SGC-24-14-00001-E Implementation of Rules Pertaining to Sanctions for the Unlawful Acceptance of Public Assistance Benefits at Certain Facilities

9/10/14 N.Y. St. Reg. SGC-24-14-00001-E

NEW YORK STATE REGISTER

VOLUME XXXVI, ISSUE 36

September 10, 2014

RULE MAKING ACTIVITIES

NEW YORK STATE GAMING COMMISSION

EMERGENCY RULE MAKING

 

I.D No. SGC-24-14-00001-E

Filing No. 752

Filing Date. Aug. 25, 2014

Effective Date. Aug. 25, 2014

Implementation of Rules Pertaining to Sanctions for the Unlawful Acceptance of Public Assistance Benefits at Certain Facilities

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

Action taken:

Amendment of sections 4009.3, 4122.3, 4500.9, 5113.1, 5113.5, 5113.7 and 5113.8; and addition of sections 4404.18, 4822.25 and 5117.7 to Title 9 NYCRR.

Statutory authority:

Racing, Pari-Mutuel Wagering and Breeding Law, sections 104(1), (19), 235(1), 310 and 520(1); Executive Law, section 435(1)(a) and (d); Tax Law, sections 1604 and 1617-a(a); L. 2014, ch. 58, part F, section 3

Finding of necessity for emergency rule:

Preservation of general welfare.

Specific reasons underlying the finding of necessity:

The Commission has determined that immediate adoption of these rules is necessary for the preservation of the general welfare. Part F of Chapter 58 of the Laws of 2014 became effective on May 30, 2014 and restricts the acceptance of public assistance benefits in certain facilities, including horse racetracks, off-track horse betting facilities, video lottery facilities and commercial bingo establishments. Section 3 of Part F provides explicitly that “the New York state gaming commission shall be authorized to promulgate regulations on an emergency basis and immediately take such other actions as necessary to implement the provisions of this act.”

The immediate adoption of these rules is necessary to implement sanctions for violations of the law since the law became effective May 30, 2014.

Subject:

Implementation of rules pertaining to sanctions for the unlawful acceptance of public assistance benefits at certain facilities.

Purpose:

To implement the restrictions and prohibitions contained in part F of chapter 58 of the Laws of 2014.

Text of emergency rule:

Section 4009.3 of Part 4009 of Subchapter A of Chapter I of Subtitle T of Title 9, Executive, of the NYCRR is amended to classify the existing text as subdivision (a) and add a new subdivision (b) as follows:

PART 4009

Pari-Mutuel Operation

§ 4009.3. Sale, exchange of tickets.

(a) No pari-mutuel tickets shall be sold except at regular ticket windows, properly designated by signs, except that tickets may be issued by automated ticket machines or bets may be sold by designated couriers according to procedures approved by the commission. No such tickets shall be exchanged.

(b) Any track conducting pari-mutuel wagering that cashes or accepts any public assistance check or electronic benefit transfer device issued by a public welfare official or department, or agent thereof, as and for public assistance, as proscribed by section 151 of the Social Services Law, shall be disciplined by the commission. Such discipline may include one or more of the following actions:

(1) revocation of a license;

(2) suspension of a license;

(3) a fine; or

(4) issuance of a public or private letter of reprimand to be placed in the file of the licensee.

Section 4122.3 of Part 4122 of Subchapter B of Chapter I of Subtitle T of Title 9, Executive, of the NYCRR is amended to add a new subdivision (d) as follows:

PART 4122

Pari-Mutuel Wagering

§ 4122.3. Sale of pari-mutuel tickets.

(a) Only one method of selling pari-mutuel tickets shall be used for the sale of tickets on individual heats or races during any racing day.

(b) No pari-mutuel tickets shall be sold except through regular ticket windows properly designated by signs showing type of tickets sold at that particular window, except that tickets may be issued by automated ticket machines, or bets may be sold by designated couriers, according to procedures approved by the commission.

(c) No pari-mutuel selling windows shall be closed nor shall the sale of pari-mutuel tickets be limited or restricted in any way for the purpose of impeding public participation in any wagering pool.

(d) Any track conducting pari-mutuel wagering that cashes or accepts any public assistance check or electronic benefit transfer device issued by a public welfare official or department, or agent thereof, as and for public assistance, as proscribed by section 151 of the Social Services Law, shall be disciplined by the commission. Such discipline may include one or more of the following actions:

(1) revocation of a license;

(2) suspension of a license;

(3) a fine; or

(4) issuance of a public or private letter of reprimand to be placed in the file of the licensee.

