Affiliate, totalisator, concessionaire, and vendor licenses

# (a)

Type of license.

# (1)

Association affiliate license. Any affiliate, as that term is defined in these regulations, of an association must obtain an association affiliate license from the board.

# (2)

Totalisator license. Any person or business organization that will provide totalisator equipment or services to any association licensee for the operation of a parimutuel system must obtain a totalisator license from the executive director.

# (3)

Concessionaire license. Any concessionaire, as such term is defined in these regulations, must obtain a concessionaire license from the executive director.

# (4)

Vendor license. Any vendor, as such term is defined in these regulations, must obtain a vendor license from the executive director.

# (5)

Affiliate of totalisator, concessionaire or vendor license. Any affiliate, as that term is defined in these regulations, of a totalisator, concessionaire, or vendor licensee must obtain the appropriate affiliate license from the division.

# (b)

Application.

# (1)

Application for a license shall be made on forms supplied by the division and shall be filed with the executive director of the division.

# (2)

Each applicant shall file such information as may from time to time be required by the division and as is hereinafter enumerated.

# (3)

In granting a license to any applicant the licensing authority will consider the applicant's financial standing and credit; the character, reputation, and criminal record of applicant or the persons identified with it, applicant's previous employment or business history, other gambling interests, business or personal affiliations, ownership of assets, and such other information as it deems pertinent to the issuance of such license in accordance with the provisions of the act.

# (c)

Hidden ownership.

# (1)

Notwithstanding anything in these regulations which may indicate the contrary, hidden ownership of an affiliate licensee is prohibited. All shareholders, bondholders, partners, associates, or other owners of an affiliate (either board or executive director licensed) as defined herein shall be individual persons, and no such ownership by business organizations shall be permitted. For example, an arrangement which would produce an affiliate of an affiliate is forbidden. Similarly no separation of legal and beneficial or equitable ownership of an affiliate shall be allowed. Ownership shall be held in the name of said shareholders, bondholders, partners, associates, or other owners. Bearer instruments and nominees shall not be used in holding such ownership interests. Any noncomplying ownership must be divested from the affiliate licensee within sixty days after an order to do so from the authority which granted its license. Affiliate licensees shall adopt appropriate amendments to their organizational instruments to permit compliance with this section.

# (2)

Subdivision (1) above of this subsection shall not apply to publicly traded corporations which hold debt or equity securities of an affiliate licensee.

# (d)

Individual or sole proprietor. An applicant who is an individual person may be required to file as part of his application a class II occupational license application.

# (e)

Corporations.

# (1)

A corporate applicant shall file as part of its application:

(A) A statement giving its name, trade name (if any), address and physical location, nature of business, date and location of incorporation, the name and address of an agent registered and authorized to receive services of process in any proceedings against applicant, and listing the other jurisdictions in which applicant does business and the nature of business conducted in such jurisdictions.

(B) Certified copies of the certificate of incorporation, bylaws, certificate of authorization (if a foreign corporation), and any other instruments under which applicant is organized and doing business.

(C) The name, legal residence, mailing address, social security number, date and place of birth, a ten-year employment history, and the office held by each officer of the applicant, of each member of the board of directors of the applicant, and of stockholders holding five percent or more of the applicant's stock.

(D) A statement showing the classes and numbers of shares of stock authorized, issued, and outstanding; designating the market value and vote per share; and giving a current list of the names, addresses, and numbers of shares held for all holders of outstanding shares.

(E) Where the beneficial owner of any stock is other than the owner or subscriber of record an explanation of such beneficial ownership including the name of the

Division of Special Revenue § 12-574-E4 owner or subscriber, the name of the beneficial owner and the conditions under which the owner or subscriber holds and votes or has subscribed for such stock.

(F) A statement explaining in full detail all stock equivalents which are authorized, issued, and exercisable to include a list of participant names, addresses, and amount of holdings.

(G) Copies of filings by the applicant with the Securities and Exchange Commission and any state agency regulating transactions of securities or business offerings as required and applicable for the preceding twelve month period.

(H) An explanation of any suspensions from trading or other action taken against any of applicant's securities or business offerings.

# (2)

Subject to the provisions of subsection (c) above, where a shareholder of five percent or more of the applicant's stock is a corporation, other than a publicly traded corporation, all of the information required of a corporate applicant under this subsection (e) must be supplied for that shareholder. Where a shareholder is a business organization other than a corporation, all of the information required of a business organization applicant under subsection (f) below must be supplied for that shareholder. Application for the relevant affiliate license shall fulfill the requirements of this subdivision for shareholders which qualify as affiliates.

# (f)

Applicant other than an individual or corporation.

