Title 809 | Chapter 001 | Regulation 003
SUPERSEDED
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PREVIOUS VERSION
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PUBLIC PROTECTION CABINET
Kentucky Horse Racing Commission
(Amended After Comments)
809 KAR 1:003.Occupational licenses.
Section 1.
Definitions.(1)
"Annual license" means the occupational license issued by the commission after a thorough review of an application, valid for the calendar year for which it is applied.(2)
"Applicant" means a person that applies for an occupational license.(3)
"Background check" means a review of an applicant's criminal, financial, and personal history conducted by the commission.(4)
"Critical component" means any sub-system for which failure or compromise can lead to loss of player entitlements, government revenue or unauthorized access to data used for generating reports for the regulatory body.(5)
"Fees" mean the administrative charges levied by the commission for the processing, issuance, and renewal of occupational licenses.(6)
(7)
(8)
"Licensee" means any individual or entity that has been granted an occupational license by the commission.(7)(9)
"Occupational license" means the categories of licenses established by the commission for participants in sports wagering pursuant to KRS 230.210.(8)(10)
"Race and sportsbook employee license" means a category of occupational license, which is required for all individuals listed in Section 6 of this administrative regulation.(9)(11)
"Temporary license" means a provisional license granted by the commission during the process of evaluating an application for a permanent license.Section 2.
General Requirements for Applications.(1)
Eligibility: Any individual or entity desiring to participate professionally in sports wagering activities in the Commonwealth shall apply to the commission for an occupational license as categorized in Section 4 of this administrative regulation. This type of license shall be required for certain persons working in a licensed facility for sports wagering, supervisors of individuals who can influence the outcome of sports wagering, specific individuals who have the capability to affect the outcome of sports wagering through the deployment of code and other persons required under this KAR Title 809.(2)
Submission timeframe: Applications for licenses shall be submitted annually. Licenses granted shall remain active only for the calendar year for which they have been applied.(3)
Legal compliance: All applicants shall demonstrate compliance with all laws and regulations regulating sports wagering in Kentucky and any other regulatory, state, federal, or taxing authority.(4)
Lack of material misrepresentation: All information provided on the application form shall be accurate and complete. Material misrepresentation on the application may result in immediate suspension, revocation, denial of the license, or imposition of fines by the commission.(5)
Minimum age: The minimum age requirement for an occupational license in sports wagering shall be eighteen (18) years.(6)
Transparency in entities: If an entity consisting of multiple individuals applies for a license, the entity shall fully disclose the identities and the type of ownership held by all controlling individuals. This information shall include the degree and type of ownership held by each individual in the entity.(7)
Categories of licenses: Different roles within the sports wagering industry may require distinct categories of licenses as set forth in Section 5 of this administrative regulation.Section 3.
Application Fees.(1)
All required application fees described under this section shall be submitted to the commission in the form of a certified check, ACH payment, or cashier's check made payable to the commission, or other form as prescribed by the commission.(2)
The following fees shall accompany applications for the following categories of occupational license:(a)
Race and Sportsbook Employee License: $150;(b)
Information Services Provider: $5,000; and(c)
Key Employee: $1,500.(3)
All occupational licenses shall be renewed annually. The renewal fee for each category shall be the same as the initial licensing fee.(4)
If additional costs become necessary to investigate an applicant for a license, the commission may assess an additional investigation fee at its discretion. Failure to submit an additional requested payment shall result in suspension of the processing of the license application and may result in denial of the license. The investigative fee shall be based on actual costs. If any portion of the investigative fee remains after the investigation is concluded, the remaining portion shall be returned to the applicant or licensee.(5)
Except as noted in subsection (4) of this section, all fees are non-refundable, regardless of whether the application is approved, denied, withdrawn, or if the license is surrendered or revoked.Section 4.
Applications.(1)
Application procedures shall be as follows:(a)
An application shall be deemed filed when the commission has received the completed application forms, including the information that the commission has required.(b)
Applicants shall submit the application online at https://khrc.ky.gov/ or in hard copy to the commission's office in Lexington, Kentucky.(c)
An applicant shall be under a continuing duty to disclose any changes in the information submitted to the commission.(d)
Any change in information required for licensing shall be submitted in writing and filed at the commission's office in Lexington, Kentucky, within thirty (30) days of the change, unless it is information listed in (e) of this section.(e)
Alternatively, any change in information may be reported online via a method approved by the commission,(f)
The applicant shall report changes in information in writing within five (5) days of the occurrence for these items:1.
Criminal charges;2.
Criminal convictions;3.
License denials and license suspensions of ten (10) days or more;4.
License revocations or fines of $500 or more in other jurisdictions;5.
Racing related disciplinary charges pending in other jurisdictions; and6.
Withdrawal, with or without prejudice, of a license application by the licensee in any jurisdiction.(2)
An applicant for a race(3)
The application forms shall be accompanied and supplemented by such documents and information as may be specified or required by the commission. Failure to supply the information requested within five (5) days after the request has been made by the commission shall constitute grounds for delaying consideration of the application.(4)
Renewal applications for licenses may be submitted and may be renewed upon the filing and approval of an application for renewal. Renewal applications for occupational licenses shall be received by the commission sixty (60) days before the expiration of the current license. Renewal applicants who fail to submit their completed applications when due shall not be considered to have made a timely and sufficient application for renewal.Section 5.
