Minnesota Administrative Rules

CHAPTER 7880, ADVANCE DEPOSIT WAGERING

MINNESOTA RACING COMMISSION

7880.0010 SCOPE.

This chapter applies to advance deposit wagering providers licensed by the commission under Minnesota Statutes, section 240.131. Advance deposit wagering providers shall not accept wagers from Minnesota residents on races conducted in Minnesota. The activities of a licensed advance deposit wagering provider are deemed to be relevant to the integrity of horse racing activities in Minnesota for purposes of Minnesota Statutes, sections 240.03 and 240.08.

Statutory Authority:

MS s 14.389; 240.131

History:

41 SR 809

Published Electronically:

January 5, 2017

7880.0020 LICENSING OF ADVANCE DEPOSIT WAGERING PROVIDERS.

Subpart 1.

License required.

No person shall offer or accept advance deposit wagers from Minnesota residents after November 1, 2016, unless the person holds a license in good standing as an advance deposit wagering provider under chapter 7877 and complies with all requirements of this chapter and applicable laws and rules.

Subp. 2.

Information required at time of application.

In lieu of the information required in part 7877.0110, an applicant for a Class C license to provide advance deposit wagering shall provide the following information to the commission at the time of application:

A.

name and address of applicant, including physical address and website or email address;

B.

name, title, and contact information of an individual authorized to communicate with the commission on matters relating to the application and license;

C.

if an owner is a corporation, partnership, or other business organization, the date and place of its incorporation or organizational filing and an organization chart showing all related business entities;

D.

executive summary of current business plan;

E.

details of the applicant's corporate structure and copies of current business organizational filings and certificate of good standing in jurisdiction where the entity is registered or incorporated;

F.

evidence of approval to conduct advance deposit wagering from the appropriate regulatory authority in the state where the principal office of the advance deposit wagering provider is located;

G.

the names, addresses, and dates of birth, and fingerprints if required by the commission, of all key employees and beneficial owners;

H.

a complete list of licenses held by the applicant with other racing jurisdictions;

I.

list of all criminal, civil, and regulatory actions where the applicant, any key employee or beneficial owner, or any business that had a key employee or beneficial owner in common with the applicant, was the subject of the action;

J.

details of racing or gaming-related licenses that have been denied, suspended, or revoked by any racing or gaming jurisdiction, including licenses where any key employee or beneficial owner of the applicant was a key employee or beneficial owner of the entity whose license was denied, suspended, or revoked;

K.

written agreements between the applicant and Minnesota licensed racetracks that meet the requirements of Minnesota Statutes, section 240.131, subdivision 3, including written documentation of approval by the applicable horsepersons' groups;

L.

copies or summaries of all contracts with Minnesota licensed racetracks that are not related to advance deposit wagering, and an assurance that the commission will be notified of any other agreements or understandings between the licensed racetrack and the applicant, whether oral or written;

M.

surety bond or other form of financial security as required by Minnesota statutes or rules;

N.

a description of the security measures used to protect account holder information and the integrity of the wagering process;

O.

total wagers accepted from Minnesota residents during the two years preceding the application, broken down by zip code if possible;

P.

consent to submit to the jurisdiction of Minnesota courts and agencies in any action relating to the subject matter of the license, application, or business with a Class A or Class B license holder;

Q.

tax identification number or Social Security number;

R.

a description of the applicant's anti-money-laundering policies and procedures; and

S.

any other information the commission determines is reasonably necessary to establish the applicant's suitability in compliance with applicable laws or rules for licensure and advance deposit wagering, and to fulfill the commission's duties under Minnesota Statutes, chapter 240.

Subp. 3.

Granting of license.

If an applicant for a Class C license to conduct advance deposit wagering submits a complete application that meets all criteria in applicable laws and rules, the commission shall undertake a review of the application and render a written determination on the application consistent with all applicable requirements.

Subp. 4.

Changes.

The commission may require changes or additions to the application, or changes to the proposed plan of operation, as a condition of granting a license if reasonably necessary to ensure compliance with applicable laws or rules and to assist the commission in fulfilling its duties under Minnesota Statutes, chapter 240.

Subp. 5.

Notification.

After a license is granted, the licensee must notify the commission in writing of any material changes to the information provided during the application process.

