Current through Register Vol. 56, No. 18, September 16, 2024
(a) The
exchange wagering licensee may employ an exchange management agent, subject to
the following requirements:
1. In the event
the exchange wagering licensee intends to enter into a written agreement with
an exchange management agent, the parties to the proposed agreement shall file
a joint petition with the Commission seeking approval for such. Through the
petition, the parties shall specify whether the exchange management agent is to
conduct or operate the exchange wagering system for the exchange wagering
licensee, whether the exchange management agent will act as agent for the
Authority in all matters approved by the Commission, and whether the exchange
management agent will employ other persons or entities to perform any of its
duties. With the prior approval of the Commission, the exchange wagering
licensee and exchange managing agent may enter into such a written agreement.
Notwithstanding this ability, exchange wagering shall only be conducted by the
exchange wagering licensee pursuant to a valid exchange wagering license issued
by the Commission, which shall at all times be held by the exchange wagering
licensee.
2. The Commission shall
not approve such a written agreement unless it is demonstrated, by clear and
convincing evidence, that: both the written agreement and the written internal
control procedures of the exchange wagering licensee set forth sufficient
provisions to ensure that the exchange wagering licensee maintains meaningful
and adequate oversight controls with respect to both the exchange wagering
system and its exchange wagering license; and that the written internal control
procedures of the exchange management agent set forth procedures to be
implemented, as may be appropriate, considering the functions to be performed
by the exchange management agent, to effectively operate the exchange wagering
system; to ensure that wagers placed through the exchange wagering system will
be accurately processed and that all aspects of wagering integrity and wagering
recordkeeping will be maintained; to effectively ensure that the exchange
wagering system operates with fiscal soundness and technological reliability;
to effectively ensure that there will be sufficient safeguards to maintain the
integrity of the horse racing industry in this State; and to effectively ensure
compliance with this chapter. As required at
N.J.A.C.
13:74C-2.1(b)8 and 2.2(d)8,
the internal control procedures of the exchange wagering licensee shall include
a certification that it has reviewed the internal control procedures of the
exchange management agent and finds them to be sufficient.
3. The written agreement between the exchange
wagering licensee and exchange management agent shall with specificity
designate which functions related to the exchange wagering system shall be
maintained or retained by the exchange wagering licensee, and which functions
related to the exchange wagering system shall be performed by the exchange
management agent.
4. The written
agreement between the exchange wagering licensee and exchange management agent
shall contain provisions that clearly provide for the portion of exchange
wagering revenues payable to the exchange management agent as
compensation.
5. Prior to acting
upon a joint petition to approve such a written agreement, the Commission shall
initiate and conduct an investigation into the qualifications of the person or
entity subject of the exchange management agent license application, at cost to
such person or entity. The Commission shall not approve any such written
agreement unless the exchange management agent demonstrates, by clear and
convincing evidence, that it and its employees are suitable, in terms of
background and qualifications, to perform the functions subject of the written
agreement, and to hold a license by the Commission to engage in such
activities.
6. The Commission may
prescribe such conditions and terms, as the Commission deems appropriate, in
approving any written agreement pursuant to this section.
7. Unless otherwise approved by the
Commission, a person or entity approved by the Commission as an exchange
management agent shall be responsible for any regulatory requirements or
conditions previously imposed upon the exchange wagering licensee, as concerns
the particular functions assumed by such person or entity.
(b) The exchange wagering licensee may employ
an exchange services agent, subject to the following requirements:
1. In the event the exchange wagering
licensee intends to enter into a written agreement with an exchange services
agent, the parties to the proposed agreement shall file a joint petition with
the Commission seeking approval for such. Through the petition, the parties
shall specify the services that the exchange services agent is to furnish. With
the prior approval of the Commission, the exchange wagering licensee and
exchange services agent may enter into such a written contract or written
agreement. Notwithstanding this ability, exchange wagering shall only be
conducted by the exchange wagering licensee pursuant to a valid exchange
wagering license issued by the Commission, which shall at all times be held by
the exchange wagering licensee.
2.