Temporary Licenses.(1)
The commission may issue a temporary license in accordance with KRS 230.805.(2)
The commission may issue the applicant a temporary license if the application and a criminal history check completed by the commission reveals that the applicant:(a)
has not been charged or convicted of a felony under state or federal law;(b)
has not been charged or convicted of a misdemeanor related to gaming; and(c)
otherwise meets the statutory criteria set forth in KRS Chapter 230.(3)
A temporary license issued under this section shall include, at a minimum, the following:(a)
The applicant's name and business address;(b)
A temporary license number assigned by the commission;(c)
Signature of the executive director, the commission chair, or their designee;(d)
The date the temporary license was issued;(e)
The date the temporary license will expire; and(f)
A reference to any conditions placed on the temporary license.(4)
If the commission grants an annual license to a temporary license holder, the temporary license shall automatically expire upon the start date of the annual license.(5)
A temporary license shall not be transferred without prior approval by the commission.(6)
Failure to advise the commission that the applicant has failed to begin or has ceased providing a licensee with goods and services shall be grounds for the commission to withdraw the temporary license and deny licensure in the future.Section 6.
Categories of Occupational Licenses.(1)
Race and sportsbook employee licenses(a)
Race and sportsbook employee license holders shall include the following categories of people, except as otherwise provided in this section:1.
Individuals who work directly in a licensed facility for sports wagering regarding the sports wagering aspect of the facility, including:a.
Sports wagering customer service representatives;b.
Sports wagering ticket writers;c.
Sports wagering supervisors;d.
Sports wagering security personnel; ande.
Sports wagering facility management;2.
Individuals directly supervising other employees in any licensed Kentucky sports wagering business who have the capability of affecting the outcome of sports wagering;3.
Employees in any licensed Kentucky sports wagering business who have the capability to affect the outcome of sports wagering through the deployment of code to production for any critical component of a sports wagering system; and4.
Employees whose duties are performed in the licensed facility for sports wagering that involve money obtained as a result of sports wagering, including the handling of tickets, money, or performing accounting and auditing functions.(b)
The following people shall hold a race and sportsbook employee license, even if they do not work directly in a licensed facility for sports wagering regarding the sports wagering aspect of the facility:1.
Audit manager;2.
Chief of security;3.
Chief of surveillance;4.
Chief financial officer or controller;5.
General manager;6.
Support operations manager;7.
Change management employees; and8.
Compliance employee supervisors;9.
Information technology professionals responsible for maintaining the technology infrastructure of the sports wagering system; and10.
Any other employee of an operator or service provider whose duties:a.
Are performed in the licensed facility for sports wagering and whose duties affect sports wagering;b.
Affect the flow of money obtained as a direct result of sports wagering operations; orc.
Include accounting and auditing functions and whose duties relate to money obtained as a result of sports wagering;(2)
Information services provider licenses. All business entities that provide information services to sports wagering licensees in Kentucky shall obtain an information services license, such as:(a)
Sports Wagering Oddsmakers or Traders;(b)
Sports Wagering Data Source;(c)
Sports Wagering Risk Management;(d)
Sports Wagering Player Account Management; and(e)
Sports Wagering Platform Providers, including geolocation technology, Know Your Customer, or Sports Wagering Equipment Manufacturer.(3)
Key employee licenses.(a)
Each person applying for a license under this administrative regulation that is not an individual shall designate an individual with decision-making authority for its day-to-day operations to apply for a key employee license.(b)
Additionally, a licensed sports wagering business operating in Kentucky shall designate a supervisor for the following areas to apply for a key employee license:1.
Compliance;2.
Trading;3.
Customer Service;4.
Finance and Audit;5.
Risk and Payments; and6.
Information Technology.Section 7.
Waiver for Race and Sports Book Employee License or Key Employee License.(1)
At any time, an applicant may(2)
The written request for waiver shall include at least the following information:(a)
The name and contact information of the waiver applicant;(b)
All gaming licenses issued to the waiver applicant;(c)
All horse racing licenses issued to the waiver applicant; and(d)
The waiver applicant's current position and job description.(3)
Upon receipt of a waiver request, the commission may grant or deny a waiver, upon consideration of at least the following factors:(a)
The nature of the employee's duties; and(b)
The best interests and integrity of horse racing, pari-mutuel wagering, and sports wagering.Section 8.
Background Checks. After an applicant files a license application, the commission may:(1)
Investigate the criminal background, employment history, and gaming history record of the applicant;(2)
Verify information provided by the applicant; or(3)
Engage in research and interviews to determine the applicant's character and qualifications.Section 9.
