(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 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.