Current through Register Vol. 41, No. 3, September 23, 2024
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.
Statutory Authority: §§
58.1-4007,
58.1-4015.1,
and
58.1-4030 through
58.1-4047
of the Code of Virginia.