Subp. 6.

Denial of license.

The commission may deny a license to conduct advance deposit wagering if any of the following conditions exist:

A.

the applicant does not submit a complete application or supply all additional information requested by the commission;

B.

the commission determines the applicant has intentionally withheld relevant information or provided false or misleading information in connection with the application;

C.

the commission determines the bond or other evidence of financial responsibility provided by the applicant is inadequate to ensure the protection of Minnesota account holders and racetracks;

D.

the applicant, or any entity with a key employee or owner in common with the applicant, has had a license revoked or denied in Minnesota or another jurisdiction;

E.

the key employees or owners cannot sign the affidavit required in Minnesota Statutes, section 240.08, subdivision 2; or

F.

the commission determines that licensure would not be in the public interest or would negatively impact the integrity of racing in Minnesota.

Subp. 7.

License not transferable.

A license to conduct advance deposit wagering shall not be transferable. An advance deposit wagering provider shall inform the commission any time there is a change in its controlling interest or when any key employee or beneficial owner listed on its original application is no longer a key employee or beneficial owner.

Statutory Authority:

MS s 14.389; 240.131

History:

41 SR 809

Published Electronically:

January 30, 2024

7880.0030 PLAN OF OPERATION.

Subpart 1.

Submission of plan.

An advance deposit wagering provider shall have a plan of operation approved by the commission which addresses the following issues in addition to those listed in Minnesota Statutes, section 240.131, subdivision 5:

A.

types of wagering and contests offered and the manner in which wagering and contests will be conducted;

B.

methods to be used for pooling wagers;

C.

a complete description of the totalizator, transmission, and data processing programs and equipment to be used;

D.

processes and procedures implemented to identify and report possible odds manipulation;

E.

methods for detecting and deterring the use of accounts for illegal activity;

F.

methods for accurately verifying an account holder's identity, age, and residence prior to establishing an account;

G.

processes for account holders to make deposits to, and withdrawals from, their accounts;

H.

a plan for reporting dormant accounts and unclaimed funds that complies with Minnesota Statutes, sections 345.39 and 345.41; and

I.

any other issues determined to be necessary by the commission to carry out its duties under Minnesota Statutes, chapter 240.

Subp. 2.

Implementing and amending the plan of operation.

After the plan of operation has been approved by the commission, the licensee must implement and follow the plan of operation and may amend it only with the commission's approval. The commission may withdraw its approval of a plan of operation if the license holder fails to follow the plan or makes material changes that do not meet the requirements of applicable laws or rules.

Statutory Authority:

MS s 14.389; 240.131

History:

41 SR 809

Published Electronically:

January 5, 2017

7880.0040 ESTABLISHMENT OF ACCOUNTS.

Subpart 1.

Requirement.

An individual customer of an advance deposit wagering provider must establish an account prior to placing an advance deposit wager. An account may only be established with a licensed advance deposit wagering provider.

Subp. 2.

Natural persons.

Accounts shall only be established by natural persons and shall not be transferable between persons.

Subp. 3.

Procedure.

To establish an account, an application must be electronically signed or otherwise expressly authorized by the applicant and must contain the following information:

A.

the applicant's full legal name;

B.

the applicant's primary residence address;

C.

the applicant's telephone number;

D.

proper identification or certification demonstrating that the applicant is at least 18 years old; and

E.

any other information the commission determines is necessary to carry out its duties under applicable laws and rules.

Subp. 4.

Applicant and account holder information.

An advance deposit wagering provider may not sell or share an applicant or account holder's information, or use an applicant or account holder's information for any purpose not related to authorized advance deposit wagering, except as authorized by the applicant or account holder.

Subp. 5.

Verification of information.

Each application for an account shall be verified with respect to name, primary residence address, and date of birth either by an independent service provider or another means adequate to ensure the accuracy of the information. If the applicant's information cannot be reliably verified, the account shall not be established.

Subp. 6.

Notice to applicants.