License Denial, Revocation, or Suspension.(1)
The commission or its designee shall deny, suspend, or revoke a license, or otherwise penalize in accordance with KRS 230.310, 230.260, or 230.814 a sports wagering licensee, for any of the following reasons:(a)
Lack of suitability as set forth in KRS Chapter 230;(b)
Adverse effect on public interest, failure to uphold the integrity of the regulatory activities, or engagement in conduct that is otherwise against the best interest of sports wagering, pari-mutuel wagering, or horse racing;(c)
Any criminal conviction, pending charges, or violation of regulatory laws;(d)
Previous license denial, suspension, or revocation by any authority of any state or federal jurisdiction;(e)
Material misrepresentation, falsification, or omission of information in a license application;(f)
Violation or attempt to manipulate outcomes of regulated activities, such as sports wagering, pari-mutuel wager, or horse racing, in any jurisdiction;(g)
Financial irresponsibility or engagement in actions against the best interest of the regulated activities;(h)
Failure to comply with rulings, orders, or requirements of the commission, such as failure to cooperate with a commission investigation;(i)
Misconduct or disorderly behavior on regulated grounds; or(j)
Possession of prohibited substances or devices, or employment of unlicensed personnel.(2)
A license suspension, revocation, or denial shall be reported in writing to the applicant by the commission or its designee.(3)
Licensees or applicants may appeal the suspension, revocation or denial accordance with KRS Chapters 13B and 230.Section 10.
Reciprocity. If a person's license has been denied, suspended, or revoked in another jurisdiction, the commission may require reinstatement of the license in that jurisdiction before a license is granted by the commission.Section 11.
Changes in Application Information.(1)
Any changes in the information provided by the licensee or applicant required for obtaining or maintaining a license shall be promptly reported to the commission in writing.(2)
Changes in information that are not detailed in subsection (2) shall be reported to the commission within thirty (30) days of the change occurring.(3)
The licensee or applicant shall report the following changes in information to the commission in writing within five (5) days:(a)
The licensee or applicant is charged with criminal activity related to sports wagering;(b)
The licensee or applicant is convicted of a crime related to sports wagering;(c)
The licensee or applicant's sports wagering license is denied or suspended for ten (10) days or more in any jurisdiction; and(d)
The licensee or applicant's sports wagering license is revoked or they are fined $500 or more in other jurisdictions;Section 12.
License Identification and Display.(1)
For each issued license, the commission shall provide an identification badge to individuals or a certificate of licensure to entities.(2)
All individuals working in a licensed facility for sports wagering shall wear an identification badge.(3)
Operators or service providers shall disable the work badge of any person whose license has been revoked or suspended.(4)
Each identification badge or license shall contain essential details, including, but not limited to, the licensee's name, license number, date of issuance, and expiration date.(5)
Individual licensees shall be required to wear their identification badges visibly at all times during their working hours in any licensed facility for sports wagering.(6)
In cases where a licensee fails to display their badge or license as required, the commission may impose penalties, which may include fines, suspension, or revocation of the license.(7)
Loss, theft, or damage of an identification badge or license shall be reported to the commission immediately. The commission shall provide a process for obtaining replacement badges or licenses under these circumstances.(8)
Any attempt to falsify, alter, or misuse an identification badge or License shall be considered a severe violation and may result in immediate revocation of the license and potential legal action.Section 13.
Incorporation by Reference.(1)
The following material is incorporated by reference:(a)
"Information Services License Application Form", KHRC 01-003-01, 06/2023;(b)
"Multi-Jurisdictional Key Employee License Form", KHRC 01-003-02, 11/2023(c)
"Race and Sportsbook Employee Application Form", KHRC 01-003-03, 11/2023(d)
"Race & Sportsbook and Key Employee License Waiver Form", KHRC 01-003-04, 06/2023.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Horse Racing Commission, 4063 Iron Works Parkway, Building B, Lexington, Kentucky 40511, Monday through Friday, 8 a.m. to 4:30 p.m. This material may also be obtained at the commission's Web site at http://khrc.ky.gov.JENNIFER WOLSING, General Counsel
For JONATHAN RABINOWITZ, Chair
RAY PERRY, Secretary
APPROVED BY AGENCY: November 15, 2023
FILED WITH LRC: November 15, 2023 at 11:15 a.m.
CONTACT PERSON: Jennifer Wolsing, General Counsel, Kentucky Horse Racing Commission, 4063 Iron Works Parkway, Building B, Lexington, Kentucky 40511, phone (859) 246-2040, fax (859) 246-2039, email jennifer.wolsing@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Jennifer Wolsing
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This regulation establishes the procedures and requirements for applying for occupational licenses related to sports wagering in the Commonwealth of Kentucky.
(b) The necessity of this administrative regulation:
This regulation is necessary to establish clear requirements and guidelines concerning the process by which applications for occupational licenses related to sports wagering in Kentucky are reviewed and approved.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
KRS 230.260(16) requires the commission to promulgate administrative regulations to establish standards for the conduct of sports wagering. KRS 230.310(2) requires the commission to license applicants for occupations related to sports wagering. This regulation sets forth the procedures and requirements for applying for an occupational license.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation enables the commission to issue occupational licenses to conduct sports wagering pursuant to KRS 230.310(2) in a consistent and systematic way.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
N/A. This is a new regulation.
(b) The necessity of the amendment to this administrative regulation:
N/A. This is a new regulation.
(c) How the amendment conforms to the content of the authorizing statutes:
N/A. This is a new regulation.