Part 4404 of Subchapter F of Chapter I of Subtitle T of Title 9, Executive, of the NYCRR is amended to add a new section 4404.18 as follows:

PART 4404

Operation of a Corporation

§ 4404.18. Restrictions on acceptance of public assistance.

Any facility conducting off-track pari-mutuel wagering that cashes or accepts any public assistance check or electronic benefit transfer device issued by a public welfare official or department, or agent thereof, as and for public assistance, as proscribed by section 151 of the Social Services Law, shall be disciplined by the commission. Such discipline may include one or more of the following actions:

(a) revocation of a license;

(b) suspension of a license;

(c) a fine; or

(d) issuance of a public or private letter of reprimand to be placed in the file of the licensee.

Subdivision (c) of section 4500.9 of Part 4500 of Subchapter G of Chapter I of Subtitle T of Title 9, Executive, of the NYCRR is amended to add a new paragraph (6) as follows:

PART 4500

Internet and Telephone Account Wagering

§ 4500.9. Conduct of wagering.

(a) Account wagers shall be transacted through only an account wagering center.

(b) The authorized pari-mutuel wagering entity may accept account wagers via any wired or wireless communications device, including but not limited to wireline telephones, wireless telephones, and the internet subject to applicable laws, rules and the approved plan of operation.

(c) The authorized pari-mutuel wagering entity shall:

(1) require the account holder to provide the account wagering identification number and PIN before an account wager is accepted.

(2) confirm all account wagering transactions before acceptance of an account wager.

(3) verify that the account has sufficient funds to pay for the wager. No wager or portion of wager shall be accepted if the account fails to have sufficient funds to cover the wager.

(4) debit the total amount of the wager from the account immediately after verifying wager.

(5) not accept any account wager if the recording devices are inoperable; and

(6) not cash or accept any public assistance check or electronic benefit transfer device issued by a public welfare official or department, or agent thereof, as and for public assistance, as proscribed by section 151 of the Social Services Law. Any entity that violates this paragraph shall be disciplined by the commission. Such discipline may include one or more of the following actions:

(i) revocation of a license;

(ii) suspension of a license;

(iii) a fine; or

(iv) issuance of a public or private letter of reprimand to be placed in the file of the licensee.

Part 4822 of Subchapter E of Chapter II of Subtitle T of Title 9, Executive, of the NYCRR is amended to add a new section 4822.25 as follows:

PART 4822

General Conduct of Bingo in Leased Premises

§ 4822.25. Restrictions on acceptance of public assistance.

Any organization conducting bingo in a leased premises, or any lessor of premises for the conduct of bingo, that cashes or accepts any public assistance check or electronic benefit transfer device issued by a public welfare official or department, or agent thereof, as and for public assistance, as proscribed by section 151 of the Social Services Law, shall be disciplined by the commission. Such discipline may include one or more of the following actions:

(a) revocation of a license;

(b) suspension of a license;

(c) a fine; or

(d) issuance of a public or private letter of reprimand to be placed in the file of the licensee.

Sections 5113.1, 5113.5, 5113.7 and 5113.8 of Part 5113 and the title of Part 5113 of Subchapter A of Chapter IV of Subtitle T of Title 9, Executive, of the NYCRR are amended as follows:

PART 5113

Suspensions,[ and] Revocations and Other Discipline

§ 5113.1. Suspension and revocation of a license [issued pursuant to the video lottery gaming law] or discipline of a licensee.

(a) Acceptance of a video lottery gaming license or renewal thereof by a licensee constitutes an agreement on the part of the licensee to be bound by these regulations and the policies and procedures of the commission. It is the affirmative responsibility of all licensees to keep informed of the content of all such regulations, policies and procedures and amendments thereto. Any licensee, other than a natural person, may be held accountable for the violations of such licensee’s principals or key employees. The commission may suspend or revoke any license issued by the commission for any violation of these regulations.