An advance deposit wagering provider must provide the following information to each applicant when an account is established:

A.

the process for funding accounts and making withdrawals from accounts;

B.

wagering rules and procedures, methods, and timing of crediting and debiting accounts, and other information that is pertinent to the operation of the account;

C.

notice that the account holder may place wagers only on races authorized for pari-mutuel wagering under Minnesota Statutes, chapter 240;

D.

a unique account number;

E.

notice that an account holder must be at least 18 years old and that individuals under the age of 18 shall not have access to the account;

F.

information on responsible wagering and how to obtain assistance with problem gambling, including the contact information for at least one problem gambling assistance program; and

G.

procedures for resolving disputes between the account holder and the advance deposit wagering provider.

Subp. 7.

Personal identification code.

An account holder shall be required to supply a secure unique personal identification code when establishing an account. The account holder must be required to supply the code when making deposits or withdrawals from the account and when placing a wager. The account holder has the right to change the code at any time.

Subp. 8.

Denial of accounts.

Nothing in this chapter prohibits an advance deposit wagering provider from refusing to open an account for reasonable business reasons.

Statutory Authority:

MS s 14.389; 240.131

History:

41 SR 809

Published Electronically:

January 5, 2017

7880.0050 OPERATION OF ACCOUNTS.

Subpart 1.

Deposits.

An account holder may make deposits to the account in the following forms:

A.

cash, which may be deposited at financial or retail outlets designated by the advance deposit wagering provider;

B.

check, money order, or negotiable order of withdrawal sent to an advance deposit wagering provider;

C.

charges made to an account holder's credit or debit card upon authorization of the account holder;

D.

electronic funds transfer from an account owned by the account holder, in which case the account holder shall be responsible for any fees imposed by the remitting entity; and

E.

any other method approved by the commission.

Subp. 2.

Credits.

The following credits shall be posted to an account by the advance deposit wagering provider as soon as practicable after the race is declared official:

A.

credit for winnings from wagers; and

B.

credit for all refunded wagers as required by the laws and rules applicable to the host track.

Subp. 3.

Debit.

Upon receipt of a wager, the advance deposit wagering provider may debit the account in the amount of the wager.

Subp. 4.

Suspension or refusal.

Nothing in this chapter prohibits an advance deposit wagering provider from suspending or refusing deposits to an account for reasonable business reasons.

Subp. 5.

Disputes.

Disputes between an account holder and an advance deposit wagering provider shall be administered under the dispute resolution procedures contained in the plan of operation approved by the commission. If the advance deposit wagering provider fails to resolve the dispute, the commission may take appropriate action under chapter 7897, or may make claims against the bond or other form of financial security if the commission determines funds are owed to an account holder.

Statutory Authority:

MS s 14.389; 240.131

History:

41 SR 809

Published Electronically:

January 5, 2017

7880.0060 CONDUCT OF WAGERING.

Subpart 1.

Acceptance of wagers.

An advance deposit wagering provider may accept wagers via any wired or wireless communications device, subject to applicable laws or rules and the approved plan of operation.

Subp. 2.

No extension of credit.

An advance deposit wagering provider shall not accept wagers from an account holder in excess of the account balance. No credit shall be extended by an advance deposit wagering provider to an account holder.

Subp. 3.

Refusal.

Nothing in this chapter prohibits an advance deposit wagering provider from suspending or refusing deposits to an account for reasonable business reasons.

Subp. 4.

Information of account holders.

No employee of an advance deposit wagering provider shall use or divulge any information related to the placing of any wager or the operation of any account except as reasonably necessary in the course and scope of the employee's employment with the advance deposit wagering provider or as authorized by the account holder.

Statutory Authority:

MS s 14.389; 240.131

History:

41 SR 809

Published Electronically:

January 5, 2017

7880.0070 CLOSING OF ACCOUNTS.

Subpart 1.

Account holders.

An account holder has the right to close an account at any time for any reason.

Subp. 2.

Providers.

Nothing in this chapter prohibits an advance deposit wagering provider from at any time closing an account for reasonable business reasons.

Subp. 3.

Inactivity.

An advance deposit wagering provider may close an account on which there has been no activity for at least six months.

Subp. 4.

Requirement to close account.

An advance deposit wagering provider shall close an account if it determines:

A.

the information used to open the account was false;

B.

the account has been used in furtherance of any illegal activity; or

C.

the account has been used in violation of any state or federal law or rule.

An advance deposit wagering provider shall provide a written report to the commission within 30 days whenever an account is closed pursuant to this subpart.