(d) How the amendment will assist in the effective administration of the statutes:
N/A. This is a new regulation.
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
This regulation directly affects individuals who will apply to be licensed to engage in certain occupations to conduct sports wagering in the Commonwealth. Since this is a new regulation creating new types of licenses, it is unknown how many individuals will be impacted by this regulation. This regulation may also affect licensed racing associations that offer sports wagering and choose to hire occupational licensees. There are currently nine (9) licensed tracks operating in the Commonwealth.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
Individuals applying for a license to conduct sports wagering under this regulation will be required to file initial and renewal applications and corresponding fees to obtain and maintain a license to conduct sports wagering in the Commonwealth.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
Applicants for a new race and sportsbook employee license are assessed a fee of $150. Applicants for an information services provider license are assessed a fee of $5,000. Applicants for a key employee license are assessed a $1,500 fee. The same fees apply to renew these licenses.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
As a result of compliance with the occupational license application requirements, licensees will be allowed to work in certain occupations in the sports wagering industry.
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
It is estimated that the commission will spend approximately $2.4 million to implement sports wagering in Kentucky in the first year.
(b) On a continuing basis:
It is further estimated that the commission will spend approximately $1.2 million annually to continue regulating sports wagering in Kentucky on a yearly basis.
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
No additional funding is required for the implementation and enforcement of the sports wagering occupational licensure regulation. The funding to implement and enforce sports wagering in Kentucky will come from the sports wagering administrative fund, as established in KRS 230.817.
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
The establishment of fees will be necessary to implement this regulation, because the regulation establishes fees for initial and renewal applicants for sports wagering occupational licenses.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
This regulation establishes fees for initial and renewal applicants for sports wagering occupational licenses.
(9) TIERING: Is tiering applied?
Tiering was not applied because this regulation will apply to all similarly-situated entities in an equal manner.
FISCAL NOTE
(1) What units, parts, or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation?
The Kentucky Horse Racing Commission and individuals applying for sports wagering occupational licenses will be impacted by this administrative regulation.
(2) Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 230.260(9) and KRS 230.310(2).
(3) Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.
(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year?
It is unknown how much revenue this occupational licensure regulation will generate for state government during the first year, as it is unknown how many people will apply for occupational licenses.
(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years?
It is unknown how much revenue this occupational licensure regulation will generate for state government during subsequent years, as it is unknown how many people will apply for occupational licenses.
(c) How much will it cost to administer this program for the first year?
It is estimated that the commission will spend approximately $2.4 million in the first year to implement sports wagering in Kentucky.
(d) How much will it cost to administer this program for subsequent years?
It is further estimated that the commission will spend approximately $1.2 million annually to continue regulating sports wagering in Kentucky in subsequent years.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Revenues (+/-):
Any revenue will be dependent on the number of initial license applicants and renewal applicants, which is unknown at this time.
Expenditures (+/-):
Any expenditures will be dependent on the number of initial license applicants and renewal applicants, which is unknown at this time. It is estimated that expenditures will increase by $2.4 million during the first year and $1.2 million during subsequent years.
Other Explanation:
N/A
(4) Estimate the effect of this administrative regulation on the expenditures and cost savings of regulated entities for the first full year the administrative regulation is to be in effect.
(a) How much cost savings will this administrative regulation generate for the regulated entities for the first year?
This administrative regulation is not expected to generate cost savings for the regulated entities during the first year.
(b) How much cost savings will this administrative regulation generate for the regulated entities for subsequent years?
This administrative regulation is not expected to generate cost savings for the regulated entities during subsequent year.
(c) How much will it cost the regulated entities for the first year?
Applicants for a new race and sportsbook employee license are assessed a fee of $150. Applicants for an information services provider license are assessed a fee of $5,000. Applicants for a key employee license are assessed a $1,500 fee.
(d) How much will it cost the regulated entities for subsequent years?
The cost of renewing these licenses is the same cost as the initial application fee.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Cost Savings (+/-):
$0
Expenditures (+/-):
Please see answers to (c) and (d) above.
Other Explanation:
N/A
(5) Explain whether this administrative regulation will have a major economic impact, as defined below.
"Major economic impact" means an overall negative or adverse economic impact from an administrative regulation of five hundred thousand dollars ($500,000) or more on state or local government or regulated entities, in aggregate, as determined by the promulgating administrative bodies. [KRS 13A.010(13)]. It is unknown whether this regulation will have a major economic impact. It is estimated that applicants seeking a race and sportsbook employee license will pay an initial fee of $150 and another $150 each year they seek to renew their license. Applicants seeing seeking licensure as an information services provider will pay an initial fee of $5,000 and a renewal fee of $5,000 each year they seek renewal. It is estimated that applicants seeking licensure as a key employee will pay an application fee of $1,500 for an initial license and a renewal fee of $1,500 each year they seek to renew the license. It is unknown how many people will apply for occupational licenses in the Commonwealth.
PUBLIC PROTECTION CABINET
Kentucky Horse Racing Commission
(Amended After Comments)
809 KAR 1:003.Occupational licenses.
Section 1.
