RWB-52-10-00001-E Electronic Application Procedure to Open an Advanced Deposit Wagering Account

12/29/10 N.Y. St. Reg. RWB-52-10-00001-E

NEW YORK STATE REGISTER

VOLUME XXXII, ISSUE 52

December 29, 2010

RULE MAKING ACTIVITIES

RACING AND WAGERING BOARD

EMERGENCY RULE MAKING

 

I.D No. RWB-52-10-00001-E

Filing No. 1254

Filing Date. Dec. 08, 2010

Effective Date. Dec. 08, 2010

Electronic Application Procedure to Open an Advanced Deposit Wagering Account

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:

Action taken:

Amendment of section 5300.4(a)(4) and (5) of Title 9 NYCRR.

Statutory authority:

Racing, Pari-Mutuel Wagering and Breeding Law, sections 101, 227, 301, 305, 401, 405, 520 and 1002

Finding of necessity for emergency rule:

Preservation of general welfare.

Specific reasons underlying the finding of necessity:

This emergency rulemaking is necessary to preserve the general welfare. Article I Section 9 of the New York State Constitution states that pari-mutuel wagering is authorized so that "the state shall derive a reasonable revenue for the support of government." In October, 2009, financial analysts announced that New York State faces a deficit of nearly $50 billion over the next three and a half years. The State Comptroller has warned that the budget deficit for the 2010-2011 budget is almost $1 billion. As a result of this budget crisis, layoffs have been ordered and cutbacks in governmental services loom large. Similarly, local governments which benefit from pari-mutuel wagering activity conducted by OTBs are facing layoffs and curtailment of services as revenues decline. The New York City Off-Track Betting Corporation has voted to abruptly cease operations effective December 7, 2010. NYCOTB takes in $166 million a year in handle through its telephone ($144 million) and internet ($21 million) wagering accounts. This emergency rulemaking is necessary to ensure that former NYCOTB customers are able to safely and securely continue internet and telephone wagering with trustworthy New York State-based pari-mutuel wagering entities. This emergency rulemaking will facilitate the procedure to open new advanced deposit wagering accounts at other authorized pari-mutuel entities within the State of New York that offer internet and telephone wagering. Without this rulemaking, former NYCOTB customers may elect to open accounts with internet wagering entities that offer electronic registration but operate outside out-of-state and outside of the United States - entities that contribute no direct portion of their handle in support of government. By adopting this measure, the wagering public will be able to conveniently open ADW accounts with OTBs and pari-mutuel wagering entities in New York State. This emergency rulemaking is needed to preserve and provide valuable revenue for a state that faces multi-year deficits and local governments that are contemplating reduced services in light of dwindling revenues.

Subject:

Electronic application procedure to open an advanced deposit wagering account.

Purpose:

To provide guidelines and procedures for online applications for advanced deposit wagering accounts.

Text of emergency rule:

Paragraphs (4) and (5) of subdivision (a) of Section 5300.4 9 NYCRR are amended to read as follows:

(4) Application shall be signed attesting to its accuracy. In the case of an online application, the applicant shall provide an electronic signature to attest to the accuracy of the information provided. "Electronic signature" shall mean an electronic sound, symbol, or process, attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record.

(5) Except in the case of an online application, [T]the name of each new account holder will be confirmed in accordance with the Federal Government's standards for evaluating and confirming government issued identification and credentials (U.S. Department of [Justice]Homeland Security Employment Verification Form I9[, which can be obtained online at http://www.usdoj.gov/usao/nh/pdfreleases/Forms/i9.pdf].) A copy of each properly validated credential will be maintained with the appropriate account application. A copy of a social security card is not required to be maintained at the time of the application if the number is verified with a credit reporting agency and such report is maintained with the account application. In the case of an online application, the pari-mutuel wagering entity shall verify the applicant's identity using, at a minimum, the name, address, social security number and date of birth of the applicant through a credit reporting agency, public database, or similarly reliable sources as provided for in the plan of operation. If there is a discrepancy between the minimum information submitted and the information provided by the electronic verification described above or if no information on the applicant is available from such electronic verification, then the pari-mutuel wagering entity shall not open the account and shall require verification through the Federal Government's standards for evaluating and confirming government issued identification and credentials (U.S. Department of Homeland Security Employment Verification Form I9).

This notice is intended

to serve only as an emergency adoption, to be valid for 90 days or less. This rule expires March 7, 2011.

