SGC-29-15-00013-P Process For and Form of Gaming Facility License Application

7/22/15 N.Y. St. Reg. SGC-29-15-00013-P

NEW YORK STATE REGISTER

VOLUME XXXVII, ISSUE 29

July 22, 2015

RULE MAKING ACTIVITIES

NEW YORK STATE GAMING COMMISSION

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. SGC-29-15-00013-P

Process For and Form of Gaming Facility License Application

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

Proposed Action:

Addition of Part 5301 to Title 9 NYCRR.

Statutory authority:

Racing, Pari-Mutuel Wagering and Breeding Law, sections 104(19), 1305(2), 1306(1), 1307(2), 1311(1), 1312(2), 1313(1), 1315(3), 1316(8), 1317(1) and 1318(1)

Subject:

Process for and form of gaming facility license application.

Purpose:

To govern the gaming facility license application, the process for determining suitability and award of a license.

Substance of proposed rule (Full text is posted at the following State website:www.gaming.ny.gov/):

This addition of Part 5301 of Subtitle T of Title 9 NYCRR will add new Sections 5301.1 through 5301.10 to allow the New York State Gaming Commission (“Commission”) to prescribe the form of the application for applicants seeking a gaming facility license, the process for determining the suitability of a gaming facility license applicant and the procedure for awarding a gaming facility license.

Sections 5301.1 and 5301.2 set forth the form of gaming facility applications and the information required of applicants, consistent with the substance of Part 5300 of Subchapter B of Chapter IV of the Commission’s regulations, which was promulgated as emergency rule making. Section 5301.3 sets forth regulations on the submission of the application fee required by Section 1316(8) of the Racing Law. Section 5301.4 sets forth a Commission waiver process, by which the Commission has the discretion to waive licensing requirement for certain persons or entities, decreasing the burden on regulated parties when warranted. Examples include qualified institutional investors and passive investors, persons holding less than five percent of the voting securities of a company, a lender in the ordinary course with no ability to control or influence the affairs of the gaming facility applicant or licensee, and others. Section 5301.5 guides applicants on the requirements of suitability determinations by referring to applicable statutory provisions. Section 5301.6 sets forth procedures for the Commission’s consideration of licensing determination, referring to applicable statutory provisions where appropriate. Section 5301.7 sets forth the form and content of the gaming facility license and related requirements. Section 5301.8 establishes that the license award is deemed to have occurred upon a public determination by the Commission to issue a license to an applicant, shall be for an initial 10-year period and shall be renewable thereafter for a period of 10 years. Section 5301.9 sets forth certain post-licensure conditions, referencing other regulations and statutory provisions where appropriate. Section 5301.10 sets forth requirements that an applicant or licensee notify the Commission of material changes to commitments and development plans, material debt transactions and changes in investors, financial sources and others, and establishes Commission approval processes. The section also sets forth regulations for Commission monitoring of project construction to help ensure that the benefits of commercial gaming are achieved in a timely manner.

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

Heather McArn, New York State Gaming Commission, One Broadway Center, 6th Floor, Schenectady, NY 12305, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. STATUTORY AUTHORITY: Racing, Pari-Mutuel Wagering and Breeding Law (“Racing Law”) section 104(19) grants authority to the Gaming Commission (“Commission”) to promulgate rules and regulations that it deems necessary to carry out its responsibilities. Racing Law section 1307(1) grants rule making authority to the Commission to implement, administer and enforce the provisions of Racing Law Article 13.

Racing Law section 1306(1) and section 1312(1) prescribe that the Gaming Facility Location Board (“Board”), which is established by the Commission, shall issue a request for applications (“RFA”) for applicants seeking a license to develop and operate gaming facilities in New York State. On March 31, 2014, the Board issued a RFA. On February 27, 2015, the Board issued a second RFA. The gaming facility applications were governed by Part 5300 of Subchapter B of Chapter IV of the Commission’s regulations. Part 5300 was promulgated as emergency rule making.