Definitions.(1)
"Annual license" means the occupational license issued by the commission after a thorough review of an application, valid for the calendar year for which it is applied.(2)
"Applicant" means a person that applies for an occupational license.(3)
"Background check" means a review of an applicant's criminal, financial, and personal history conducted by the commission.(4)
"Critical component" means any sub-system for which failure or compromise can lead to loss of player entitlements, government revenue or unauthorized access to data used for generating reports for the regulatory body.(5)
"Fees" mean the administrative charges levied by the commission for the processing, issuance, and renewal of occupational licenses.(6)
"Licensee" means any individual or entity that has been granted an occupational license by the commission.(7)
"Occupational license" means the categories of licenses established by the commission for participants in sports wagering pursuant to KRS 230.210.(8)
"Race and sportsbook employee license" means a category of occupational license, which is required for all individuals listed in Section 6 of this administrative regulation.(9)
"Temporary license" means a provisional license granted by the commission during the process of evaluating an application for a permanent license.Section 2.
General Requirements for Applications.(1)
Eligibility: Any individual or entity desiring to participate professionally in sports wagering activities in the Commonwealth shall apply to the commission for an occupational license as categorized in Section 4 of this administrative regulation. This type of license shall be required for certain persons working in a licensed facility for sports wagering, supervisors of individuals who can influence the outcome of sports wagering, specific individuals who have the capability to affect the outcome of sports wagering through the deployment of code and other persons required under this KAR Title 809.(2)
Submission timeframe: Applications for licenses shall be submitted annually. Licenses granted shall remain active only for the calendar year for which they have been applied.(3)
Legal compliance: All applicants shall demonstrate compliance with all laws and regulations regulating sports wagering in Kentucky and any other regulatory, state, federal, or taxing authority.(4)
Lack of material misrepresentation: All information provided on the application form shall be accurate and complete. Material misrepresentation on the application may result in immediate suspension, revocation, denial of the license, or imposition of fines by the commission.(5)
Minimum age: The minimum age requirement for an occupational license in sports wagering shall be eighteen (18) years.(6)
Transparency in entities: If an entity consisting of multiple individuals applies for a license, the entity shall fully disclose the identities and the type of ownership held by all controlling individuals. This information shall include the degree and type of ownership held by each individual in the entity.(7)
Categories of licenses: Different roles within the sports wagering industry may require distinct categories of licenses as set forth in Section 5 of this administrative regulation.Section 3.
Application Fees.(1)
All required application fees described under this section shall be submitted to the commission in the form of a certified check, ACH payment, or cashier's check made payable to the commission, or other form as prescribed by the commission.(2)
The following fees shall accompany applications for the following categories of occupational license:(a)
Race and Sportsbook Employee License: $150;(b)
Information Services Provider: $5,000; and(c)
Key Employee: $1,500.(3)
All occupational licenses shall be renewed annually. The renewal fee for each category shall be the same as the initial licensing fee.(4)
If additional costs become necessary to investigate an applicant for a license, the commission may assess an additional investigation fee at its discretion. Failure to submit an additional requested payment shall result in suspension of the processing of the license application and may result in denial of the license. The investigative fee shall be based on actual costs. If any portion of the investigative fee remains after the investigation is concluded, the remaining portion shall be returned to the applicant or licensee.(5)
Except as noted in subsection (4) of this section, all fees are non-refundable, regardless of whether the application is approved, denied, withdrawn, or if the license is surrendered or revoked.Section 4.
Applications.(1)
Application procedures shall be as follows:(a)
An application shall be deemed filed when the commission has received the completed application forms, including the information that the commission has required.(b)
Applicants shall submit the application online at https://khrc.ky.gov/ or in hard copy to the commission's office in Lexington, Kentucky.(c)
An applicant shall be under a continuing duty to disclose any changes in the information submitted to the commission.(d)
Any change in information required for licensing shall be submitted in writing and filed at the commission's office in Lexington, Kentucky, within thirty (30) days of the change, unless it is information listed in (e) of this section.(e)
Alternatively, any change in information may be reported online via a method approved by the commission,(f)
The applicant shall report changes in information in writing within five (5) days of the occurrence for these items:1.
Criminal charges;2.
Criminal convictions;3.
License denials and license suspensions of ten (10) days or more;4.
License revocations or fines of $500 or more in other jurisdictions;5.
Racing related disciplinary charges pending in other jurisdictions; and6.
Withdrawal, with or without prejudice, of a license application by the licensee in any jurisdiction.(2)
An applicant for a race and sportsbook employee license or an information services provider license shall include with its application an agreement or statement of intent indicating that a licensed operator or service provider shall utilize the applicant for the provision of goods and services. For 2023, the agreement or statement of intent supporting the applicant's claims may come from a person applying for an operator or service provider license.(3)
The application forms shall be accompanied and supplemented by such documents and information as may be specified or required by the commission. Failure to supply the information requested within five (5) days after the request has been made by the commission shall constitute grounds for delaying consideration of the application.(4)
Renewal applications for licenses may be submitted and may be renewed upon the filing and approval of an application for renewal. Renewal applications for occupational licenses shall be received by the commission sixty (60) days before the expiration of the current license. Renewal applicants who fail to submit their completed applications when due shall not be considered to have made a timely and sufficient application for renewal.Section 5.