(b) At the discretion of the commission, a license issued under these regulations may be subjected to suspension or revocation, [or] the renewal of such license may be rejected[,] or a licensee may be fined for any of the following reasons, or any combination thereof:

(1) Any violation of any provision of such license, the act, other applicable law or these regulations;

(2) Failure to comply with instructions of the commission concerning a licensed activity;

(3) Conviction of any:

(i) Felony offense, as such term as defined in [State] Penal Law Section 10.00(5), or an equivalent offense committed in another jurisdiction;

(ii) A misdemeanor related to gambling, gaming, bribery, fraud, or any other offense prejudicial to public confidence in the State lottery;

(4) Failure to file any returns or reports or to keep records or to pay any fee or submit revenue as may be required;

(5) Fraud, deceit, misrepresentation or conduct prejudicial to public confidence in the commission;

(6) Failure to furnish a surety or other bond in such amount as may be required by the commission;

(7) A material change since issuance of the license with respect to any matter required to be considered by the commission;

(8) [Violation of the provisions of the Act and/or these regulations;]

[(9)] Whenever the commission finds that the licensee’s experience, character, and general fitness are such that participation in video lottery gaming is inconsistent with the public interest or convenience or for any other reason within the discretion of the commission;

[(10)](9) The failure to notify the commission, in writing, within a reasonable time of any arrest for a misdemeanor or a felony, indictment, or service of a summons, or conviction for any felony whether within or without the State, or within or without the United States, occurring during the term of the license or the renewal thereof.

(c) Prior to commencing a disciplinary proceeding, each licensee shall have the opportunity to correct and/or explain the issue raised by the commission.

(d) Upon suspension or revocation of any license issued pursuant to these regulations, other than a video lottery gaming agent license, the licensee shall surrender such license and any badges for the video lottery gaming facility to the commission. Such licensee shall be banned from entering the video lottery gaming facility for a period of one year or until the license is reinstated, whichever first occurs.

[(d)](e) Upon termination of a video lottery gaming agent’s license for any reason, the video lottery gaming agent shall:

(1) Go to such agent’s bank on a date designated by the commission for the purpose of rendering a final video lottery gaming accounting of any accounts established by these regulations.

(2) Surrender of the video lottery gaming agent’s license and other material provided by the commission.

(3) Upon failure of any video lottery gaming agent to settle accounts on or before the designated date, the commission may exercise such enforcement powers as may be provided for by law. The video lottery gaming agent will provide unrestricted entry onto such agent’s premises for the purpose of the removal of all video lottery gaming equipment and incidentals.

* * *

§ 5113.5. Penalties imposed by commission prior to reissuance of license.

The commission may require a person or business entity who is subjected to disciplinary proceedings, or who formerly held a license pursuant to these regulations, to meet certain conditions before reissuing a license to that person or business entity, including but not limited to the following:

(a) restitution of money;

(b) restitution of property;

(c) suspension or revocation of the payment to the video lottery gaming agent of any portion of the video lottery gaming marketing allowance;

(d) making periodic reports to the commission as required; and

(e) payment of outstanding fines imposed by the commission.

Any or all of the conditions imposed by the commission pursuant to this Part may be imposed jointly and/or severally.

* * *

§ 5113.7. Disciplinary hearings.

Any disciplinary hearing commenced pursuant to these regulations shall be conducted substantially in accordance with the provisions of section 5000.[7]6 of this subtitle. In the event of a conflict between that section and these regulations, these regulations shall control.

§ 5113.8. Final action by commission.

After notice and hearing, in the event the commission finds insufficient evidence to support the violations claimed, the commission may find the licensee not guilty of any of the grounds alleged for disciplinary action; in which event the disciplinary proceedings shall be terminated. The commission may, however, find the licensee guilty by a preponderance of the evidence of some or all of the grounds alleged for disciplinary action[;], in which event the commission may take one or more of the following actions:

(a) revoke the license; [and/or]

(b) suspend the license for a period of time not to exceed six months; [and/or]

(c) fine the licensee; or

(d) issue a public or private letter of reprimand to be placed in the file of the licensee.

This section does not prevent the commission from compromising or settling at any time a formal hearing. Written findings of fact, conclusions of law, and an order must be entered before any decision of the commission shall be considered final.

PART 5117

[Underage Gaming; Alcoholic Beverages; Firearms; Responsible Gaming; Undesirable Persons] Restrictions at Facilities

§ 5117.7. Restrictions on acceptance of public assistance.

