Approval Or Denial Of An Initial Application

(1) In accordance with the Sports Gaming Act, T.C.A. § 4-49-120, the Council shall not grant a License or approve a Registration for an Applicant that has one or more of the following individuals associated with it as Key Personnel: (a) Any Person identified in 1350-01-.03(13)(a); (b) An employee of, coach of, player for, or person who is a member or employee of a governing body of, a sports team, league, or association, upon which Wagers are permitted to be placed; or (c) A Person having the ability to directly affect the outcome of a Sporting Event. (2) Applicants shall not be issued a License or approved for Registration if they, or any of their Key Personnel, have been convicted of any felony. Applicants shall not be issued a License, approved for Registration if they, or their Key Personnel, have been convicted of any gambling- related offense that the Council finds threatens the integrity of sports wagering in Tennessee and the public interest. (3) In all cases, the Council shall have sole authority to approve, condition, or deny an application for a License or Registration, or renewal thereof. (4) In determining whether to approve or deny an application for a License or Registration the Council may consider the following factors: (a) Whether the Applicant is proposing an Interactive Sports Gaming operation that will have a positive impact through increased revenues to the State of Tennessee. (b) Whether the Applicant possesses adequate funds or has secured adequate financing to commence and maintain an Interactive Sports Gaming operation or serve as a Vendor. (c) Whether the Applicant has the financial stability, integrity, and responsibility to conduct Interactive Sports Gaming, or serve as a Vendor for Interactive Sports Gaming. SPORTS GAMING LICENSE STANDARDS CHAPTER 1350-01 (d) Whether the Applicant has sufficient business ability and experience to create and maintain a successful Interactive Sports Gaming operation or serve as a Vendor for Interactive Sports Gaming. (e) Whether the Sports Gaming Operator License Applicant has proposed adequate measures for security of any Sports Gaming System, server, or components thereof. (f) Whether the Sports Gaming Operator License Applicant has demonstrated that its proposed Interactive Sports Gaming operation will be conducted in accordance with the Sports Gaming Act and all other applicable local, state, and federal laws, and has satisfied the requirements set forth in these Rules. (g) Whether the Applicant or its Key Personnel have been: 1. Convicted of a disqualifying offense, as established by the Sports Gaming Act; 2. Arrested, charged, indicted, or have received a target letter from the U.S. Department of Justice in connection with any investigation of offshore sports gaming activities that serviced the United States; 3. Arrested, charged with, convicted of, pleaded guilty to, or forfeited bail concerning any criminal offense under the laws of any jurisdiction, other than for a minor traffic offense; or 4. Indicted of any felony, gambling-related offense, or any other offense(s) that the Council finds will threaten the integrity of sports wagering in Tennessee and the public interest. (h) The past and present compliance of the Applicant, its affiliates, or affiliated companies relating to gaming operations or activities in any other jurisdiction, including, but not limited to, whether the Applicant has a history of non-compliance with the gaming requirements or prohibitions of any jurisdiction. (i) Whether the Applicant has knowingly made a false statement of a material fact in any application or other communication to the Council or failed to disclose to the Council a violation of this Rule by Applicant, as applicable. (j) Whether the Applicant has had a license to operate any gaming or sports wagering activity suspended or revoked or been denied from operating any gaming or sports wagering activity by any governmental authority responsible for the regulation of gaming activities in any jurisdiction. (k) Whether an Applicant has timely remitted the balance of any application, license, or other fees when due to the Council. (l) Whether the Applicant has filed, or had filed against it, a proceeding for bankruptcy, liquidation, or insolvency or has ever been involved in any formal process to adjust, defer, suspend, or otherwise work out the payment of any debt. (m) Whether the Applicant has been served with a complaint, lien, or other notice filed with any public body regarding a payment of any tax or obligation required under any law in any jurisdiction, where the Applicant has been in breach for one or more years. (n) Whether the Applicant is or has been a defendant in litigation involving its business practices that would call into question its suitability to obtain a License or Registration. SPORTS GAMING LICENSE STANDARDS CHAPTER 1350-01 (o) Whether the Sports Gaming Operator License Applicant has submitted a Responsible Gaming Plan that meets the Council’s requirements. (p) Whether the Sports Gaming Operator License Applicant has demonstrated that it has met the reserve requirements, including obtaining the required Bond set forth in these Rules. (q) Whether the Sports Gaming Operator License Applicant has met the insurance requirements set forth in these Rules. (r) Whether the Applicant has submitted financial statements in accordance with these Rules. (s) Whether the Sports Gaming Operator License Applicant has submitted a Sports Gaming System Operational Assessment by an Independent Testing Laboratory in accordance with these Rules. (t) Whether the Sports Gaming Operator License Applicant has submitted a Sports Gaming System Technology Integrity and Security Assessment by an Independent Testing Laboratory in accordance with these Rules. (u) Whether the Sports Gaming Operator License Applicant has established the bank account required by Rule 1350-01-.07(5) for the payment of privilege tax. (v) Whether the Sports Gaming Operator License Applicant has submitted House Rules in accordance with these Rules. (w) Whether the Sports Gaming Operator License Applicant has submitted Terms and Conditions in accordance with these Rules. (x) Whether the Sports Gaming Operator License Applicant has developed Internal