Temporary Licenses.(1)
The commission may issue a temporary license in accordance with KRS 230.805.(2)
The commission may issue the applicant a temporary license if the application and a criminal history check completed by the commission reveals that the applicant:(a)
has not been charged or convicted of a felony under state or federal law;(b)
has not been charged or convicted of a misdemeanor related to gaming; and(c)
otherwise meets the statutory criteria set forth in KRS Chapter 230.(3)
A temporary license issued under this section shall include, at a minimum, the following:(a)
The applicant's name and business address;(b)
A temporary license number assigned by the commission;(c)
Signature of the executive director, the commission chair, or their designee;(d)
The date the temporary license was issued;(e)
The date the temporary license will expire; and(f)
A reference to any conditions placed on the temporary license.(4)
If the commission grants an annual license to a temporary license holder, the temporary license shall automatically expire upon the start date of the annual license.(5)
A temporary license shall not be transferred without prior approval by the commission.(6)
Failure to advise the commission that the applicant has failed to begin or has ceased providing a licensee with goods and services shall be grounds for the commission to withdraw the temporary license and deny licensure in the future.Section 6.
Categories of Occupational Licenses.(1)
Race and sportsbook employee licenses(a)
Race and sportsbook employee license holders shall include the following categories of people, except as otherwise provided in this section:1.
Individuals who work directly in a licensed facility for sports wagering regarding the sports wagering aspect of the facility, including:a.
Sports wagering customer service representatives;b.
Sports wagering ticket writers;c.
Sports wagering supervisors;d.
Sports wagering security personnel; ande.
Sports wagering facility management;2.
Individuals directly supervising other employees in any licensed Kentucky sports wagering business who have the capability of affecting the outcome of sports wagering;3.
Employees in any licensed Kentucky sports wagering business who have the capability to affect the outcome of sports wagering through the deployment of code to production for any critical component of a sports wagering system; and4.
Employees whose duties are performed in the licensed facility for sports wagering that involve money obtained as a result of sports wagering, including the handling of tickets, money, or performing accounting and auditing functions.(b)
The following people shall hold a race and sportsbook employee license, even if they do not work directly in a licensed facility for sports wagering regarding the sports wagering aspect of the facility:1.
Audit manager;2.
Chief of security;3.
Chief of surveillance;4.
Chief financial officer or controller;5.
General manager;6.
Support operations manager;7.
Change management employees; and8.
Compliance employee supervisors;9.
Information technology professionals responsible for maintaining the technology infrastructure of the sports wagering system; and10.
Any other employee of an operator or service provider whose duties:a.
Are performed in the licensed facility for sports wagering and whose duties affect sports wagering;b.
Affect the flow of money obtained as a direct result of sports wagering operations; orc.
Include accounting and auditing functions and whose duties relate to money obtained as a result of sports wagering;(2)
Information services provider licenses. All business entities that provide information services to sports wagering licensees in Kentucky shall obtain an information services license, such as:(a)
Sports Wagering Oddsmakers or Traders;(b)
Sports Wagering Data Source;(c)
Sports Wagering Risk Management;(d)
Sports Wagering Player Account Management; and(e)
Sports Wagering Platform Providers, including geolocation technology, Know Your Customer, or Sports Wagering Equipment Manufacturer.(3)
Key employee licenses.(a)
Each person applying for a license under this administrative regulation that is not an individual shall designate an individual with decision-making authority for its day-to-day operations to apply for a key employee license.(b)
Additionally, a licensed sports wagering business operating in Kentucky shall designate a supervisor for the following areas to apply for a key employee license:1.
Compliance;2.
Trading;3.
Customer Service;4.
Finance and Audit;5.
Risk and Payments; and6.
Information Technology.Section 7.
Waiver for Race and Sports Book Employee License or Key Employee License.(1)
At any time, an applicant may submit a written request for a waiver to be exempt from licensure to prevent dual licensing for one individual across multiple disciplines. This waiver shall be submitted to the commission's office in Lexington, Kentucky on form Race & Sportsbook and Key Employee License Waiver Form, KHRC 01-003-04 or online at http://khrc.ky.gov.(2)
The written request for waiver shall include at least the following information:(a)
The name and contact information of the waiver applicant;(b)
All gaming licenses issued to the waiver applicant;(c)
All horse racing licenses issued to the waiver applicant; and(d)
The waiver applicant's current position and job description.(3)
Upon receipt of a waiver request, the commission may grant or deny a waiver, upon consideration of at least the following factors:(a)
The nature of the employee's duties; and(b)
The best interests and integrity of horse racing, pari-mutuel wagering, and sports wagering.Section 8.
Background Checks. After an applicant files a license application, the commission may:(1)
Investigate the criminal background, employment history, and gaming history record of the applicant;(2)
Verify information provided by the applicant; or(3)
Engage in research and interviews to determine the applicant's character and qualifications.Section 9.
