HORSE RACING COMMISSION

(1) The advance deposit wagering rules set forth in this chapter shall apply to the establishment and operation of accounts by an authorized advance deposit wagering service provider for applicants whose principal residence address is in the state of Washington.

(2) Advance deposit wagering by any person whose principal residence address is in the state of Washington may be conducted only by an authorized advance deposit wagering service provider licensed by the commission pursuant to this chapter.

(3) A class 1 racing association must ((obtain commission approval of its)) have a contract in place with an authorized advance deposit wagering service provider that complies with all state and federal laws and regulations. Contracts shall be approved by the commission.

(4) No advance deposit wagering service provider shall solicit, accept, open or operate an account for any person with a principal residence address in the state of Washington unless the service provider has received a license in good standing from the commission.

(5) The commission may suspend or revoke a license to operate as an authorized advance deposit wagering service provider, withdraw approval of a contract between a class 1 racing association and an authorized advance deposit wagering service provider and/or impose fines, if the authorized advance deposit wagering service provider, its officers, directors, or employees violate chapter 67.16 RCW or Title 260 WAC.

(6) An authorized advance deposit wagering service provider located within Washington shall not solicit, accept, open or operate advance deposit wagering accounts for persons whose principal residence is outside of the state of Washington, including residents of foreign jurisdictions unless:

(a) The service provider has received a license from the commission in good standing;

(b) Wagering on that same type of live racing is lawful in the jurisdiction which is the person's principal residence; and

(c) The authorized advance deposit wagering service provider complies with the provisions of the Interstate Horseracing Act, 15 U.S.C. §§ 3001 to 3007, and the laws of the jurisdiction, which is the principal place of residence of the applicant.

(7) The authorized advance deposit wagering service provider shall provide a bond or irrevocable letter of credit in an amount set by the commission for the purpose of ensuring that payments to the commission and to Washington account holders are made. In the alternative, a service provider may provide other means of assurance of such payment including, but not limited to, evidence of bond(s), irrevocable letter(s) of credit or other forms of financial guarantees posted and in good standing with regulatory authorities in other jurisdictions, which shall be subject to the approval of the commission. Any bond, letter of credit or other assurance of payment acceptable to the commission provided by the service provider shall run to the Washington horse racing commission as obligee, and shall be for the benefit of the commission and any account holder who suffers a loss by reason of the service provider's violation of chapter 67.16 RCW or these rules. The bond, letter of credit or other assurance of payment shall be conditioned on the obligor as licensee faithfully complying with chapter 67.16 RCW and these rules. The bond shall be continuous and may be canceled by the surety only upon the surety giving written notice to the executive secretary of its intent to cancel the bond. The notice of cancellation shall be effective no sooner than thirty days after the notice is received by the executive secretary. In the event of cancellation of the bond, letter of credit or other assurance of payment the service provider shall file a new bond, letter of credit or other assurance of payment prior to the effective date of the cancellation notice.

(8) Persons whose primary residence is within Washington shall not participate in advance deposit wagering unless such activity is conducted through an authorized advance deposit wagering service provider.

(9) The content and frequency of reports from an authorized advance deposit wagering service provider shall be at the discretion of the commission.

(10) No class 1 racing association shall enter into a written agreement under this section that is in violation of, or may be construed as waiving any provision of chapter 67.16 RCW, Title 260 WAC or any applicable federal, state or local law.

(11) Every class 1 racing association approved under this chapter shall file with the commission a monthly statement showing amounts contributed to and balances in the purse fund and the breeders awards fund. This statement shall be filed with the commission no later than twenty-five days after the end of each month.

(12) In determining whether to approve an application under this chapter, the commission shall consider the following factors:

(a) The impacts on all entities conducting business as part of the Washington horse racing industry;

(b) Whether the commission deems the state compliance and monitoring efforts of the state where the authorized advance deposit wagering service provider is located are sufficient for compliance with applicable laws and for the protection of the public and to ensure the integrity of all operations and financial transactions under the agreement between the class 1 racing association and the authorized advance deposit wagering service provider; and

(c) Any other factor the commission identifies on the record as relevant to its determination.