Any video lottery gaming agent that cashes or accepts any public assistance check or electronic benefit transfer device issued by a public welfare official or department, or agent thereof, as and for public assistance, as proscribed by section 151 of the Social Services Law, shall be disciplined by the commission pursuant to Part 5113 of this Subchapter.

This notice is intended

to serve only as a notice of emergency adoption. This agency intends to adopt the provisions of this emergency rule as a permanent rule, having previously submitted to the Department of State a notice of proposed rule making, I.D. No. SGC-24-14-00001-EP, Issue of June 18, 2014. The emergency rule will expire October 23, 2014.

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

Kristen Buckley, New York State Gaming Commission, 1 Broadway Center, PO Box 7500, Schenectady, New York 12301-7500, [phone], email: [e-mail]

Regulatory Impact Statement

1. STATUTORY AUTHORITY: Section 3 of Part F of Chapter 58 of the Laws of 2014 authorizes the Gaming Commission to promulgate regulations on an emergency basis and immediately take such other actions as necessary to implement Part F of Chapter 58 of the Laws of 2014.

Racing, Pari-Mutuel Wagering and Breeding Law (“Racing Law”) section 104(1) gives the Gaming Commission general jurisdiction over all gaming activities in the State.

Racing Law section 104(19) authorizes the Gaming Commission to promulgate any rules and regulations that it deems necessary to carry out its responsibilities.

Racing Law section 235(1) authorizes the Gaming Commission to make rules regulating the conduct of pari-mutuel betting.

Racing Law section 310 authorizes the Gaming Commission to suspend or revoke licenses granted by it and to impose monetary fines upon those participating in any way in any harness race meet at which pari-mutuel betting is conducted.

Racing Law section 520(1) gives the Gaming Commission general jurisdiction over the operation of all off-track betting facilities within the State and authorizes the Gaming Commission to issue rules and regulations in regard to off-track betting facilities.

Executive Law sections 435(1)(a) and (d) gives the Gaming Commission the authority to supervise the administration of the bingo licensing law, to adopt rules and regulations governing the conduct of bingo and to suspend or revoke licenses relating to the conduct of bingo.

Tax Law section 1604 authorizes the Gaming Commission to operate the lottery and to promulgate rules and regulations governing the operation thereof.

Tax Law section 1617-a (a) authorizes the Gaming Commission to license the operation of video lottery gaming pursuant to the rules and regulations of the Gaming Commission.

2. LEGISLATIVE OBJECTIVES: The federal Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112–96, 126 Stat. 156, enacted February 22, 2012) requires states to put in place policies and procedures to prevent federal public assistance benefits from being used in any electronic benefits transaction at designated types of businesses such as horse racetracks, off-track horse betting facilities, video lottery facilities and commercial bingo establishments. In response to this requirement, New York State enacted Part F of Chapter 58 of the Laws of 2014, which amends Social Services Law sections 21-a and 151 to restrict the acceptance of federal public assistance benefits distributed by the State at such locations. The legislation became effective May 30, 2014. This emergency rule making carries out the legislative objectives of the above-referenced laws by implementing the requirements of Part F of Chapter 58 of the Laws of 2014 as such requirements pertain to facilities regulated by the Gaming Commission.

3. NEEDS AND BENEFITS: This emergency rule making is necessary to enable the Gaming Commission to enforce Part F of Chapter 58 of the Laws of 2014, as directed by the Legislature. The legislation restricts at various facilities the acceptance of federal public assistance benefits distributed by the State and sets forth the sanctions that regulated parties will face if they do not comply. This rule making implements the legislation by establishing a range of possible sanctions for regulated parties that accept federal public assistance benefits in violation of Social Services Law section 151. Such sanctions may include license revocation, license suspension, fines or written reprimands.

The change to section 4009.3 restricts the acceptance of federal public assistance benefits for pari-mutuel wagering at thoroughbred racetracks and outlines potential sanctions. The change to section 4122.3 restricts the acceptance of federal public assistance benefits for pari-mutuel wagering at harness racetracks and outlines potential sanctions. The change to section 4500.9 restricts the acceptance of federal public assistance benefits for internet and telephone wagering and outlines potential sanctions. The addition of section 4404.18 restricts the acceptance of federal public assistance benefits for off-track pari-mutuel wagering and outlines potential sanctions. The addition of section 4822.25 restricts the acceptance of federal public assistance benefits for commercial bingo establishments and outlines potential sanctions.