License Denial, Revocation, or Suspension.(1)
The commission or its designee shall deny, suspend, or revoke a license, or otherwise penalize in accordance with KRS 230.310, 230.260, or 230.814 a sports wagering licensee, for any of the following reasons:(a)
Lack of suitability as set forth in KRS Chapter 230;(b)
Adverse effect on public interest, failure to uphold the integrity of the regulatory activities, or engagement in conduct that is otherwise against the best interest of sports wagering, pari-mutuel wagering, or horse racing;(c)
Any criminal conviction, pending charges, or violation of regulatory laws;(d)
Previous license denial, suspension, or revocation by any authority of any state or federal jurisdiction;(e)
Material misrepresentation, falsification, or omission of information in a license application;(f)
Violation or attempt to manipulate outcomes of regulated activities, such as sports wagering, pari-mutuel wager, or horse racing, in any jurisdiction;(g)
Financial irresponsibility or engagement in actions against the best interest of the regulated activities;(h)
Failure to comply with rulings, orders, or requirements of the commission, such as failure to cooperate with a commission investigation;(i)
Misconduct or disorderly behavior on regulated grounds; or(j)
Possession of prohibited substances or devices, or employment of unlicensed personnel.(2)
A license suspension, revocation, or denial shall be reported in writing to the applicant by the commission or its designee.(3)
Licensees or applicants may appeal the suspension, revocation or denial accordance with KRS Chapters 13B and 230.Section 10.
Reciprocity. If a person's license has been denied, suspended, or revoked in another jurisdiction, the commission may require reinstatement of the license in that jurisdiction before a license is granted by the commission.Section 11.
Changes in Application Information.(1)
Any changes in the information provided by the licensee or applicant required for obtaining or maintaining a license shall be promptly reported to the commission in writing.(2)
Changes in information that are not detailed in subsection (2) shall be reported to the commission within thirty (30) days of the change occurring.(3)
The licensee or applicant shall report the following changes in information to the commission in writing within five (5) days:(a)
The licensee or applicant is charged with criminal activity related to sports wagering;(b)
The licensee or applicant is convicted of a crime related to sports wagering;(c)
The licensee or applicant's sports wagering license is denied or suspended for ten (10) days or more in any jurisdiction; and(d)
The licensee or applicant's sports wagering license is revoked or they are fined $500 or more in other jurisdictions;Section 12.
License Identification and Display.(1)
For each issued license, the commission shall provide an identification badge to individuals or a certificate of licensure to entities.(2)
All individuals working in a licensed facility for sports wagering shall wear an identification badge.(3)
Operators or service providers shall disable the work badge of any person whose license has been revoked or suspended.(4)
Each identification badge or license shall contain essential details, including, but not limited to, the licensee's name, license number, date of issuance, and expiration date.(5)
Individual licensees shall be required to wear their identification badges visibly at all times during their working hours in any licensed facility for sports wagering.(6)
In cases where a licensee fails to display their badge or license as required, the commission may impose penalties, which may include fines, suspension, or revocation of the license.(7)
Loss, theft, or damage of an identification badge or license shall be reported to the commission immediately. The commission shall provide a process for obtaining replacement badges or licenses under these circumstances.(8)
Any attempt to falsify, alter, or misuse an identification badge or License shall be considered a severe violation and may result in immediate revocation of the license and potential legal action.Section 13.
Incorporation by Reference.(1)
The following material is incorporated by reference:(a)
"Information Services License Application Form", KHRC 01-003-01, 06/2023;(b)
"Multi-Jurisdictional Key Employee License Form", KHRC 01-003-02, 11/2023;(c)
"Race and Sportsbook Employee Application Form", KHRC 01-003-03, 11/2023; and(d)
"Race & Sportsbook and Key Employee License Waiver Form", KHRC 01-003-04, 06/2023.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Horse Racing Commission, 4063 Iron Works Parkway, Building B, Lexington, Kentucky 40511, Monday through Friday, 8 a.m. to 4:30 p.m. This material may also be obtained at the commission's Web site at http://khrc.ky.gov.JENNIFER WOLSING, General Counsel
For JONATHAN RABINOWITZ, Chair
RAY PERRY, Secretary
APPROVED BY AGENCY: November 15, 2023
FILED WITH LRC: November 15, 2023 at 11:15 a.m.
CONTACT PERSON: Jennifer Wolsing, General Counsel, Kentucky Horse Racing Commission, 4063 Iron Works Parkway, Building B, Lexington, Kentucky 40511, phone (859) 246-2040, fax (859) 246-2039, email jennifer.wolsing@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Jennifer Wolsing
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This regulation establishes the procedures and requirements for applying for occupational licenses related to sports wagering in the Commonwealth of Kentucky.
(b) The necessity of this administrative regulation:
This regulation is necessary to establish clear requirements and guidelines concerning the process by which applications for occupational licenses related to sports wagering in Kentucky are reviewed and approved.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
KRS 230.260(16) requires the commission to promulgate administrative regulations to establish standards for the conduct of sports wagering. KRS 230.310(2) requires the commission to license applicants for occupations related to sports wagering. This regulation sets forth the procedures and requirements for applying for an occupational license.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation enables the commission to issue occupational licenses to conduct sports wagering pursuant to KRS 230.310(2) in a consistent and systematic way.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
N/A. This is a new regulation.
