a license under
205
CMR 15.04(4), or M.G.L. c.
128A;
(f) whether the person has
been convicted of a crime of moral turpitude;
(g) whether, and to what extent, the person
has associated with members of organized crime and other persons of
disreputable character;
(h) whether
the person has failed to demonstrate responsible business practices in any
jurisdiction;
(i) whether awarding
a license to the applicant would have an adverse impact upon the integrity of
the racing industry;
(j) whether
awarding a license to the applicant would have an adverse impact on the
interest of members of the public in racing competition honestly managed and of
good quality; and
(k) the extent to
which the person have cooperated with the Bureau during the review of the
Racing Meeting License Application.
(4) The Commission shall determine that an
applicant is unsuitable if the applicant or one of its qualifiers:
(a) has knowingly made a false statement of a
material fact to the Commission or IEB;
(b) has had a license revoked by any
governmental authority responsible for regulation of racing or associated
pari-mutuel wagering activities or gaming or sports wagering
activities;
(c) has been convicted
of a felony or other crime involving embezzlement, theft, fraud, perjury or a
gambling-related offense;
(d) has
not demonstrated to the satisfaction of the Commission financial responsibility
sufficient to adequately meet the requirements of the proposed
enterprise;
(e) has affiliates or
close associates that would not qualify for a license, or whose relationship
with the applicant may pose an injurious threat to the interests of the
Commonwealth.
(5)
Persons Required to Be Qualified. The following
persons shall be qualifiers for any application:
(a) If the applicant is a corporation:
1. Each officer;
2. Each inside director;
3. Any person owning, or having another
beneficial or proprietary interest in, 10% or more of the common stock of the
applicant, or a holding, intermediary or subsidiary company of such company;
and
4. 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 applicant's operations in the
Commonwealth.
(b) If the
applicant is a limited liability corporation:
1. Each member;
2. Each transferee of a member's
interest;
3. Any other holder of a
beneficial or proprietary interest of 10% or more in the applicant;
4. Each manager; and
5. 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 applicant's operations in the
Commonwealth.
(c) If the
applicant is a partnership:
1. Each
partner;
2. Any other holder of a
beneficial or proprietary interest of 10% or more in the applicant;
and
3. 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 applicant's operations in the
Commonwealth.
(6)
Other
Qualifiers. The Commission may, in its sole discretion, require
other persons that have a business association of any kind with the applicant
to undergo a qualifier review and determination process. These persons may
include, but are not limited to, holding, intermediary or subsidiary companies
of the applicant.
(7)
Waivers. In addition to any other exception or
exemption under
205
CMR 15.04, upon written petition, the
Commission may waive the requirement to be qualified as a qualifier under
205
CMR 15.04(5) and (6) for:
(a) Institutional investors holding up to 15%
of the stock of the applicant, 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 applicant or 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 applicant, 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 15.00, 205 CMR 3.00:
Harness Horse Racing and 205 CMR 4.00: Horse
Racing respectively before taking any action that may influence or
affect the affairs of the applicant or a holding, intermediary or subsidiary
company; or
(b) Any person who, in
the opinion of the Bureau or the Commission, cannot exercise control or provide
direction to an applicant or a holding, intermediary or subsidiary company
thereof.
(8)
Persons Deemed Suitable.
(a) Any person may be deemed durably suitable
for purposes of M.G.L. c. 128A and 205 CMR without an additional finding of
suitability pursuant to
205
CMR 15.04 if they were previously:
1. qualified pursuant to M.G.L. c. 23K or 205
CMR 116.00: Persons Required to Be Licensed or Qualified;
or
2. found suitable pursuant to
205
CMR 215.01(1):
Durable Finding of Suitability.
(b) Any person may be deemed temporarily
suitable for purposes of M.G.L. c. 128A and 205 CMR without an additional
finding of suitability pursuant to
205
CMR 15.04 if they were previously found
preliminarily suitable pursuant to
205
CMR 215.01(2):
Preliminary Finding of Suitability.
(9)
Qualification of New
Qualifiers. No person requiring qualification pursuant to
205
CMR 15.04 may perform any duties or exercise
any powers relating to the position that said qualifier is seeking to assume
for a licensee unless the person notifies the Bureau in writing within 30 days
of appointment to the position. Such notification shall be accompanied by an
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.
(a) A person
with reason to believe that their new position with an applicant or licensee
may require qualification pursuant to
205
CMR 15.04 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 15.04(5) and (6) 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. Following submission of the completed form, the person may
continue to perform duties and exercise powers relating to the position pending
qualification.
(b) 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 recommendation in accordance with
205
CMR 15.04(1)(c) whether the
new qualifier meets the standards for suitability.
(c) Upon notification by the Bureau of a
determination that reasonable cause exists to believe the qualifier may not
ultimately be found suitable, an applicant shall promptly remove the qualifier
from his or her position until such time as the Commission makes its final
determination on suitability.
(10)
Internal Review of
Determinations. An applicant or qualifier may request review of
any determination made by the Bureau in accordance with either
205
CMR 15.04(5) through (7) or
205
CMR 15.04(9) 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.
(11)
Unsuitable
Qualifiers. An unsuitable qualifier may not hold an interest in a
license. A licensee's articles of organization or other document governing the
sale or transfer of securities or other interests shall contain provisions in a
form approved by the Commission stating that the sale, assignment, transfer,
pledge or other disposition of any security issued by it is conditional and
shall be ineffective if disapproved by the Commission. Further, a licensee
shall have a mechanism approved by the Commission in place by which it may
effectuate divestiture or redemption of securities, or a like process, in the
event of a negative determination of suitability being issued to a person
required to be qualified.
(12)
Transfers of Interest in Licenses and Licensees. Prior
to giving written approval to a sale, transfer, or conveyance of a beneficial
or legal interest in a license or licensee in accordance with M.G.L. c. 128A,
§ 11C, the Commission must find the transferee durably or temporarily
suitable in accordance with
205
CMR 15.04 as though the transferee was an
applicant or qualifier for a new license.