The changes to sections 5113.1, 5113.5 and 5113.8 make clear that a licensee can face license sanctions or be fined for violations of other applicable laws such as Social Service Law section 151. The change to section 5113.7 corrects an erroneous cross-reference to the section of the Gaming Commission’s regulations governing the conduct of license suspension and revocation hearings. The addition of section 5117.7 restricts the acceptance of federal public assistance benefits at video lottery facilities and outlines potential sanctions. These changes and additions are necessary to enforce Part F of Chapter 58 of the Laws of 2014 and to make clear to regulated parties their obligations under the new law.

4. COSTS:

(a) Costs to the regulated parties for the implementation of and continuing compliance with the rule: There are no costs to regulated parties who comply with the law. Regulated parties that have not already done so may implement electronic benefit transfer blocking technology at their facilities to assist their compliance with statute. Regulated parties that do not comply with the law will face sanctions that may include fines.

(b) Costs to the regulating agency, the State, and local government: The rules will impose some costs to the Commission to sanction parties that violate the law and to conduct hearings, where necessary. The rules will not impose any additional costs on local government, except that regional off-track betting corporations may implement electronic benefit transfer technology at their facilities to assist their compliance with statute.

(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 Gaming Commission’s experience regulating racing and gaming activities within the State.

5. PAPERWORK: The rules are not expected to impose any significant paperwork requirements on regulated parties.

6. LOCAL GOVERNMENT: The rules do not impose any mandatory program, service, duty, or responsibility upon local government because compliance with Part F of Chapter 58 of the Laws of 2014 is strictly a matter of State law.

7. DUPLICATION: The rules do not duplicate, overlap or conflict with any existing State or federal requirements. The rules complement federal legislation and rules.

8. ALTERNATIVES: The Gaming Commission is directed to create these rules by Section 3 of Part F of Chapter 58 of the Laws of 2014. Therefore, no alternatives were considered.

9. FEDERAL STANDARDS: The federal Middle Class Tax relief and Job Creation Act of 2012 (Pub. L. 112-96, 126 Stat. 156 enacted February 22, 2012) requires states to restrict the acceptance of public assistance in the manner implemented by Part F of Chapter 58 of the Laws of 2014.

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

Regulatory Flexibility Analysis

1. EFFECT OF THE RULE: The rules will affect any party operating horse racetracks, off-track horse betting facilities, video lottery facilities and commercial bingo establishments. Each must comply with Part F of Chapter 58 of the Laws of 2014, as must all regulated parties governed by such law.

2. COMPLIANCE REQUIREMENTS: The rules will not impose any compliance requirements on small business or local governments.

3. PROFESSIONAL SERVICES: The rules will not require small businesses or local governments to obtain professional services.

4. COMPLIANCE COSTS: Regulated parties that have not already done so may implement electronic benefit transfer blocking technology at their facilities to assist their compliance with statute. Regulated parties that do not comply with the law will face sanctions that may include fines.

5. ECONOMIC AND TECHNOLOGICAL FEASIBILITY: The rules will not impose any technological requirements on small businesses or local governments, but regulated parties that have not already done so may implement electronic benefit transfer blocking technology at their facilities to assist their compliance with statute.

6. MINIMIZING ADVERSE IMPACT: The rules will not have an adverse economic impact on small businesses or local governments.

7. SMALL BUSINESS AND LOCAL GOVERNMENT PARTICIPATION: Small business and local government may comment on the proposed rules during the public comment period.

8. In accordance with NYS State Administrative Procedures Act (SAPA) Section 202-b, this rule making does not include a cure period because the Gaming Commission is promulgating this regulation to implement Part F of Chapter 58 of the Laws of 2014.

Rural Area Flexibility Analysis

A rural flexibility analysis is not attached because the rules do not impose any adverse impact or reporting, recordkeeping, or other compliance requirements on public or private entities in rural areas. The rules apply uniformly throughout the State to any party operating horse racetracks, off-track horse betting facilities, video lottery facilities and commercial bingo establishments.

Job Impact Statement

The Gaming Commission has no reason to believe that these rules will have any adverse impact on any jobs or employment opportunities. The rules prescribe sanctions for a regulated party that does not comply with statute. The rules will not impact jobs and employment and a full Job Impact Statement is not necessary.

Assessment of Public Comment

The agency received no public comment since publication of the last assessment of public comment.