Racing Law section 1307(2) prescribes that the Commission regulate, among other things, the method and forms of the application for gaming licenses; the methods, procedures and form for delivery of information concerning any person’s family, habits, character, associates, criminal record, business activities, and financial affairs; the procedures for the fingerprinting of an applicant; the manner and method of the collection of payments of fees; and the grounds and procedures for the revocation or suspension of a gaming facility license.

Racing Law section 1313(1) provides that the Commission prescribe the initial form of the application for gaming licenses.

Racing Law section 1316(8) authorizes the Commission to collect an application fee.

Upon receipt of an application, Racing Law section 1317(1) authorizes the Commission to cause to be commenced an investigation into the applicant’s suitability.

Racing Law section 1316 mandates the Commission review the application to confirm it meets certain minimum license thresholds. Racing Law section 1318(1) requires the Commission deny a gaming facility license to any applicant it determines disqualified.

Racing Law section 1311(1) authorizes the Commission to award up to four gaming licenses and requires licensees to commence gaming operations no more than 24 months following license award.

Racing Law section 1315 requires applicants who are awarded a gaming facility license to deposit 10 percent of the total proposed investment and to pay a gaming facility license fee. Racing Law section 1315(3) authorizes the Commission to assess a fine of up to $50 million on a gaming facility licensee who does not commence gaming operations within 24 months of a license award.

Racing Law section 1311(1) prescribes that the Commission determine the renewal term of a gaming facility license.

2. LEGISLATIVE OBJECTIVES: This rule making carries out the legislative objectives and implements the requirements of the above-referenced statutes.

3. NEEDS AND BENEFITS: This rule making is necessary to establish gaming facility licensing requirements to govern the commercial casino licensing process, thereby enabling the Commission to implement Article 13 of the Racing Law and help New York State to capitalize on the economic development potential of legalized gambling, create thousands of well-paying jobs and increase revenue to the State. In addition this rule making is necessary to promote public confidence and trust in the credibility and integrity of casino gambling in New York State.

Sections 5301.1 and 5301.2 set forth the form of gaming facility applications and the information required of applicants, consistent with the substance of Part 5300 of Subchapter B of Chapter IV of the Commission’s regulations, which was promulgated as emergency rule making.

Section 5301.3 sets forth regulations on the submission of the application fee required by Section 1316(8) of the Racing Law.

Section 5301.4 sets forth a Commission waiver process, by which the Commission has the discretion to waive licensing requirements for certain persons or entities, decreasing the burden on regulated parties when warranted. Examples include qualified institutional investors and passive investors, persons holding less than five percent of the voting securities of a company, a lender in the ordinary course with no ability to control or influence the affairs of the gaming facility applicant or licensee, and others.

Section 5301.5 guides applicants on the requirements of suitability determinations by referring to applicable statutory provisions.

Section 5301.6 sets forth procedures for the Commission’s consideration of licensing determination, referring to applicable statutory provisions where appropriate.

Section 5301.7 sets forth the form and content of the gaming facility license and related requirements.

Section 5301.8 establishes that the license award is deemed to have occurred upon a public determination by the Commission to issue a license to an applicant, shall be for an initial 10-year period and shall be renewable thereafter for a period of 10 years.

Section 5301.9 sets forth certain post-licensure conditions, referencing other regulations and statutory provisions where appropriate.

Section 5301.10 sets forth requirements that an applicant or licensee notify the Commission of material changes to commitments and development plans, material debt transactions and changes in investors, financial sources and others, and establishes Commission approval processes. The section also sets forth regulations for Commission monitoring of project construction to help ensure that the benefits of commercial gaming are achieved in a timely manner.

4. COSTS:

(a) Costs to the regulated parties for the implementation of and continuing compliance with these rules: Those parties who apply for a gaming facility license will bear some costs. There is an application fee of $1 million prescribed by Racing Law section 1316(8) to defray the costs of processing the application and investigating the applicant. In addition, those parties who are awarded a gaming facility license will be required, pursuant to Racing Law sections 1315(1) and (4), to deposit 10 percent of the total proposed investment and to pay a gaming facility license fee. In addition, those parties awarded a gaming facility license who do not begin gaming operations within 24 months of the award may be assessed a fine of up to $50 million, as prescribed by Racing Law section 1315(3).