(1) A class 1 racing association licensed under chapters 67.16 RCW and ((chapter)) 260-13 WAC may apply for a license from the commission to operate as an advance deposit wagering service provider in accordance with chapter 67.16 RCW and this chapter.

(2) An application to operate as an advance deposit wagering service provider must address the requirements of this chapter, and the class 1 racing association shall file with the commission an original and five copies of the application and plan of operation.

(3) As part of the application, the class 1 racing association shall submit a detailed plan of how its proposed advance deposit wagering service provider would operate. At a minimum, the operating plan shall address the following issues:

(a) The manner in which the proposed simulcasting and advance deposit wagering service provider will operate and the regular hours of operation;

(b) Programs for responsible wagering;

(c) A plan for verification of an applicant's identity, age and residence when establishing an account;

(d) Establish a dispute resolution process for account holders who file a claim against the advance deposit wagering service provider;

(e) The requirements for accounts established and operated for persons whose principal residence is outside of the state of Washington;

(f) The process for an account holder to make withdrawals from the account holder's account;

(g) The process for handling wagers when wagering pools cannot be merged with the wagering pools of the race track where the race is being run live; and

(h) Any additional information required by the commission.

(4) The commission may require changes in a proposed plan of operations as a condition of granting a license.

(5) The commission may conduct investigations or inspections or request additional information from the class 1 racing association, as it deems appropriate in determining whether to license the class 1 racing association to operate as an advance deposit wagering service provider.

(6) A license authorizes ((only)) the class 1 racing association to establish, manage and operate an advance deposit wagering service provider. The class 1 racing association shall not subcontract operation of the advance deposit wagering service provider to another person or entity without authorization from the commission. The class 1 racing association shall assume liability in respect to Washington accounts for any subcontractor authorized by the commission.

(7) Approval of a license under this section shall be for twelve months from the date of approval, unless rescinded by the commission.

(8) No subsequent changes in the advance deposit wagering service provider's plan of operations may occur unless ordered by the commission or until written approval is obtained from the commission.

(9) The commission, or its staff, shall be given access to review and audit all records and financial information of a class 1 racing association related to the conduct of advance deposit wagering, including resident and nonresident accounts. This information shall be made available to the commission or its staff by the class 1 racing association at its location at reasonable hours. The commission may require the class 1 racing association to annually submit to the commission audited financial statements of the advance deposit wagering service provider.

(1) The source market fee generated from wagers on a class 1 racing association's live races will be distributed to the class 1 racing association conducting that meet after deducting contributions to the commission, one percent owners bonus, breeders awards, and class C purse fund per WAC 260-49-070. The remaining source market fee from the class 1 racing association's live meet shall be distributed in accordance with the agreement between the class 1 racing association and the recognized horsemen's association.

(2) The source market fee generated from races conducted outside Washington shall be allocated proportionate to the gross amount of all sources of parimutuel wagering during each twelve-month period derived from the associations' live race meets after deducting contributions to the commission, one percent owners' bonus, and breeders awards((, and class C purse fund per WAC 260-49-070)). The remaining proportional share of the source market fee from races conducted outside Washington shall be distributed in accordance with the agreement between the class 1 racing association and the recognized horsemen's association. "All sources of parimutuel wagering" shall mean the total of in-state and out-of-state wagering on the associations' live race meet. This percentage must be calculated annually. The commission shall calculate the proportion of the source market fee for each class 1 racing association based upon the preceding calendar year. The commission shall inform the authorized advance deposit wagering service provider(s) of the percentage of source market fee to be distributed to each class 1 racing association. The authorized advance deposit wagering service provider(s) shall distribute the source market fee to the class 1 racing associations according to the percentages established by the commission.

(3) A class 1 racing association is not entitled to source market fees until it has completed one race meet in accordance with the requirements of RCW 67.16.200.

(4) A class 1 racing association must complete a live race meet in accordance with RCW 67.16.200 within each succeeding twelve-month period to maintain eligibility to continue participating in advance deposit wagering and to receive a proportionate share of the source market fee.