The Commission shall not approve such a written agreement unless it is
demonstrated, by clear and convincing evidence, that: the written agreement,
and the written internal control procedures of the exchange wagering licensee,
set forth sufficient provisions to ensure that the exchange wagering licensee
maintains meaningful and adequate oversight controls with respect to both the
exchange wagering system and its exchange wagering license; and that the
written internal control procedures of the exchange services agent set forth
procedures to be implemented, as may be appropriate, considering the functions
to be performed by the exchange services agent, to effectively operate the
exchange wagering system; to ensure that wagers placed through the exchange
wagering system will be accurately processed and that all aspects of wagering
integrity and wagering recordkeeping will be maintained; to effectively ensure
that the exchange wagering system operates with fiscal soundness and
technological reliability; to effectively ensure that there will be sufficient
safeguards to maintain the integrity of the horse racing industry in this
State; and to effectively ensure compliance with this chapter. As required at
N.J.A.C.
13:74C-2.1(b)8 and 2.2(d)8,
the internal control procedures of the exchange wagering licensee shall include
a certification that it has reviewed the internal control procedures of the
exchange wagering services agent and finds them to be sufficient.
3. The written agreement between the exchange
wagering licensee and exchange services agent shall, with specificity,
designate which functions related to the exchange wagering system shall be
maintained or retained by the exchange wagering licensee, and which functions
related to the exchange wagering system shall be performed by the exchange
services agent.
4. The written
agreement between the exchange wagering licensee and exchange services agent
shall contain provisions that clearly provide for the portion of exchange
wagering revenues payable to the exchange services agent as
compensation.
5. Prior to acting
upon a joint petition to approve such a written agreement, the Commission shall
initiate and conduct an investigation into the qualifications of the person or
entity subject of the exchange services agent license application, at cost to
such person or entity. The Commission shall not approve any such written
agreement unless the exchange services agent demonstrates, by clear and
convincing evidence, that it and its employees are suitable, in terms of
background and qualifications, to perform the functions subject of the written
contract or agreement, and to hold a license by the Commission to engage in
such activities.
6. The Commission
may prescribe such conditions and terms, as the Commission deems appropriate,
in approving any written agreement pursuant to this section.
7. Unless otherwise approved by the
Commission, and in addition to the requirements imposed upon the holder of the
exchange wagering license by the Act and this chapter, a person or entity
approved by the Commission as an exchange services agent shall be responsible
for any regulatory requirements or conditions previously imposed upon the
exchange wagering licensee, as concerns the particular functions assumed by
such person or entity.
(c) Where the exchange wagering licensee
employs an exchange management agent, and such person or entity does not also
function as an exchange services agent, nothing in this section shall be
interpreted to prohibit the exchange management agent from entering into a
written agreement with an exchange services agent, for the provision of such
services in connection with the exchange wagering system, if such action is
authorized as part of the agreed-to duties it performs on behalf the exchange
wagering licensee. In such event, the exchange wagering licensee, exchange
management agent, and exchange services agent shall participate as joint
parties to the petition required to be filed with the Commission required by
(b)1 above, and it must be demonstrated to the Commission that the exchange
services agent is qualified to perform its proposed functions. In such event,
the joint petition shall additionally include the written agreement intended to
be entered into between the exchange management agent and exchange services
agent, which written agreement must be approved by the Commission. The written
agreement shall, with specificity, designate which functions related to the
exchange wagering system shall be maintained or retained by the exchange
management agent, which functions related to the exchange wagering system shall
be performed by the exchange services agent, and it shall also contain
provisions that clearly provide for the compensation payable to the exchange
services agent. In such case, the joint petition shall additionally include:
the internal control procedures of the exchange services agent; a certification
of the exchange management agent that said internal control procedures have
been incorporated within its own internal control procedures; and the
certification of the exchange wagering licensee required pursuant to (b) above
and N.J.A.C. 13:74C-2.1(b)8
and 2.2(d)8.
(d) Nothing in this section shall be
interpreted from prohibiting an exchange management agent from also functioning
as an exchange services agent, provided it demonstrates to the Commission, by
clear and convincing evidence, that it is qualified to perform both the
functions of an exchange management agent and exchange services agent, and
provided that each aspect of this section is complied with. A person or entity
approved by the Commission to provide both such services shall be licensed by
the Commission as both an exchange management agent and as an exchange services
agent, as required at
N.J.A.C.
13:74C-6.1(d).
(e) Nothing in this section shall be
interpreted to prohibit the exchange wagering licensee from conducting or
operating the exchange itself, from acting in all exchange wagering matters
approved by the Commission itself, and from providing exchange wagering service
provider services itself, where the Commission finds that the exchange wagering
licensee is qualified in all respects to perform such functions.