(b) The necessity of the amendment to this administrative regulation:
N/A. This is a new regulation.
(c) How the amendment conforms to the content of the authorizing statutes:
N/A. This is a new regulation.
(d) How the amendment will assist in the effective administration of the statutes:
N/A. This is a new regulation.
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
This regulation directly affects individuals who will apply to be licensed to engage in certain occupations to conduct sports wagering in the Commonwealth. Since this is a new regulation creating new types of licenses, it is unknown how many individuals will be impacted by this regulation. This regulation may also affect licensed racing associations that offer sports wagering and choose to hire occupational licensees. There are currently nine (9) licensed tracks operating in the Commonwealth.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
Individuals applying for a license to conduct sports wagering under this regulation will be required to file initial and renewal applications and corresponding fees to obtain and maintain a license to conduct sports wagering in the Commonwealth.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
Applicants for a new race and sportsbook employee license are assessed a fee of $150. Applicants for an information services provider license are assessed a fee of $5,000. Applicants for a key employee license are assessed a $1,500 fee. The same fees apply to renew these licenses.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
As a result of compliance with the occupational license application requirements, licensees will be allowed to work in certain occupations in the sports wagering industry.
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
It is estimated that the commission will spend approximately $2.4 million to implement sports wagering in Kentucky in the first year.
(b) On a continuing basis:
It is further estimated that the commission will spend approximately $1.2 million annually to continue regulating sports wagering in Kentucky on a yearly basis.
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
No additional funding is required for the implementation and enforcement of the sports wagering occupational licensure regulation. The funding to implement and enforce sports wagering in Kentucky will come from the sports wagering administrative fund, as established in KRS 230.817.
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
The establishment of fees will be necessary to implement this regulation, because the regulation establishes fees for initial and renewal applicants for sports wagering occupational licenses.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
This regulation establishes fees for initial and renewal applicants for sports wagering occupational licenses.
(9) TIERING: Is tiering applied?
Tiering was not applied because this regulation will apply to all similarly-situated entities in an equal manner.
FISCAL NOTE
(1) What units, parts, or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation?
The Kentucky Horse Racing Commission and individuals applying for sports wagering occupational licenses will be impacted by this administrative regulation.
(2) Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 230.260(9) and KRS 230.310(2).
(3) Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.
(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year?
It is unknown how much revenue this occupational licensure regulation will generate for state government during the first year, as it is unknown how many people will apply for occupational licenses.
(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years?
It is unknown how much revenue this occupational licensure regulation will generate for state government during subsequent years, as it is unknown how many people will apply for occupational licenses.
(c) How much will it cost to administer this program for the first year?
It is estimated that the commission will spend approximately $2.4 million in the first year to implement sports wagering in Kentucky.
(d) How much will it cost to administer this program for subsequent years?
It is further estimated that the commission will spend approximately $1.2 million annually to continue regulating sports wagering in Kentucky in subsequent years.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Revenues (+/-):
Any revenue will be dependent on the number of initial license applicants and renewal applicants, which is unknown at this time.
Expenditures (+/-):
Any expenditures will be dependent on the number of initial license applicants and renewal applicants, which is unknown at this time. It is estimated that expenditures will increase by $2.4 million during the first year and $1.2 million during subsequent years.
Other Explanation:
N/A
(4) Estimate the effect of this administrative regulation on the expenditures and cost savings of regulated entities for the first full year the administrative regulation is to be in effect.
(a) How much cost savings will this administrative regulation generate for the regulated entities for the first year?
This administrative regulation is not expected to generate cost savings for the regulated entities during the first year.
(b) How much cost savings will this administrative regulation generate for the regulated entities for subsequent years?
This administrative regulation is not expected to generate cost savings for the regulated entities during subsequent year.
(c) How much will it cost the regulated entities for the first year?
Applicants for a new race and sportsbook employee license are assessed a fee of $150. Applicants for an information services provider license are assessed a fee of $5,000. Applicants for a key employee license are assessed a $1,500 fee.
(d) How much will it cost the regulated entities for subsequent years?
The cost of renewing these licenses is the same cost as the initial application fee.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Cost Savings (+/-):
$0
Expenditures (+/-):
Please see answers to (c) and (d) above.
Other Explanation:
N/A
(5) Explain whether this administrative regulation will have a major economic impact, as defined below.
"Major economic impact" means an overall negative or adverse economic impact from an administrative regulation of five hundred thousand dollars ($500,000) or more on state or local government or regulated entities, in aggregate, as determined by the promulgating administrative bodies. [KRS 13A.010(13)]. It is unknown whether this regulation will have a major economic impact. It is estimated that applicants seeking a race and sportsbook employee license will pay an initial fee of $150 and another $150 each year they seek to renew their license. Applicants seeing seeking licensure as an information services provider will pay an initial fee of $5,000 and a renewal fee of $5,000 each year they seek renewal. It is estimated that applicants seeking licensure as a key employee will pay an application fee of $1,500 for an initial license and a renewal fee of $1,500 each year they seek to renew the license. It is unknown how many people will apply for occupational licenses in the Commonwealth.