(b) Costs to the regulating agency, the State, and local governments for the implementation of and continued administration of the rule: These rules will impose some costs on the division of state police and the Commission for reviewing gaming facility applications, investigating applicants and issuing licenses, however it is anticipated that a gaming facility applicant’s payment of the $1 million application fee prescribed by Racing Law section 1316(8) will offset such costs. These rules will not impose any additional costs on local governments.

(c) The information, including the source or sources of such information, and methodology upon which the cost analysis is based: The cost estimates are based on the Commission’s experience regulating racing and gaming activities within the State.

5. LOCAL GOVERNMENT MANDATES: These rules impose a responsibility on local governments to issue approvals and permits as may be required for the construction and commencement of gaming facility operations within 24 months of license award.

6. PAPERWORK: These rules are not expected to impose any significant paperwork requirements for gaming facility applicants and licensees other than the paperwork necessary for the application submission and the licensee reporting requirements.

7. DUPLICATION: These rules do not duplicate, overlap or conflict with any existing State or federal requirements.

8. ALTERNATIVES: The Commission is required to create these rules under Racing Law section 1307(2) and section 1311(1). Therefore, no alternatives were considered.

9. FEDERAL STANDARDS: There are no federal standards applicable to the licensing of gaming facilities in New York. It is purely a matter of New York State law.

10. COMPLIANCE SCHEDULE: The Commission anticipates that the affected parties will be able to achieve compliance with these rules upon adoption.

Regulatory Flexibility Analysis

1. EFFECT OF RULE: These rules will allow for the application, investigation, selection and licensure of gaming facility applicants. In addition these rules will require gaming facility licensees to construct their gaming facility within 24 months of license award. Host local governments will be affected by these rules. Small businesses will not be affected by these rules.

2. COMPLIANCE REQUIREMENTS: There are no new compliance requirements imposed on host local governments or small businesses as a result of these rules.

3. PROFESSIONAL SERVICES: No new or additional professional services are required in order to comply with these rules.

4. COMPLIANCE COSTS: Host local governments may experience an increase in costs associated with the issuance of approvals and permits which may be required for the construction and opening of the gaming facility.

5. ECONOMIC AND TECHNOLOGICAL FEASIBILITY: These rules will not impose any technological costs on small businesses or local governments.

6. MINIMIZING ADVERSE IMPACT: These rules require applicants to provide studies and reports by independent experts regarding the impacts of the proposed gaming facilities on local government services, small businesses, traffic, environment, tourism, and unemployment, among other things. These rules also require applicants to provide plans for mitigating these potential impacts.

7. SMALL BUSINESS AND LOCAL GOVERNMENT PARTICIPATION: Small businesses and host local governments will have the opportunity to participate in the rule making process during the public comment period which will commence when these rules are formally proposed.

Rural Area Flexibility Analysis

Several of the development zone regions authorized to host a licensed gaming facility, as contemplated by Racing, Pari-Mutuel Wagering and Breeding Law section 1310, are located within “rural areas” as that term is defined in Executive Law section 481(7). The decision to locate a licensed gaming facility in a rural area will not have an adverse economic impact. These rules have the potential to boost economic development within rural areas. Accordingly, a rural flexibility analysis is not required and one has not been prepared.

Job Impact Statement

1. NATURE OF IMPACT: The Commission has determined that these rules will not have a substantial adverse impact on jobs or employment opportunities. To the contrary, these rules are intended to create thousands of well-paying jobs.

2. CATEGORIES AND NUMBERS AFFECTED: It is anticipated that up to 4 gaming facilities, as contemplated by Racing, Pari-Mutuel Wagering and Breeding Law Article 13, would employ more than 4,000 people. In addition, the construction of the gaming facilities will generate many new jobs. It is anticipated that employment in surrounding communities will also increase in order to service the influx of gaming facility patrons.

3. REGIONS OF ADVERSE IMPACT: The Commission does not anticipate regions of the State to suffer a disproportionate adverse impact in regard to jobs or employment opportunities.

4. MINMIZING ADVERSE IMPACT: These rules do not create any unnecessary adverse impact on existing jobs. A positive impact on jobs and employment is anticipated.