Control standards in accordance with Chapter 1350-03. (y) Whether the Sports Gaming Operator License Applicant has demonstrated that it has appropriate procedures and controls in place to meet the requirements related to Sports Gaming Accounts in accordance with these Rules. (z) Whether awarding a License or approving a Registration would undermine the public’s confidence in the Interactive Sports Gaming industry in the State of Tennessee. (aa) Whether the Sports Gaming Operator License Applicant is utilizing the services of an Integrity Monitoring Provider. (bb) Whether the Applicant meets other prescribed standards for the issuance of a License or approval of a Registration, as set forth in these Rules. (5) Completed Applications for Initial Licensure or Registration. (a) Upon receipt of an application, the Council shall review it for completeness and submit the requisite information to the appropriate investigative individual or entity to conduct the criminal history review and report. (b) In the event the review of the application reveals a deficiency, the Council shall notify the Applicant in writing (which may include e-mail). The Council shall have no obligation to continue to review the application until the deficiency is corrected. SPORTS GAMING LICENSE STANDARDS CHAPTER 1350-01 (c) Upon a determination that the application is complete, the Council shall notify the Applicant in writing (which may include e-mail) that the application has been deemed complete. The Council shall approve or deny the application within ninety (90) calendar days of it declaring the application complete. Despite this determination, the Council may continue to request additional information from Applicant. If, as a result of the investigation into the background of the Applicant or its affiliated Persons or entities, a sufficient amount of additional information is required to be provided, the Council may notify the Applicant in writing (which may include e-mail) at the time of the request for additional information that it is suspending or revoking its determination of application completeness. (d) In the event the Council suspends its determination of completeness, such suspension shall remain in place until such time as the additional requested information is provided by Applicant. The imposition of a suspension of completeness will result in a resetting of the ninety (90) day timeframe for the Council to approve or to deny the application. (6) Sports Gaming Operator License and Vendor Registration Applicant Background Investigations for Initial Licensure or Registration. (a) Upon determination that each Key Personnel application is complete, the Council shall initiate an investigation into the background of Applicant’s Key Personnel, excluding Institutional Investors. (b) The Council shall conduct a due diligence investigation of the Applicant to assess whether a License shall be awarded or Registration approved. The investigation will focus on integrity, background, responsibility, financial stability, criminal history, reputation, character, and ability to perform scope of services and shall require documents and information as specified on the forms available on the Council’s website. (c) Criminal history background investigations shall include the submission of fingerprints to the Tennessee Bureau of Investigation, Federal Bureau of Investigation, or any other foreign government agency, public or private, deemed to be appropriate by the Council. Applicant will be required to disclose the following information and include a description of the circumstances, dates, location, nature of violation, disposition, and status: 1. Whether the Applicant or any Key Personnel have been arrested, charged, or convicted of a criminal offense in any jurisdiction, excluding minor traffic violations, such as parking tickets, speeding, etc.; 2. Whether the Applicant or any Key Personnel have been subject to any disciplinary action or non-routine investigation by any administrative, governmental, law enforcement, or regulatory body; and 3. Whether the Applicant or any Key Personnel have been charged with a violation of any statute, rule, regulation, or ordinance of any administrative, regulatory, or other governmental body. (d) A Sports Gaming Operator License Applicant’s financial stability review shall include the following information: 1. Whether the Sports Gaming Operator License Applicant or its Key Personnel have been in default of paying any taxes, fees, or other obligations owed to the State of Tennessee, any local governmental entity in Tennessee, or the federal government; SPORTS GAMING LICENSE STANDARDS CHAPTER 1350-01 2. Documents evidencing the financial activities and stability of the Sports Gaming Operator License Applicant and its Key Personnel, including bank statements of the Sports Gaming Operator License Applicant, business and personal income and disbursement schedules, tax returns, or other documentation satisfactory to the Council that demonstrate by clear and convincing evidence that the Sports Gaming Operator License Applicant has sufficient business ability and experience to establish and maintain a successful Interactive Sports Gaming operation or business; and 3. Documents evidencing the ability of the Sports Gaming Operator License Applicant to meet ongoing operating expenses necessary for the maintenance of continuous and stable Interactive Sports Gaming operations or business and the Sports Gaming Operator License Applicant’s ability to pay, as and when owed, winning Wagers and all state and federal taxes. (7) Geolocation Requirements. (a) Prior to Licensure, a Sports Gaming Operator License Applicant must demonstrate that it utilizes a geolocation system that provides the following functions, at a minimum: 1. Detects the physical location of a Player attempting to access any Sports Gaming System; 2. Monitors and blocks unauthorized attempts to place a Wager using the Sports Gaming System; 3. Ensures that a Player is continually located within the geographical boundaries of Tennessee when the Wager is initiated and received. If the session is longer than a single Bet or Wager: (i) Rechecks the geographical location every twenty (20) minutes or five (5) minutes if within one (1) mile of the state border; and (ii) Rechecks intervals based on the Player’s proximity to the border with an assumed travel velocity of seventy (70) miles per hour, and a maximum interval not exceeding twenty (20) minutes; 4. Does not rely solely upon IP addresses to determine location when a mobile or Internet connection is being used to place a wager; and 5. For locations in Tennessee suspected of Suspicious Wagering Activity or Unusual Wagering Activity, allows for the creation of a custom virtual boundary around a physical location to identify the history of Patrons attempting to access the Sports Gaming System at that location. (b) A Sports Gaming Operator License Applicant must disclose in its Terms and Conditions that the Sports Gaming System utilizes a third-party Geolocation Service that gathers geolocation and other data in accordance with these Rules, and that the Geolocation Service Vendor may share information with the Council regarding the Bettor’s geographical location, access and use of the Applicant’s Sports Gaming System, device type, device operating system, and device identifier, including passed/failed transactions, and the IP address for use in accordance with the Sports Gaming Act and these Rules. (8) Responsible Gaming Plan. SPORTS GAMING LICENSE STANDARDS CHAPTER 1350-01 Each Sports Gaming Operator License Applicant shall propose a Responsible Gaming Plan as an element of its License Application. A Licensee shall maintain its plan for as long as the Licensee accepts Wagers in the State of Tennessee. A Licensee may propose amendments to its Responsible Gaming Plan, provided it submits the amendment for approval by the Council at least forty-five (45) days before the proposed effective date of any changes to the Responsible Gaming Plan. The Responsible Gaming Plan shall include, at a minimum, the following: (a) Plan goals, statement of policy and commitment, procedures, and deadlines for implementation; (b) A process for individuals to add themselves to the Licensee-Specific Self-Exclusion List; (c) A process for individuals to add themselves to the Statewide Self-Exclusion List, by directing individuals to the Council; (d) A process for the Licensee to prevent individuals who have requested Voluntary Self- Exclusion from placing Wagers. For each individual who makes such a Voluntary Self- Exclusion request, Licensees shall provide the individual with additional responsible gaming resources; (e) A method to share with the Council an individual’s request to be added to the Licensee- Specific Self-Exclusion List; (f) A method for receiving information from the Council regarding restrictions from individuals added to the Statewide Self-Exclusion List; (g) A program where Players have the option to set an Account Cool-Off; (h) If a Player sets a Responsible Gaming Limit, the Licensee shall prevent the Player from exceeding that limit during the time period requested by the Player; (i) A plan for making responsible gaming information available and legible on the Licensee’s website(s), mobile app(s), advertisements, or other platforms for Interactive Sports Gaming, including publication of a problem-gambling helpline telephone number that provides information about responsible gaming and services, and that has been approved by the Council pursuant to Rule 1350-01-.07(11); (j) A plan for providing comprehensive responsible gaming training to employees who may interact with Players from the State of Tennessee, including annual or periodic refresher training. Training should equip the trainee to respond to circumstances in which Player account activity may indicate signs that are consistent with gambling addiction; (k) Procedures to prevent underage gambling, including age-affirmation mechanisms that utilize, at a minimum, month, date, and year of birth that will apply before the Person can gain access to any Sports Gaming System where Players can engage in Interactive Sports Gaming. A Sports Gaming Operator may use information obtained from third parties to verify that a Person is authorized to open an account, place Wagers, and make deposits and withdrawals; (l) A process to provide Players with information about their play. This includes history, money spent, games played, net wins/losses, limits history, and any other relevant information; SPORTS GAMING LICENSE STANDARDS CHAPTER 1350-01 (m) A process to provide Players with updates during play about time and money spent and account balances in cash; (n) A clear and conspicuous display on the Licensee’s website(s), mobile app(s), advertisements, or other platforms for Interactive Sports Gaming indicating that it is unlawful for a Person under twenty-one (21) years of age to engage in Interactive Sports Gaming in the State of Tennessee; (o) Procedures to prohibit a Person who places Wagers with the Licensee from establishing more than one active Sports Gaming Account with the Licensee; and (p) Procedures to permit a Person that places Wagers with the Licensee to terminate their Sports Gaming Account at any time, for any reason, and without penalty. (9) Final Approval of Initial Applications for Licensure and Registration (see Rule 1350-01-.12 for Renewals). (a) If the Council determines that the applicable application requirements and considerations set forth in the Sports Gaming Act and these Rules have been met to its satisfaction, the Council shall issue a Sports Gaming Operator License or approve the Registration of a Vendor, as applicable. (b) For each License application approved, the application fee shall be credited to the annual License fee, and the Licensee shall send the balance of the annual fee to the Council within ten (10) days of approval of a License. (c) No Licensee shall be permitted to accept Wagers unless and until it has submitted both its Sports Gaming System Operational Assessment and Sports Gaming System Technology Integrity and Security Assessment, both of which must be completed by a qualified Independent Testing Laboratory that is registered as a Vendor. (d) Each Licensee and Registrant has a continuing duty and obligation to Immediately Notify the Council of any material change in status or applicable information that, if known by the Council, could disqualify the Licensee or Registrant from holding the License or being approved for Registration.