Subp. 5.

Procedures.

Except as provided in subpart 6, whenever an account is closed, an advance deposit wagering provider shall, within seven calendar days:

A.

ensure that all required debits and credits have been made; and

B.

return to the account holder all money then on deposit by sending a check to the primary residence address of the account holder.

Subp. 6.

Account holder deceased.

In the event an account holder is deceased, unclaimed cash balances in the account shall be released to the decedent's legal representative upon receipt of a copy of a valid death certificate, after which the account shall be closed.

Statutory Authority:

MS s 14.389; 240.131

History:

41 SR 809

Published Electronically:

January 5, 2017

7880.0080 RECORD KEEPING AND REPORTING.

Subpart 1.

Maintenance of records.

An advance deposit wagering provider shall maintain the following information on each account for a minimum of two years:

A.

a record of all deposits, credits, and debits; and

B.

a record of all wagers made.

Subp. 2.

Providing of records.

Upon request of the account holder, an advance deposit wagering provider shall provide any records it maintains on the account holder's account under subpart 1. Records may be provided in paper or electronic format.

Subp. 3.

Other information to be available.

An advance deposit wagering provider shall make an account holder's current account balance available to the account holder at all times.

Subp. 4.

Audit.

An advance deposit wagering provider shall allow the commission and its designees to review and audit all records related in any way to its licensure, financial solvency, accounts, and the conduct of wagering by Minnesota residents. Information relevant to the review and audit shall be made available to the commission or its designees upon request and in a format required by the commission.

Subp. 5.

Annual financial statement.

A licensed advance deposit wagering provider shall provide an annual audited financial statement to the commission.

Subp. 6.

Report.

A licensed advance deposit wagering provider shall report to the commission quarterly all source market fees and other payments made to licensed racetracks, the pari-mutuel activity on which the source market fees were paid, and the number of accounts held by Minnesota residents at the end of the reporting period.

Statutory Authority:

MS s 14.389; 240.131

History:

41 SR 809

Published Electronically:

January 5, 2017

7880.0090 PAYMENTS TO THE STATE.

Subpart 1.

Agreement.

A licensed racetrack must negotiate a separate agreement, with the horsepersons organization representing a majority of horsepersons racing at the licensed racetrack, for the apportionment of source market fees set aside for purse accounts and the breeders' fund pursuant to Minnesota Statutes, section 240.131, subdivision 6, paragraph (d). The agreement must be approved by the commission.

Subp. 2.

Payment to state.

A licensed racetrack shall remit source market fees set aside for the breeders' fund pursuant to Minnesota Statutes, section 240.131, subdivision 6, paragraph (d), to the state no later than seven days after the end of the month in which it receives the fees from the advance deposit wagering provider.

Statutory Authority:

MS s 14.389; 240.131

History:

41 SR 809

Published Electronically:

January 5, 2017

7880.0110 PENALTIES.

Subpart 1.

Suspension or revocation.

The commission may suspend or revoke a license to provide advance deposit wagering, issue a fine, or deny or withdraw approval of a contract between a licensed racetrack and an advance deposit wagering provider if:

A.

the licensee violates applicable laws or rules;

B.

the bond or other form of financial security is canceled or expired and not replaced by another form of financial security approved by the commission;

C.

the licensee has knowingly provided false or misleading information to the commission or withheld information required to be provided;

D.

the licensee has had a license denied, suspended, or revoked in another state;

E.

the licensee fails to comply with any conditions on the license imposed by the commission; or

F.

the licensee poses a threat to the public interest or the integrity of racing or wagering in Minnesota.

Subp. 2.

Contested case hearing.

If the commission suspends or revokes a Class C license to provide advance deposit wagering, the license holder shall have the right to request a contested case hearing under Minnesota Statutes, chapter 14, to be held as set forth in parts 1400.8505 to 1400.8612. The request must be made in writing to the commission by certified mail or personal service. A request sent by certified mail must be postmarked within ten days after the license holder receives the suspension or revocation order from the commission. An appeal sent by personal service must be received by the commission within ten days after the license holder receives the order from the commission.

Statutory Authority:

MS s 14.389; 240.131

History:

41 SR 809

Published Electronically:

January 5, 2017