Text of rule and any required statements and analyses may be obtained from:

John Googas, New York State Racing & Wagering Board, One Broadway Center, Suite 600, Schenectady, New York 12305-2553, [phone], email: [e-mail]

Regulatory Impact Statement

1. Statutory authority: Racing, Pari-Mutuel Wagering and Breeding Law Sections 101, 227, 301, 305, 401, 405, 520, and 1002. Section 101 vests the Board with general jurisdiction over all horse racing and all pari-mutuel wagering activities in New York State. Section 227 grants the Board the authority to make rules regarding the conduct of pari-mutuel wagering activities associated with thoroughbred horse racing events. Section 301 grants the Board the authority to supervise generally all harness race meetings in New York State at which pari-mutuel betting is conducted and the authority to adopt rules accordingly. Section 305 grants the Board the authority to make rules regarding the conduct of pari-mutuel wagering activities associated with harness horse racing events. Section 401 grants the Board the authority to supervise generally all quarterhorse race meetings in New York State at which pari-mutuel betting is conducted and the authority to adopt rules accordingly. Section 405 grants the Board the authority to make rules regarding the conduct of pari-mutuel wagering activities associated with quarter horse racing events. Section 520 grants the Board general jurisdiction over the operation of off-track betting facilities within the state and the authority to adopt rules accordingly. Section 1002 grants the Board general jurisdiction over the simulcasting of horse races within the state and the authority to adopt rules accordingly.

2. Legislative objectives: This proposed amendment advances the legislative objective of regulating the conduct of pari-mutuel wagering activity in a manner designed to maintain the integrity of racing while generating a reasonable revenue for the support of government.

3. Needs and benefits. This rule is necessary to allow person to apply on-line to wager through advanced deposit wagering (ADW). Pari-mutuel operators, such as Nassau Downs OTB, Catskill OTB, and Yonkers Raceway will be able to process electronic application for telephone and internet accounts on the same day without having to appear in person to submit an application.

The Board adopted its Internet and Telephone Wagering Rules (Part 5300 of 9 NYCRR) in January 2009. This rulemaking will amend those rules to expressly authorize the online applications for opening an internet or telephone wagering account.

This rule is needed to compete with various internet wagering sites located off-shore and out-of-state. The Board has received concerns from pari-mutuel wagering entities in New York State that they may be losing customers to these competing internet wagering sites. This rulemaking is necessary for New York State OTBs and racetracks to remain competitive in the realm of internet and telephone wagering.

4. Costs:

(a) Costs to regulated parties for the implementation of and continuing compliance with the rule. None. This rule is permissive in nature and doesn't impose costs on pari-mutuel wagering entities with internet and telephone wagering systems.

(b) Costs to the agency, the state and local goverments for the implementation and continuation of the rule: None. Local governments would bear no costs because the regulation of pari-mutuel wagering is exclusively regulated by the New York State Racing and Wagering Board. This rule would not impose costs upon the New York State Racing and Wagering Board because the amendments would not alter the regulatory practices employed by the Board.

(c) The information related to costs was obtained by the New York State Racing and Wagering Board based upon analysis of current practices by authorized pari-mutuel wagering entities in the State of New York.

5. Paperwork: This rule will not require any additional paperwork. In fact, by authorizing the electronic submission of applications, pari-mutuel wagering companies should experience a decrease in paperwork compared to the current application submission requirements.

6. Local government mandates: Since the New York State Racing & Wagering Board is solely responsible for the regulations of pari-mutuel wagering activities in the State of New York, there is no program, service, duty or responsibility imposed by the rule upon any county, city, town, village, school district, fire district or other special district.

7. Duplication: There are no relevant rules or legal requirements of the state and federal governments that duplicate, overlap or conflict with the rule.

8. Alternative approaches: This Board considered various requirements for proof of identification. It considered a number of various sources that could be utilized to verify a person's identity electronically, and whether those sources should be expressly identified in the rule. Ultimately, the Board determined that the language in the current text is general enough to provide practical implementation of the rule, and specific enough to be enforceable.

9. Federal standards: There are no federal standards for pari-mutuel wagering. The New York State Racing and Wagering Board is solely responsible for regulating pari-mutuel wagering activity in New York State.

10. Compliance schedule: As an emergency rule, this rule will go into effect the day that it is submitted to the Department of State. As regular rule, this rule will go into effect permanently on the day that it is published in the State Register under a Notice of Adoption.

Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement

As is evident by the nature of this rulemaking, this proposal affects the procedures for same-day electronic enrollment for advanced deposit wagering and does not require a Regulatory Flexibility Statement, Rural Area Flexibility Statement or Job Impact Statement because it will not impose an adverse impact on rural areas, nor will it affect jobs. A Regulatory Flexibility Statement and a Rural Area Flexibility Statement are not required because the rule does not adversely affect small business, local governments, public entities, private entities, or jobs in rural areas. The rule will have a positive impact on local governments by facilitating the enrollment of former New York City Off-Track Betting customers with other OTBs that support local government through surcharges and dividend payments. There will be no impact for reporting, recordkeeping or other compliance requirements on public or private entities in rural areas. There will also be no adverse impact on small businesses and jobs in rural areas. A Jobs Impact Statement is not required because this rule amendment will not adversely impact jobs. This rulemaking may help preserve government service jobs. This rulemaking does not impact upon a small business pursuant to such definition in the State Administrative Procedure Act § 102(8) nor does it negatively affect employment. The proposal will not impose adverse economic impact on reporting, recordkeeping or other compliance requirements on small businesses in rural or urban areas nor on employment opportunities. The rule does not impose any technological changes on the industry either. This rulemaking merely explains the procedures for processing an application using technology adopted by the pari-mutuel wagering entities.