# (1)

An applicant which is neither an individual person nor a corporation must file as part of its application:

(A) A statement giving its name, trade name (if any), address and physical location, nature of business, date and location of organization, the name and address of an agent registered and authorized to receive services of process in any proceedings against applicant, and listing the other jurisdictions in which applicant does business and the nature of business conducted in such jurisdictions.

(B) Certified copies of all instruments under which applicant is organized and doing business and of the certificate of authorization, if applicable for a foreign business organization.

(C) The name, legal residence, mailing address, social security number, date and place of birth, a ten-year employment history, the office held within the business organization, the percentage of ownership held, and a listing of three personal references for each business organization participant who owns five percent or more of applicant's equity.

(D) Copies of filing by the applicant with the Securities and Exchange Commission and any state agency regulating transactions of securities or business offerings as required and applicable for the preceding twelve month period.

(E) An explanation of any suspensions from trading or other action taken against any of applicant's securities or business offerings.

# (2)

Subject to the provisions of subsection (c) above, where a participant in the applicant which owns five percent or more of applicant's equity is a corporation other than a publicly traded corporation all of the information required of a corporate applicant under subsection (e) above must be supplied for that participant. Where a participant is a business organization other than a corporation, all of the information required of a business organization applicant under this subsection (f) must be supplied for that participant. Application for an association affiliate license shall fulfill the requirements of this subdivision for participants which qualify as affiliates.

# (g)

Requirements for all applicants. In addition to the information requested under subsections (d), (e) and (f) of this section applicants must also supply the following in their applications:

# (1)

Tax information. Applicant's Federal Identification Number, applicant's Connecticut Tax Registration Number, or a copy of applicant's application for a Connecticut Tax Registration Number, complete copies of applicant's most recent federal and state income tax returns, and any amendments thereto and a statement explaining any outstanding tax delinquencies or unresolved disputes.

# (2)

Financial statements. A copy of the applicant's financial statements for the preceding fiscal year including, where they exist, copies of the management representation and lawyer's contingency letters provided to applicant's certified public accountant for the most recently completed financial audit. If certified financial statements are unavailable, a copy of the preceding fiscal year's financial statements attested to under oath.

# (3)

Major contractual services.

(A) The names and addresses of every person or business organization which provides (or will provide) major contractual services, as defined in these regulations to applicant for purposes of its licensed activity indicating the nature of such services rendered or to be rendered and equipment or property provided or to be provided.

(B) Relative to such contractual services disclosed in subparagraph (A) immediately above, copies of all pertinent written agreements or statements explaining the substance of oral agreements or understandings including the names and addresses of the parties with whom made and also stating whether such parties are related through control, family, or business association with the applicant, its partners, associates, officers, directors, and principal owners.

# (4)

Control. If applicant is directly or indirectly controlled by another person or business organization, a statement showing how such control is exercised and the extent of the control.

# (5)

Related party transactions.

(A) If any of the partners, associates, officers, directors, or principal owners of the applicant are related through control, family or business association to any other person or business organization doing business with any legalized gambling entity by providing or receiving goods or services, and if the annual value of such goods or services supplied is at least $25,000 or represents at least 25 percent of such related party's gross annual receipts, a statement containing the names and addresses of the related parties, and a full description of the goods provided or services rendered indicating the dollar value and, where known, the percentage of business such represents. If a fee or other consideration was or is to be paid or received for these transactions, the value and recipient of such must be indicated in this statement.

(B) If any of the partners, associates, officers, directors, or principal owners of the applicant are related through control, family ownership, or business association to any other person or business organization through which the applicant provided or is to provide or received or is to receive mortgages, loans, leases, realty, or equipment, and if the annual value of such items provided or received is at least $25,000 or represents at least 25 percent of such person's or business organization's gross annual receipts, a statement containing the names and addresses of the persons or business organizations providing or receiving the aforementioned items, the names and addresses of the related parties, and a full description of the items provided or received indicating the dollar value. If a fee or other consideration was or is to be paid or received, the value and recipient of such must be indicated in this statement.

# (6)

Interest in other gambling activities. If applicant now has or has ever had any interest in or connection with a legalized gambling entity, has ever applied for a license relating to legalized gambling, has had a license application denied, has

Division of Special Revenue § 12-574-E4 held a license, or had a license suspended or revoked, whether within or without the state of Connecticut, a statement fully disclosing:

(A) The names and addresses of the involved persons or business organizations;

(B) The nature of the interest or connection including the dates of such;

(C) The name under which such legalized gambling activity was conducted;

(D) A complete description of the legalized gambling activity and the licensing procedures; and

(E) Any administrative findings of violation relating to gambling on the part of such legalized gambling entity.

# (7)

Bankruptcies. If voluntary proceedings in bankruptcy have ever been instituted by or if involuntary proceedings in bankruptcy have ever been brought against the applicant, a full disclosure concerning the persons or business organizations involved, identifying the court and the proceeding by dates and file number, and stating the facts upon which the proceedings were based and the disposition of the matter.

# (8)

Contingent liabilities. A statement disclosing all current, material (more than $100,000) litigation, unsatisfied judgments, decrees, orders, and other liabilities including but not limited to tax assessment, surety or guarantorships; providing such details as dates, principal parties thereto, factual and legal basis; and explaining the impact such may have upon the applicant's operations if the applicant is rendered an unfavorable decision.

# (9)

Managers and supervisors. A statement listing the names and positions or titles of the applicant's managerial and supervisory personnel for the operation of the licensed activity.

# (h)

Applicant owner of facility. If applicant owns or will own any of the land or buildings which constitute the facility and provides such to the association, applicant must provide as part of its application:

# (1)

Cost and cost allocation. A statement giving the acquisition or construction cost of said land or buildings including a detailed allocation of the cost to include such items as buildings, land, equipment, contracts, inventory, intangible items etc.
Copies of all appraisal documents, maps, plans, blueprints, deeds, detailed inventory listing, titles, guarantees, affidavits, leases, agreements, etc. which form the basis for the cost must be included with this statement.

# (2)

Sources and amounts of funding.

(A) A statement detailing the sources and amounts of funding of such cost including:

# (i)

Sales or offers to sell stocks, bonds, or other securities.

(ii) Investment by owners.

(iii) Loans, notes, mortgages, installment sales.

(iv) Sale and lease-back.

(v) Other.

(B) Written copies of all financing documents indicating the names and addresses of the parties involved, the terms of financing/funding/capitalization, and the conditions of applicable payment or repayment.

(3) Acquisition documents.

# (A)

An index to and copies of all proposed acquisition documents and a certification by counsel that the division has been provided with a copy of all such documents.

# (B)

Within seven (7) days after acquisition is complete, an index to and copies of all fully executed acquisition documents and a certification by counsel that the division has been provided with a copy of all such executed documents.

(i) Conditions of licensure.

(1) If a license is granted, the applicant agrees to abide by and comply with the provisions of the act and any rules and regulations as the division with the advice and consent of the board has adopted or may hereafter adopt.

(2) If a license is granted, it will become the duty of the applicant/licensee to file with the board or the division such reports and financial data as may be required by the act or by such rules and regulations as the division with the advice and consent of the board has adopted or may hereafter adopt and to make such payments as may be required by said act or rules and regulations. This duty shall continue for the entire duration of the license.

(3) All exhibits, statements, reports, papers, data, etc. submitted pursuant to an application for an association license shall be current, accurate, and complete.
Applicant shall immediately provide the division with a full description of any significant operational change in any of the information submitted as part of its application.

(4) Any license which may be granted to an applicant is predicated upon the information contained in its application which applicant verifies under oath. For any material false or misleading statement or answer in an application, said application may be denied, or if a license has already been granted, the license may be fined or such license may be suspended or revoked or any combination thereof.

(5) All partners, trustees, shareholders, and other owners (including beneficial owners) of the applicant/licensee as disclosed under this section must be qualified under the act and these rules for appropriate licensure, either affiliate or occupational.
Where such a party fails to be or to remain so qualified, any ownership held by such party (including beneficial ownership) must be divested by that party not later than sixty days after an order from the board or the executive director. The applicant/ licensee shall include appropriate provisions in its organizational instruments to effect such divestiture. Nothing in this subdivision shall be deemed to limit the application of any other provision of these rules or of any provision of the act.

# (j)

Nontransferability. No license shall be transferable or assignable in any manner or particular.

# (k)

Duration of licensure and renewals.

# (1)

Any license granted by the executive director shall be effective for not more than one year. Totalisator, concessionaire, vendor, and their affiliate licenses shall expire on the thirty-first day of August of each year. Previously licensed applicants or applicants for renewal shall provide currently updated application material but will not be required to resubmit historical data which is already available to the division.

# (2)

Association affiliate licenses issued by the board need not be renewed, however, holders of such licenses shall file statements revising application information as material changes in such information occur. If such information is to be disclosed pursuant to the provisions of Section 12-584 of the Connecticut General Statutes and Section 12-584-1 of these rules it need not be resubmitted. Failure to provide timely updates may result in penalty to such licensee or its allied association licensee.

# (l)

Certification. The license application shall be signed and attested to under oath before a notary public or Commissioner of the Superior Court by the applicant if applicant is an individual person, by all general partners if applicant is a partnership, or by an officer duly authorized by the board of directors if applicant is a corporation.
A corporate applicant shall attach to its application a certified copy of the minutes or resolution of the board of directors specifically authorizing that officer to sign

Division of Special Revenue § 12-574-E5 for the corporation. Said minutes or resolution shall be signed by the secretary of the corporation and the corporate seal shall be affixed thereto.